17 unchanged sentences
• Consolidated Results of Operations
−Removed: ◦ Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: ◦ Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
+Added: ◦ Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: ◦ Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
• Operating Results by Business Segment
10 unchanged sentences
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 solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.
−Removed: Our principal assets as of June 30, 2021 include:
+Added: Our principal assets as of September 30, 2021 include:
nitrogen manufacturing facilities located in Donaldsonville, Louisiana (the largest nitrogen complex in the world);
14 unchanged sentences
Since ammonia is one of the most efficient ways to transport and store hydrogen and is also a fuel in its own right, we believe that the Company, as the world’s largest producer of ammonia with an unparalleled manufacturing and distribution network and deep technical expertise, is uniquely positioned to fulfill anticipated demand for hydrogen and ammonia from green and blue sources.
−Removed: Our approach will focus on green ammonia production, which refers to ammonia produced through a carbon-free process, and blue ammonia, which relates to ammonia produced by conventional processes but with CO 2 removed through carbon capture and sequestration (CCS) and other certified carbon abatement projects.
−Removed: We announced an initial green ammonia project at our flagship Donaldsonville nitrogen complex to produce approximately 20,000 tons per year of green ammonia.
+Added: Our approach is focusing on green ammonia production, which refers to ammonia produced through a carbon-free process, and blue ammonia, which relates to ammonia produced by conventional processes but with CO 2 removed through carbon capture and sequestration (CCS) and other certified carbon abatement projects.
+Added: We announced an initial green ammonia project at our flagship Donaldsonville nitrogen complex to produce approximately 20,000 tons per year of green ammonia, which is further discussed below.
Additionally, we are developing CCS and other carbon abatement projects across our production facilities that will enable us to produce blue ammonia.
In April 2021, we signed an engineering and procurement contract with thyssenkrupp to supply a 20 MW alkaline water electrolysis plant to produce green hydrogen at our Donaldsonville nitrogen complex.
−Removed: Construction and installation, which will be managed by us, is expected to begin in the second half of 2021 and to finish in 2023.
+Added: Construction and installation, which will be managed by us, is expected to begin in the fourth quarter of 2021 and to finish in 2023.
The cost of the project is expected to fit within our annual capital expenditure budgets.
1 unchanged sentence
We believe that, when completed in 2023, the Donaldsonville green ammonia project will be the largest of its kind in North America.
+Added: In the third quarter of 2021, we signed a memorandum of understanding with Mitsui & Co., Inc.
+Added: that will guide us in a joint exploration of the development of blue ammonia projects in the United States.
+Added: We plan to conduct preliminary studies covering areas such as blue ammonia supply and supply chain infrastructure, CO 2 transportation and storage, expected environmental impacts, and blue ammonia economics and marketing opportunities in Japan and in other countries.
Market Conditions and Current Developments
Selling Prices and Sales Volume
−Removed: Our average selling price was higher in the second quarter of 2021 than in the second quarter of 2020, driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
−Removed: In the second quarter of 2021, the average selling price for our products was $307 per ton, an increase of 37%, compared to $224 per ton in the second quarter of 2020.
−Removed: We reported higher average selling prices in the second quarter of 2021 as compared to the second quarter of 2020 across all our segments, which drove an increase in net sales of approximately $437 million.
−Removed: In the six months ended June 30, 2021, the average selling price for our products was $271 per ton, or 25% higher compared to $216 per ton for the six months ended June 30, 2020.
−Removed: This resulted in an increase in net sales of approximately $538 million.
−Removed: Our total sales volume was 4% lower in the second quarter of 2021 than in the second quarter of 2020.
−Removed: We shipped 5.2 million tons of product in the second quarter of 2021 compared to 5.4 million tons in last year’s second quarter due primarily to the impact of decreased supply resulting from lower production of ammonia and the resulting upgraded products.
−Removed: Lower sales volume drove a decrease in net sales of approximately $82 million.
−Removed: We shipped 9.7 million tons of product in the first six months of 2021 compared to 10.1 million tons in the first six months of 2020, or a decline of 3%.
+Added: Our average selling price was higher in the third quarter of 2021 than in the third quarter of 2020, driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
+Added: In the third quarter of 2021, the average selling price for our products was $360 per ton, an increase of 101%, compared to $179 per ton in the third quarter of 2020, reflecting higher average selling prices across all our segments, which drove an increase in net sales of approximately $686 million.
+Added: In the nine months ended September 30, 2021, the average selling price for our products was $296 per ton, or 45% higher compared to $204 per ton for the nine months ended September 30, 2020.
+Added: This resulted in an increase in net sales of approximately $1.22 billion.
+Added: Our total sales volume was 20% lower in the third quarter of 2021 than in the third quarter of 2020 with lower sales reported in all segments.
+Added: We shipped 3.8 million tons of product in the third quarter of 2021 compared to 4.7 million tons in the third quarter of 2020 due primarily to lower supply from the impact of weather-related outages and the impact of both planned and unplanned maintenance activity.
+Added: During the third quarter of 2021, lower production was due primarily to a high level of plant turnaround and maintenance activity as well as downtime resulting from the impact of Hurricane Ida.
+Added: The lower sales volumes also reflect the idling of certain portions of our U.K.
+Added: operations in the second half of September due to the United Kingdom energy crisis, which is further discussed below.
Lower sales volume drove a decrease in net sales of approximately $171 million.
−Removed: The decrease in total sales volume was due primarily to the impact of decreased supply resulting from lower production in our ammonia, granular urea and AN segments in the first six months of 2021 as a result of severe weather conditions in the first quarter of 2021 due to Winter Storm Uri, which disrupted natural gas supply at certain of our facilities, and higher maintenance activity.
−Removed: Due to the lower production, we procured additional granular urea in order to meet customer obligations and provide additional manufacturing flexibility once production resumed.
−Removed: During the six months ended June 30, 2021, to meet customer obligations, we purchased 201,000 tons of granular urea for $71 million, which we sold to customers for $68 million.
−Removed: We currently expect sales volumes for our products in 2021 will be approximately 19 million product tons as a result of the increase in maintenance activity due to maintenance deferred from 2020, activity previously planned to occur in 2022 and the severe weather conditions in the first quarter of 2021.
CF INDUSTRIES HOLDINGS, INC.
+Added: We shipped 13.5 million tons of product in the first nine months of 2021 compared to 14.8 million tons in the first nine months of 2020, or a decline of 9%.
+Added: Lower sales volume drove a decrease in net sales of approximately $309 million.
+Added: The decrease in total sales volume was due primarily to the impact of decreased supply resulting from lower production in our ammonia, granular urea and AN segments in the first nine months of 2021 as a result of severe weather conditions in the first and third quarters of 2021, which disrupted natural gas and electricity supply, respectively.
+Added: Higher plant turnaround and maintenance activity also impacted the period.
+Added: Due to the lower production, we procured additional granular urea in the nine months ended September 30, 2021 in order to meet customer obligations and provide additional manufacturing flexibility once production resumed.
+Added: During the nine months ended September 30, 2021, to meet customer obligations, we purchased 201,000 tons of granular urea for $71 million, which we sold to customers for $68 million.
+Added: We currently expect sales volumes for our products in 2021 will be approximately 18 million product tons as a result of the increase in maintenance activity due to maintenance deferred from 2020, activity previously planned to occur in 2022 but accelerated into 2021, and the severe weather conditions in the first and third quarters of 2021.
Natural gas is the principal raw material used to produce our nitrogen products.
1 unchanged sentence
Natural gas is a significant cost component of manufactured nitrogen products, representing approximately one-third of our production costs.
+Added: The following table presents the average daily market price of natural gas at the Henry Hub, the most heavily-traded natural gas pricing point in North America, and the National Balancing Point, the major trading point for natural gas in the United Kingdom:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
+Added: 2021 2020 2021 v.
+Added: 2020 2021 2020 2021 v.
+Added: Natural gas supplemental data (per MMBtu)
+Added: Average daily market price of natural gas Henry Hub (Louisiana) $ 4.27 $ 1.95 $ 2.32 119 % $ 3.52 $ 1.82 $ 1.70 93 %
+Added: Average daily market price of natural gas National Balancing Point (United Kingdom) $ 15.98 $ 2.69 $ 13.29 494 % $ 10.63 $ 2.49 $ 8.14 327 %
+Added: Most of our nitrogen manufacturing facilities are located in the United States and Canada.
+Added: As a result, the price of natural gas in North America, which is subject to volatility, directly impacts a substantial portion of our operating expenses.
+Added: Natural gas prices during the first nine months of 2021 were higher than in the first nine months of 2020 due primarily to the impact of both extreme cold weather in the first quarter of 2021, including Winter Storm Uri in February 2021, and increased natural gas demand in the second and third quarters of 2021 due to the combination of the economy emerging from the COVID-19 pandemic and higher than normal temperatures.
+Added: 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 September 30, 2021 was $4.27 per MMBtu compared to $1.95 per MMBtu for the three months ended September 30, 2020, an increase of 119%.
+Added: For the three months ended September 30, 2021, the daily closing price at the Henry Hub reached a low of $3.54 per MMBtu on July 9, 2021 and a high of $5.93 per MMBtu on September 29, 2021.
+Added: The average daily market price at the Henry Hub for the nine months ended September 30, 2021 was $3.52 per MMBtu compared to $1.82 per MMBtu for the nine months ended September 30, 2020, an increase of 93%.
+Added: As a result of Winter Storm Uri, the daily closing price at the Henry Hub reached a high of $23.61 per MMBtu on February 18, 2021.
+Added: The average daily market price of natural gas at the Henry Hub for October 2021 was $5.49 per MMBtu.
In February 2021, the central portion of the United States experienced extreme and unprecedented cold weather due to the impact of Winter Storm Uri.
1 unchanged sentence
This occurred at the same time as large increases in natural gas demand were occurring due to the cold temperatures.
−Removed: Due to these unprecedented factors, several states declared a state of emergency and natural gas was redirected for residential usage.
−Removed: At certain of our manufacturing locations, we reduced our natural gas consumption and therefore these plants either operated at reduced rates or temporarily suspended operations.
+Added: Due to these unprecedented factors, several states declared a state of emergency and natural gas was redirected for residential use.
+Added: At certain of our manufacturing locations, we reduced our natural gas consumption, and, as a consequence, our plants at these locations either operated at reduced rates or temporarily suspended operations.
We net settled certain natural gas contracts with our suppliers and received prevailing market prices, which were in excess of our cost.
−Removed: As a result, we recognized a gain of $112 million, which is reflected in cost of sales in our consolidated statement of operations for the six months ended June 30, 2021.
−Removed: Most of our nitrogen manufacturing facilities are located in the United States and Canada.
−Removed: As a result, the price of natural gas in North America, which is subject to volatility, directly impacts a substantial portion of our operating expenses.
−Removed: Natural gas prices during the first six months of 2021 were higher than in the first six months of 2020, due primarily to the impact of extreme cold weather in the first quarter of 2021, including Winter Storm Uri in February 2021, followed by above normal temperatures in the second quarter of 2021 and increased energy demand as the economy emerged from the COVID-19 pandemic.
−Removed: 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, 2021 was $2.88 per MMBtu compared to $1.65 per MMBtu for the three months ended June 30, 2020, an increase of 75%.
−Removed: The average daily market price at the Henry Hub for the six months ended June 30, 2021 was $3.13 per MMBtu compared to $1.76 per MMBtu for the six months ended June 30, 2020, an increase of 78%.
−Removed: As a result of Winter Storm Uri, the daily closing price at the Henry Hub reached a high of $23.61 per MMBtu on February 18, 2021.
−Removed: We also have manufacturing facilities located in the United Kingdom.
−Removed: These facilities are subject to fluctuations associated with the price of natural gas in Europe.
+Added: As a result, we recognized a gain of $112 million, which is reflected in cost of sales in our consolidated statement of operations for the nine months ended September 30, 2021.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: Our two nitrogen manufacturing facilities located in the United Kingdom are subject to fluctuations associated with the price of natural gas in Europe.
+Added: The price of natural gas in the United Kingdom increased throughout the first nine months of 2021 and reached unprecedented high levels in the third quarter of 2021, due primarily to a tighter supply and demand balance in the global liquefied natural gas market as a result of strong demand for natural gas in anticipation of winter weather and in response to low storage levels of natural gas in both Asia and Europe.
+Added: These factors have resulted in record high global prices for liquefied natural gas, raising European and U.K.
+Added: market prices to compete for limited supply.
+Added: Due to the high price levels for natural gas, we halted certain of our U.K.
+Added: manufacturing operations in September 2021.
+Added: See the discussion under “United Kingdom Energy Crisis,” below, for further information.
The major natural gas trading point for the United Kingdom is the National Balancing Point (NBP).
−Removed: The average daily market price of natural gas at NBP for the three months ended June 30, 2021 was $8.90 per MMBtu compared to $1.60 per MMBtu for the three months ended June 30, 2020.
−Removed: The price of natural gas in the United Kingdom increased in the first six months of 2021 due primarily to a tighter supply and demand balance in the global liquefied natural gas market as a result of severe cold temperatures in Asia that increased global liquefied natural gas demand and resulted in record Asian prices for liquefied natural gas, raising European market prices to compete for limited supply.
−Removed: The average daily market price at the NBP for the six months ended June 30, 2021 was $7.90 per MMBtu compared to $2.40 per MMBtu for the six months ended June 30, 2020, an increase of 229%.
−Removed: Subsequent to June 30, 2021, the average daily market price of natural gas at NBP for July 2021 was $12.37 per MMBtu.
−Removed: In the second quarter of 2021, the cost of natural gas used for production, which includes the impact of realized natural gas derivatives, increased 75% to $3.25 per MMBtu in the three months ended June 30, 2021 from $1.86 per MMBtu in the three months ended June 30, 2020.
+Added: The average daily market price of natural gas at NBP for the three months ended September 30, 2021 was $15.98 per MMBtu compared to $2.69 per MMBtu for the three months ended September 30, 2020, an increase of nearly 500%.
+Added: For the three months ended September 30, 2021, the daily closing price at NBP reached a low of $11.14 per MMBtu on July 8, 2021 and a high of $25.41 per MMBtu on September 21, 2021.
+Added: The average daily market price of natural gas at NBP for the nine months ended September 30, 2021 was $10.63 per MMBtu compared to $2.49 per MMBtu for the nine months ended September 30, 2020, an increase of 327%.
+Added: The average daily market price of natural gas at NBP for October 2021 was $27.32 per MMBtu.
+Added: In the third quarter of 2021, the cost of natural gas used for production, which includes the impact of realized natural gas derivatives, increased 120% to $4.21 per MMBtu from $1.91 per MMBtu in the three months ended September 30, 2020.
This increase in natural gas costs resulted in a decrease in gross margin of approximately $153 million.
−Removed: In the first half of 2021, the cost of natural gas used for production, which includes the impact of realized natural gas derivatives and excludes the $112 million gain that resulted from the net settlement of certain natural gas contracts with our suppliers, increased 47% to $3.24 per MMBtu in the six months ended June 30, 2021 from $2.20 per MMBtu in the six months ended June 30, 2020.
+Added: In the first nine months of 2021, the cost of natural gas used for production, which includes the impact of realized natural gas derivatives and excludes the $112 million gain that resulted from the net settlement of certain natural gas contracts with our suppliers, increased 66% to $3.51 per MMBtu from $2.11 per MMBtu in the nine months ended September 30, 2020.
This increase in natural gas costs resulted in a decrease in gross margin of approximately $332 million.
+Added: United Kingdom Energy Crisis
+Added: During the third quarter of 2021, the United Kingdom experienced an energy crisis that included a substantial increase in the price of natural gas.
+Added: In the first half of 2021, natural gas prices had increased to levels that were considered high compared to historical prices, and prices then more than doubled within the third quarter of 2021.
+Added: The average daily market price of natural gas at NBP was $3.20 per MMBtu for the full year ended December 31, 2020.
+Added: During the third quarter of 2021, the average daily market price of natural gas at NBP was $15.98 per MMBtu, with a high of $25.41 per MMBtu on September 21, 2021.
+Added: On September 15, 2021, we announced the halt of operations at both our Ince and Billingham manufacturing facilities in the United Kingdom due to negative profitability driven by the high cost of natural gas.
+Added: The halt of operations at our U.K.
+Added: plants impacted the availability of certain products in the United Kingdom, including carbon dioxide, which is a byproduct of ammonia production.
+Added: Due to the critical nature of carbon dioxide to certain industries in the United Kingdom, on September 21, 2021, we entered into an interim agreement with the U.K.
+Added: Under the terms of the agreement, the U.K.
+Added: government agreed to cover the costs to restart the ammonia plant at Billingham and to offset losses incurred from production for a 21-day period.
+Added: As a result, we resumed production of ammonia at the Billingham facility in order to produce carbon dioxide for the United Kingdom.
+Added: While the interim agreement was in place, we entered into carbon dioxide pricing and offtake agreements with our customers, which have an initial term through January 31, 2022.
+Added: The amount of financial support that will be provided by the U.K.
+Added: government for the September 2021 period of the interim agreement is not expected to be material to our results of operations.
+Added: As of the filing of this report, production continues to be idled at our Ince facility.
+Added: energy crisis necessitated an evaluation of the goodwill and long-lived assets, including definite-lived intangible assets, of our U.K.
+Added: operations to determine if their fair value had declined to below their carrying value.
+Added: We concluded that a decline in the fair value had occurred, and we recognized impairment charges of $495 million in the third quarter of 2021, consisting of a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.
+Added: See “Items Affecting Comparability of Results—U.K.
+Added: energy crisis impacts,” “Liquidity and Capital Resources—United Kingdom Energy Crisis,” below, Note 3—United Kingdom Energy Crisis and Impairment Charges, Note 6—Property, Plant and Equipment—Net and Note 7—Goodwill and Other Intangible Assets for further information.
+Added: As of September 30, 2021, after the recognition of the $495 million of impairment charges noted above, the goodwill related to our U.K.
+Added: operations was approximately $26 million and the remaining long-lived assets related to our U.K.
+Added: operations was $450 million, primarily consisting of property, plant and equipment.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: The results of our U.K.
+Added: operations are included in our ammonia, AN and Other segments, and account for a small portion of our consolidated gross margin.
+Added: For the nine months ended September 30, 2021, our U.K.
+Added: operations generated negative gross margin representing approximately 3% of our consolidated gross margin.
+Added: For the year ended December 31, 2020, gross margin generated by our U.K.
+Added: operations accounted for 2% of our consolidated gross margin.
Manufacturing Costs and Granular Urea Purchases
−Removed: In the first half of 2021, we experienced lower production levels and higher manufacturing and maintenance costs.
−Removed: In response to the lower production levels, we procured granular urea in order to meet customer obligations and provide additional manufacturing flexibility.
+Added: In the first nine months of 2021, we experienced lower production levels and higher manufacturing and maintenance costs.
+Added: In response to the lower production levels, in the first nine months of 2021, we procured granular urea in order to meet customer obligations and provide additional manufacturing flexibility.
The following summarizes the impact from these activities:
−Removed: • Certain of our plants operated at lower operating rates or temporarily suspended operations due to the lack of natural gas due to Winter Storm Uri or due to maintenance activity in 2021 that was deferred from 2020 as a result of the COVID-19 pandemic.
−Removed: Because of these factors, in the first half of 2021, we incurred higher costs for manufacturing, maintenance and repair activity for both scheduled and unscheduled downtime.
+Added: • Certain of our plants operated at lower operating rates or temporarily suspended operations due to the lack of natural gas due to Winter Storm Uri or due to maintenance activity in 2021, including activity that was deferred from 2020 as a result of the COVID-19 pandemic.
+Added: Because of these factors and the halt of operations in the United Kingdom, we incurred higher costs for manufacturing, maintenance and repair activity for both scheduled and unscheduled downtime in the first nine months of 2021.
• Due to the lower production, we procured additional granular urea in order to meet customer obligations.
−Removed: In the first half of 2021, we purchased approximately $71 million of granular urea, which we sold to customers for $68 million.
−Removed: CF INDUSTRIES HOLDINGS, INC.
+Added: In the nine months ended September 30, 2021, we purchased approximately $71 million of granular urea, which we sold to customers for $68 million.
COVID-19 Pandemic
6 unchanged sentences
We will continue to monitor safety guidelines related to COVID-19 as issued by governmental authorities and adjust our safety protocols, as needed.
+Added: CF INDUSTRIES HOLDINGS, INC.
Financial Executive Summary
−Removed: We reported net earnings attributable to common stockholders of $246 million for the three months ended June 30, 2021 compared to $190 million for the three months ended June 30, 2020, an increase in net earnings of $56 million, or 29%.
−Removed: The increase in net earnings was due primarily to higher average selling prices, partially offset by higher natural gas costs and higher costs related to manufacturing, maintenance and repair activity.
−Removed: Gross margin increased by $169 million in the second quarter of 2021 to $503 million as compared to $334 million in the second quarter of 2020.
+Added: We reported a net loss attributable to common stockholders of $185 million for the three months ended September 30, 2021 compared to a net loss attributable to common stockholders of $28 million for the three months ended September 30, 2020, a decrease in net earnings of $157 million.
+Added: Diluted net earnings per share attributable to common stockholders decreased $0.73 per share, to a loss of $0.86 per share in the third quarter of 2021 compared to a loss of $0.13 per share in the third quarter of 2020.
+Added: These decreases were due primarily to impairment charges related to our U.K.
+Added: operations, partially offset by higher operating results driven by an increase in gross margin.
+Added: Impact of impairment charges
+Added: The decrease in net earnings and diluted net earnings per share in the third quarter of 2021 was due primarily to impairment charges related to our U.K.
+Added: operations of $495 million, consisting of a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.
+Added: The after-tax impact of the impairment charges to the net loss per share attributable to common stockholders and diluted net loss per share attributable to common stockholders was $403 million and $1.88, respectively.
+Added: See “Market Conditions and Current Developments—United Kingdom Energy Crisis,” above, Note 3—United Kingdom Energy Crisis and Impairment Charges, Note 6—Property, Plant and Equipment—Net and Note 7—Goodwill and Other Intangible Assets, for further information.
+Added: The following table includes gross margin, operating (loss) earnings, (loss) earnings before income taxes, net (loss) earnings attributable to common stockholders and diluted net (loss) earnings per share attributable to common stockholders for the third quarter of 2021, and shows the impact of the impairment charges on each of these measures by also including the corresponding “as adjusted” measure, which excludes the before- and after-tax impacts of the impairment charges.
+Added: Management utilizes these “as adjusted” measures, and believes they provide useful information to investors, for assessing period-to-period changes in our underlying operating performance, because these “as adjusted” measures exclude the non-cash impairment charges that resulted from the U.K.
+Added: energy crisis, as more fully described above.
+Added: Three months ended September 30, 2021
+Added: As reported Impact of impairment charges As adjusted (1)
+Added: (dollars in millions, except per share)
+Added: Gross margin $ 440 $ — $ 440
+Added: Operating (loss) earnings (97) 495 398
+Added: (Loss) earnings before income taxes (137) 495 358
+Added: Net (loss) earnings attributable to common stockholders (2)
+Added: (185) 403 218
+Added: Diluted net (loss) earnings per share attributable to common stockholders (2)
+Added: (0.86) 1.88 1.02
+Added: _______________________________________________________________________________
+Added: (1) The “as adjusted” financial measures presented above are non-GAAP financial measures that should be viewed in addition to, and not as an alternative for, our reported results calculated and presented in accordance with U.S.
+Added: (2) The after-tax impact of impairment charges reflects the amount of income tax benefit recognized in the three months ended September 30, 2021 in accordance with guidance on accounting for income taxes in interim reporting periods.
+Added: Impact of higher gross margin
+Added: Gross margin increased by $357 million in the third quarter of 2021 to $440 million as compared to $83 million in the third quarter of 2020.
The following table and related discussion describe the significant factors that drove the increase in gross margin.
Variance due to the following items:
−Removed: Second Quarter of 2020 Higher Average Selling Prices (1)
−Removed: Higher Natural Gas Costs (2)
−Removed: Higher Manufacturing, Maintenance, and Other Costs Increase in Purchased Urea (3)
−Removed: Second Quarter of 2021
+Added: Third Quarter of 2020 Higher Average Selling Prices Lower Volume Higher Natural Gas Costs (1)
+Added: Unrealized MTM on natural gas derivatives Higher Manufacturing, Maintenance, and Other Costs Third Quarter of 2021
(dollars in millions)
4 unchanged sentences
_______________________________________________________________________________
−Removed: (1) Selling price and volume impact of granular urea purchased to satisfy customer commitments is reflected in the Increase in Purchased Urea column.
(1) Higher natural gas costs include the impact, if any, of realized natural gas derivatives.
−Removed: (3) Represents the impact of the incremental tons compared to the prior year period.
−Removed: • Average selling prices increased 37% to $307 per ton in the second quarter of 2021 from $224 per ton in the second quarter of 2020, which increased gross margin by $437 million,
−Removed: • Sales volume declined by 4% to 5.2 million tons in the second quarter of 2021 from 5.4 million tons in the second quarter of 2020, which reduced gross margin by $30 million,
−Removed: • The cost of natural gas used for production increased 75% to $3.25 per MMBtu in the second quarter of 2021 from $1.86 per MMBtu in the second quarter of 2020, which reduced gross margin by $131 million,
−Removed: • We incurred higher manufacturing, maintenance and other costs, which reduced gross margin by $105 million, due primarily to higher plant turnaround, maintenance and repair activities, and
−Removed: • During the second quarter of 2021, to meet customer obligations, we purchased 104,000 tons of granular urea, an increase of 80,000 tons compared to the second quarter of 2020.
−Removed: Diluted net earnings per share attributable to common stockholders increased $0.25 per share, to $1.14 per share, in the second quarter of 2021 compared to $0.89 per share in the second quarter of 2020.
−Removed: This increase was due primarily to higher net earnings driven by the increase in average selling prices described above.
CF INDUSTRIES HOLDINGS, INC.
+Added: • Average selling prices increased 101% to $360 per ton in the third quarter of 2021 from $179 per ton in the third quarter of 2020, which increased gross margin by $686 million,
+Added: • Sales volume declined by 20% to 3.8 million tons in the third quarter of 2021 from 4.7 million tons in the third quarter of 2020, which reduced gross margin by $49 million,
+Added: • The cost of natural gas used for production increased 120% to $4.21 per MMBtu in the third quarter of 2021 from $1.91 per MMBtu in the third quarter of 2020, which reduced gross margin by $153 million, and
+Added: • We incurred higher manufacturing, maintenance and other costs, which reduced gross margin by $139 million, due primarily to higher plant turnaround and maintenance activity.
Items Affecting Comparability of Results
−Removed: In addition to the impact of market conditions, winter storms and manufacturing and maintenance activity discussed above, certain items impacted the comparability of our financial results during the three and six months ended June 30, 2021 and 2020.
+Added: In addition to the impact of market conditions discussed above, certain items impacted the comparability of our financial results during the three and nine months ended September 30, 2021 and 2020.
The following table and related discussion outline these items and how they impacted the comparability of our financial results during these periods.
−Removed: During the three months ended June 30, 2021 and 2020, we reported net earnings attributable to common stockholders of $246 million and $190 million, respectively.
−Removed: During the six months ended June 30, 2021 and 2020, we reported net earnings attributable to common stockholders of $397 million and $258 million, respectively.
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: During the three months ended September 30, 2021 and 2020, we reported a net loss attributable to common stockholders of $185 million and $28 million, respectively.
+Added: During the nine months ended September 30, 2021 and 2020, we reported net earnings attributable to common stockholders of $212 million and $230 million, respectively.
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
3 unchanged sentences
$ (12) $ (9) $ — $ — $ (18) $ (14) $ (12) $ (9)
+Added: COVID impacts:
Special COVID-19 bonus for operational workforce (1)
— — 4 3 — — 19 15
+Added: Turnaround deferral (1)
+Added: — — 7 6 — — 7 6
+Added: Asset impairments (2)
+Added: 495 403 — — 495 403 — —
Loss (gain) on foreign currency transactions, including intercompany loans (3)
2 unchanged sentences
— — 1 1 — — 9 7
+Added: Loss on sale of surplus land (3)
+Added: — — 2 1 — — 2 1
Insurance proceeds (3)
5 unchanged sentences
(1) Included in cost of sales in our consolidated statements of operations.
+Added: (2) The after-tax impact of asset impairment charges reflects the amount of income tax benefit recognized in the three and nine months ended September 30, 2021 in accordance with guidance on accounting for income taxes in interim reporting periods.
(3) Included in other operating—net in our consolidated statements of operations.
6 unchanged sentences
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.
−Removed: In the six months ended June 30, 2021 and 2020, we recognized unrealized net mark-to-market gains of $6 million and $12 million, respectively.
−Removed: Special COVID-19 bonus for operational workforce
+Added: In the three months ended September 30, 2021, we recognized an unrealized net mark-to-market gain of $12 million.
+Added: In the nine months ended September 30, 2021 and 2020, we recognized unrealized net mark-to-market gains of $18 million and $12 million, respectively.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: COVID impacts
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.
−Removed: 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, and the remaining $4 million was recognized in the third quarter of 2020.
+Added: Approximately $19 million was paid as part of the program and was recognized in cost of sales in our consolidated statements of operations for the nine months ended September 30, 2020, of which approximately $4 million was recognized in the third quarter of 2020.
+Added: In the three and nine months ended September 30, 2020, certain plant turnaround activities were deferred because of the COVID-19 pandemic.
+Added: As a result, we incurred $7 million of expense, which is recognized in cost of sales in our consolidated statements of operations.
Loss (gain) on foreign currency transactions, including intercompany loans
−Removed: In the six months ended June 30, 2021 and 2020, we recognized losses of $3 million and $13 million, respectively, which consist of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.
+Added: In the nine months ended September 30, 2021 and 2020, we recognized losses of $5 million and $7 million, respectively, which consist of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.
+Added: Asset impairments
+Added: As a result of the U.K.
+Added: energy crisis and the events described under “Market Conditions and Current Developments—United Kingdom Energy Crisis,” above, we recognized impairment charges of $495 million in the third quarter of 2021, including a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.
+Added: See Note 3—United Kingdom Energy Crisis and Impairment Charges, Note 6—Property, Plant and Equipment—Net and Note 7—Goodwill and Other Intangible Assets for further information.
Engineering cost write-off
−Removed: In June 2020, a project at one of our nitrogen complexes was cancelled and, as a result, $8 million of previously capitalized engineering costs were expensed in the three months ended June 30, 2020.
+Added: In June 2020, a project at one of our nitrogen complexes was cancelled and, as a result, $9 million of previously capitalized engineering costs were expensed in the nine months ended September 30, 2020.
The expense is reflected in other operating—net in our consolidated statements of operations.
−Removed: CF INDUSTRIES HOLDINGS, INC.
+Added: Loss on sale of surplus land
+Added: In the three and nine months ended September 30, 2020, we recognized a loss of $2 million on the sale of surplus land, which is reflected in other operating—net in our consolidated statements of operations.
Insurance proceeds
−Removed: In the six months ended June 30, 2020, we recognized income of $10 million related to insurance claims at one of our nitrogen complexes, which consisted of $8 million related to business interruption proceeds and $2 million related to property insurance proceeds.
+Added: In the nine months ended September 30, 2020, we recognized income of $10 million related to insurance claims at one of our nitrogen complexes, which consisted of $8 million related to business interruption proceeds and $2 million related to property insurance proceeds.
These proceeds are reflected in other operating—net in our consolidated statement of operations.
3 unchanged sentences
As a result, we recognized a loss on debt extinguishment of $6 million, primarily consisting of a premium paid on the early redemption of the notes.
+Added: On September 10, 2021, we redeemed $250 million principal amount, representing one-third of the $750 million principal amount outstanding immediately prior to such redemption, of the 3.450% senior notes due 2023 (2023 Notes), in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.
+Added: The total aggregate redemption price paid on the 2023 Notes was approximately $265 million, including accrued interest.
+Added: As a result, we recognized a loss on debt extinguishment of $13 million, primarily consisting of a premium paid on the early redemption of the notes.
Terra amended tax returns
7 unchanged sentences
tax aspects of the Amended Tax Returns.
+Added: CF INDUSTRIES HOLDINGS, INC.
In the second quarter of 2020, we received IRS notices indicating the amount of tax and interest to be refunded and received with respect to the income tax and withholding tax returns.
4 unchanged sentences
In July 2020, we received an additional $2 million, which finalized these matters with the IRS.
−Removed: In 2017, we made a Voluntary Disclosures Program filing with the Canada Revenue Agency (CRA) with respect to the Canadian tax aspects of this matter and paid additional Canadian taxes due.
+Added: In 2017, we made a Voluntary Disclosures Program filing with the Canada Revenue Agency (CRA) with respect to the Canadian tax aspects of the amended returns and paid additional Canadian taxes due.
In late 2020, the CRA settled with us the voluntary disclosure matter, and, in the first quarter of 2021, we received approximately $20 million of withholding tax refunds, including interest, from the CRA.
3 unchanged sentences
The following table presents our consolidated results of operations and supplemental data:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 v.
6 unchanged sentences
Selling, general and administrative expenses 52 49 3 6 % 167 154 13 8 %
−Removed: Other operating—net 4 6 (2) (33) % 2 12 (10) (83) %
−Removed: Total other operating costs and expenses 64 57 7 12 % 117 117 — — %
−Removed: Equity in earnings of operating affiliate 11 3 8 N/M 22 6 16 N/M
−Removed: Operating earnings 450 280 170 61 % 697 427 270 63 %
+Added: Goodwill impairment 259 — 259 N/M 259 — 259 N/M
+Added: Long-lived and intangible asset impairment 236 — 236 N/M 236 — 236 N/M
+Added: Other operating—net 5 (4) 9 N/M 7 8 (1) (13) %
+Added: Total other operating costs and expenses 552 45 507 N/M 669 162 507 313 %
+Added: Equity in earnings of operating affiliate 15 2 13 N/M 37 8 29 363 %
+Added: Operating (loss) earnings (97) 40 (137) N/M 600 467 133 28 %
Interest expense—net 46 48 (2) (4) % 140 123 17 14 %
−Removed: Loss on debt extinguishment — — — — % 6 — 6 N/M
+Added: Loss on debt extinguishment 13 — 13 N/M 19 — 19 N/M
Other non-operating—net (19) 1 (20) N/M (17) (2) (15) N/M
−Removed: Earnings before income taxes 402 251 151 60 % 595 355 240 68 %
−Removed: Income tax provision 85 33 52 158 % 103 46 57 124 %
−Removed: Net earnings 317 218 99 45 % 492 309 183 59 %
+Added: (Loss) earnings before income taxes (137) (9) (128) N/M 458 346 112 32 %
+Added: Income tax (benefit) provision (46) (13) (33) (254) % 57 33 24 73 %
+Added: Net (loss) earnings (91) 4 (95) N/M 401 313 88 28 %
Net earnings attributable to noncontrolling interest 94 32 62 194 % 189 83 106 128 %
−Removed: Net earnings attributable to common stockholders $ 246 $ 190 $ 56 29 % $ 397 $ 258 $ 139 54 %
−Removed: Diluted net earnings per share attributable to common stockholders
−Removed: $ 1.14 $ 0.89 $ 0.25 28 % $ 1.83 $ 1.20 $ 0.63 53 %
+Added: Net (loss) earnings attributable to common stockholders $ (185) $ (28) $ (157) N/M $ 212 $ 230 $ (18) (8) %
+Added: Diluted net (loss) earnings per share attributable to common stockholders
+Added: $ (0.86) $ (0.13) $ (0.73) N/M $ 0.98 $ 1.07 $ (0.09) (8) %
Diluted weighted-average common shares outstanding
5 unchanged sentences
Average daily market price of natural gas Henry Hub (Louisiana) $ 4.27 $ 1.95 $ 2.32 119 % $ 3.52 $ 1.82 $ 1.70 93 %
−Removed: Average daily market price of natural gas National Balancing Point (UK) $ 8.90 $ 1.60 $ 7.30 N/M $ 7.90 $ 2.40 $ 5.50 229 %
−Removed: Unrealized net mark-to-market gain on natural gas derivatives $ — $ — $ — — % $ (6) $ (12) $ 6 50 %
+Added: Average daily market price of natural gas National Balancing Point (United Kingdom) $ 15.98 $ 2.69 $ 13.29 494 % $ 10.63 $ 2.49 $ 8.14 327 %
+Added: Unrealized net mark-to-market gain on natural gas derivatives $ (12) $ — $ (12) N/M $ (18) $ (12) $ (6) (50) %
Depreciation and amortization $ 203 $ 212 $ (9) (4) % $ 650 $ 662 $ (12) (2) %
12 unchanged sentences
Excludes unrealized mark-to-market gains and losses on natural gas derivatives.
−Removed: For the six months ended June 30, 2021, excludes the $112 million gain on net settlement of certain natural gas contracts with our suppliers due to Winter Storm Uri in February 2021.
−Removed: (2) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.
+Added: For the nine months ended September 30, 2021,
CF INDUSTRIES HOLDINGS, INC.
−Removed: Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: Our total net sales increased $384 million, or 32%, to $1.59 billion in the second quarter of 2021 compared to $1.20 billion in the second quarter of 2020 due to an increase in average selling prices, partially offset by a decrease in sales volume.
−Removed: Average selling prices increased by 37% due to strong market conditions, which was partially offset by a 4% decline in sales volume.
−Removed: The increase in net sales also reflects the sale of 104,000 tons of granular urea that we purchased during the second quarter of 2021 to meet customer obligations, an increase of 80,000 tons compared to the second quarter of 2020.
−Removed: Our average selling price was $307 per ton in the second quarter of 2021, or 37% higher, compared to $224 per ton in the second quarter of 2020 due to higher average selling prices across all of our segments, primarily driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
−Removed: Our total sales volume of 5.2 million product tons in the second quarter of 2021 was 4% lower compared to 5.4 million tons in the second quarter of 2020 as lower sales volume in our granular urea, ammonia and AN segments was offset by higher sales volume in our UAN and Other segments.
−Removed: Sales volume was lower as a result of lower production due to reduced plant operating rates as a result of higher plant turnaround and maintenance activity in 2021.
+Added: excludes the $112 million gain on net settlement of certain natural gas contracts with our suppliers due to Winter Storm Uri in February 2021.
+Added: (2) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.
+Added: Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: Our total net sales increased $515 million or 61%, to $1.36 billion in the third quarter of 2021 compared to $847 million in the third quarter of 2020 due to an increase in average selling prices, partially offset by a decrease in sales volume.
+Added: Our average selling price was $360 per ton in the third quarter of 2021, or 101% higher, compared to $179 per ton in the third quarter of 2020 due to higher average selling prices across all of our segments, primarily driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
+Added: Our total sales volume of 3.8 million product tons in the third quarter of 2021 was 20% lower compared to 4.7 million product tons in the third quarter of 2020 due to lower supply from the impact of weather-related production outages and the impact of both planned and unplanned maintenance activity.
+Added: During the third quarter of 2021, lower production was due primarily to a high level of plant turnaround and maintenance activity as well as downtime resulting from the impact of Hurricane Ida.
Cost of Sales
−Removed: Our total cost of sales increased $215 million, or 25%, to $1.09 billion in the second quarter of 2021 from $870 million in the second quarter of 2020.
+Added: Our total cost of sales increased $158 million, or 21%, to $922 million in the third quarter of 2021 from $764 million in the third quarter of 2020.
The increase in our cost of sales was due primarily to higher costs for natural gas, which increased cost of sales by $153 million, and higher manufacturing, maintenance and other costs, which increased cost of sales by $139 million.
−Removed: These increases were partially offset by a decline in cost of sales of $52 million due primarily to a 4% decline in sales volume.
−Removed: The increase in cost of sales also reflects the purchase of 104,000 tons of granular urea to meet customer obligations, an increase of 80,000 tons compared to the second quarter of 2020.
−Removed: Cost of sales averaged $210 per ton in the second quarter of 2021, a 30% increase from $162 per ton in the second quarter of 2020.
−Removed: The cost of natural gas used for production, including the impact of realized derivatives, increased 75% to $3.25 per MMBtu in the second quarter of 2021 from $1.86 per MMBtu in the second quarter of 2020.
+Added: These increases were partially offset by a decline in cost of sales of $122 million due to a 20% decline in sales volume.
+Added: Cost of sales averaged $244 per ton in the third quarter of 2021, a 51% increase from $162 per ton in the third quarter of 2020.
+Added: The cost of natural gas used for production, including the impact of realized derivatives, increased 120% to $4.21 per MMBtu in the third quarter of 2021 from $1.91 per MMBtu in the third quarter of 2020.
Selling, General and Administrative Expenses
−Removed: Selling, general and administrative expenses increased $9 million to $60 million in the second quarter of 2021 as compared to $51 million in the second quarter of 2020.
−Removed: The increase was due primarily to higher incentive compensation due to strong operating performance.
+Added: Selling, general and administrative expenses increased $3 million to $52 million in the third quarter of 2021 as compared to $49 million in the third quarter of 2020.
+Added: The increase was due primarily to higher incentive compensation, due to strong operating performance, and higher costs associated with certain corporate initiatives.
+Added: Goodwill Impairment and Long-lived and Intangible Asset Impairment
+Added: During the third quarter of 2021, the U.K.
+Added: energy crisis impacted our U.K.
+Added: operations, as described above under the heading “United Kingdom Energy Crisis” in the section titled “Market Conditions and Current Developments.” This necessitated an evaluation of the long-lived and intangible assets, including goodwill, of our U.K.
+Added: operations to determine if their fair value had declined to below their carrying value.
+Added: Management concluded that a decline in the fair value had occurred, and we recognized impairment charges of $495 million in the third quarter of 2021, consisting of a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.
+Added: See “Items Affecting Comparability of Results—U.K.
+Added: energy crisis impacts,” above;
+Added: “Liquidity and Capital Resources—United Kingdom Energy Crisis,” below;
+Added: Note 3—United Kingdom Energy Crisis and Impairment Charges;
+Added: Note 6—Property, Plant and Equipment—Net;
+Added: and Note 7—Goodwill and Other Intangible Assets for further information.
Other Operating—Net
−Removed: Other operating—net was $4 million of expense in the second quarter of 2021 compared to $6 million of expense in the second quarter of 2020.
−Removed: The $4 million of expense in the second quarter of 2021 was due primarily to the loss on foreign currency transactions of $3 million, which consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.
−Removed: 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.
+Added: Other operating—net was $5 million of expense in the third quarter of 2021 compared to $4 million of income in the third quarter of 2020.
+Added: The $5 million of expense in the third quarter of 2021 includes a loss on foreign currency transactions of $2 million, which consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.
+Added: The $4 million of income in the third quarter of 2020 was due primarily to a gain on foreign currency transactions of $6 million.
+Added: CF INDUSTRIES HOLDINGS, INC.
Equity in Earnings of Operating Affiliate
−Removed: Equity in earnings of operating affiliate was $11 million in the second quarter of 2021 compared to $3 million in the second quarter of 2020.
−Removed: The increase in the second quarter of 2021 was due primarily to an increase in the operating results of PLNL as a result of higher ammonia selling prices.
+Added: Equity in earnings of operating affiliate was $15 million in the third quarter of 2021 compared to $2 million in the third quarter of 2020.
+Added: The increase in the third quarter of 2021 was due primarily to an increase in the operating results of PLNL as a result of higher ammonia selling prices partially offset by higher natural gas costs.
Interest Expense—Net
−Removed: Net interest expense was $46 million in the second quarter of 2021 compared to $32 million in the second quarter of 2020.
−Removed: The second quarter of 2020 included $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.
−Removed: CF INDUSTRIES HOLDINGS, INC.
−Removed: For the three months ended June 30, 2021, we recorded an income tax provision of $85 million on pre-tax income of $402 million, or an effective tax rate of 21.2%, compared to an income tax provision of $33 million on pre-tax income of $251 million, or an effective tax rate of 13.4%, for the three months ended June 30, 2020.
−Removed: 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.
−Removed: 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.
−Removed: Our effective tax rate for the three months ended June 30, 2021 of 21.2%, which is based on pre-tax income of $402 million, including $71 million of earnings attributable to the noncontrolling interest, would be 4.6 percentage points higher, or 25.8%, if based on pre-tax income exclusive of the $71 million of earnings attributable to the noncontrolling interest.
−Removed: 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, or 15.0%, if based on pre-tax income exclusive of the $28 million attributable to the noncontrolling interest.
+Added: Net interest expense was $46 million in the third quarter of 2021 compared to $48 million in the third quarter of 2020.
+Added: The decrease was due primarily to our redemption of $250 million principal amount of the 2023 Notes, which is more fully described under “Liquidity and Capital Resources—Senior Notes,” below.
+Added: Loss on Debt Extinguishment
+Added: On September 10, 2021, we redeemed $250 million principal amount, representing one-third of the $750 million principal amount outstanding immediately prior to such redemption, of the 2023 Notes, in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.
+Added: The total aggregate redemption price paid on the 2023 Notes was approximately $265 million, including accrued interest.
+Added: As a result, we recognized a loss on debt extinguishment of $13 million, primarily consisting of a premium paid on the early redemption of the notes.
+Added: Other Non-Operating—Net
+Added: Other non-operating—net was $19 million of income in the third quarter of 2021 compared to $1 million of expense in the third quarter of 2020.
+Added: The $19 million of income in the third quarter of 2021 was due primarily to a gain of $20 million on the sale of European Union (EU) carbon credits that, due to Brexit, could no longer be utilized by our U.K.
+Added: plants for carbon emission obligations in the United Kingdom.
+Added: For the three months ended September 30, 2021, we recorded an income tax benefit of $46 million on a pre-tax loss of $137 million, or an effective tax rate of 34.3%, compared to an income tax benefit of $13 million on a pre-tax loss of $9 million, or an effective tax rate of 155.0%, for the three months ended September 30, 2020.
+Added: For the three months ended September 30, 2021, we did not record an income tax benefit related to the goodwill impairment described in Note 3—United Kingdom Energy Crisis and Impairment Charges as the impairment is non-deductible for income tax purposes.
+Added: In addition, as a result of the effective settlement of the U.S.
+Added: federal income tax audit for the 2012-2016 tax years, we reversed an accrual for unrecognized tax benefits and recognized a discrete income tax benefit of approximately $15 million.
+Added: Our effective tax rate is also impacted by earnings attributable to the noncontrolling interest in CFN, as our consolidated income tax (benefit) provision does not include a tax provision on the earnings attributable to the noncontrolling interest.
+Added: Our effective tax rate for the three months ended September 30, 2021 of 34.3%, which is based on a pre-tax loss of $137 million, including $94 million of earnings attributable to the noncontrolling interest, would be 14.0 percentage points lower, or 20.3%, if based on pre-tax loss exclusive of the $94 million of earnings attributable to the noncontrolling interest.
+Added: Our effective tax rate for the three months ended September 30, 2020 of 155.0%, which is based on a pre-tax loss of $9 million, including $32 million of earnings attributable to the noncontrolling interest, would be 121.6 percentage points lower, or 33.4%, if based on a pre-tax loss exclusive of the $32 million of earnings attributable to the noncontrolling interest.
See Note 10—Income Taxes and Note 14—Noncontrolling Interest for additional information.
Net Earnings Attributable to Noncontrolling Interest
−Removed: Net earnings attributable to noncontrolling interest increased $43 million to $71 million in the second quarter of 2021 as compared to $28 million in the second quarter of 2020 due to higher earnings of CFN driven by higher average selling prices due primarily to a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
−Removed: Diluted Net Earnings Per Share Attributable to Common Stockholders
−Removed: Net earnings per share attributable to common stockholders increased $0.25 to $1.14 per diluted share in the second quarter of 2021 from $0.89 per diluted share in the second quarter of 2020.
−Removed: This increase was due primarily to higher net earnings, driven by the increase in average selling prices described above.
−Removed: Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
−Removed: Our total net sales increased $461 million, or 21%, to $2.64 billion in the first six months of 2021 as compared to $2.18 billion in the first six months of 2020 due to a 25% increase in average selling prices, partially offset by a 3% decrease in sales volume.
−Removed: The increase in net sales also reflects the sale of 201,000 tons of granular urea that we purchased during the first half of 2021 to meet customer obligations, an increase of 177,000 tons compared to the first half of 2020.
−Removed: Average selling prices were $271 per ton in the first six months of 2021, or 25% higher compared to $216 per ton in the first six months of 2020 due to higher average selling prices across all of our segments, primarily driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
−Removed: Our total sales volume of 9.7 million product tons in the first six months of 2021 was 3% lower compared to 10.1 million product tons in the first six months of 2020 as a result of lower production due to the temporary idling of certain plants due to Winter Storm Uri and reduced plant operating rates as a result of higher plant turnaround, maintenance and repair activities in 2021.
−Removed: Cost of Sales
−Removed: Our total cost of sales increased $207 million, or 13%, to $1.84 billion in the first six months of 2021 as compared to $1.64 billion in the first six months of 2020.
−Removed: The increase in our cost of sales was due primarily to higher costs for natural gas, including the impact of realized derivatives, which increased cost of sales by $179 million, higher manufacturing, maintenance and other costs, which increased cost of sales by $168 million, and higher costs for purchased products as we purchased $71 million of granular urea during the first half of 2021 to meet customer obligations.
−Removed: These increases were partially offset by the $112 million gain we recognized from the net settlement of certain natural gas contracts with our suppliers in February 2021 due to Winter Storm Uri as described above under the heading “Natural Gas” in the section titled “Market Conditions and Current Developments.” The $112 million gain on the net settlement of certain natural gas contracts in February 2021 is reflected in, and had the effect of reducing, our cost of sales in the first six months of
+Added: Net earnings attributable to noncontrolling interest increased $62 million to $94 million in the third quarter of 2021 as compared to $32 million in the third quarter of 2020 due to higher earnings of CFN driven by higher average selling prices due primarily to a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
+Added: Diluted Net (Loss) Earnings Per Share Attributable to Common Stockholders
+Added: Net earnings per share attributable to common stockholders decreased $0.73 to a loss of $0.86 per diluted share in the third quarter of 2021 from a loss of $0.13 per diluted share in the third quarter of 2020.
+Added: This decrease was due primarily to impairment charges related to our U.K.
+Added: operations, partially offset by higher operating results driven by an increase in gross margin.
CF INDUSTRIES HOLDINGS, INC.
−Removed: In addition, there was a $98 million decline in cost of sales in the first six months of 2021, as compared to the first six months of 2020, due primarily to a 3% decline in sales volume.
−Removed: Cost of sales averaged $189 per ton in the first six months of 2021, a 17% increase from $161 per ton in the first six months of 2020.
−Removed: The cost of natural gas used for production, including the impact of realized derivatives, increased 47% to $3.24 per MMBtu in the first six months of 2021 from $2.20 per MMBtu in the first six months of 2020.
−Removed: The cost of natural gas used for production of $3.24 per MMBtu in the first half of 2021 does not include the $112 million gain from the net settlement of certain natural gas contracts in February 2021.
+Added: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
+Added: Our total net sales increased $976 million, or 32%, to $4.00 billion in the first nine months of 2021 as compared to $3.02 billion in the first nine months of 2020 due to a 45% increase in average selling prices, partially offset by a 9% decrease in sales volume.
+Added: Average selling prices were $296 per ton in the first nine months of 2021, or 45% higher compared to $204 per ton in the first nine months of 2020 due to higher average selling prices across all of our segments, primarily driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand as well as decreased global supply availability as higher global energy costs continued to drive lower global operating rates.
+Added: Our total sales volume of 13.5 million product tons in the first nine months of 2021 was 9% lower compared to 14.8 million product tons in the first nine months of 2020 as a result of decreased supply due to lower production due primarily to a high level of plant turnaround and maintenance activity as well as downtime resulting from the impacts of Winter Storm Uri and Hurricane Ida.
+Added: Cost of Sales
+Added: Our total cost of sales increased $365 million, or 15%, to $2.77 billion in the first nine months of 2021 as compared to $2.40 billion in the first nine months of 2020.
+Added: The increase in our cost of sales was due primarily to higher costs for natural gas, including the impact of realized derivatives, which increased cost of sales by $332 million, higher manufacturing, maintenance and other costs, which increased cost of sales by $307 million, and higher costs for purchased products as we purchased $71 million of granular urea during the first nine months of 2021 to meet customer obligations.
+Added: These increases were partially offset by the $112 million gain we recognized from the net settlement of certain natural gas contracts with our suppliers in February 2021 due to Winter Storm Uri as described above under the heading “Natural Gas” in the section titled “Market Conditions and Current Developments.” The $112 million gain on the net settlement of certain natural gas contracts in February 2021 is reflected in, and had the effect of reducing, our cost of sales in the first nine months of 2021.
+Added: In addition, there was a $220 million decline in cost of sales in the first nine months of 2021, as compared to the first nine months of 2020, due primarily to a 9% decline in sales volume.
+Added: Cost of sales averaged $205 per ton in the first nine months of 2021, a 27% increase from $162 per ton in the first nine months of 2020.
+Added: The cost of natural gas used for production, including the impact of realized derivatives, increased 66% to $3.51 per MMBtu in the first nine months of 2021 from $2.11 per MMBtu in the first nine months of 2020.
+Added: The cost of natural gas used for production of $3.51 per MMBtu in the first nine months of 2021 does not include the $112 million gain from the net settlement of certain natural gas contracts in February 2021.
Selling, General and Administrative Expenses
−Removed: Selling, general and administrative expenses increased $10 million to $115 million in the first six months of 2021 as compared to $105 million in the first six months of 2020.
−Removed: The increase was due primarily to higher incentive compensation due to strong operating performance.
+Added: Selling, general and administrative expenses increased $13 million to $167 million in the first nine months of 2021 as compared to $154 million in the first nine months of 2020.
+Added: The increase was due primarily to higher incentive compensation, due to strong operating performance, and higher costs associated with certain corporate initiatives.
+Added: Goodwill Impairment and Long-lived and Intangible Asset Impairment
+Added: During the third quarter of 2021, the U.K.
+Added: energy crisis impacted our U.K.
+Added: operations, as described above under the heading “United Kingdom Energy Crisis” in the section titled “Market Conditions and Current Developments.” This crisis necessitated an evaluation of the long-lived and intangible assets, including goodwill, of our U.K.
+Added: operations to determine if their fair value had declined to below their carrying value.
+Added: Management concluded that a decline in the fair value had occurred, and we recognized impairment charges of $495 million in the third quarter of 2021, consisting of a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.
+Added: See “Items Affecting Comparability of Results—U.K.
+Added: energy crisis impacts,” above;
+Added: “Liquidity and Capital Resources—United Kingdom Energy Crisis,” below;
+Added: Note 3—United Kingdom Energy Crisis and Impairment Charges;
+Added: Note 6—Property, Plant and Equipment—Net;
+Added: and Note 7—Goodwill and Other Intangible Assets for further information.
+Added: CF INDUSTRIES HOLDINGS, INC.
Other Operating—Net
−Removed: Other operating—net was $2 million of expense in the first six months of 2021 compared to $12 million of expense in the first six months of 2020.
−Removed: The expense in the first six months of 2020 includes $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,” and foreign currency transaction losses of $13 million, due to the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.
+Added: Other operating—net was $7 million of expense in the first nine months of 2021 compared to $8 million of expense in the first nine months of 2020.
+Added: The expense in the first nine months of 2021 includes a loss on foreign currency transactions of $5 million, which consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.
+Added: The other operating—net expense in the first nine months of 2020 includes $9 million of expense related to the cancellation of a project, which is described in the section above titled “Items Affecting Comparability of Results—Engineering cost write-off,” and foreign currency transaction losses of $7 million.
These factors were partially offset by insurance proceeds of $10 million.
1 unchanged sentence
Equity in Earnings of Operating Affiliate
−Removed: Equity in earnings of operating affiliate was $22 million in the first six months of 2021 compared to $6 million in the first six months of 2020.
−Removed: The increase was due primarily to an increase in the operating results of PLNL as a result of higher ammonia selling prices.
+Added: Equity in earnings of operating affiliate was $37 million in the first nine months of 2021 compared to $8 million in the first nine months of 2020.
+Added: The increase was due primarily to an increase in the operating results of PLNL as a result of higher ammonia selling prices partially offset by higher natural gas costs.
Interest Expense—Net
−Removed: Net interest expense increased by $19 million to $94 million in the first six months of 2021 compared to $75 million in the first six months of 2020.
−Removed: The increase is due to $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.
+Added: Net interest expense increased by $17 million to $140 million in the first nine months of 2021 compared to $123 million in the first nine months of 2020.
+Added: The increase is due primarily to $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.
Loss on Debt Extinguishment
2 unchanged sentences
As a result, we recognized a loss on debt extinguishment of $6 million, primarily consisting of a premium paid on the early redemption of the notes.
−Removed: For the six months ended June 30, 2021, we recorded an income tax provision of $103 million on pre-tax income of $595 million, or an effective tax rate of 17.4%, compared to an income tax provision of $46 million on pre-tax income of $355 million, or an effective tax rate of 13.1%, for the six months ended June 30, 2020.
−Removed: For the six months ended June 30, 2021, our income tax provision includes a $22 million benefit reflecting the impact of agreement on certain issues related to U.S.
−Removed: federal income tax audits.
−Removed: 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.
+Added: On September 10, 2021, we redeemed $250 million principal amount, representing one-third of the $750 million principal amount outstanding immediately prior to such redemption, of the 2023 Notes, in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.
+Added: The total aggregate redemption price paid on the 2023 Notes was approximately $265 million, including accrued interest.
+Added: As a result, we recognized a loss on debt extinguishment of $13 million, primarily consisting of a premium paid on the early redemption of the notes.
+Added: Other Non-Operating—Net
+Added: Other non-operating—net was $17 million of income in the first nine months of 2021 compared to $2 million of income in the first nine months of 2020.
+Added: The $17 million of income in the first nine months of 2021 was due primarily to a gain of $20 million on the sale of EU carbon credits that, due to Brexit, could no longer be utilized by our U.K.
+Added: plants for carbon emission obligations in the United Kingdom.
+Added: For the nine months ended September 30, 2021, we recorded an income tax provision of $57 million on pre-tax income of $458 million, or an effective tax rate of 12.3%, compared to an income tax provision of $33 million on pre-tax income of $346 million, or an effective tax rate of 9.4%, for the nine months ended September 30, 2020.
+Added: For the nine months ended September 30, 2021, we did not record an income tax benefit related to the goodwill impairment described in Note 3—United Kingdom Energy Crisis and Impairment Charges as the impairment is non-deductible for income tax purposes.
+Added: In addition, our income tax provision includes a $36 million benefit reflecting the impact of agreement on certain issues related to U.S.
+Added: federal income tax audits, including a discrete income tax benefit of approximately $15 million due to the reversal of an accrual for unrecognized tax benefits as a result of the effective settlement of the U.S.
+Added: federal income tax audit for the 2012-2016 tax years.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: For the nine months ended September 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.
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.
−Removed: Our effective tax rate for the six months ended June 30, 2021 of 17.4%, which is based on pre-tax income of $595 million, including $95 million attributable to the noncontrolling interest, would be 3.3 percentage points higher, or 20.7%, if based on pre-tax
−Removed: CF INDUSTRIES HOLDINGS, INC.
−Removed: income exclusive of the $95 million attributable to the noncontrolling interest.
−Removed: 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, or 15.2%, if based on pre-tax income exclusive of the $51 million attributable to the noncontrolling interest.
+Added: Our effective tax rate for the nine months ended September 30, 2021 of 12.3%, which is based on pre-tax income of $458 million, including $189 million of earnings attributable to the noncontrolling interest, would be 8.7 percentage points higher, or 21.0%, if based on pre-tax income exclusive of the $189 million of earnings attributable to the noncontrolling interest.
+Added: Our effective tax rate for the nine months ended September 30, 2020 of 9.4%, which is based on pre-tax income of $346 million, including $83 million of earnings attributable to the noncontrolling interest, would be 3.0 percentage points higher, or 12.4%, if based on pre-tax income exclusive of the $83 million of earnings attributable to the noncontrolling interest.
See Note 10—Income Taxes and Note 14—Noncontrolling Interest for additional information.
Net Earnings Attributable to Noncontrolling Interest
−Removed: Net earnings attributable to noncontrolling interest increased 86% to $95 million in the first six months of 2021 from $51 million in the first six months of 2020 due to higher earnings of CFN driven by higher average selling prices due primarily to a tighter global nitrogen supply and demand balance as higher global energy costs drove lower global operating rates.
+Added: Net earnings attributable to noncontrolling interest increased 128% to $189 million in the first nine months of 2021 from $83 million in the first nine months of 2020 due to higher earnings of CFN driven by higher average selling prices due primarily to a tighter global nitrogen supply and demand balance as higher global energy costs drove lower global operating rates.
Diluted Net Earnings Per Share Attributable to Common Stockholders
−Removed: Net earnings per share attributable to common stockholders increased 53% to $1.83 per diluted share in the first six months of 2021 from $1.20 per diluted share in the first six months of 2020.
−Removed: This increase is due primarily to the increase in net earnings, driven by higher average selling prices, as described above.
+Added: Net earnings per share attributable to common stockholders decreased 8% to $0.98 per diluted share in the first nine months of 2021 from $1.07 per diluted share in the first nine months of 2020.
+Added: This decrease is due primarily to impairment charges related to our U.K.
+Added: operations, partially offset by higher operating results driven by an increase in gross margin.
CF INDUSTRIES HOLDINGS, INC.
6 unchanged sentences
Variance due to the following items:
−Removed: Second Quarter of 2020 Higher Average Selling Prices (1)
−Removed: Higher Natural Gas Costs (2)
−Removed: Unrealized MTM on natural gas derivatives Higher Manufacturing, Maintenance and Other Costs Increase in Purchased Urea (3)
−Removed: Second Quarter of 2021
+Added: Third Quarter of 2020 Higher Average Selling Prices Volume Higher Natural Gas Costs (1)
+Added: Unrealized MTM on natural gas derivatives Higher Manufacturing, Maintenance and Other Costs Third Quarter of 2021
(dollars in millions)
26 unchanged sentences
Variance due to the following items:
−Removed: Six Months Ended June 30, 2020 Higher Average Selling Prices (1)
+Added: Nine Months Ended September 30, 2020 Higher Average Selling Prices (2)
Higher Natural Gas Costs (1)
−Removed: Unrealized MTM on natural gas derivatives Higher Manufacturing, Maintenance and Other Costs Increase in Purchased Urea (3)
−Removed: Gain on Net Settlement of Natural Gas Contracts Six Months Ended June 30, 2021
+Added: Unrealized MTM on natural gas derivatives (3)
+Added: Higher Manufacturing, Maintenance and Other Costs Increase in Purchased Urea (4)
+Added: Gain on Net Settlement of Natural Gas Contracts Nine Months Ended September 30, 2021
(dollars in millions)
25 unchanged sentences
_______________________________________________________________________________
−Removed: (1) Selling price and volume impact of granular urea purchased to satisfy customer commitments is reflected in the Increase in Purchased Urea column.
(1) Higher natural gas costs include the impact, if any, of realized natural gas derivatives.
+Added: (2) Selling price and volume impact of granular urea purchased to satisfy customer commitments is reflected in the Increase in Purchased Urea column.
+Added: (3) Represents the variance in the net unrealized mark-to-market gains and losses on natural gas derivatives compared to the prior year period.
(4) Represents the impact of the incremental tons compared to the prior year period.
7 unchanged sentences
The following table presents summary operating data for our ammonia segment:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 v.
3 unchanged sentences
Cost of sales 262 174 88 51 % 675 609 66 11 %
−Removed: Gross margin $ 126 $ 102 $ 24 24 % $ 252 $ 122 $ 130 107 %
+Added: Gross margin $ 82 $ (9) $ 91 N/M $ 334 $ 113 $ 221 196 %
Gross margin percentage 23.8 % (5.5) % 29.3 % 33.1 % 15.7 % 17.4 %
5 unchanged sentences
$ 608 $ 253 $ 355 140 % $ 511 $ 329 $ 182 55 %
−Removed: Gross margin per product ton $ 122 $ 91 $ 31 34 % $ 147 $ 65 $ 82 126 %
+Added: Gross margin per product ton $ 119 $ (11) $ 130 N/M $ 139 $ 42 $ 97 231 %
Gross margin per nutrient ton (1)
−Removed: $ 148 $ 111 $ 37 33 % $ 179 $ 79 $ 100 127 %
+Added: $ 145 $ (14) $ 159 N/M $ 169 $ 52 $ 117 225 %
Depreciation and amortization $ 41 $ 34 $ 7 21 % $ 138 $ 133 $ 5 4 %
−Removed: Unrealized net mark-to-market gain on natural gas derivatives $ — $ — $ — — % $ (2) $ (4) $ 2 50 %
+Added: Unrealized net mark-to-market gain on natural gas derivatives $ (4) $ — $ (4) N/M $ (6) $ (4) $ (2) (50) %
_______________________________________________________________________________
+Added: N/M—Not Meaningful
(1) Ammonia represents 82% nitrogen content.
Nutrient tons represent the tons of nitrogen within the product tons.
−Removed: Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: Net sales in our ammonia segment increased by $95 million, or 26%, to $459 million in the second quarter of 2021 from $364 million in the second quarter of 2020 due primarily to a 36% increase in average selling prices, partially offset by a 7% decrease in sales volume.
−Removed: Average selling prices increased to $443 per ton in the second quarter of 2021 compared to $326 per ton in the second quarter of 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
−Removed: Sales volume was lower due primarily to lower supply availability resulting from reduced production, due to higher plant turnaround and maintenance activity in 2021.
+Added: Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: Net sales in our ammonia segment increased by $179 million, or 108%, to $344 million in the third quarter of 2021 from $165 million in the third quarter of 2020 due primarily to a 140% increase in average selling prices, partially offset by a 13% decrease in sales volume.
+Added: Average selling prices increased to $499 per ton in the third quarter of 2021 compared to $208 per ton in the third quarter of 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: Sales volume was lower due primarily to lower supply availability resulting from reduced production, due to higher plant turnaround and maintenance activity in 2021 and weather-related outages, including the impact of Hurricane Ida.
Cost of Sales.
−Removed: Cost of sales in our ammonia segment averaged $321 per ton in the second quarter of 2021, a 37% increase from $235 per ton in the second quarter of 2020.
−Removed: The increase is due primarily to higher realized natural gas costs, higher costs related to plant turnaround and maintenance activity, and a higher cost for purchased ammonia from our joint venture in Trinidad.
+Added: Cost of sales in our ammonia segment averaged $380 per ton in the third quarter of 2021, a 74% increase from $219 per ton in the third quarter of 2020.
+Added: The increase is due primarily to higher realized natural gas costs, higher costs related to plant turnaround and maintenance activity, and a higher cost per ton for purchased ammonia from our joint venture in Trinidad.
Gross Margin .
−Removed: Gross margin in our ammonia segment increased by $24 million to $126 million in the second quarter of 2021 from $102 million in the second quarter of 2020, and our gross margin percentage was 27.5% in the second quarter of 2021 compared to 28.0% in the second quarter of 2020 .
+Added: Gross margin in our ammonia segment increased by $91 million to $82 million in the third quarter of 2021 from a loss of $9 million in the third quarter of 2020, and our gross margin percentage was 23.8% in the third quarter of 2021 compared to (5.5)% in the third quarter of 2020 .
The increase in gross margin was due primarily to a 140% increase in average selling prices, which increased gross margin by $197 million.
−Removed: This factor was partially offset by the impact of a $46 million net increase in manufacturing, maintenance and other costs , an increase in realized natural gas costs, which reduced gross margin by $38 million, and a 7% decrease in sales volume, which decreased gross margin by $13 million.
−Removed: Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
−Removed: Net sales in our ammonia segment increased by $108 million, or 19%, to $665 million in the six months ended June 30, 2021 from $557 million in the six months ended June 30, 2020 due primarily to a 31% increase in average selling prices, partially offset by a 9% decrease in sales volume.
+Added: The impact of higher average selling prices was partially offset by the impact of a $71 million net increase in manufacturing, maintenance and other costs , an increase in realized natural gas costs, which reduced gross margin by $35 million, and a 13% decrease in sales volume, which decreased gross margin by $4 million.
+Added: Gross margin also includes the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2021.
+Added: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
+Added: Net sales in our ammonia segment increased by $287 million, or 40%, to $1,009 million in the nine months ended September 30, 2021 from $722 million in the nine months ended September 30, 2020 due primarily to a 55% increase in average selling prices, partially offset by a 10% decrease in sales volume.
The increase in average selling prices was due primarily to the impact of a tighter global nitrogen supply and demand balance.
−Removed: Sales volume was lower due primarily to lower supply
+Added: Sales volume was lower due primarily to lower
CF INDUSTRIES HOLDINGS, INC.
−Removed: availability resulting from reduced production due to higher plant turnaround and maintenance activity, including the impact of Winter Storm Uri.
+Added: supply availability resulting from reduced inventory and production due to plant turnaround and maintenance activity and weather-related outages, including the impact of Winter Storm Uri.
Cost of Sales.
−Removed: Cost of sales in our ammonia segment averaged $240 per ton in the six months ended June 30, 2021, a 4% increase from $231 per ton in the six months ended June 30, 2020.
−Removed: The increase is due primarily to higher realized natural gas costs, a higher cost for purchased ammonia from our joint venture in Trinidad, and higher maintenance and repair activity, partially offset by the impact of the $112 million gain on the net settlement of certain natural gas contracts with our suppliers in February 2021.
+Added: Cost of sales in our ammonia segment averaged $280 per ton in the nine months ended September 30, 2021, a 23% increase from $228 per ton in the nine months ended September 30, 2020.
+Added: The increase is due primarily to higher realized natural gas costs, higher costs related to plant turnaround, maintenance and repair activity, and a higher cost per ton for purchased ammonia from our joint venture in Trinidad, partially offset by the impact of the $112 million gain on the net settlement of certain natural gas contracts in February 2021.
See “Market Conditions and Current Developments” above, for additional information on the operational impact of Winter Storm Uri.
Gross Margin .
−Removed: Gross margin in our ammonia segment increased by $130 million to $252 million in the six months ended June 30, 2021 from $122 million in the six months ended June 30, 2020, and our gross margin percentage was 37.9% in the six months ended June 30, 2021 compared to 21.9% in the six months ended June 30, 2020.
+Added: Gross margin in our ammonia segment increased by $221 million to $334 million in the nine months ended September 30, 2021 from $113 million in the nine months ended September 30, 2020, and our gross margin percentage was 33.1% in the nine months ended September 30, 2021 compared to 15.7% in the nine months ended September 30, 2020.
The increase in gross margin was due primarily to a 55% increase in average selling prices, which increased gross margin by $348 million and the $112 million gain on the net settlement of certain natural gas contracts in February 2021.
−Removed: These factors were partially offset by a $71 million net increase in manufacturing, maintenance and other costs, an increase in realized natural gas costs, which decreased gross margin by $43 million, a 9% decrease in sales volume, which decreased gross margin by $17 million, and the impact of a $2 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2021 compared to a $4 million gain in the six months ended June 30, 2020.
+Added: These factors were partially offset by a $142 million net increase in manufacturing, maintenance and other costs, an increase in realized natural gas costs, which decreased gross margin by $78 million, and a 10% decrease in sales volume, which decreased gross margin by $21 million.
+Added: Gross margin also includes the impact of a $6 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2021 compared to a $4 million gain in the nine months ended September 30, 2020.
Granular Urea Segment
5 unchanged sentences
The following table presents summary operating data for our granular urea segment:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 v.
15 unchanged sentences
Depreciation and amortization $ 58 $ 60 $ (2) (3) % $ 179 $ 198 $ (19) (10) %
−Removed: Unrealized net mark-to-market gain on natural gas derivatives $ — $ — $ — — % $ (2) $ (4) $ 2 50 %
+Added: Unrealized net mark-to-market gain on natural gas derivatives $ (3) $ — $ (3) N/M $ (5) $ (4) $ (1) (25) %
_______________________________________________________________________________
+Added: N/M—Not Meaningful
(1) Granular urea represents 46% nitrogen content.
Nutrient tons represent the tons of nitrogen within the product tons.
−Removed: Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: Net sales in our granular urea segment increased $104 million, or 32%, to $433 million in the second quarter of 2021 from $329 million in the second quarter of 2020 due primarily to a 59% increase in average selling prices, partially offset by a 17% decrease in sales volume.
−Removed: Average selling prices increased to $397 per ton in the second quarter of 2021 compared to $250 per ton in the second quarter of 2020 due primarily to a tighter global nitrogen supply and demand balance.
−Removed: Sales volume was lower due primarily to lower supply availability resulting from reduced production due to the impact of maintenance and repair activity.
−Removed: Due to the reduced production, we purchased additional granular urea, which we sold for $36 million, to meet customer obligations.
+Added: Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: Net sales in our granular urea segment increased $137 million, or 55%, to $386 million in the third quarter of 2021 from $249 million in the third quarter of 2020 due primarily to a 100% increase in average selling prices, partially offset by a 22% decrease in sales volume.
+Added: Average selling prices increased to $449 per ton in the third quarter of 2021 compared to $225 per ton in the third quarter of 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: Sales volume was lower due primarily to lower supply availability resulting from reduced production due to plant turnaround and maintenance activity and weather-related outages, including the impact of Hurricane Ida.
CF INDUSTRIES HOLDINGS, INC.
Cost of Sales.
−Removed: Cost of sales in our granular urea segment averaged $221 per ton in the second quarter of 2021, a 42% increase from $156 per ton in the second quarter of 2020, due primarily to higher realized natural gas costs and higher costs related to maintenance and repair activity.
−Removed: In addition, we purchased $38 million of granular urea in the second quarter of 2021 to meet customer obligations.
+Added: Cost of sales in our granular urea segment averaged $233 per ton in the third quarter of 2021, a 41% increase from $165 per ton in the third quarter of 2020, due primarily to higher realized natural gas costs and higher costs related to plant turnaround and maintenance activity.
Gross Margin .
−Removed: Gross margin in our granular urea segment increased by $68 million to $192 million in the second quarter of 2021 from $124 million in the second quarter of 2020, and our gross margin percentage was 44.3% in the second quarter of 2021 compared to 37.7% in the second quarter of 2020.
+Added: Gross margin in our granular urea segment increased by $120 million to $186 million in the third quarter of 2021 from $66 million in the third quarter of 2020, and our gross margin percentage was 48.2% in the third quarter of 2021 compared to 26.5% in the third quarter of 2020.
The increase in gross margin was due primarily to a 100% increase in average selling prices, which increased gross margin by $194 million.
−Removed: This factor was partially offset by a 17% decrease in sales volume, which decreased gross margin by $29 million, the impact of an increase in realized natural gas costs, which decreased gross margin by $27 million, and an $18 million net increase in other manufacturing and distribution costs.
−Removed: In addition, we experienced lower production during the second quarter of 2021 and purchased 104,000 tons of granular urea to meet customer obligations, which had the impact of reducing our gross margin percentage in our granular urea segment by 4.6 percentage points.
−Removed: Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
−Removed: Net sales in our granular urea segment increased $166 million, or 25%, to $832 million in the six months ended June 30, 2021 from $666 million in the six months ended June 30, 2020 due primarily to a 40% increase in average selling prices, partially offset by an 11% decrease in sales volume.
−Removed: Average selling prices increased to $345 per ton in the six months ended June 30, 2021 compared to $247 per ton in the six months ended June 30, 2020 due primarily to a tighter global nitrogen supply and demand balance.
−Removed: Sales volume was lower due primarily to lower supply availability resulting from reduced production due to the impact of Winter Storm Uri and maintenance and repair activity.
−Removed: Due to the reduced production, we purchased granular urea, which we sold for $68 million, to meet customer obligations.
+Added: The impact of higher average selling prices was partially offset by an increase in realized natural gas costs, which decreased gross margin by $38 million, a $21 million net increase in other manufacturing, maintenance and other costs, and a 22% decrease in sales volume, which decreased gross margin by $18 million.
+Added: Gross margin also includes the impact of a $3 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2021.
+Added: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
+Added: Net sales in our granular urea segment increased $303 million, or 33%, to $1,218 million in the nine months ended September 30, 2021 from $915 million in the nine months ended September 30, 2020 due primarily to a 54% increase in average selling prices, partially offset by a 14% decrease in sales volume.
+Added: Average selling prices increased to $372 per ton in the nine months ended September 30, 2021 compared to $241 per ton in the nine months ended September 30, 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: Sales volume was lower due primarily to lower supply availability resulting from reduced production due to plant turnaround, maintenance and repair activity and the impact of Winter Storm Uri.
+Added: Due to the reduced production, we purchased granular urea in the nine months ended September 30, 2021, which we sold for $68 million, to meet customer obligations.
Cost of Sales.
−Removed: Cost of sales in our granular urea segment averaged $209 per ton in the six months ended June 30, 2021, a 31% increase from $159 per ton in the six months ended June 30, 2020, due primarily to higher realized natural gas costs and higher costs related to maintenance and repair activity due primarily to Winter Storm Uri.
−Removed: In addition, we purchased $71 million of granular urea to meet customer obligations.
+Added: Cost of sales in our granular urea segment averaged $215 per ton in the nine months ended September 30, 2021, a 34% increase from $161 per ton in the nine months ended September 30, 2020, due primarily to higher realized natural gas costs and higher costs related to plant turnaround, maintenance and repair activity due primarily to Winter Storm Uri.
+Added: In addition, we purchased $71 million of granular urea in the nine months ended September 30, 2021 to meet customer obligations.
Gross Margin .
−Removed: Gross margin in our granular urea segment increased by $90 million to $327 million in the six months ended June 30, 2021 from $237 million in the six months ended June 30, 2020, and our gross margin percentage was 39.3% in the six months ended June 30, 2021 compared to 35.6% in the six months ended June 30, 2020.
+Added: Gross margin in our granular urea segment increased by $210 million to $513 million in the nine months ended September 30, 2021 from $303 million in the nine months ended September 30, 2020, and our gross margin percentage was 42.1% in the nine months ended September 30, 2021 compared to 33.1% in the nine months ended September 30, 2020.
The increase in gross margin was due to a 54% increase in average selling prices, which increased gross margin by $404 million.
−Removed: This factor was partially offset by an 11% decrease in sales volume, which decreased gross margin by $43 million, higher realized natural gas costs, which decreased gross margin by $43 million, a $29 million net increase in manufacturing, maintenance and other costs, and the impact of a $2 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2021 compared to a $4 million gain in the six months ended June 30, 2020.
−Removed: In addition, we experienced lower production during the six months ended June 30, 2021 and purchased 201,000 tons of granular urea to meet customer obligations, which had the impact of reducing our gross margin percentage in our granular urea segment by 3.9 percentage points.
+Added: The impact of higher average selling prices was partially offset by higher realized natural gas costs, which decreased gross margin by $81 million, a 14% decrease in sales volume, which decreased gross margin by $61 million, and a $50 million net increase in manufacturing, maintenance and other costs.
+Added: In addition, we have experienced lower production throughout 2021.
+Added: As a result, in the nine months ended September 30, 2021, we purchased 201,000 tons of granular urea to meet customer obligations, which had the impact of reducing our gross margin percentage in our granular urea segment by 2.8 percentage points.
+Added: Gross margin also includes the impact of a $5 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2021 compared to a $4 million gain in the nine months ended September 30, 2020.
CF INDUSTRIES HOLDINGS, INC.
8 unchanged sentences
The following table presents summary operating data for our UAN segment:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 v.
3 unchanged sentences
Cost of sales 233 237 (4) (2) % 759 675 84 12 %
−Removed: Gross margin $ 138 $ 63 $ 75 119 % $ 140 $ 105 $ 35 33 %
+Added: Gross margin $ 157 $ 11 $ 146 N/M $ 297 $ 116 $ 181 156 %
Gross margin percentage 40.3 % 4.4 % 35.9 % 28.1 % 14.7 % 13.4 %
5 unchanged sentences
$ 963 $ 455 $ 508 112 % $ 707 $ 507 $ 200 39 %
−Removed: Gross margin per product ton $ 71 $ 34 $ 37 109 % $ 40 $ 33 $ 7 21 %
+Added: Gross margin per product ton $ 122 $ 6 $ 116 N/M $ 63 $ 23 $ 40 174 %
Gross margin per nutrient ton (1)
−Removed: $ 225 $ 109 $ 116 106 % $ 129 $ 103 $ 26 25 %
+Added: $ 388 $ 20 $ 368 N/M $ 199 $ 74 $ 125 169 %
Depreciation and amortization $ 56 $ 69 $ (13) (19) % $ 188 $ 186 $ 2 1 %
−Removed: Unrealized net mark-to-market gain on natural gas derivatives $ — $ (1) $ 1 100 % $ (2) $ (4) $ 2 50 %
+Added: Unrealized net mark-to-market gain on natural gas derivatives $ (3) $ — $ (3) N/M $ (5) $ (4) $ (1) (25) %
_______________________________________________________________________________
+Added: N/M—Not Meaningful
(1) UAN represents between 28% and 32% of nitrogen content.
Nutrient tons represent the tons of nitrogen within the product tons.
−Removed: Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: Net sales in our UAN segment increased $126 million, or 41%, to $434 million in the second quarter of 2021 from $308 million in the second quarter of 2020 due primarily to a 34% increase in average selling prices and a 6% increase in sales volume.
−Removed: Average selling prices increased to $223 per ton in the second quarter of 2021 compared to $167 per ton in the second quarter of 2020 due primarily to a tighter global nitrogen supply and demand balance.
−Removed: Sales volume was higher due primarily to higher demand resulting in a drawdown of our inventory.
+Added: Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: Net sales in our UAN segment increased $142 million, or 57%, to $390 million in the third quarter of 2021 from $248 million in the third quarter of 2020 due primarily to a 111% increase in average selling prices, partially offset by a 26% decrease in sales volume.
+Added: Average selling prices increased to $304 per ton in the third quarter of 2021 compared to $144 per ton in the third quarter of 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: Sales volume was lower due primarily to lower supply availability from reduced production due to plant turnaround and maintenance activity and the impact of weather-related outages.
Cost of Sales.
−Removed: Cost of sales in our UAN segment averaged $152 per ton in the second quarter of 2021, a 14% increase from $133 per ton in the second quarter of 2020, due primarily to the impact of higher realized natural gas costs and higher costs related to maintenance and repair activity.
+Added: Cost of sales in our UAN segment averaged $182 per ton in the third quarter of 2021, a 32% increase from $138 per ton in the third quarter of 2020, due primarily to the impact of higher realized natural gas costs and higher costs related to plant turnaround and maintenance activity.
Gross Margin .
−Removed: Gross margin in our UAN segment increased by $75 million to $138 million in the second quarter of 2021 from $63 million in the second quarter of 2020, and our gross margin percentage was 31.8% in the second quarter of 2021 compared to 20.5% in the second quarter of 2020.
−Removed: The increase in gross margin was due to a 34% increase in average selling prices, which increased gross margin by $104 million, and a 6% increase in sales volume, which increased gross margin by $9 million.
−Removed: These factors were partially offset by higher realized natural gas costs, which decreased gross margin by $36 million, a $1 million net increase in manufacturing, maintenance and other costs, and the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the second quarter of 2020 .
−Removed: Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
−Removed: Net sales in our UAN segment increased $123 million, or 23%, to $666 million in the six months ended June 30, 2021 from $543 million in the six months ended June 30, 2020 due primarily to a 14% increase in average selling prices and a 7% increase in sales volume.
−Removed: Average selling prices increased to $192 per ton in the six months ended June 30, 2021 compared to $168 per ton in the six months ended June 30, 2020, due primarily to a tighter global nitrogen supply and demand balance.
−Removed: The increase in sales volume was due to higher demand resulting in a drawdown of our inventory.
−Removed: Cost of Sales.
−Removed: Cost of sales in our UAN segment averaged $152 per ton in the six months ended June 30, 2021, a 13% increase from $135 per ton in the six months ended June 30, 2020.
−Removed: The increase was due primarily to the impact of higher realized natural gas costs and higher costs related to maintenance and repair activity.
+Added: Gross margin in our UAN segment increased by $146 million to $157 million in the third quarter of 2021 from $11 million in the third quarter of 2020, and our gross margin percentage was 40.3% in the third quarter of 2021 compared to 4.4% in the third quarter of 2020.
+Added: The increase in gross margin was due to a 111% increase in average selling prices, which increased gross margin by $207 million.
+Added: The impact of higher average selling prices was partially offset by higher realized natural gas costs, which decreased gross margin by $35 million, a 26% decrease in sales volume, which decreased gross margin by $20 million, and a $9 million net increase in manufacturing, maintenance and other costs .
+Added: Gross margin includes the impact of a $3 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2021.
+Added: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
+Added: Net sales in our UAN segment increased $265 million, or 34%, to $1,056 million in the nine months ended September 30, 2021 from $791 million in the nine months ended September 30, 2020 due primarily to a 39% increase in average selling prices, partially offset by a 4% decrease in sales volume.
+Added: Average selling prices increased to $223 per ton in the nine months ended September 30, 2021 compared to $160 per ton in the nine months ended September 30, 2020, due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: The decrease in sales volume was due to lower supply
CF INDUSTRIES HOLDINGS, INC.
+Added: availability from reduced production due to plant turnaround and maintenance activity and the impact of weather-related outages.
+Added: Cost of Sales.
+Added: Cost of sales in our UAN segment averaged $160 per ton in the nine months ended September 30, 2021, a 17% increase from $137 per ton in the nine months ended September 30, 2020.
+Added: The increase was due primarily to the impact of higher realized natural gas costs and higher costs related to plant turnaround, maintenance and repair activity.
Gross Margin .
−Removed: Gross margin in our UAN segment increased by $35 million to $140 million in the six months ended June 30, 2021 from $105 million in the six months ended June 30, 2020, and our gross margin percentage was 21.0% in the six months ended June 30, 2021 compared to 19.3% in the six months ended June 30, 2020.
−Removed: The increase in gross margin was due to a 14% increase in average selling prices, which increased gross margin by $81 million, and a 7% increase in sales volume, which increased gross margin by $17 million.
−Removed: These factors were partially offset by higher realized natural gas costs, which decreased gross margin by $50 million, an $11 million net increase in manufacturing, maintenance and other costs, and the impact of a $2 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2021 compared to a $4 million gain in the six months ended June 30, 2020.
+Added: Gross margin in our UAN segment increased by $181 million to $297 million in the nine months ended September 30, 2021 from $116 million in the nine months ended September 30, 2020, and our gross margin percentage was 28.1% in the nine months ended September 30, 2021 compared to 14.7% in the nine months ended September 30, 2020.
+Added: The increase in gross margin was due to a 39% increase in average selling prices, which increased gross margin by $288 million.
+Added: The impact of higher average selling prices was partially offset by higher realized natural gas costs, which decreased gross margin by $85 million, a $20 million net increase in manufacturing, maintenance and other costs, and a 4% decrease in sales volume, which decreased gross margin by $3 million.
+Added: Gross margin also includes the impact of a $5 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2021 compared to a $4 million gain in the nine months ended September 30, 2020.
Antidumping and Countervailing Duty Investigations
3 unchanged sentences
We requested the investigations due to the harm we believe the domestic UAN industry has experienced from dumped and unfairly subsidized imports from these two countries.
−Removed: The ITC instituted preliminary phase injury investigations on July 1, 2021 and Commerce initiated antidumping and countervailing duty investigations on July 20, 2021.
−Removed: The ITC is scheduled to take a preliminary vote on August 13, 2021 on whether there is a reasonable indication that the U.S.
−Removed: UAN industry is materially injured or threatened with material injury by reason of imports of UAN from Russia and Trinidad.
−Removed: If the ITC preliminary determination is negative, the ITC and Commerce investigations will be terminated and no antidumping or countervailing duties will be imposed on imports of UAN from Russia or Trinidad.
−Removed: If the ITC preliminary determination is affirmative, Commerce will proceed with its preliminary and final determinations on whether and to what extent these imports are dumped and unfairly subsidized.
−Removed: If any of Commerce’s final determinations are affirmative, the ITC will make a final determination as to whether the unfairly traded imports materially injure or threaten material injury to the domestic UAN industry.
−Removed: If the ITC makes affirmative final determinations, then Commerce can impose duties equal to the level of dumping and unfair subsidies it has found.
+Added: The ITC instituted preliminary phase injury investigations on July 1, 2021, and Commerce announced the initiation of antidumping and countervailing duty investigations on July 21, 2021.
+Added: On August 13, the ITC announced its unanimous preliminary affirmative determination, finding that there is a reasonable indication that the U.S.
+Added: UAN industry is materially injured by reason of imports of UAN from Russia and Trinidad.
+Added: As a result, Commerce is proceeding with its investigations of whether and to what extent these imports are dumped and unfairly subsidized.
+Added: Commerce is due to announce the preliminary countervailing duty determinations on November 30.
+Added: Commerce’s preliminary antidumping determinations are currently due on December 8, but may be postponed.
+Added: We expect that Commerce will issue final determinations in 2022.
+Added: If any of Commerce’s final determinations are affirmative, the ITC would make a final determination as to whether the unfairly traded imports materially injure or threaten material injury to the U.S.
+Added: UAN industry.
+Added: If the ITC makes affirmative final determinations, then Commerce can impose duties equal to the level of dumping and unfair subsidies it finds.
At this time, we cannot predict the outcome of the proceedings, including whether antidumping or countervailing duties will be imposed on imports from either country, or the rate of any such duties.
+Added: CF INDUSTRIES HOLDINGS, INC.
Our AN segment produces ammonium nitrate (AN).
3 unchanged sentences
The following table presents summary operating data for our AN segment:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 v.
3 unchanged sentences
Cost of sales 122 96 26 27 % 337 290 47 16 %
−Removed: Gross margin $ 16 $ 27 $ (11) (41) % $ 26 $ 40 $ (14) (35) %
+Added: Gross margin $ (4) $ 13 $ (17) N/M $ 22 $ 53 $ (31) (58) %
Gross margin percentage (3.4) % 11.9 % (15.3) % 6.1 % 15.5 % (9.4) %
5 unchanged sentences
$ 861 $ 589 $ 272 46 % $ 789 $ 608 $ 181 30 %
−Removed: Gross margin per product ton $ 32 $ 47 $ (15) (32) % $ 28 $ 36 $ (8) (22) %
+Added: Gross margin per product ton $ (10) $ 24 $ (34) N/M $ 16 $ 32 $ (16) (50) %
Gross margin per nutrient ton (1)
−Removed: $ 94 $ 138 $ (44) (32) % $ 82 $ 106 $ (24) (23) %
+Added: $ (29) $ 70 $ (99) N/M $ 48 $ 94 $ (46) (49) %
Depreciation and amortization $ 20 $ 25 $ (5) (20) % $ 61 $ 76 $ (15) (20) %
−Removed: Unrealized net mark-to-market loss on natural gas derivatives $ — $ 1 $ (1) (100) % $ — $ — $ — — %
+Added: Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ — $ (1) N/M $ (1) $ — $ (1) N/M
_______________________________________________________________________________
+Added: N/M—Not Meaningful
(1) AN represents between 29% and 35% of nitrogen content.
Nutrient tons represent the tons of nitrogen within the product tons.
−Removed: CF INDUSTRIES HOLDINGS, INC.
−Removed: Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: Net sales in our AN segment increased $18 million, or 15%, to $136 million in the second quarter of 2021 from $118 million in the second quarter of 2020 due primarily to a 32% increase in average selling prices, partially offset by a 13% decrease in sales volume.
−Removed: Average selling prices increased to $271 per ton in the second quarter of 2021 compared to $205 per ton in the second quarter of 2020 due primarily to a tighter global nitrogen supply and demand balance.
−Removed: Sales volume declined due primarily to lower supply availability resulting from reduced production, due to plant turnaround activity.
+Added: Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: On September 15, 2021, we announced the halt of operations at both our Ince and Billingham manufacturing facilities in the United Kingdom due to negative profitability driven by the high cost of natural gas.
+Added: See the discussion under “Market Conditions and Current Developments—United Kingdom Energy Crisis,” above, for further information.
+Added: Net sales in our AN segment increased $9 million, or 8%, to $118 million in the third quarter of 2021 from $109 million in the third quarter of 2020 due primarily to a 46% increase in average selling prices, partially offset by a 26% decrease in sales volume.
+Added: Average selling prices increased to $290 per ton in the third quarter of 2021 compared to $199 per ton in the third quarter of 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: Sales volume declined due to lower supply availability resulting from reduced production due primarily to plant turnaround and maintenance activity.
Cost of Sales.
−Removed: Cost of sales in our AN segment averaged $239 per ton in the second quarter of 2021, a 51% increase from $158 per ton in the second quarter of 2020.
+Added: Cost of sales in our AN segment averaged $300 per ton in the third quarter of 2021, a 71% increase from $175 per ton in the third quarter of 2020.
The increase was due primarily to higher realized natural gas costs and higher costs related to plant turnaround activity.
−Removed: Natural gas costs increased in both the United States and the United Kingdom in 2021 due to increased energy demand as both economies emerged from the COVID-19 pandemic.
−Removed: For example, as measured by the average daily market price of natural gas at the NBP, the major natural gas trading point for the United Kingdom, natural gas prices increased to $8.90 per MMBtu in the second quarter of 2021 from $1.60 per MMBtu in the second quarter of 2020.
+Added: Natural gas costs increased in both the United States and the United Kingdom in 2021.
+Added: For example, as measured by the average daily market price of natural gas at the NBP, the major natural gas trading point for the United Kingdom, natural gas prices increased to $15.98 per MMBtu in the third quarter of 2021 from $2.69 per MMBtu in the third quarter of 2020.
+Added: See the discussion under “Market Conditions and Current Developments—Natural Gas,” above, for further information.
Gross Margin .
−Removed: Gross margin in our AN segment decreased $11 million, or 41%, to $16 million in the second quarter of 2021 from $27 million in the second quarter of 2020, and our gross margin percentage was 11.8% in the second quarter of 2021 compared to 22.9% in the second quarter of 2020.
−Removed: The decrease in gross margin was due to a net increase of $22 million in manufacturing, maintenance and other costs, an increase in realized natural gas costs, which decreased gross margin by $19 million, and a 13% decrease in sales volume, which decreased gross margin by $5 million.
−Removed: These factors were partially offset by a 32% increase in average selling prices, which increased gross margin by $34 million, and the impact of a $1 million unrealized net mark-to-market loss on natural gas derivatives in the second quarter of 2020.
−Removed: Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
−Removed: Net sales in our AN segment increased $7 million, or 3%, to $241 million in the six months ended June 30, 2021 from $234 million in the six months ended June 30, 2020 due primarily to a 24% increase in average selling prices, partially offset by a 16% decrease in sales volume.
−Removed: Average selling prices increased to $257 per ton in the six months ended June 30, 2021 compared to $208 per ton in the six months ended June 30, 2020 due primarily to a tighter global nitrogen supply and demand balance.
−Removed: The decrease in sales volume was due to lower supply availability as a result of reduced production.
+Added: Gross margin in our AN segment decreased $17 million to a loss of $4 million in the third quarter of 2021 from $13 million in the third quarter of 2020, and our gross margin percentage was (3.4)% in the third quarter of 2021 compared to 11.9% in the third quarter of 2020.
+Added: The decrease in gross margin was due to an increase in realized natural gas costs, which decreased gross margin by $28 million, a net increase of $19 million in manufacturing, maintenance and other costs, and a 26% decrease in sales volume, which decreased gross margin by $8 million.
+Added: These factors were partially offset by a 46% increase in average selling prices, which increased gross margin by $37 million.
+Added: Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2021.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
+Added: Net sales in our AN segment increased $16 million, or 5%, to $359 million in the nine months ended September 30, 2021 from $343 million in the nine months ended September 30, 2020 due primarily to a 30% increase in average selling prices, partially offset by a 19% decrease in sales volume.
+Added: Average selling prices increased to $267 per ton in the nine months ended September 30, 2021 compared to $205 per ton in the nine months ended September 30, 2020 due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: The decrease in sales volume was due primarily to lower supply availability as a result of reduced production due to plant turnaround and maintenance activity.
Cost of Sales.
−Removed: Cost of sales in our AN segment averaged $229 per ton in the six months ended June 30, 2021, a 33% increase from $172 per ton in the six months ended June 30, 2020.
−Removed: The increase was due primarily to higher realized natural gas costs and higher costs related to plant maintenance activity.
+Added: Cost of sales in our AN segment averaged $251 per ton in the nine months ended September 30, 2021, a 45% increase from $173 per ton in the nine months ended September 30, 2020.
+Added: The increase was due primarily to higher realized natural gas costs and higher costs related to plant turnaround and maintenance activity.
Gross Margin .
−Removed: Gross margin in our AN segment decreased by $14 million, or 35%, to $26 million in the six months ended June 30, 2021 from $40 million in the six months ended June 30, 2020, and our gross margin percentage was 10.8% in the six months ended June 30, 2021 compared to 17.1% in the six months ended June 30, 2020.
+Added: Gross margin in our AN segment decreased by $31 million, or 58%, to $22 million in the nine months ended September 30, 2021 from $53 million in the nine months ended September 30, 2020, and our gross margin percentage was 6.1% in the nine months ended September 30, 2021 compared to 15.5% in the nine months ended September 30, 2020.
The decrease in gross margin was due to an increase in realized natural gas costs, which decreased gross margin by $55 million, a net increase of $44 million in manufacturing, maintenance and other costs, and a 19% decrease in sales volume, which decreased gross margin by $16 million.
These factors were partially offset by a 30% increase in average selling prices, which increased gross margin by $83 million.
−Removed: CF INDUSTRIES HOLDINGS, INC.
+Added: Gross margin includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2021.
Other Segment
5 unchanged sentences
The following table presents summary operating data for our Other segment:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 v.
3 unchanged sentences
Cost of sales 105 74 31 42 % 290 215 75 35 %
−Removed: Gross margin $ 31 $ 18 $ 13 72 % $ 47 $ 34 $ 13 38 %
+Added: Gross margin $ 19 $ 2 $ 17 N/M $ 66 $ 36 $ 30 83 %
Gross margin percentage 15.3 % 2.6 % 12.7 % 18.5 % 14.3 % 4.2 %
5 unchanged sentences
$ 1,170 $ 685 $ 485 71 % $ 1,026 $ 740 $ 286 39 %
−Removed: Gross margin per product ton $ 52 $ 33 $ 19 58 % $ 39 $ 30 $ 9 30 %
+Added: Gross margin per product ton $ 35 $ 4 $ 31 N/M $ 38 $ 21 $ 17 81 %
Gross margin per nutrient ton (1)
−Removed: $ 261 $ 167 $ 94 56 % $ 195 $ 149 $ 46 31 %
+Added: $ 179 $ 18 $ 161 N/M $ 190 $ 106 $ 84 79 %
Depreciation and amortization $ 22 $ 18 $ 4 22 % $ 67 $ 52 $ 15 29 %
−Removed: Unrealized net mark-to-market (gain) loss on natural gas derivatives $ — $ — $ — — % $ — $ — $ — — %
+Added: Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ — $ (1) N/M $ (1) $ — $ (1) N/M
_______________________________________________________________________________
+Added: N/M—Not Meaningful
(1) Nutrient tons represent the tons of nitrogen within the product tons.
−Removed: Second Quarter of 2021 Compared to Second Quarter of 2020
−Removed: Net sales in our Other segment increased by $41 million, or 48%, to $126 million in the second quarter of 2021 from $85 million in the second quarter of 2020 due primarily to a 34% increase in average selling prices and an 11% increase in sales volume.
−Removed: The increase in average selling prices was due primarily to a tighter global nitrogen supply and demand balance.
−Removed: The increase in sales volume was due primarily to higher DEF and nitric acid sales volumes, partially offset by lower NPK sales volume.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: Third Quarter of 2021 Compared to Third Quarter of 2020
+Added: Net sales in our Other segment increased by $48 million, or 63%, to $124 million in the third quarter of 2021 from $76 million in the third quarter of 2020 due primarily to a 70% increase in average selling prices, partially offset by a 4% decrease in sales volume.
+Added: The increase in average selling prices was due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: The decrease in sales volume was due primarily to lower urea liquor and NPK sales, partially offset by higher DEF sales.
Cost of Sales.
−Removed: Cost of sales in our Other segment averaged $159 per ton in the second quarter of 2021, a 27% increase from $125 per ton in the second quarter of 2020, due primarily to higher realized natural gas costs and higher costs related to plant maintenance activity.
+Added: Cost of sales in our Other segment averaged $193 per ton in the third quarter of 2021, a 48% increase from $130 per ton in the third quarter of 2020, due primarily to higher realized natural gas costs and higher costs related to plant turnaround and maintenance activity.
Gross Margin .
−Removed: Gross margin in our Other segment increased by $13 million, or 72%, to $31 million in the second quarter of 2021 from $18 million in the second quarter of 2020, and our gross margin percentage was 24.6% in the second quarter of 2021 compared to 21.2% in the second quarter of 2020.
−Removed: The increase in gross margin was due to a 34% increase in average selling prices, which increased gross margin by $34 million, and an 11% increase in sales volume, which increased gross margin by $8 million.
−Removed: These factors were partially offset by an $18 million net increase in manufacturing, maintenance and other costs, and an increase in realized natural gas costs, which decreased gross margin by $11 million.
−Removed: Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020
−Removed: Net sales in our Other segment increased by $57 million, or 33%, to $232 million in the six months ended June 30, 2021 from $175 million in the six months ended June 30, 2020 due primarily to a 26% increase in average selling prices and a 5% increase in sales volume.
−Removed: The increase in average selling prices was due primarily to a tighter global nitrogen
−Removed: CF INDUSTRIES HOLDINGS, INC.
−Removed: supply and demand balance.
−Removed: The increase in sales volume was due primarily to higher DEF and nitric acid sales volumes, partially offset by lower NPK volume.
+Added: Gross margin in our Other segment increased by $17 million to $19 million in the third quarter of 2021 from $2 million in the third quarter of 2020, and our gross margin percentage was 15.3% in the third quarter of 2021 compared to 2.6% in the third quarter of 2020.
+Added: The increase in gross margin was due to a 70% increase in average selling prices, which increased gross margin by $51 million and an increase of $1 million due to product mix.
+Added: These factors were partially offset by a $19 million net increase in manufacturing, maintenance and other costs and an increase in realized natural gas costs, which decreased gross margin by $17 million.
+Added: Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2021.
+Added: Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
+Added: Net sales in our Other segment increased by $105 million, or 42%, to $356 million in the nine months ended September 30, 2021 from $251 million in the nine months ended September 30, 2020 due primarily to a 40% increase in average selling prices and a 2% increase in sales volume.
+Added: The increase in average selling prices was due primarily to the impact of a tighter global nitrogen supply and demand balance.
+Added: The increase in sales volume was due primarily to higher DEF sales volumes, partially offset by lower NPK sales volumes.
Cost of Sales.
−Removed: Cost of sales in our Other segment averaged $154 per ton in the six months ended June 30, 2021, a 25% increase from $123 per ton in the six months ended June 30, 2020 due primarily to higher costs related to plant maintenance activity and higher realized natural gas costs.
+Added: Cost of sales in our Other segment averaged $166 per ton in the nine months ended September 30, 2021, a 33% increase from $125 per ton in the nine months ended September 30, 2020 due primarily to higher realized natural gas costs and higher costs related to plant turnaround and maintenance activity.
Gross Margin .
−Removed: Gross margin in our Other segment increased by $13 million, or 38%, to $47 million in the six months ended June 30, 2021 from $34 million in the six months ended June 30, 2020, and our gross margin percentage was 20.3% in the six months ended June 30, 2021 compared to 19.4% in the six months ended June 30, 2020.
+Added: Gross margin in our Other segment increased by $30 million, or 83%, to $66 million in the nine months ended September 30, 2021 from $36 million in the nine months ended September 30, 2020, and our gross margin percentage was 18.5% in the nine months ended September 30, 2021 compared to 14.3% in the nine months ended September 30, 2020.
The increase in gross margin was due to a 40% increase in average selling prices, which increased gross margin by $101 million, and a 2% increase in sales volume, which increased gross margin by $12 million.
These factors were partially offset by a $51 million net increase in manufacturing, maintenance and other costs and an increase in realized natural gas costs, which decreased gross margin by $33 million.
+Added: Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2021.
CF INDUSTRIES HOLDINGS, INC.
8 unchanged sentences
On March 20, 2021, we redeemed in full all of the remaining $250 million outstanding principal amount of the 2021 Notes, in accordance with the optional redemption provisions in the indenture governing the 2021 Notes.
−Removed: The total aggregate redemption price paid on the 2021 Notes in connection with the redemption was $258 million, including accrued interest.
−Removed: As a result, we recognized a loss on debt extinguishment of $6 million in the six months ended June 30, 2021, primarily consisting of a premium paid on the early redemption of the notes.
−Removed: On August 9, 2021, we announced that our wholly owned subsidiary CF Industries has elected to redeem on September 10, 2021, $250 million principal amount, representing one-third of the currently outstanding $750 million principal amount, of the 3.450% senior notes due 2023 (the 2023 Notes), in accordance with the optional redemption provisions provided in the indenture governing the 2023 Notes.
−Removed: See discussion under “Debt,” below, for further information.
−Removed: As of June 30, 2021, our cash and cash equivalents balance was $777 million, an increase of $94 million from $683 million at December 31, 2020.
−Removed: At June 30, 2021, 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.
+Added: On September 10, 2021, we redeemed $250 million principal amount, representing one-third of the $750 million principal amount outstanding immediately prior to such redemption, of the 2023 Notes, in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.
+Added: See the discussion under “Debt,” below, for further information.
+Added: As of September 30, 2021, our cash and cash equivalents balance was $757 million, an increase of $74 million from $683 million at December 31, 2020.
+Added: At September 30, 2021, 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.
+Added: United Kingdom Energy Crisis
+Added: On September 15, 2021, we announced the halt of operations at both our Ince and Billingham manufacturing facilities in the United Kingdom due to negative profitability driven by the high cost of natural gas.
+Added: The halt of operations at our U.K.
+Added: plants impacted the availability of certain products in the United Kingdom, including carbon dioxide, which is a byproduct of ammonia production.
+Added: Due to the critical nature of carbon dioxide to certain industries in the United Kingdom, on September 21, 2021, we entered into an interim agreement with the U.K.
+Added: Under the terms of the agreement, the U.K.
+Added: government agreed to cover the costs to restart the ammonia plant at Billingham and to offset losses incurred from production for a 21-day period.
+Added: As a result, we resumed production of ammonia at the Billingham facility in order to produce carbon dioxide for the United Kingdom.
+Added: While the interim agreement was in place, we entered into carbon dioxide pricing and offtake agreements with our customers, which have an initial term through January 31, 2022.
+Added: The amount of financial support that will be provided by the U.K.
+Added: government for the September 2021 period of the interim agreement is not expected to be material to our results of operations.
+Added: As a result of the U.K.
+Added: energy crisis and the events described above, we recognized impairment charges of $495 million in the third quarter of 2021, consisting of a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.
+Added: See Note 3—United Kingdom Energy Crisis and Impairment Charges, Note 6—Property, Plant and Equipment—Net and Note 7—Goodwill and Other Intangible Assets for additional information.
+Added: As of September 30, 2021, after the recognition of the $495 million of impairment charges, the goodwill related to our U.K.
+Added: operations was approximately $26 million and the remaining long-lived assets related to our U.K.
+Added: operations were approximately $450 million, primarily consisting of property, plant and equipment.
+Added: Management continues to assess the volatile market conditions in the United Kingdom that are impacting our U.K.
+Added: The factors that could lead to the resolution of the U.K.
+Added: energy crisis, and the timing of any such resolution, are unknown to us.
+Added: Production continues to be idled at our Ince facility, while the Billingham facility is currently operating due to the carbon dioxide agreements described above.
+Added: There remains significant uncertainty regarding future plans for these sites pending greater clarity as to the future cost of natural gas and electricity, selling prices for the products we produce in the United Kingdom and U.K.
+Added: government policy.
+Added: Persistence of the current levels of energy costs and product prices facing our U.K.
+Added: operations could lead to the continued idling or shutting down of our U.K.
+Added: This could result in, among other things, additional funding to support the cash needs of the U.K.
+Added: operations and recognition of further losses or further impairment charges related to our U.K.
+Added: Each of these actions could have a material adverse impact on our results of operations and cash flows.
+Added: CF INDUSTRIES HOLDINGS, INC.
Cash Equivalents
7 unchanged sentences
We make capital expenditures to sustain our asset base, increase our capacity, improve plant efficiency and comply with various environmental, health and safety requirements.
−Removed: Capital expenditures totaled $181 million in the first six months of 2021 compared to $119 million in the first six months of 2020.
−Removed: We currently anticipate that capital expenditures for the full year of 2021 will be in the range of $500 million, which includes expenditures for our green ammonia project at our Donaldsonville manufacturing complex and reflects higher capital spending due to maintenance deferred from 2020 as well as activity that was previously planned to occur in 2022.
+Added: Capital expenditures totaled $382 million in the first nine months of 2021 compared to $206 million in the first nine months of 2020.
+Added: We currently anticipate that capital expenditures for the full year of 2021 will be in the range of $500 million, which includes expenditures for our green ammonia project at our Donaldsonville manufacturing complex and reflects higher capital spending due to maintenance deferred from 2020 as well as activity that was previously planned to occur in 2022, but accelerated into 2021.
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.
−Removed: CF INDUSTRIES HOLDINGS, INC.
Revolving Credit Agreement
−Removed: We have a senior secured revolving credit agreement (the Revolving Credit Agreement), which provides for a revolving credit facility of up to $750 million with a maturity of December 5, 2024.
+Added: We have a senior unsecured revolving credit agreement (the Revolving Credit Agreement), which provides for a revolving credit facility of up to $750 million with a maturity of December 5, 2024.
The Revolving Credit Agreement includes a letter of credit sub-limit of $125 million.
4 unchanged sentences
The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time.
−Removed: CF Industries is the lead borrower under the Revolving Credit Agreement.
−Removed: 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).
+Added: CF Industries is the lead borrower, and CF Holdings is the sole guarantor, under the Revolving Credit Agreement.
+Added: As of September 30, 2021, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit.
+Added: There were no borrowings outstanding under the Revolving Credit Agreement as of September 30, 2021 or December 31, 2020, or during the nine months ended September 30, 2021.
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.
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.
−Removed: As of June 30, 2021, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit.
−Removed: There were no borrowings outstanding under the Revolving Credit Agreement as of June 30, 2021 or December 31, 2020, or during the six months ended June 30, 2021.
−Removed: Maximum borrowings under the Revolving Credit Agreement during the six months ended June 30, 2020 were $500 million.
−Removed: The weighted-average annual interest rate of borrowings under the Revolving Credit Agreement during the six months ended June 30, 2020 was 2.05%.
−Removed: Borrowings under the Revolving Credit Agreement as of March 31, 2020 were repaid in full in April 2020.
+Added: During the nine months ended September 30, 2020, maximum borrowings under the Revolving Credit Agreement were $500 million and the weighted-average annual interest rate of borrowings during the nine months ended September 30, 2020 was 2.05%.
The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants.
−Removed: As of June 30, 2021, we were in compliance with all covenants under the Revolving Credit Agreement.
+Added: As of September 30, 2021, we were in compliance with all covenants under the Revolving Credit Agreement.
Letters of Credit
In addition to the letters of credit that may be issued under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement with capacity to issue up to $250 million of letters of credit.
−Removed: As of June 30, 2021, approximately $222 million of letters of credit were outstanding under this agreement.
+Added: As of September 30, 2021, approximately $229 million of letters of credit were outstanding under this agreement.
CF INDUSTRIES HOLDINGS, INC.
−Removed: Long-term debt presented on our consolidated balance sheets as of June 30, 2021 and December 31, 2020 consisted of the following debt securities issued by CF Industries:
−Removed: Effective Interest Rate June 30, 2021 December 31, 2020
+Added: Long-term debt presented on our consolidated balance sheets as of September 30, 2021 and December 31, 2020 consisted of the following debt securities issued by CF Industries:
+Added: Effective Interest Rate September 30, 2021 December 31, 2020
Principal Carrying Amount (1)
9 unchanged sentences
4.500% due December 2026 (2)
+Added: 4.759% 750 741 750 740
Total long-term debt $ 3,500 $ 3,465 $ 4,000 $ 3,961
3 unchanged sentences
(1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs.
−Removed: Total unamortized debt discount was $9 million as of both June 30, 2021 and December 31, 2020, and total deferred debt issuance costs were $28 million and $30 million as of June 30, 2021 and December 31, 2020, respectively.
+Added: Total unamortized debt discount was $8 million and $9 million as of September 30, 2021 and December 31, 2020, respectively, and total deferred debt issuance costs were $27 million and $30 million as of September 30, 2021 and December 31, 2020, respectively.
+Added: (2) Effective August 23, 2021, these notes are no longer secured, in accordance with the terms of the applicable indenture.
Public Senior Notes
1 unchanged sentence
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.
−Removed: On August 9, 2021, we announced that CF Industries has elected to redeem on September 10, 2021, $250 million principal amount, representing one-third of the currently outstanding $750 million principal amount, of the 2023 Notes, in accordance with the optional redemption provisions provided in the indenture governing the 2023 Notes.
−Removed: We estimate, based on market interest rates on August 2, 2021, the total amount for the partial redemption of the 2023 Notes will be approximately $265 million, including accrued interest.
−Removed: The partial redemption of the 2023 Notes will be funded with cash on hand.
−Removed: See Note 11—Financing Agreements for additional information.
+Added: On September 10, 2021, we redeemed $250 million principal amount, representing one-third of the $750 million principal amount outstanding immediately prior to such redemption, of the 2023 Notes, in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.
+Added: The total amount paid for the redemption of the $250 million principal amount of the 2023 Notes, which was funded with cash on hand, was approximately $265 million, including accrued interest.
+Added: As a result, we recognized a loss on debt extinguishment of $13 million in the third quarter of 2021, primarily consisting of a premium paid on the early redemption of the notes.
Senior Secured Notes
1 unchanged sentence
The total aggregate redemption price paid on the 2021 Notes in connection with the redemption was $258 million, including accrued interest.
−Removed: As a result, we recognized a loss on debt extinguishment of $6 million in the six months ended June 30, 2021, primarily consisting of a premium paid on the early redemption of the notes.
−Removed: Under the terms of the indenture governing the 4.500% senior secured notes due 2026 (the 2026 Notes), the 2026 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.
−Removed: The subsidiary guarantors of the 2026 Notes currently consist of CFE, CFS, CF USA and CFIDF.
−Removed: Subject to certain exceptions, the obligations under the 2026 Notes and each guarantor’s related guarantee are secured by a first priority security interest in substantially all of the assets of CF Industries, CF Holdings and the subsidiary guarantors, including a pledge by CF USA of its equity interests in CFN and mortgages over certain material fee-owned domestic real properties (the Collateral).
−Removed: 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 2026 Notes.
−Removed: The liens on the Collateral securing the obligations under the 2026 Notes and the related
+Added: As a result, we recognized a loss on debt extinguishment of $6 million in the first quarter of 2021, primarily consisting of a premium paid on the early redemption of the notes.
+Added: Under the terms of the indenture governing the 4.500% senior secured notes due 2026 (the 2026 Notes), the 2026 Notes are guaranteed on a senior secured basis by CF Holdings.
+Added: Until August 23, 2021, the 2026 Notes were guaranteed by certain subsidiaries of CF Industries.
+Added: The requirement for subsidiary guarantees of the 2026 Notes was eliminated, and all subsidiary guarantees were automatically released, as a result of an investment grade rating event under the terms of the indenture governing the 2026 Notes on August 23, 2021.
+Added: Prior to the investment grade rating event, subject to certain exceptions, the obligations under the 2026 Notes and related guarantees were secured by a first priority security interest in collateral consisting of substantially all of the assets of CF Industries, CF Holdings and the subsidiary guarantors.
+Added: As a result of the investment grade rating event, the liens on the collateral securing the obligations under the 2026 Notes and related guarantees were
CF INDUSTRIES HOLDINGS, INC.
−Removed: guarantees will be automatically released and the covenant under the 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 indenture.
+Added: automatically released on August 23, 2021, and the indenture covenant that had limited dispositions of assets constituting collateral no longer applies.
Interest on the 2026 Notes is payable semiannually, and the 2026 Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices.
−Removed: Share Repurchase Program
+Added: Share Repurchase Programs
On February 13, 2019, the Board authorized the repurchase of up to $1 billion of CF Holdings common stock through December 31, 2021 (the 2019 Share Repurchase Program).
−Removed: Repurchases under the 2019 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise.
+Added: Since the 2019 Share Repurchase Program was announced in February 2019, we have repurchased approximately 11.3 million shares for $487 million, consisting of:
+Added: • 1.1 million shares repurchased during the third quarter of 2021 for $50 million,
+Added: • 2.6 million shares repurchased during the first quarter of 2020 for $100 million, and
+Added: • 7.6 million shares repurchased during 2019 for $337 million.
+Added: On November 3, 2021, the Board authorized the repurchase of up to $1.5 billion of CF Holdings common stock from January 1, 2022 through December 31, 2024 (the 2021 Share Repurchase Program).
+Added: Repurchases under our share repurchase programs may be made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise.
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.
−Removed: Since the 2019 Share Repurchase Program was announced in February 2019, we have repurchased approximately 10.2 million shares for $437 million, including 2.6 million shares repurchased during the first quarter of 2020 for $100 million.
−Removed: No shares have been repurchased since the first quarter of 2020 under the 2019 Share Repurchase Program.
Forward Sales and Customer Advances
3 unchanged sentences
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.
−Removed: As of June 30, 2021 and December 31, 2020, we had $9 million and $130 million, respectively, in customer advances on our consolidated balance sheets.
+Added: As of September 30, 2021 and December 31, 2020, we had $375 million and $130 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, our customers’ outlook of future market fundamentals and seasonality.
11 unchanged sentences
Volatility in reported quarterly earnings can result from the unrealized mark-to-market adjustments in the value of the derivatives.
−Removed: As of June 30, 2021, our open natural gas derivative contracts consisted of natural gas basis swaps for 6.8 million MMBtus.
+Added: As of September 30, 2021, our open natural gas derivative contracts consisted of natural gas basis swaps and options for 20.7 million MMBtus.
As of December 31, 2020, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 34.1 million MMBtus.
+Added: CF INDUSTRIES HOLDINGS, INC.
Defined Benefit Pension Plans
−Removed: We contributed $14 million to our pension plans during the six months ended June 30, 2021.
+Added: We contributed $33 million to our pension plans during the nine months ended September 30, 2021.
Over the remainder of 2021, we expect to contribute an additional $6 million to our pension plans, or a total of approximately $39 million for the full year 2021.
−Removed: CF INDUSTRIES HOLDINGS, INC.
+Added: In addition, we currently expect our U.K.
+Added: subsidiary to contribute a total of approximately $91 million to our U.K.
+Added: plans in the four-year period ending in 2025, as agreed with the plans’ trustees.
Distribution to Noncontrolling Interest in CFN
1 unchanged sentence
On July 30, 2021, CFN distributed $130 million to CHS for the distribution period ended June 30, 2021.
+Added: The estimate of the partnership distribution earned by CHS, but not yet declared, for the third quarter of 2021 is approximately $94 million.
Operating Activities
−Removed: Net cash provided by operating activities during the first six months of 2021 was $706 million, a decrease of $12 million compared to $718 million in the first six months of 2020.
−Removed: The decrease in cash flow from operations was due primarily to unfavorable changes in net working capital, partially offset by higher net earnings.
−Removed: During the first six months of 2021, net changes in working capital reduced cash flow from operations by $182 million, while in the first six months of 2020 net changes in working capital contributed $77 million to cash flow from operations.
−Removed: The decreased cash flow from working capital changes was primarily driven by accounts receivable and customer advances.
−Removed: The increase in net earnings was due primarily to higher average selling prices and the $112 million gain on the net settlement of certain natural gas contracts with our suppliers in February 2021, partially offset by higher costs related to manufacturing, maintenance and repair activity.
+Added: Net cash provided by operating activities during the first nine months of 2021 was $1,393 million, an increase of $452 million compared to $941 million in the first nine months of 2020.
+Added: The increase in cash flow from operations was due primarily to higher net earnings, partially offset by unfavorable changes in net working capital.
+Added: Net earnings for the first nine months of 2021 was $401 million as compared to $313 million for the first nine months of 2020.
+Added: Additionally, the first nine months of 2021 includes non-cash pre-tax impairment charges of $495 million that reduced net earnings, as described above under “United Kingdom Energy Crisis.” The increase in net earnings was due primarily to higher average selling prices and a $112 million gain on the net settlement of certain natural gas contracts with our suppliers in February 2021, partially offset by higher costs related to manufacturing, maintenance and repair activity.
+Added: During the first nine months of 2021, net changes in working capital reduced cash flow from operations by $53 million, while in the first nine months of 2020 net changes in working capital contributed $69 million to cash flow from operations.
+Added: The decreased cash flow from working capital changes was primarily driven by cash taxes paid, inventories and accounts receivable, partially offset by an increase in customer advances.
Investing Activities
−Removed: Net cash used in investing activities was $182 million in the first six months of 2021 as compared to $117 million in the first six months of 2020.
−Removed: During the first six months of 2021, capital expenditures totaled $181 million compared to $119 million in the first six months of 2020.
+Added: Net cash used in investing activities was $383 million in the first nine months of 2021 as compared to $201 million in the first nine months of 2020.
+Added: During the first nine months of 2021, capital expenditures totaled $382 million compared to $206 million in the first nine months of 2020.
Financing Activities
−Removed: Net cash used in financing activities was $433 million in the first six months of 2021 compared to $323 million in the first six months of 2020.
−Removed: In the first six months of 2021, no shares of common stock were repurchased compared to $100 million in the first six months of 2020.
−Removed: Dividends paid on common stock was $130 million in the first six months of 2021 compared to $129 million in the first six months of 2020.
−Removed: Distributions to noncontrolling interest totaled $64 million in the first six months of 2021 as compared to $88 million in the first six months of 2020.
+Added: Net cash used in financing activities was $936 million in the first nine months of 2021 compared to $473 million in the first nine months of 2020.
+Added: In the first nine months of 2021, we paid $518 million in connection with the redemption of the 2021 Notes and the partial redemption of the 2023 Notes.
+Added: In the first nine months of 2021, we spent $50 million to repurchase shares of common stock compared to $100 million in the first nine months of 2020.
+Added: Dividends paid on common stock was $195 million in the first nine months of 2021 compared to $193 million in the first nine months of 2020.
+Added: Distributions to noncontrolling interest totaled $194 million in the first nine months of 2021 as compared to $174 million in the first nine months of 2020.
Terra Amended Tax Returns
12 unchanged sentences
In July 2020, we received an additional $2 million, which finalized these matters with the IRS.
−Removed: In 2017, we made a Voluntary Disclosures Program filing with the Canada Revenue Agency (CRA) with respect to the Canadian tax aspects of this matter and paid additional Canadian taxes due.
+Added: CF INDUSTRIES HOLDINGS, INC.
+Added: In 2017, we made a Voluntary Disclosures Program filing with the Canada Revenue Agency (CRA) with respect to the Canadian tax aspects of the amended returns and paid additional Canadian taxes due.
In late 2020, the CRA settled with us the voluntary disclosure matter, and, in the first quarter of 2021, we received approximately $20 million of withholding tax refunds, including interest, from the CRA.
6 unchanged sentences
The arbitration decision will be issued no later than the first quarter of 2022.
−Removed: CF INDUSTRIES HOLDINGS, INC.
If we accept the arbitration decision, the associated letters of credit would be cancelled and we may owe additional tax and interest to one taxing jurisdiction, which would likely be due in the second quarter of 2022.
3 unchanged sentences
Regulation of Greenhouse Gases
−Removed: Our U.K manufacturing plants are subject to greenhouse gas (GHG) regulations in the United Kingdom.
+Added: manufacturing plants are subject to greenhouse gas (GHG) regulations in the United Kingdom.
After the United Kingdom’s exit from the European Union, the U.K.
6 unchanged sentences
requirements, we are required to obtain and surrender emission allowances equivalent to our annual greenhouse gas emissions, although we anticipate that we will be allocated a certain number of free allowances.
−Removed: Our remaining European Union emissions credits are not applicable in the United Kingdom, and separate U.K.
−Removed: emissions credits will need to be procured to offset emissions that are in excess of the number of free allowances allocated to us.
−Removed: We have recognized the estimated cost to procure the necessary U.K.
−Removed: credits based on our understanding of the program requirements and using market observable transactions.
−Removed: Given the recent development of the U.K.
−Removed: emissions trading market and the limited number of participants, changes in the price of credits could occur as the market is subject to change based on market participants and liquidity.
+Added: As a result of the new GHG regulations and the establishment of the UK ETS, our remaining European Union emissions credits are no longer applicable for us in the United Kingdom, and we will need separate U.K.
+Added: emissions credits to offset emissions that are in excess of the number of free allowances allocated to us.
+Added: Accordingly, in the third quarter of 2021, we sold our remaining EU emissions credits for approximately $20 million and recognized a corresponding gain, which is included in other non-operating—net in our consolidated statements of operations, as the credits were earned by us in prior years due to approved emission abatement actions that we had taken and, therefore, did not have a recognized cost associated with them.
+Added: We subsequently purchased approximately 321,000 of U.K.
+Added: carbon credits, which can be used to satisfy future carbon credit obligations in the United Kingdom, for approximately $19 million.
+Added: We may need to procure additional U.K.
+Added: carbon credits in the future.
+Added: emissions trading market is not a liquid market with numerous observable transactions.
+Added: Given the recent development of the market and the limited number of participants, changes in the price of credits could occur as the market is subject to change based on market participants and liquidity.
It is unclear if the UK ETS will be linked with other emission trading programs from other countries.
government can also change the emission cap or allowances of the GHG regulations, which could also impact the cost of compliance with this program.
+Added: CF INDUSTRIES HOLDINGS, INC.
Critical Accounting Estimates
−Removed: There were no changes to our significant accounting estimates during the first six months of 2021.
+Added: Our discussion and analysis of our financial condition, results of operations, liquidity and capital resources is based upon our consolidated financial statements, which have been prepared in accordance with U.S.
+Added: GAAP requires that we select policies and make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.
+Added: On an ongoing basis, we evaluate our estimates.
+Added: We base our estimates on historical experience, technological assessment, opinions of appropriate outside experts, and the most recent information available to us.
+Added: Actual results may differ from these estimates.
+Added: Changes in estimates that may have a material impact on our results are discussed in the context of the underlying financial statements to which they relate.
+Added: The following discussion presents information about our critical accounting estimates related to the recoverability of long-lived assets and goodwill.
+Added: Recoverability of Long-Lived Assets and Goodwill
+Added: We review the carrying values of our property, plant and equipment and other long-lived assets, including our finite-lived intangible assets, and goodwill in accordance with U.S.
+Added: GAAP in order to assess recoverability.
+Added: Factors that we must estimate when performing impairment tests include production and sales volumes, selling prices, raw material costs, operating rates, operating expenses, inflation, discount rates, exchange rates, tax rates and capital spending.
+Added: Significant judgment is involved in estimating each of these factors, which include inherent uncertainties.
+Added: The factors we use are consistent with those used in our internal planning process.
+Added: The recoverability of the values associated with our goodwill and long-lived assets is dependent upon future operating performance of the specific businesses to which they are attributed.
+Added: Certain of the operating assumptions are particularly sensitive to the cyclical nature of the fertilizer business.
+Added: Adverse changes in demand for our products, increases in supply and the availability and costs of key raw materials could significantly affect the results of our review.
+Added: The recoverability and impairment tests of long-lived assets are required only when conditions exist that indicate the carrying value may not be recoverable.
+Added: For goodwill, impairment tests are required at least annually, or more frequently if events or circumstances indicate that it may be impaired.
+Added: During the third quarter of 2021, the U.K.
+Added: energy crisis necessitated an evaluation of the goodwill and long-lived assets, including definite-lived intangible assets, of our U.K.
+Added: operations to determine if their fair value had declined to below their carrying value.
+Added: We performed the impairment evaluations on the U.K.
+Added: ammonia, U.K.
+Added: Other asset groups’ long-lived assets, including definite-lived intangible assets, and the U.K.
+Added: ammonia, U.K.
+Added: Other reporting units’ goodwill as of September 30, 2021.
+Added: Based on these analyses, we concluded that a decline in the fair value had occurred and we recognized impairment charges of $ 495 million in the third quarter of 2021, consisting of a goodwill impairment charge of $ 259 million and long-lived and intangible asset impairment charges of $ 236 million.
+Added: See Note 3—United Kingdom Energy Crisis and Impairment Charges, Note 6—Property, Plant and Equipment—Net and Note 7—Goodwill and Other Intangible Assets for additional information regarding the long-lived asset and goodwill impairment analyses, including the methodologies and assumptions used in estimating the fair values of our reporting units.
CF INDUSTRIES HOLDINGS, INC.
39 unchanged sentences
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.