What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-02 compared with 2022-11-03 · 329 added, 652 removed, 397 unchanged (71% of the section changed)

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• Overview of CF Holdings

◦ Our Company

◦ Our Commitment to a Clean Energy Economy

• Market Conditions and Current Developments

• Agreement to Purchase Ammonia Production Facility

• Market Conditions

• Financial Executive Summary

1 unchanged sentence

• Consolidated Results of Operations

◦ Third Quarter of 2022 Compared to Third Quarter of 2021

◦ Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

• Operating Results by Business Segment

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Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers.

Our principal assets as of September 30, 2022 include:

Our principal assets as of March 31, 2023 include:

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

Port Neal, Iowa;

Sergeant Bluff, Iowa (our Port Neal complex);

Yazoo City, Mississippi;

Verdigris, Oklahoma;

Claremore, Oklahoma (our Verdigris complex);

and Woodward, Oklahoma.

3 unchanged sentences

• a United Kingdom nitrogen manufacturing facility located in Billingham;

CF INDUSTRIES HOLDINGS, INC.

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

CF INDUSTRIES HOLDINGS, INC.

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

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In August 2022, the final restructuring plan was approved, and decommissioning activities were initiated.

See “Market Conditions and Current Developments—United Kingdom Operations,” below for more information.

Our Commitment to a Clean Energy Economy

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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.

Our approach includes green ammonia production, which refers to ammonia produced through a carbon-free process, and blue ammonia production, 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.

In October 2020, we announced an initial green ammonia project at our Donaldsonville complex.

Our approach includes green ammonia production, which refers to ammonia produced through a carbon-free process, and blue ammonia production, which relates to ammonia produced by conventional processes but with CO 2 byproduct removed through carbon capture and sequestration (CCS).

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 complex.

Construction and installation, which is being managed by us, began in the fourth quarter of 2021 and is expected to finish in 2023, with an estimated total cost of approximately $100 million.

The cost of the project is expected to fit within our annual capital expenditure budgets.

Construction and installation, which is being managed by us, is expected to finish in late 2023, with an estimated total cost of approximately $100 million.

We will integrate the green hydrogen generated by the electrolysis plant into existing ammonia synthesis loops to enable the production of approximately 20,000 tons per year of green ammonia.

We believe that, when completed in 2023, the Donaldsonville green ammonia project will be the largest of its kind in North America.

We believe that the Donaldsonville green ammonia project will be the largest of its kind in North America at the time of its startup.

In July 2022, we and Mitsui & Co., Ltd.

signed a joint development agreement for the companies’ proposed plans for an export-oriented greenfield ammonia production facility in the southeastern United States to produce blue ammonia.

In September 2022, we acquired the land for the project.

We expect to commence during the fourth quarter of 2022 a front-end engineering design (FEED) study, which typically takes nine to twelve months to complete.

A final investment decision as to whether to move forward with construction of the facility is expected to occur in the second half of 2023.

Construction and commissioning of a new world-scale capacity ammonia plant typically takes approximately four years from the time construction begins.

We have also announced steps to produce blue ammonia from our existing ammonia production network, including a project to construct a CO 2 dehydration and compression facility at our Donaldsonville complex to enable the transport and sequestration of the ammonia process byproduct.

(Mitsui) signed a joint development agreement for the companies’ proposed plans to construct an export-oriented blue ammonia facility.

We and Mitsui continue to progress a front-end engineering and design (FEED) study for the project, and expect to make a final investment decision on the proposed facility in the second half of 2023.

Should the companies agree to move forward, the ammonia facility would be constructed at our new Blue Point complex.

We own the land for the complex, which is located on the west bank of the Mississippi river in Ascension Parish, Louisiana.

Construction and commissioning of a new world-scale ammonia plant typically takes approximately four years from the time construction begins.

In the first quarter of 2023, we signed a memorandum of understanding (MOU) with JERA Co., Inc.

(JERA), Japan’s largest energy generator, regarding the long-term supply of up to 500,000 tonnes per year of clean ammonia beginning in 2027.

The execution of the MOU was the result of a supplier comparison and evaluation process for the procurement of clean ammonia that JERA initiated in February 2022 for the world’s first commercial scale ammonia co-firing operations that JERA is developing.

The MOU establishes a framework for JERA and us to assess how we would best supply JERA with clean ammonia, which will be required to be produced with at least 60% lower carbon emissions than conventionally produced ammonia, under a long-term offtake agreement.

We and JERA expect to evaluate a range of potential supply options, including JERA making an equity investment with us to develop a clean ammonia facility in Louisiana and a supplementary long-term offtake agreement.

In the first quarter of 2023, we signed an MOU with LOTTE CHEMICAL Corporation (LOTTE), a global chemicals company in South Korea.

The MOU will guide LOTTE and us in a joint exploration of the development of clean ammonia production in the United States, in addition to the quantification of expected clean ammonia demand in South Korea and long-term clean ammonia offtake volumes into South Korea.

We are also pursuing opportunities to produce blue ammonia from our existing ammonia production network.

We are currently executing a project with an estimated cost of $200 million to construct a CO 2 dehydration and compression facility at our Donaldsonville complex to enable the transport and permanent sequestration of the ammonia process CO 2 byproduct.

Engineering activities and procurement of major equipment for the facility are in progress, and modification of the site’s existing equipment to allow integration with existing operations has begun.

Construction of the dehydration and compression units at the Donaldsonville complex is expected to begin in 2023, with an estimated total cost of $200 million.

Once the units are in service and sequestration is initiated, we expect that the Donaldsonville complex will have the capacity to dehydrate and compress up to 2 million tons per year of CO 2 enabling the production of blue ammonia.

Once the dehydration and compression unit is in service and sequestration is initiated, we expect that the Donaldsonville complex will have the capacity to dehydrate and compress up to 2 million tons per year of CO 2 , enabling the production of blue ammonia.

In October 2022, we announced that we had entered into a definitive CO 2 offtake agreement with ExxonMobil to transport and permanently sequester CO 2 from Donaldsonville.

Start-up for the project is scheduled for early 2025.

Start-up for the project is planned for 2025.

Under current regulations, the project would be expected to qualify for tax credits under Section 45Q of the Internal Revenue Code, which provides a credit per tonne of CO 2 sequestered.

Market Conditions and Current Developments

Geopolitical Environment

Russia’s invasion of Ukraine in February 2022, and the resulting war between Russia and Ukraine, has disrupted global markets for certain commodities, including natural gas, nitrogen fertilizers and certain commodity grains, leading to production curtailments, export reductions and logistical complications involving these commodities.

Additionally, energy, financial and transportation sanctions have been announced by U.S., Canadian, European and other governments in response to the war.

Market participants are adjusting trade flows and manufacturers are adjusting production levels in response to these factors.

Continued market disruption is expected given the uncertainty of the situation.

As of the date of this filing, nitrogen fertilizers have been explicitly exempted from sanctions by the United States and certain other governments.

CF INDUSTRIES HOLDINGS, INC.

Agreement to Purchase Ammonia Production Facility

On March 20, 2023, we entered into an asset purchase agreement with Dyno Nobel Louisiana Ammonia, LLC (DNLA), a U.S.

subsidiary of Australian-based Incitec Pivot Limited (IPL), and IPL.

Under the terms of the agreement, we will purchase DNLA’s ammonia production complex located in Waggaman, Louisiana for a purchase price of $1.675 billion, subject to adjustment.

The facility has a nameplate capacity of 880,000 tons of ammonia annually.

The parties will allocate $425 million of the purchase price to a long-term ammonia offtake agreement providing for us to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc.

We expect to fund the balance of the purchase price, representing the $1.675 billion purchase price, as adjusted, less $425 million, with cash on hand.

The consummation of the transaction is subject to the satisfaction or waiver of customary conditions, including, among others, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The agreement includes certain customary termination rights, including the right of either party to terminate the agreement if the closing has not occurred by March 20, 2025.

We have agreed to pay a termination fee of $75 million if the agreement is terminated in certain circumstances and certain regulatory approvals are not obtained.

Market Conditions

Geopolitical Environment

Changes in the geopolitical environment can have significant effects on our financial results.

Russia’s invasion of Ukraine in February 2022, and the resulting war between Russia and Ukraine, disrupted global markets for certain commodities, including natural gas, nitrogen fertilizers and certain commodity grains, leading to production curtailments, export reductions and logistical complications involving these commodities.

Additionally, energy, financial and transportation sanctions were announced by U.S., Canadian, European and other governments against Russia in response to the war.

During 2022 and continuing into 2023, market participants adjusted trade flows and manufacturers adjusted production levels in response to these factors.

As of the date of filing of this report, nitrogen fertilizers have largely been explicitly exempted from Russian sanctions by the United States and certain other governments.

As further described below, natural gas is the principal raw material used to produce our nitrogen products.

Natural gas is also a globally traded commodity that experiences price fluctuations based on supply demand balances and has been impacted by the recent geopolitical events.

European energy markets, which have historically sourced a substantial portion of their natural gas supply from Russia, have been disrupted by Russia’s invasion of Ukraine and the subsequent reduction of Russian natural gas supply to Europe.

This has led to further increases in natural gas prices and natural gas price volatility, which in turn have led to disruptions in manufacturing and distribution activities at other nitrogen manufacturers and suppliers in our industry, resulting in changes in nitrogen product trade flows and reductions in global fertilizer supply.

In addition, as discussed under “Market Conditions and Current Developments—United Kingdom Operations,” below, in September 2022, we temporarily idled ammonia production at our Billingham complex due to the high price of natural gas.

Several European governments, including the United Kingdom, and the European Union (EU) are seeking to address energy market supply and volatility with certain proposed government programs and policy changes.

The scope of these proposed programs and policy changes, and their impact on us, are unknown at the present time.

The geopolitical developments relating to the war in Ukraine have also led to some supply chain disruptions for Russian producers of fertilizer, contributing to reduced global nitrogen fertilizer supply.

Prior to the invasion, Russia in recent years had been a significant supplier of nitrogen fertilizer products to North America and Europe and a leading exporter of nitrogen fertilizer products globally.

Natural gas is a globally traded commodity that experiences price fluctuations based on supply and demand balances and has been impacted by geopolitical events relating to the war between Russia and Ukraine.

European energy markets, which have historically sourced a substantial portion of their natural gas from Russia, were disrupted by Russia’s invasion of Ukraine and the subsequent reduction of Russian natural gas supply to Europe during 2022.

This led to further increases in natural gas prices and natural gas price volatility, which in turn led to disruptions in manufacturing and distribution activities at other nitrogen manufacturers and suppliers in our industry, resulting in changes in nitrogen product trade flows and reductions in global fertilizer supply.

In September 2022, in response to the high prices for natural gas in the United Kingdom, we temporarily idled ammonia production at our Billingham complex and since that time have been importing ammonia from one of our North American manufacturing facilities or from purchases in the open market for upgrade into AN and other nitrogen products at that location.

The geopolitical developments relating to the war in Ukraine also led to some supply chain disruptions for Russian producers of fertilizer, contributing to reduced global nitrogen fertilizer supply.

Prior to its February 2022 invasion of Ukraine, Russia in recent years had been a significant supplier of nitrogen fertilizer products to North America and Europe and a leading exporter of nitrogen fertilizer products globally.

Since that invasion, the closure of a pipeline historically transporting ammonia from Russia through Ukraine for export has been a large contributor to reduced global exportable ammonia supply.

In addition, Russia and Ukraine have been large exporters of commodity grains such as wheat, corn and soybeans.

The direct and indirect impacts of the war in Ukraine, and the related uncertainty, have resulted in reduced commodity grain supply from Russia and Ukraine, causing increased prices for grains globally.

The increase in commodity grain prices in turn has supported strong demand for nitrogen fertilizer in the first nine months of 2022.

These events have further contributed to an already tight global supply demand balance for nitrogen fertilizers.

These factors are causing changes in global trade flows as both manufacturers and customers react to the changing market dynamics.

As a result, global nitrogen fertilizer prices have remained high and have also experienced significant volatility in 2022.

We expect that the recent geopolitical events, and any further government-imposed sanctions or other government actions affecting food or energy security, will continue to have an impact on the supply demand balance of nitrogen fertilizer products globally and selling prices for our nitrogen fertilizer products, but the scope and duration of these impacts are unknown at the present time.

The direct and indirect impacts of the war in Ukraine, and the related uncertainty, resulted in reduced commodity grain supply from Russia and Ukraine, causing increased prices for grains globally.

The increase in commodity grain prices in turn supported strong demand for nitrogen fertilizer in 2022.

All of these geopolitical developments further contributed to an already tight global supply and demand balance for nitrogen fertilizers.

These factors caused changes in global trade flows as both manufacturers and customers reacted to the changing market dynamics.

As a result, global nitrogen fertilizer prices remained high and also experienced significant volatility in 2022.

As Russian-sourced natural gas supply declined due to geopolitical factors, European purchasers of natural gas increased imports from the liquified natural gas (LNG) market to build storage levels leading up to the winter 2022/2023 peak demand season.

As storage levels of natural gas increased due to the increased LNG imports, in conjunction with a warmer than expected winter in Europe, prices for natural gas first stabilized and then fell as the first quarter of 2023 progressed.

As natural gas prices decreased, certain nitrogen producers restarted previously idled production, leading to an increase in global nitrogen production operating rates.

The increased nitrogen product supply availability resulting from the increase in operating rates, in

CF INDUSTRIES HOLDINGS, INC.

addition to new global production coming on line and an increase in Russian imports into North America, resulted in lower average selling prices in the first quarter of 2023 compared to average selling prices realized in 2022.

Nitrogen Selling Prices

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In general, the prevailing global prices for nitrogen products must be at a level to incent the high cost marginal producer to produce product at a breakeven or above price, or else they would cease production and leave a portion of global demand unsatisfied.

In the third quarter of 2022, the average selling price for our products was $527 per ton, an increase of 46%, compared to $360 per ton in the third quarter of 2021, reflecting higher average selling prices across all our segments, which drove an increase in net sales of approximately $717 million for the third quarter of 2022 compared to the third quarter of 2021.

The increase in our average selling price was caused by a tighter global nitrogen supply and demand balance resulting from strong global demand as well as a decrease in global supply availability as higher global energy costs continued to drive lower global operating rates, and exacerbated by the geopolitical environment described above.

In the nine months ended September 30, 2022, the average selling price for our products was $619 per ton, or 109% higher compared to $296 per ton in the nine months ended September 30, 2021.

This resulted in an increase in net sales of approximately $4.43 billion for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

In the first quarter of 2023, the average selling price for our products was $444 per ton, a decrease of 28% compared to $620 per ton in the first quarter of 2022, reflecting lower average selling prices across all our segments, which drove a decrease in net sales of approximately $804 million for the first quarter of 2023 compared to the first quarter of 2022.

The decrease in average selling prices reflects the impact of an increase in global supply availability as lower global energy costs drove higher global operating rates.

In addition, higher average selling prices in 2022 were driven in part by the geopolitical environment experienced in 2022, as described above.

Natural gas is the principal raw material used to produce our nitrogen products.

Natural gas is both a chemical feedstock and a fuel used to produce nitrogen products.

Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 50% of our production costs in the first nine months of 2022 and 40% of our production costs in 2021.

Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 50% of our production costs in both the first three months of 2023 and in the year ended December 31, 2022.

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 (NBP), the major trading point for natural gas in the United Kingdom:

CF INDUSTRIES HOLDINGS, INC.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

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As a result, the price of natural gas in North America directly impacts a substantial portion of our operating expenses.

North American natural gas prices during the first nine months of 2022 were higher on average than the first nine months of 2021 due to tighter supply and demand conditions within the market.

Natural gas prices increased steadily through the first half of 2022 as demand growth from both power generation and liquefied natural gas (LNG) exports exceeded production increases.

Late in the second quarter of 2022, prices declined as the Freeport LNG facility outage reduced natural gas demand and allowed natural gas injections to refill storage at an accelerated pace.

Record high temperatures in the United States in the third quarter of 2022 and the limited substitution to coal generation due to high coal prices and available coal supply increased demand for natural gas in the electricity sector, raising natural gas prices to over $9.00 per MMBtu.

Natural gas prices decreased late in the third quarter of 2022 due to increasing production, cooler temperatures and above average storage injections.

For October 2022, the average daily market price of natural gas at the Henry Hub was $5.69 per MMBtu.

In the first quarter of 2021, the central portion of the United States experienced extreme and unprecedented cold weather due to the impact of Winter Storm Uri.

Certain natural gas suppliers and natural gas pipelines declared force majeure events due to frozen equipment.

This occurred at the same time as large increases in natural gas demand were occurring due to the cold temperatures.

Due to these unprecedented factors, several states declared a state of emergency, and natural gas was redirected for residential use.

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.

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.

North American natural gas prices were lower on average during the first three months of 2023 than during the first three months of 2022.

Warmer-than-normal temperatures in the first quarter of 2023 drove lower heating demand for natural gas, while North American supply remained strong, as there were few weather-related disruptions.

In addition, although the higher cost for natural gas outside of North America incentivized liquefaction facilities in the United States to export domestic natural gas during the first quarter of 2023, the ongoing outage at the Freeport LNG facility limited total gas exports, supporting domestic supply.

As a result, North American gas withdrawals from storage during the first quarter of 2023 were lower than normal, leading to end-of-quarter storage levels that were 32% higher than one year ago and 20% higher than the five-year average.

For the first three weeks of April 2023, the average daily market price of natural gas at the Henry Hub was $2.11 per MMBtu.

Our Billingham U.K.

nitrogen manufacturing facility is subject to fluctuations associated with the price of natural gas in Europe.

Russia’s invasion of Ukraine on February 24, 2022 disrupted European energy markets and threatened security of supply, driving natural gas prices in Europe upward to unprecedented levels.

During the second quarter of 2022, the price of natural gas in the United Kingdom declined as Russian natural gas flows via pipeline to Europe generally remained steady despite the ongoing war in Ukraine.

European natural gas prices began to increase late in the second quarter of 2022 after the unplanned outage of the Freeport LNG liquefaction terminal impacted global LNG supply.

In the third quarter of 2022, prices continued to increase when Russian natural gas pipeline flows to Europe via the Nord Stream 1 pipeline ceased.

Natural gas prices began to decrease late in the third quarter of 2022 as natural gas storage levels in continental Europe built to robust levels, although prices remained elevated compared to historical price levels.

For the nine months ended September 30, 2022, the daily closing price at the NBP reached a low of $1.23 per MMBtu on June 10, 2022 and a high of $67.08 per MMBtu on March 8, 2022.

For October 2022, the average daily market price of natural gas at the NBP was $11.68 per MMBtu.

In the third quarter of 2022, the cost of natural gas used for production, which includes the impact of realized natural gas derivatives, increased 98% to $8.35 per MMBtu from $4.21 per MMBtu in the third quarter of 2021.

This increase in natural gas costs resulted in a decrease in gross margin of approximately $358 million.

In the first nine months of 2022, the cost of natural gas used for production, which includes the impact of realized natural gas derivatives, increased 107% to $7.28 per MMBtu from $3.51 per MMBtu in the first nine months of 2021.

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.

This increase in natural gas costs for the first nine months of 2022 compared to the first nine months of 2021 resulted in a decrease in gross margin of approximately $981 million.

CF INDUSTRIES HOLDINGS, INC.

United Kingdom Operations

Starting in the third quarter of 2021 the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas, which impacted our U.K.

The energy crisis and the geopolitical environment, as discussed above, have continued to evolve since the third quarter of 2021.

As a result of these factors, management has taken certain actions relating to our U.K.

The table below summarizes the charges that have been recognized pertaining to our U.K.

operations since the third quarter of 2021, which are further described following the table.

Three Months Ended

September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 Total

(in millions)

goodwill impairment $ 259 $ 26 $ — $ — $ — $ 285

long-lived and intangible asset impairment 236 — — 152 87 $ 475

operations restructuring — — — 10 8 $ 18

Total $ 495 $ 26 $ — $ 162 $ 95 $ 778

2021 Impairment

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.

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.

Shortly thereafter, our Billingham facility resumed operations.

energy crisis necessitated evaluations in the third and fourth quarters of 2021 of the long-lived assets, including definite-lived intangible assets, and goodwill of our U.K.

operations to determine if their fair value had declined to below their carrying value.

These evaluations in 2021 resulted in total goodwill impairment charges of $285 million, of which $259 million was recorded in the third quarter of 2021, and total long-lived and intangible asset impairment charges of $236 million, which were recorded in the third quarter of 2021.

As of December 31, 2021, after the recognition of the goodwill impairment charges, no goodwill related to our U.K.

operations remained.

2022 Impairment and Restructuring

First quarter 2022 — During the first quarter of 2022, we concluded that the continued impacts of the U.K.

energy crisis, including higher natural gas prices due in part to the geopolitical environment described above, triggered an additional long-lived asset impairment test.

The results of this test indicated that no additional long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K.

asset groups.

Second quarter 2022 — In the second quarter of 2022, the long-term outlook deteriorated for nitrogen producers in regions that rely on LNG imports to satisfy natural gas demand.

As further described above, natural gas represents a substantial portion of the cost to produce nitrogen products.

Natural gas forward prices suggested that nitrogen facilities in the United Kingdom and mainland Europe would be the world’s high-cost marginal producers for the foreseeable future, presenting a constant challenge to the sustainability of our U.K.

In June 2022, due in large part to the nitrogen industry conditions described above, we approved and announced our proposed plan to restructure our U.K.

operations, including the permanent closure of our Ince facility and optimization of the remaining manufacturing operations at the Billingham facility.

As a result, in the second quarter of 2022, we recorded total charges of $162 million as follows:

• asset impairment charges of $152 million, which are included in the U.K.

long-lived and intangible asset impairment line item in our consolidated statement of operations, consisting of the following:

◦ an impairment charge of $135 million related to property, plant and equipment at the Ince facility that has been classified as held for abandonment, including a liability of approximately $9 million for the costs of certain asset retirement activities at the site;

◦ an intangible asset impairment charge of $8 million related to trade names;

◦ a charge of $9 million related to the write-down of spare parts and certain raw materials at the Ince facility;

Russia’s invasion of Ukraine in February 2022 disrupted European energy markets and threatened security of supply, driving natural gas prices in Europe upward to unprecedented levels.

During the first quarter of 2023, Europe benefited from warmer-than-normal temperatures along with increased LNG imports, which were used to fill local storage capacity, decreasing the risk of natural gas shortage.

This resulted in lower natural gas prices in the United Kingdom during the first quarter of 2023, despite lower European natural gas imports from Russia.

Throughout the first quarter of 2023, storage levels remained well above historical averages, putting the market in a strong position to refill stocks in preparation for the next winter season and contributing to lower prices.

For the three months ended March 31, 2023, the daily closing price at the NBP reached a low of $11.00 per MMBtu on March 21, 2023 and a high of $21.51 per MMBtu on two consecutive days in January 2023.

For the first three weeks of April 2023, the average daily market price of natural gas at the NBP was $12.84 per MMBtu.

In the first quarter of 2023, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, increased 2% to $6.62 per MMBtu from $6.48 per MMBtu in the first quarter of 2022.

This increase in natural gas costs resulted in a decrease in gross margin of approximately $28 million compared to the first quarter 2022.

The higher cost of

CF INDUSTRIES HOLDINGS, INC.

• a charge for post-employment benefits of $10 million, which is included in the U.K.

operations restructuring line item in our consolidated statements of operations, related to contractual and statutory obligations due to employees whose employment would be terminated in the proposed plan.

As a result of the proposed restructuring of our U.K.

operations, we concluded that an additional impairment test was triggered in the second quarter of 2022 for the asset groups that comprise the continuing U.K.

operations, consisting of U.K.

Ammonia, U.K.

The results of this long-lived asset impairment test indicated that no additional asset impairment should be recorded as the undiscounted estimated future cash flows for the continuing U.K.

operations were in excess of the carrying values for each of the U.K.

asset groups.

Third quarter 2022 — In the third quarter of 2022, the United Kingdom continued to experience extremely high and volatile natural gas prices.

Russian natural gas pipeline flows to Europe via the Nord Stream 1 pipeline ceased, causing the United Kingdom to experience unprecedented natural gas prices.

In addition, the European Union announced a desire to cap the price that Europe would pay Russia for natural gas deliveries, further contributing to the uncertainty in European energy markets.

Given these factors and the lack of a corresponding increase in global nitrogen product market prices, in September 2022, we temporarily idled ammonia production at our Billingham complex.

As a result, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K.

operations, which resulted in asset impairment charges of $87 million, primarily related to property, plant and equipment and definite-lived intangible assets, which are included in the U.K.

long-lived and intangible asset impairment line item in our consolidated statement of operations.

In August 2022, the final restructuring plan for our U.K.

operations was approved, and decommissioning activities were initiated.

As a result, in the third quarter of 2022, we incurred additional charges related to our U.K.

restructuring of $8 million, primarily related to one-time termination benefits, which are included in the U.K.

operations restructuring line item in our consolidated statement of operations.

The following table summarizes the total impact of these factors for the three and nine months ending September 30, 2022 and 2021.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

2021 2022 2021 2022 v.

(in millions)

goodwill impairment $ — $ 259 $ (259) (100) % $ — $ 259 $ (259) (100) %

long-lived and intangible asset impairment 87 236 (149) (63) % 239 236 3 1 %

operations restructuring 8 — 8 N/M 18 — 18 N/M

Total $ 95 $ 495 $ (400) (81) % $ 257 $ 495 $ (238) (48) %

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N/M—Not Meaningful

We are working with customers, vendors, regulators and others to finalize closure plans of our Ince complex, and we expect substantially all of these restructuring activities will be completed within the next twelve months.

The results of our U.K.

operations are included in our Ammonia, AN and Other segments, and account for a small portion of our consolidated gross margin.

For the nine months ended September 30, 2022, gross margin generated by our U.K.

operations represented approximately 3% of our consolidated gross margin.

For the year ended December 31, 2021, our U.K.

operations generated negative gross margin representing approximately 1% of our consolidated gross margin.

natural gas reflects the impact of losses realized on natural gas derivatives that settled during the first quarter of 2023.

In 2022, in response to high North American natural gas prices and continued price volatility, we entered into certain natural gas derivatives in order to reduce our exposure to further natural gas price volatility in the winter of 2022/2023.

Financial Executive Summary

We reported net earnings attributable to common stockholders of $438 million for the three months ended September 30, 2022 compared to a net loss attributable to common stockholders of $185 million for the three months ended September 30, 2021, an increase in net earnings of $623 million.

The loss of $185 million in the three months ended September 30, 2021, was due primarily to impairment charges related to our U.K.

operations of $495 million that are more fully described above under “Market Conditions and Current Developments—United Kingdom Operations.” The three months ended September 30, 2022 also includes impairment and restructuring charges of $95 million pertaining to our U.K.

The increase in net earnings for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 reflects an increase of $476 million in gross margin to $916 million for the three months ended September 30, 2022.

The increase in gross margin was due primarily to higher average selling prices and higher sales volumes, partially offset by higher natural gas prices.

Diluted net earnings per share attributable to common stockholders increased $3.04 per share, to $2.18 per share, in the third quarter of 2022 compared to a loss of $0.86 per share in the third quarter of 2021.

CF INDUSTRIES HOLDINGS, INC.

Average selling prices increased 46% to $527 per ton in the third quarter of 2022 from $360 per ton in the third quarter of 2021, which increased gross margin by $717 million.

Our total sales volume of 4.4 million product tons in the third quarter of 2022 was 16% higher compared to 3.8 million product tons in the third quarter of 2021, which increased gross margin by $165 million.

The impact of higher average selling prices and higher sales volume was partially offset by an increase in natural gas costs.

The cost of natural gas used for production increased 98% to $8.35 per MMBtu in the third quarter of 2022 from $4.21 per MMBtu in the third quarter of 2021, which reduced gross margin by $358 million.

Partially offsetting the increase in gross margin was an increase in the income tax provision due primarily to increased profitability.

We reported net earnings attributable to common stockholders of $560 million for the three months ended March 31, 2023 compared to $883 million for the three months ended March 31, 2022, a decrease in net earnings of $323 million.

The decrease in net earnings for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 reflects a decrease of $835 million in gross margin to $863 million for the three months ended March 31, 2023.

The decrease in gross margin was due primarily to a decrease of 28% in average selling prices to $444 per ton in the first quarter of 2023 from $620 per ton in the first quarter of 2022, which decreased gross margin by $804 million.

Lower gross margin was partially offset by a decrease in interest expense of $201 million due primarily to interest expense on tax liabilities related to Canadian-U.S.

transfer pricing matters in the first quarter of 2022 that did not recur in 2023 and a decrease in the income tax provision of $232 million due primarily to lower earnings in the first quarter of 2023.

Diluted net earnings per share attributable to common stockholders decreased $1.36 per share, to $2.85 per share, in the first quarter of 2023 compared to $4.21 per share in the first quarter of 2022 due primarily to lower net earnings, partially offset by lower weighted-average common shares outstanding as a result of shares repurchased under our share repurchase program.

Items Affecting Comparability of Results

For the three months ended September 30, 2022, we reported net earnings attributable to common stockholders of $438 million compared to a net loss attributable to common stockholders of $185 million for the three months ended September 30, 2021.

For the nine months ended September 30, 2022 and 2021, we reported net earnings attributable to common stockholders of $2.49 billion and $212 million, respectively.

In addition to the impact of market conditions discussed above, certain items impacted the comparability of our financial results for the three and nine months ended September 30, 2022 and 2021.

The following table and related discussion outline these items that impacted the comparability of our financial results for these periods.

For the three months ended March 31, 2023 and 2022, we reported net earnings attributable to common stockholders of $560 million and $883 million, respectively.

In addition to the impact of market conditions discussed above, certain items affected the comparability of our financial results for the three months ended March 31, 2023 and 2022.

The following table and related discussion outline these items and their impact on the comparability of our financial results for these periods.

The descriptions of items below that refer to amounts in the table refer to the pre-tax amounts unless otherwise noted.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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

Three Months Ended March 31,

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

(in millions)

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

$ 11 $ 7 $ (12) $ (9) $ (39) $ (31) $ (18) $ (14)

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

27 21 2 1 38 29 5 4

goodwill impairment (3)

— — 259 219 — — 259 219

long-lived and intangible asset impairment (3)

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

$ (72) $ (55) $ (33) $ (25)

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

operations restructuring 2 2 — —

Pension settlement loss (4)

24 18 — — 24 18 — —

Transaction costs related to acquisition agreement 13 10 — —

Canada Revenue Agency Competent Authority Matter and transfer pricing positions:

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______________________________________________________________________________

Loss on debt extinguishment — — 13 10 8 6 19 15

______________________________________________________________________________

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

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

(3) The after-tax impact of goodwill impairment and long-lived and intangible asset impairment charges reflects the amount of income tax benefit recognized in accordance with guidance on accounting for income taxes in interim reporting periods.

(4) Included in other non-operating—net in our consolidated statements of operations.

(5) For the three months ended September 30, 2022, the after-tax income tax provision amount of $2 million reflects the $3 million of income tax provision referenced below under “Transfer pricing positions,” net of $1 million of income tax provision that is reflected in the after-tax interest income amount shown in this table.

For the nine months ended September 30, 2022, the after-tax income tax provision amount of $54 million reflects an income tax provision of $62 million, consisting of the $78 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $16 million of income tax benefit referenced below under “Transfer pricing positions,” net of $8 million of income tax provision that is reflected in the after-tax interest expense and interest income amounts shown in this table.

CF INDUSTRIES HOLDINGS, INC.

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

(3) For the three months ended March 31, 2022, the after-tax income tax provision amount of $72 million reflects an income tax provision of $78 million, consisting of the $76 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $2 million of income tax provision referenced below under “Transfer pricing positions,” net of $6 million of income tax provision that is reflected in the after-tax interest expense and interest income amounts shown in this table.

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

Natural gas is the largest and most volatile single component of the manufacturing cost for our nitrogen-based products.

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

In the three months ended September 30, 2022 and 2021, we recognized an unrealized net mark-to-market loss of $11 million and a gain of $12 million, respectively.

In the nine months ended September 30, 2022 and 2021, we recognized unrealized net mark-to-market gains of $39 million and $18 million, respectively.

Loss on foreign currency transactions, including intercompany loans

In the three months ended September 30, 2022 and 2021, we recognized losses on foreign currency transactions of $27 million and $2 million, respectively.

In the nine months ended September 30, 2022 and 2021, we recognized losses on foreign currency transactions of $38 million and $5 million, respectively.

Loss on foreign currency transactions 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.

In the three and nine months ended September 30, 2022, we recognized total charges related to our U.K.

operations of $95 million and $257 million, respectively, consisting primarily of asset impairment charges related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets.

See “Market Conditions and Current Developments—United Kingdom Operations,” above, for further discussion.

In the third quarter of 2021, we recognized impairment charges of $495 million, including a goodwill impairment charge of $259 million and long-lived and intangible asset impairment charges of $236 million.

See Note 5—United Kingdom Operations Restructuring and Impairment Charges, Note 6—Property, Plant and Equipment—Net and Note 7—Goodwill and Other Intangible Assets for further information.

Pension settlement loss

On July 15, 2022, we entered into an agreement with an insurance company to purchase a non-participating group annuity contract and transfer approximately $375 million of our primary U.S.

defined benefit pension plan’s projected benefit obligation, subject to customary closing conditions.

The transaction closed on July 22, 2022 and was funded with plan assets.

Under the transaction, the insurance company assumed responsibility for pension benefits and annuity administration for approximately 4,000 retirees or their beneficiaries.

As a result of this transaction, in the third quarter of 2022, we remeasured the plan's projected benefit obligation and plan assets, and we recognized a non-cash pre-tax pension settlement loss of $24 million, reflecting the unamortized net unrecognized postretirement benefit costs related to the settled obligations, with a corresponding offset to accumulated other comprehensive loss.

In the three months ended March 31, 2023 and 2022, we recognized unrealized net mark-to-market gains of $72 million and $33 million, respectively.

CF INDUSTRIES HOLDINGS, INC.

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

In the three months ended March 31, 2023 and 2022, we recognized a (gain) loss on foreign currency transactions of $(1) million and $6 million, respectively.

Gains and losses on foreign currency transactions 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.

operations restructuring

In the three months ended March 31, 2023, we incurred restructuring costs of $2 million related to the permanent closure of our Ince facility.

Transaction costs related to acquisition agreement

On March 20, 2023, we entered into an asset purchase agreement with DNLA and IPL to acquire DNLA’s ammonia production complex located in Waggaman, Louisiana, as described above under “Agreement to Purchase Ammonia Production Facility.” In the three months ended March 31, 2023, we incurred $13 million of transaction costs related to the acquisition agreement.

Canada Revenue Agency Competent Authority Matter

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We filed Notices of Objection with respect to the Notices of Reassessment with the CRA and Alberta TRA and posted letters of credit in lieu of paying the additional tax liability assessed.

The letters of credit serve as security until the matter is resolved.

The letters of credit served as security until the matter was resolved.

In 2018, the matter, including the related transfer pricing topic regarding the allocation of profits between Canada and the United States, was accepted for consideration under the bilateral settlement provisions of the U.S.-Canada tax treaty (the Treaty) by the United States and Canadian competent authorities, and included tax years 2006 through 2011.

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In March 2022, we received further details of the results of the arbitration proceedings and the settlement provisions between the United States and Canadian competent authorities, and we accepted the decision of the arbitration panel.

Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 is subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years of approximately $129 million, based on current estimates.

In the third quarter of 2022, $81 million of this tax liability and $66 million of related interest was assessed and paid.

As a result, the letters

CF INDUSTRIES HOLDINGS, INC.

of credit we had posted in lieu of paying the additional tax liability assessed by the Notices of Reassessment were cancelled.

We expect the remaining tax liability and related interest will be assessed and paid in the fourth quarter of 2022.

Due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, the Company will then file amended tax returns in the United States to request a refund of tax overpaid.

In the nine months ended September 30, 2022, as a result of the impact of these events on our Canadian and U.S.

federal and state income taxes, we recognized an income tax provision of $78 million, reflecting the net impact of $129 million of accrued income taxes payable to Canada for tax years 2006 to 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $103 million, primarily reflecting the impact of estimated interest payable to Canada.

Of the $78 million of income tax provision and $103 million of net interest expense recognized in the nine months ended September 30, 2022, a reduction of $1 million of net interest expense was recognized in the three months ended September 30, 2022.

Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 was subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years.

See Note 8—Income Taxes for additional information.

In the three months ended March 31, 2022, as a result of the impact of these events on our Canadian and U.S.

federal and state income taxes, we recognized an income tax provision of $76 million, reflecting the net impact of $127 million of accrued income taxes payable to Canada for tax years 2006 through 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $99 million, primarily reflecting the impact of estimated interest payable to Canada.

Transfer pricing positions

As a result of the outcome of the arbitration decision discussed above, we also evaluated our transfer pricing positions between Canada and the United States for open years 2012 and after.

Based on this evaluation, we recorded the following in the nine months ended September 30, 2022:

In the first quarter of 2022, as a result of the outcome of the arbitration decision discussed above, we also evaluated our transfer pricing positions between Canada and the United States for open years 2012 and after.

Based on this evaluation, we recorded the following:

• liabilities for unrecognized tax benefits of $319 million, with a corresponding income tax provision, and accrued interest of $91 million related to the liabilities for unrecognized tax benefits, and

• noncurrent income tax receivables of $329 million, with a corresponding income tax benefit, and accrued interest income of $28 million related to the noncurrent income tax receivables.

In the nine months ended September 30, 2022, the impact of these evaluations of transfer pricing positions on our consolidated statement of operations, including $29 million of net deferred income tax provision for other transfer pricing tax effects, was $16 million of income tax benefit and $90 million of net interest expense before tax ($98 million after tax).

Of the $16 million of income tax benefit and $90 million of net interest expense recognized in the nine months ended September 30, 2022, $3 million of income tax provision and $4 million of net interest expense ($5 million after tax) was recognized in the three months ended September 30, 2022.

Loss on debt extinguishment

On April 21, 2022, we redeemed in full all of the $500 million outstanding principal amount of the 3.450% senior notes due June 2023 (the 2023 Notes) in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes was $513 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $8 million, consisting primarily of the premium paid on the redemption of the $500 million principal amount of the 2023 Notes prior to their scheduled maturity.

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.

The total aggregate redemption price paid on the 2023 Notes was approximately $265 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $13 million in the third quarter of 2021, consisting primarily of a premium paid on the redemption of the $250 million principal amount of the 2023 Notes prior to their scheduled maturity.

On March 20, 2021, we redeemed in full all of the $250 million outstanding principal amount of the 3.400% senior secured notes due December 2021 (the 2021 Notes) in accordance with the optional redemption provisions in the indenture governing the 2021 Notes.

The total aggregate redemption price paid in connection with the redemption of the 2021 Notes was $258 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $6 million, consisting primarily of the premium paid on the redemption of the $250 million principal amount of the 2021 Notes prior to their scheduled maturity.

In the three months ended March 31, 2022, the impact of this evaluation of transfer pricing positions on our consolidated statement of operations, including a $12 million deferred income tax provision for other transfer pricing tax effects, was a $2 million income tax provision and $63 million of net interest expense before tax ($69 million after tax).

CF INDUSTRIES HOLDINGS, INC.

1 unchanged sentence

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

5 unchanged sentences

Selling, general and administrative expenses 74 64 10 16 %

goodwill impairment — 259 (259) (100) % — 259 (259) (100) %

long-lived and intangible asset impairment 87 236 (149) (63) % 239 236 3 1 %

operations restructuring 8 — 8 N/M 18 — 18 N/M

Other operating—net 25 5 20 400 % 33 7 26 371 %

operations restructuring 2 — 2 N/M

Transaction costs 13 — 13 N/M

Other operating—net (35) 2 (37) N/M

Total other operating costs and expenses 54 66 (12) (18) %

Equity in earnings of operating affiliate 17 26 (9) (35) %

Operating earnings (loss) 750 (97) 847 N/M 4,186 600 3,586 N/M

Operating earnings 826 1,658 (832) (50) %

Interest expense—net 10 205 (195) (95) %

Loss on debt extinguishment — 13 (13) (100) % 8 19 (11) (58) %

Other non-operating—net 23 (19) 42 N/M 24 (17) 41 N/M

Earnings (loss) before income taxes 693 (137) 830 N/M 3,841 458 3,383 N/M

Income tax provision (benefit) 155 (46) 201 N/M 913 57 856 N/M

Net earnings (loss) 538 (91) 629 N/M 2,928 401 2,527 N/M

Other non-operating—net (3) 1 (4) N/M

Earnings before income taxes 819 1,452 (633) (44) %

Income tax provision 169 401 (232) (58) %

Net earnings 650 1,051 (401) (38) %

Net earnings attributable to noncontrolling interest 90 168 (78) (46) %

Net earnings (loss) attributable to common stockholders $ 438 $ (185) $ 623 N/M $ 2,486 $ 212 $ 2,274 N/M

Diluted net earnings (loss) per share attributable to common stockholders

$ 2.18 $ (0.86) $ 3.04 N/M $ 12.04 $ 0.98 $ 11.06 N/M

Net earnings attributable to common stockholders $ 560 $ 883 $ (323) (37) %

Diluted net earnings per share attributable to common stockholders

$ 2.85 $ 4.21 $ (1.36) (32) %

Diluted weighted-average common shares outstanding

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Natural gas supplemental data (per MMBtu)

Cost of natural gas used for production in cost of sales (1)

Natural gas costs in cost of sales (1)

$ 5.14 $ 6.70 $ (1.56) (23) %

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

1.48 (0.22) 1.70 N/M

Cost of natural gas used for production in cost of sales $ 6.62 $ 6.48 $ 0.14 2 %

Average daily market price of natural gas Henry Hub (Louisiana) $ 2.68 $ 4.60 $ (1.92) (42) %

Average daily market price of natural gas National Balancing Point (United Kingdom) $ 16.20 $ 30.20 $ (14.00) (46) %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 11 $ (12) $ 23 N/M $ (39) $ (18) $ (21) (117) %

Unrealized net mark-to-market gain on natural gas derivatives $ (72) $ (33) $ (39) (118) %

Depreciation and amortization $ 206 $ 208 $ (2) (1) %

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N/M—Not Meaningful

CF INDUSTRIES HOLDINGS, INC.

(1) Includes the cost of natural gas used for production and related transportation that is included in cost of sales during the period under the first-in, first-out inventory cost method.

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Excludes unrealized mark-to-market gains and losses on natural gas derivatives.

For the nine months ended September 30, 2021, excludes the $112 million gain on net settlement of certain natural gas contracts with our suppliers due to Winter Storm Uri.

(3) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.

Third Quarter of 2022 Compared to Third Quarter of 2021

Our total net sales increased $959 million or 70%, to $2.32 billion in the third quarter of 2022 compared to $1.36 billion in the third quarter of 2021 due to an increase in average selling prices and an increase in sales volume.

Our average selling price was $527 per ton in the third quarter of 2022, or 46% higher, compared to $360 per ton in the third quarter of 2021 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 and geopolitical events drove lower global operating rates.

See “Market Conditions and Current Developments—Geopolitical Environment,” above, for further discussion.

Our total sales volume of 4.4 million product tons in the third quarter of 2022 was 16% higher compared to 3.8 million product tons in the third quarter of 2021, as higher sales volume in our Granular Urea and UAN segments was partially offset by lower sales volume in our Other, Ammonia and AN segments.

Cost of Sales

Our total cost of sales increased $483 million, or 52%, to $1.41 billion in the third quarter of 2022 from $922 million in the third quarter of 2021.

The increase in our cost of sales was due primarily to higher costs for natural gas, which increased cost of sales by $358 million, and an increase in sales volume of 16% that increased cost of sales by $77 million.

Cost of sales also includes the impact of a $11 million unrealized net mark-to-market loss on natural gas derivatives in the third quarter of 2022 compared to a $12 million gain in the third quarter of 2021.

Cost of sales averaged $319 per ton in the third quarter of 2022, a 31% increase from $244 per ton in the third quarter of 2021.

The cost of natural gas used for production, including the impact of realized derivatives, increased 98% to $8.35 per MMBtu in the third quarter of 2022 from $4.21 per MMBtu in the third quarter of 2021.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $14 million to $66 million in the third quarter of 2022 as compared to $52 million in the third quarter of 2021.

The increase was due primarily to higher costs associated with corporate initiatives, including costs related to the development of a new enterprise resource planning system (ERP) for our North American operations and higher incentive compensation costs.

In the three months ended September 30, 2022, we recognized total charges related to our U.K.

operations of $95 million, consisting of $87 million of asset impairment charges primarily related to property, plant and equipment at our Billingham facility and definite-lived intangible assets and $8 million of restructuring charges primarily related to one-time termination benefits.

In the three months ended September 30, 2021, we recognized total charges related to our U.K.

operations of $495 million, consisting of goodwill impairment of $259 million and long-lived and intangible asset impairment charges of $236 million.

See “Market Conditions and Current Developments—United Kingdom Operations,” above;

Note 5—United Kingdom Operations Restructuring and Impairment Charges;

Note 6—Property, Plant and Equipment—Net;

and Note 7—Goodwill and Other Intangible Assets for further information.

Other Operating—Net

Other operating—net was $25 million of expense in the third quarter of 2022 compared to $5 million of expense in the third quarter of 2021.

The $25 million of expense in the third quarter of 2022 includes a loss on foreign currency transactions of $27 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.

CF INDUSTRIES HOLDINGS, INC.

Equity in Earnings of Operating Affiliate

Equity in earnings of operating affiliate was $20 million in the third quarter of 2022 compared to $15 million in the third quarter of 2021.

The increase in the third quarter of 2022 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

Net interest expense was $34 million in the third quarter of 2022 compared to $46 million in the third quarter of 2021.

The net decrease of $12 million was due primarily to higher interest income on investments and lower interest expense on borrowings due to the redemption of $500 million principal amount of the 2023 Notes in April 2022 prior to their scheduled maturity.

Loss on Debt Extinguishment

The total aggregate redemption price paid on the 2023 Notes was approximately $265 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $13 million, consisting primarily of a premium paid on the redemption of the $250 million principal amount of the 2023 Notes prior to their scheduled maturity.

Other Non-Operating—Net

Other non-operating—net was $23 million of expense in the third quarter of 2022 compared to $19 million of income in the third quarter of 2021.

The $23 million of expense in the third quarter of 2022 was due primarily to a pension settlement loss of $24 million related to the purchase of a non-participating group annuity contract to settle retiree obligations under our primary U.S.

defined benefit pension plan, which is more fully described under “Items Affecting Comparability of Results—Pension settlement loss,” above.

The $19 million of income in the third quarter of 2021 was due primarily to a gain of $20 million on the sale of EU carbon credits that, due to the exit of the United Kingdom from the EU (Brexit), could no longer be utilized by our U.K.

plants for carbon emission obligations in the United Kingdom.

For the three months ended September 30, 2022, we recorded an income tax provision of $155 million on pre-tax income of $693 million, or an effective tax rate of 22.3%, compared to an income tax benefit of $46 million on a pre-tax loss of $137 million, or an effective tax rate of 34.3%, for the three months ended September 30, 2021.

For the three months ended September 30, 2022, our income tax provision includes $18 million of income tax expense to record a valuation allowance in the United Kingdom due to the uncertainty surrounding the realization of the deferred tax assets as a result of the impairment described in Note 5—United Kingdom Operations Restructuring and Impairment Charges.

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

Our effective tax rate for the three months ended September 30, 2022 of 22.3%, which is based on pre-tax income of $693 million, including $100 million of earnings attributable to the noncontrolling interest, would be 3.7 percentage points higher, or 26.0%, if based on pre-tax income exclusive of the $100 million of earnings attributable to the noncontrolling interest.

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 income exclusive of the $94 million of earnings attributable to the noncontrolling interest.

See Note 10—Income Taxes and Note 15—Noncontrolling Interest for additional information.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest increased $6 million to $100 million in the third quarter of 2022 as compared to $94 million in the third quarter of 2021 due to higher earnings of CFN driven by higher average selling prices as described above under “Net Sales.”

Diluted Net Earnings (Loss) Per Share Attributable to Common Stockholders

Net earnings per share attributable to common stockholders increased $3.04 to $2.18 per diluted share in the third quarter of 2022 from a net loss of $0.86 per diluted share in the third quarter of 2021.

This increase was due primarily to an increase in

CF INDUSTRIES HOLDINGS, INC.

gross margin, driven by higher average selling prices and higher sales volume, and a decrease in charges related to our U.K.

These increases were partially offset by higher natural gas costs and an increase in the income tax provision due primarily to increased profitability.

Additionally, net earnings per diluted share increased due to a 7% reduction in the diluted weighted-average common shares outstanding, which declined from 214.9 million shares for the three months ended September 30, 2021 to 200.9 million shares for the three months ended September 30, 2022, due primarily to repurchases of common shares under our share repurchase programs.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Our total net sales increased $4.58 billion, or 115%, to $8.58 billion in the first nine months of 2022 as compared to $4.00 billion in the first nine months of 2021 due primarily to an increase in average selling prices and an increase in sales volume.

Average selling prices were $619 per ton in the first nine months of 2022, or 109% higher compared to $296 per ton in the first nine months of 2021, 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 and geopolitical events drove lower global operating rates.

See “Market Conditions and Current Developments—Geopolitical Environment,” above, for further discussion.

Our total sales volume of 13.9 million product tons in the first nine months of 2022 was 3% higher compared to 13.5 million product tons in the first nine months of 2021 as a result of higher sales volume in our UAN and Granular Urea segments partially offset by lower sales volume in our Other, AN and Ammonia segments.

First Quarter of 2023 Compared to First Quarter of 2022

Our total net sales decreased $856 million, or 30%, to $2.01 billion in the first quarter of 2023 compared to $2.87 billion in the first quarter of 2022 due to decreases in average selling prices and sales volume.

Our average selling price was $444 per ton in the first quarter of 2023, or 28% lower compared to $620 per ton in the first quarter of 2022, due to lower average selling prices across all of our segments, primarily driven by an increase in global supply availability as lower global energy costs drove higher global operating rates.

Our total sales volume of 4.5 million product tons in the first quarter of 2023 was 2% lower compared to 4.6 million product tons in the first quarter of 2022, as lower sales volume in our UAN, Ammonia, AN and Other segments was partially offset by higher sales volume in our Granular Urea segment.

Cost of Sales

Our total cost of sales increased approximately $1.21 billion, or 44%, to $3.97 billion in the first nine months of 2022 as compared to $2.77 billion in the first nine months of 2021.

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 $981 million, and higher costs for ammonia purchased from PLNL, our joint venture in Trinidad.

In addition, in the first nine months of 2021, cost of sales includes a gain of $112 million on the net settlement of certain natural gas contracts with our suppliers as a result of Winter Storm Uri.

Cost of sales also includes the impact of a $39 million unrealized net mark-to-market gain on natural gas derivatives in the first nine months of 2022 compared to a $18 million gain in the first nine months of 2021.

Cost of sales averaged $287 per ton in the first nine months of 2022, a 40% increase from $205 per ton in the first nine months of 2021.

The cost of natural gas used for production, including the impact of realized derivatives, increased 107% to $7.28 per MMBtu in the first nine months of 2022 from $3.51 per MMBtu in the first nine months of 2021.

Our total cost of sales decreased $21 million, or 2%, to $1.15 billion in the first quarter of 2023 from $1.17 billion in the first quarter of 2022.

The decrease in our cost of sales was due primarily to a decrease in sales volume of 2%, which decreased cost of sales by $30 million, and lower costs for ammonia purchased from PLNL, our joint venture in Trinidad.

The factors that decreased cost of sales were partially offset by higher costs for natural gas, including the impact of realized derivatives, which increased cost of sales by $28 million, and higher costs for imported ammonia for our operations in the United Kingdom.

Higher costs for natural gas were due primarily to losses on natural gas derivatives settled in the first quarter of 2023, partially offset by lower costs for natural gas in the United Kingdom as we imported ammonia for upgrading to AN.

Cost of sales also includes the impact of a $72 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2023 compared to a $33 million gain in the first quarter of 2022.

Cost of sales averaged $254 per ton in the first quarter of 2023 compared to $253 per ton in the first quarter of 2022.

The cost of natural gas used for production includes the impact of natural gas derivatives used to reduce the volatility of natural gas prices.

The cost of natural gas increased 2% to $6.62 per MMBtu in the first quarter of 2023 from $6.48 per MMBtu in the first quarter of 2022.

The higher cost of natural gas reflects the impact of losses realized on natural gas derivatives that settled during the first quarter of 2023.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $36 million to $203 million in the first nine months of 2022 as compared to $167 million in the first nine months of 2021.

The increase was due primarily to higher costs associated with certain corporate initiatives, including costs related to the development of a new enterprise resource planning system (ERP) for our North American operations and higher incentive compensation costs.

In the nine months ended September 30, 2022, we recognized total charges related to our U.K.

operations of $257 million, consisting of $239 million of asset impairment charges primarily related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets and $18 million of restructuring charges primarily related to post-employment benefits related to contractual and statutory obligations and one-time termination benefits.

In the nine months ended September 30, 2021, we recognized total charges related to our U.K.

operations of $495 million, consisting of goodwill impairment of $259 million and long-lived and intangible asset impairment charges of $236 million.

See “Market Conditions and Current Developments—United Kingdom Operations,” above;

Note 5—United Kingdom Operations Restructuring and Impairment Charges;

Note 6—Property, Plant and Equipment—Net;

and Note 7—Goodwill and Other Intangible Assets for further information.

CF INDUSTRIES HOLDINGS, INC.

Selling, general and administrative expenses increased $10 million to $74 million in the first quarter of 2023 as compared to $64 million in the first quarter of 2022.

The increase was due primarily to higher costs related to certain corporate initiatives, including amortization of our recently implemented enterprise resource planning (ERP) system, and higher salaries and incentive compensation.

Transaction Costs

Other Operating—Net

Other operating—net was $33 million of expense in the first nine months of 2022 compared to $7 million of expense in the first nine months of 2021.

The $33 million of expense in the first nine months of 2022 includes a loss on foreign currency transactions of $38 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.

Other operating—net was $35 million of income in the first quarter of 2023 compared to $2 million of expense in the first quarter of 2022.

The $35 million of income in the first quarter of 2023 consists primarily of a gain on sales of emission credits.

Equity in Earnings of Operating Affiliate

Equity in earnings of operating affiliate was $74 million in the first nine months of 2022 compared to $37 million in the first nine months of 2021.

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

Net interest expense increased by $173 million to $313 million in the first nine months of 2022 compared to $140 million in the first nine months of 2021.

The increase was due primarily to $193 million of net interest expense recorded in the first nine months of 2022 related to income tax matters, which are more fully described under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter” and “Items Affecting Comparability of Results—Transfer pricing positions,” above.

This increase was partially offset by a $15 million decrease in interest on borrowings due to the redemption of senior notes in April 2022, September 2021 and March 2021.

Loss on Debt Extinguishment

On April 21, 2022, we redeemed in full all of the $500 million outstanding principal amount of the 2023 Notes in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes was $513 million, including accrued interest.

The total aggregate redemption price paid on the 2023 Notes was approximately $265 million, including accrued interest.

On March 20, 2021, we redeemed in full all of the $250 million outstanding principal amount of the 2021 Notes in accordance with the optional redemption provisions in the indenture governing the 2021 Notes.

The total aggregate redemption price paid on the 2021 Notes in connection with the redemption was $258 million, including accrued interest.

Other Non-Operating—Net

Other non-operating—net was $24 million of expense in the first nine months of 2022 compared to $17 million of income in the first nine months of 2021.

The $24 million of expense in the first nine months of 2022 was due primarily to a pension settlement loss of $24 million related to the purchase of a non-participating group annuity contract to settle retiree obligations under our primary U.S.

defined benefit pension plan, which is more fully described under “Items Affecting Comparability of Results—Pension settlement loss,” above.

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.

plants for carbon emission obligations in the United Kingdom.

For the nine months ended September 30, 2022, we recorded an income tax provision of $913 million on pre-tax income of $3.84 billion, or an effective tax rate of 23.8%, compared to an income tax provision of $57 million on pre-tax income of $458 million, or an effective tax rate of 12.3%, for the nine months ended September 30, 2021.

For the nine months ended September 30, 2022, our income tax provision includes $18 million of income tax expense to record a valuation allowance in the United Kingdom, $22 million of income tax benefit for the excess tax benefit related to

Equity in earnings of operating affiliate was $17 million in the first quarter of 2023 compared to $26 million in the first quarter of 2022.

The decrease was due primarily to a decrease in the operating results of PLNL as a result of lower ammonia selling prices, partially offset by lower natural gas costs.

CF INDUSTRIES HOLDINGS, INC.

certain share-based compensation activity and $78 million of income tax provision related to the Canada Revenue Agency Competent Authority Matter, which is further described above under “Items Affecting Comparability of Results.

For the nine months ended September 30, 2021, we did not record an income tax benefit related to the goodwill impairment described in Note 5—United Kingdom Operations Restructuring and Impairment Charges, above, as the impairment is non-deductible for income tax purposes.

In addition, our income tax provision includes a $36 million benefit reflecting the impact of agreement on certain issues related to U.S.

federal income tax audits.

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

Our effective tax rate for the nine months ended September 30, 2022 of 23.8%, which is based on pre-tax income of $3.84 billion, including $442 million of earnings attributable to the noncontrolling interest, would be 3.1 percentage points higher, or 26.9%, if based on pre-tax income exclusive of the $442 million of earnings attributable to the noncontrolling interest.

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.

See Note 10—Income Taxes and Note 15—Noncontrolling Interest for additional information.

Interest Expense—Net

Net interest expense was $10 million in the first quarter of 2023 compared to $205 million in the first quarter of 2022.

The decrease of $195 million was due primarily to $162 million of net interest expense recorded in the first quarter of 2022 related to income tax matters, which are described under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter” and “Items Affecting Comparability of Results—Transfer pricing positions,” above.

In addition, the decrease in net interest expense was due to higher interest income on investments and lower interest expense on borrowings due to the redemption of $500 million principal amount of 3.450% senior notes due June 2023 in April 2022 prior to their scheduled maturity.

For the three months ended March 31, 2023, we recorded an income tax provision of $169 million on pre-tax income of $819 million, or an effective tax rate of 20.6%, compared to an income tax provision of $401 million on a pre-tax income of $1.45 billion, or an effective tax rate of 27.6%, for the three months ended March 31, 2022.

Our effective tax rate for the three months ended March 31, 2023 of 20.6%, which is based on pre-tax income of $819 million, including $90 million of earnings attributable to the noncontrolling interest, would be 2.6 percentage points higher, or 23.2%, if based on pre-tax income exclusive of the $90 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended March 31, 2022 of 27.6%, which is based on pre-tax income of $1.45 billion, including $168 million of earnings attributable to the noncontrolling interest, would be 3.7 percentage points higher, or 31.3%, if based on pre-tax income exclusive of the $168 million of earnings attributable to the noncontrolling interest.

See Note 12—Noncontrolling Interest for additional information.

In addition, for the three months ended March 31, 2022, our income tax provision includes $20 million of income tax benefit due to share-based compensation activity and $78 million of income tax provision related to the Canada Revenue Agency Competent Authority Matter and certain transfer pricing reserves recorded in the period, which are described above under “Items Affecting Comparability of Results.”

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest increased 134% to $442 million in the first nine months of 2022 from $189 million in the first nine months of 2021 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.

Net earnings attributable to noncontrolling interest decreased $78 million to $90 million in the first quarter of 2023 compared to $168 million in the first quarter of 2022 due to lower earnings of CFN driven by lower average selling prices as described above under “Net Sales.”

Diluted Net Earnings Per Share Attributable to Common Stockholders

Net earnings per share attributable to common stockholders increased $11.06 per diluted share to $12.04 per diluted share in the first nine months of 2022 from $0.98 per diluted share in the first nine months of 2021.

This increase is due primarily to an increase in gross margin, driven by higher average selling prices and higher sales volume, and a decrease in charges related to our U.K.

These factors that increased net earnings were partially offset by higher natural gas costs, an increase in the income tax provision due primarily to increased profitability, and an increase in net earnings attributable to noncontrolling interest.

Additionally, net earnings per diluted share increased due to a 5% reduction in the diluted weighted-average common shares outstanding, which declined from 216.4 million shares for the nine months ended September 30, 2021 to 206.5 million shares for the nine months ended September 30, 2022, due primarily to repurchases of common shares under our share repurchase programs.

Net earnings per share attributable to common stockholders decreased $1.36 to $2.85 per diluted share in the first quarter of 2023 from $4.21 per diluted share in the first quarter of 2022.

This decrease was due primarily to a decrease in gross margin, driven by lower average selling prices.

Lower gross margin was partially offset by a decrease in interest expense due primarily to interest expense on tax liabilities in the first quarter of 2022 related to Canadian-U.S.

transfer pricing matters and a decrease in the income tax provision resulting from lower profitability.

Additionally, diluted weighted-average common shares outstanding declined 6% from 209.9 million shares for the three months ended March 31, 2022 to 196.9 million shares for the three months ended March 31, 2023, due primarily to repurchases of common shares under our share repurchase program.

CF INDUSTRIES HOLDINGS, INC.

4 unchanged sentences

Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes), are centrally managed and are not included in the measurement of segment profitability reviewed by management.

The following tables present summary operating results by business segment:

Granular Urea (2)

The following table presents summary operating results by business segment:

Ammonia Granular Urea (1)

(in millions)

Three months ended September 30, 2022

Net sales $ 531 $ 689 $ 736 $ 180 $ 185 $ 2,321

Cost of sales 353 394 414 136 108 1,405

Gross margin $ 178 $ 295 $ 322 $ 44 $ 77 $ 916

Gross margin percentage 33.5 % 42.8 % 43.8 % 24.4 % 41.6 % 39.5 %

Three months ended September 30, 2021

Net sales $ 344 $ 386 $ 390 $ 118 $ 124 $ 1,362

Cost of sales 262 200 233 122 105 922

Gross margin $ 82 $ 186 $ 157 $ (4) $ 19 $ 440

Gross margin percentage 23.8 % 48.2 % 40.3 % (3.4) % 15.3 % 32.3 %

Nine months ended September 30, 2022

Three months ended March 31, 2023

Net sales $ 424 $ 611 $ 667 $ 159 $ 151 $ 2,012

2 unchanged sentences

Gross margin percentage 34.0 % 46.5 % 48.1 % 34.6 % 39.1 % 42.9 %

Nine months ended September 30, 2021

Three months ended March 31, 2022

Net sales $ 640 $ 765 $ 1,015 $ 223 $ 225 $ 2,868

3 unchanged sentences

_______________________________________________________________________________

(1) Cost of sales and gross margin for the Ammonia segment in the nine months ended September 30, 2021 include a $112 million gain on the net settlement of certain natural gas contracts with our suppliers.

See Note 14—Derivative Financial Instruments for additional information.

(1) The cost of the products that are upgraded into other products is transferred at cost into the upgraded product results.

1 unchanged sentence

Ammonia Segment

Our Ammonia segment produces anhydrous ammonia (ammonia), which is our most concentrated nitrogen product.

Ammonia contains 82% nitrogen and 18% hydrogen.

The results of our Ammonia segment consist of sales of ammonia to external customers.

In addition, ammonia is the base nitrogen product that we upgrade into other nitrogen products such as granular urea, UAN and AN.

We produce ammonia at all of our nitrogen manufacturing complexes.

Our Ammonia segment produces anhydrous ammonia (ammonia), which is the base product that we manufacture, containing 82% nitrogen and 18% hydrogen.

The results of our Ammonia segment consist of sales of ammonia to external customers for its nitrogen content as a fertilizer, in emissions control and in other industrial applications.

In addition, we upgrade ammonia into other nitrogen products such as granular urea, UAN and AN.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

14 unchanged sentences

Depreciation and amortization $ 31 $ 34 $ (3) (9) %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 4 $ (4) $ 8 N/M $ (6) $ (6) $ — — %

Unrealized net mark-to-market gain on natural gas derivatives $ (21) $ (8) $ (13) (163) %

_______________________________________________________________________________

N/M—Not Meaningful

(1) Ammonia represents 82% nitrogen content.

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

In September 2022, due to the unprecedented high price of natural gas in the United Kingdom, we temporarily idled ammonia production at our Billingham, U.K.

The Billingham complex has continued to produce upgraded products, including AN, by utilizing ammonia on hand and ammonia that has been imported from our Donaldsonville, Louisiana complex.

Third Quarter of 2022 Compared to Third Quarter of 2021

Net sales in our Ammonia segment increased by $187 million, or 54%, to $531 million in the third quarter of 2022 from $344 million in the third quarter of 2021 due primarily to a 66% increase in average selling prices, partially offset by a 7% decrease in sales volume.

Average selling prices increased to $826 per ton in the third quarter of 2022 compared to $499 per ton in the third quarter of 2021 due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” Sales volume was lower due primarily to lower supply availability from inventory and net production.

First Quarter of 2023 Compared to First Quarter of 2022

Net sales in our Ammonia segment decreased by $216 million, or 34%, to $424 million in the first quarter of 2023 from $640 million in the first quarter of 2022 due to a 26% decrease in average selling prices and a 10% decrease in sales volume.

Average selling prices decreased to $650 per ton in the first quarter of 2023 compared to $880 per ton in the first quarter of 2022 due primarily to an increase in global supply availability as lower global energy costs drove higher global operating rates.

Sales volume was lower due primarily to lower demand compared to a robust ammonia sales environment in the first quarter of 2022.

Cost of Sales.

Cost of sales in our Ammonia segment averaged $549 per ton in the third quarter of 2022, a 44% increase from $380 per ton in the third quarter of 2021.

The increase was due primarily to higher realized natural gas costs and a higher cost per ton for purchased ammonia from PLNL, our joint venture in Trinidad.

Cost of sales in our Ammonia segment averaged $429 per ton in the first quarter of 2023, an 11% increase from $385 per ton in the first quarter of 2022.

The increase was due primarily to higher realized natural gas costs, including the impact of realized derivatives, partially offset by a lower cost per ton for purchased ammonia from PLNL, our joint venture in Trinidad.

Gross Margin .

Gross margin in our Ammonia segment increased by $96 million to $178 million in the third quarter of 2022 from $82 million in the third quarter of 2021, and our gross margin percentage was 33.5% in the third quarter of 2022 compared to 23.8% in the third quarter of 2021 .

The increase in gross margin was due primarily to a 66% increase in average selling prices, which increased gross margin by $214 million.

The impact of the increase in average selling prices was partially offset by an increase in realized natural gas costs, which reduced gross margin by $91 million, a 7% decrease in sales volume, which reduced gross margin by $10 million, and a $9 million net increase in manufacturing, maintenance and other costs.

Gross margin also includes the impact of a $4 million unrealized net mark-to-market loss on natural gas derivatives in the third quarter of 2022 compared to a $4 million gain in the third quarter of 2021.

Gross margin in our Ammonia segment decreased by $216 million to $144 million in the first quarter of 2023 from $360 million in the first quarter of 2022, and our gross margin percentage was 34.0% in the first quarter of 2023 compared to 56.3% in the first quarter of 2022 .

The decrease in gross margin was due primarily to a 26% decrease in average selling prices, which decreased gross margin by $144 million, a 10% decrease in sales volume, which decreased gross margin by $63 million, and an increase in realized natural gas costs, including the impact of realized derivatives, which reduced gross margin by $47 million.

The factors that decreased gross margin were partially offset by a $25 million net decrease in manufacturing, maintenance and other costs, driven by lower purchased product costs.

Gross margin also includes the impact of a $21 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2023 compared to an $8 million gain in the first quarter of 2022.

CF INDUSTRIES HOLDINGS, INC.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales in our Ammonia segment increased by $1.28 billion, or 127%, to $2.29 billion in the nine months ended September 30, 2022 from $1.01 billion in the nine months ended September 30, 2021 due primarily to a 127% increase in average selling prices.

Cost of Sales.

Cost of sales in our Ammonia segment averaged $447 per ton in the nine months ended September 30, 2022, a 60% increase from $280 per ton in the nine months ended September 30, 2021.

The increase is due primarily to higher realized natural gas costs, a higher cost per ton for purchased ammonia from our joint venture in Trinidad and 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—Natural Gas” above, for additional information on the operational impact of Winter Storm Uri.

Gross Margin .

Gross margin in our Ammonia segment increased by $877 million to $1.21 billion in the nine months ended September 30, 2022 from $334 million in the nine months ended September 30, 2021, and our gross margin percentage was 53.0% in the nine months ended September 30, 2022 compared to 33.1% in the nine months ended September 30, 2021.

The increase in gross margin was due primarily to a 127% increase in average selling prices, which increased gross margin by $1.29 billion, and favorable location product mix, which increased gross margin by $12 million.

These increases were partially offset by an increase in realized natural gas costs, which decreased gross margin by $241 million, and a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $71 million.

In addition, the impact of the $112 million gain on the net settlement of certain natural gas contracts is included in the nine months ended September 30, 2021.

Granular Urea Segment

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Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of our solid nitrogen fertilizers.

Granular urea is produced at our Donaldsonville, Louisiana;

Medicine Hat, Alberta;

and Port Neal, Iowa, nitrogen complexes.

Granular urea is produced at our Donaldsonville, Port Neal and Medicine Hat nitrogen complexes.

The following table presents summary operating data for our Granular Urea segment:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

14 unchanged sentences

Depreciation and amortization $ 79 $ 64 $ 15 23 %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 4 $ (3) $ 7 N/M $ (4) $ (5) $ 1 20 %

Unrealized net mark-to-market gain on natural gas derivatives $ (20) $ (7) $ (13) (186) %

_______________________________________________________________________________

N/M—Not Meaningful

(1) Granular urea represents 46% nitrogen content.

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

Third Quarter of 2022 Compared to Third Quarter of 2021

Net sales in our Granular Urea segment increased $303 million, or 78%, to $689 million in the third quarter of 2022 from $386 million in the third quarter of 2021 due primarily to a 47% increase in sales volume and a 22% increase in average selling prices.

Sales volume was higher due primarily to higher supply availability resulting from higher production.

Average selling prices increased to $546 per ton in the third quarter of 2022 compared to $449 per ton in the third quarter of

CF INDUSTRIES HOLDINGS, INC.

2021 due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.”

Cost of Sales.

Cost of sales in our Granular Urea segment averaged $312 per ton in the third quarter of 2022, a 34% increase from $233 per ton in the third quarter of 2021, due primarily to higher realized natural gas costs.

Gross Margin .

Gross margin in our Granular Urea segment increased by $109 million to $295 million in the third quarter of 2022 from $186 million in the third quarter of 2021, and our gross margin percentage was 42.8% in the third quarter of 2022 compared to 48.2% in the third quarter of 2021.

The increase in gross margin was due primarily to a 22% increase in average selling prices, which increased gross margin by $120 million, a 47% increase in sales volume, which increased gross margin by $95 million , and a $3 million net decrease in manufacturing, maintenance and other costs.

These factors were partially offset by an increase in realized natural gas costs, which reduced gross margin by $96 million.

Gross margin also includes the impact of a $4 million unrealized net mark-to-market loss on natural gas derivatives in the third quarter of 2022 compared to a $3 million gain in the third quarter of 2021.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales in our Granular Urea segment increased $1.07 billion, or 88%, to $2.29 billion in the nine months ended September 30, 2022 from $1.22 billion in the nine months ended September 30, 2021 due primarily to a 74% increase in average selling prices and an 8% increase in sales volume.

Average selling prices increased to $646 per ton in the nine months ended September 30, 2022 compared to $372 per ton in the nine months ended September 30, 2021 due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” Sales volume was higher due primarily to higher supply availability resulting from higher production.

First Quarter of 2023 Compared to First Quarter of 2022

Net sales in our Granular Urea segment decreased $154 million, or 20%, to $611 million in the first quarter of 2023 from $765 million in the first quarter of 2022 due primarily to a 34% decrease in average selling prices, partially offset by a 21% increase in sales volume.

Average selling prices decreased to $462 per ton in the first quarter of 2023 compared to $698 per ton in the first quarter of 2022 due primarily to an increase in global supply availability as lower global energy costs drove higher global operating rates, and an increase in global supply availability resulting from new global production coming online.

Sales volume was higher due primarily to greater supply availability resulting from higher production.

Cost of Sales.

Cost of sales in our Granular Urea segment averaged $289 per ton in the nine months ended September 30, 2022, a 34% increase from $215 per ton in the nine months ended September 30, 2021, due primarily to higher realized natural gas costs.

Cost of sales in our Granular Urea segment averaged $247 per ton in the first quarter of 2023 compared to $246 per ton in the first quarter of 2022, as higher realized natural gas costs, including the impact of realized derivatives, were partially offset by the impact of lower production costs.

Gross Margin .

Gross margin in our Granular Urea segment increased by $750 million to $1.26 billion in the nine months ended September 30, 2022 from $513 million in the nine months ended September 30, 2021, and our gross margin percentage was 55.2% in the nine months ended September 30, 2022 compared to 42.1% in the nine months ended September 30, 2021.

The increase in gross margin was due primarily to a 74% increase in average selling prices, which increased gross margin by $917 million, an 8% increase in sales volume, which increased gross margin b y $112 million, and a $42 million net decrease in manufacturing, maintenance and other costs.

These factors were partially offset by higher realized natural gas costs, which decreased gross margin by $236 million .

G ross margin also includes the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2022 compared to a $5 million gain in the nine months ended September 30, 2021.

Gross margin in our Granular Urea segment decreased by $211 million to $284 million in the first quarter of 2023 from $495 million in the first quarter of 2022, and our gross margin percentage was 46.5% in the first quarter of 2023 compared to 64.7% in the first quarter of 2022.

The decrease in gross margin was due primarily to a 34% decrease in average selling prices, which decreased gross margin by $313 million, and an increase in realized natural gas costs, including the impact of realized derivatives, which reduced gross margin by $19 million.

The factors that reduced gross margin were partially offset by a 21% increase in sales volume, which increased gross margin by $104 million , and a $4 million net decrease in manufacturing, maintenance and other costs.

Gross margin also includes the impact of a $20 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2023 compared to a $7 million gain in the first quarter of 2022.

CF INDUSTRIES HOLDINGS, INC.

1 unchanged sentence

UAN, a liquid fertilizer product with a nitrogen content that typically ranges from 28% to 32%, is produced by combining urea and ammonium nitrate.

UAN is produced at our nitrogen complexes in Courtright, Ontario;

Donaldsonville, Louisiana;

Port Neal, Iowa;

Verdigris, Oklahoma;

Woodward, Oklahoma;

and Yazoo City, Mississippi.

UAN is produced at our Courtright, Donaldsonville, Port Neal, Verdigris, Woodward and Yazoo City nitrogen complexes.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

14 unchanged sentences

Depreciation and amortization $ 66 $ 70 $ (4) (6) %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 4 $ (3) $ 7 N/M $ (4) $ (5) $ 1 20 %

Unrealized net mark-to-market gain on natural gas derivatives $ (21) $ (8) $ (13) (163) %

_______________________________________________________________________________

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.

Third Quarter of 2022 Compared to Third Quarter of 2021

Net sales in our UAN segment increased $346 million, or 89%, to $736 million in the third quarter of 2022 from $390 million in the third quarter of 2021 due to a 47% increase in average selling prices and a 28% increase in sales volume.

Average selling prices increased to $448 per ton in the third quarter of 2022 compared to $304 per ton in the third quarter of 2021 due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” Sales volume was higher due primarily to greater supply availability as a result of higher production, as well as a delay in fertilizer application from the second quarter of 2022 into the third quarter of 2022 due to delayed crop planting as a result of unfavorable weather conditions.

Cost of Sales.

Cost of sales in our UAN segment averaged $252 per ton in the third quarter of 2022, a 38% increase from $182 per ton in the third quarter of 2021, due primarily to the impact of higher realized natural gas costs and higher freight costs due primarily to an increase in exports.

Gross Margin .

Gross margin in our UAN segment increased by $165 million to $322 million in the third quarter of 2022 from $157 million in the third quarter of 2021, and our gross margin percentage was 43.8% in the third quarter of 2022 compared to 40.3% in the third quarter of 2021.

The increase in gross margin was due primarily to a 47% increase in average selling prices, which increased gross margin by $235 million, and a 28% increase in sales volume, which increased gross margin by $61 million.

These increases were partially offset by an increase in realized natural gas costs, which reduced gross margin by $90 million, and a net increase in manufacturing, maintenance and other costs, which reduced gross margin by $34 million .

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales in our UAN segment increased $1.67 billion, or 158%, to $2.73 billion in the nine months ended September 30, 2022 from $1.06 billion in the nine months ended September 30, 2021 due primarily to a 140% increase in average selling prices and a 7% increase in sales volume.

Average selling prices increased to $535 per ton in the nine months

CF INDUSTRIES HOLDINGS, INC.

ended September 30, 2022 compared to $223 per ton in the nine months ended September 30, 2021, due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” Sales volume was higher due primarily to increased production.

First Quarter of 2023 Compared to First Quarter of 2022

Net sales in our UAN segment decreased $348 million, or 34%, to $667 million in the first quarter of 2023 from $1.02 billion in the first quarter of 2022 due to a 28% decrease in average selling prices and a 9% decrease in sales volume.

Average selling prices decreased to $401 per ton in the first quarter of 2023 compared to $555 per ton in the first quarter of 2022 due primarily to an increase in global supply availability as lower global energy costs drove higher global operating rates.

Sales volume was lower due primarily to lower supply availability resulting from a decrease in production.

Cost of Sales.

Cost of sales in our UAN segment averaged $216 per ton in the nine months ended September 30, 2022, a 35% increase from $160 per ton in the nine months ended September 30, 2021.

The increase was due primarily to the impact of higher realized natural gas costs and higher freight costs due primarily to an increase in exports.

Cost of sales in our UAN segment averaged $208 per ton in the first quarter of 2023, an 11% increase from $188 per ton in the first quarter of 2022, due primarily to the impact of higher realized natural gas costs, including the impact of realized derivatives, and higher production costs.

Gross Margin .

Gross margin in our UAN segment increased by $1.33 billion to $1.63 billion in the nine months ended September 30, 2022 from $297 million in the nine months ended September 30, 2021, and our gross margin percentage was 59.6% in the nine months ended September 30, 2022 compared to 28.1% in the nine months ended September 30, 2021.

The increase in gross margin was due primarily to a 140% increase in average selling prices, which increased gross margin by $1.59 billion, and a 7% increase in sales volume, which increased gross margin by $39 million.

These increases were partially offset by higher realized natural gas costs, which decreased gross margin by $220 million, and a $77 million net increase in manufacturing, maintenance and other costs.

Gross margin also includes the impact of a net $4 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2022 compared to a $5 million gain in the nine months ended September 30, 2021.

Antidumping and Countervailing Duty Investigations

On June 30, 2021, we filed petitions with the U.S.

Department of Commerce (Commerce) and the U.S.

International Trade Commission (ITC) requesting the initiation of antidumping and countervailing duty investigations on imports of UAN from Russia and Trinidad.

Preliminary affirmative determinations were announced by the ITC on August 13, 2021 and by Commerce on November 30, 2021 and January 27, 2022.

On June 21, 2022, Commerce announced final affirmative determinations finding that imports from Russia are dumped (i.e., sold at less than fair value) at rates ranging from 8.16% to 122.93% and unfairly subsidized at rates ranging from 6.27% to 9.66%.

In addition, Commerce found that imports from Trinidad are dumped at a rate of 111.71% and unfairly subsidized at a rate of 1.83%.

On July 18, 2022, the ITC announced that it had determined that such unfairly traded imports from Russia and Trinidad did not materially injure or threaten material injury to the domestic UAN industry.

On July 19, 2022, we requested that Commerce proceed to issue a countervailing duty order on UAN imports from Russia, notwithstanding the negative injury determination.

The Commerce Department rejected that request on August 5, 2022.

CF did not make a similar request with respect to an antidumping duty order on UAN from Russia, or any duty order on UAN from Trinidad.

The ITC published a notice of its negative determination on August 10, 2022, resulting in the termination of the Antidumping and Countervailing Duties (AD/CVD) investigations.

Accordingly, AD/CVD cash deposits collected on imports during the pendency of the investigations are being refunded, and no further duties will be imposed.

Gross margin in our UAN segment decreased by $349 million to $321 million in the first quarter of 2023 from $670 million in the first quarter of 2022, and our gross margin percentage was 48.1% in the first quarter of 2023 compared to 66.0% in the first quarter of 2022.

The decrease in gross margin was due primarily to a 28% decrease in average selling prices, which decreased gross margin by $259 million, a 9% decrease in sales volume, which decreased gross margin by $63 million, an increase in realized natural gas costs, including the impact of realized derivatives, which reduced gross margin by $29 million, and a net increase in manufacturing, maintenance and other costs, which reduced gross margin by $11 million .

CF INDUSTRIES HOLDINGS, INC.

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AN is used as nitrogen fertilizer and is also used by industrial customers for commercial explosives and blasting systems.

AN is produced at our nitrogen complexes in Yazoo City, Mississippi and Billingham, United Kingdom.

AN is produced at our Yazoo City and Billingham nitrogen complexes.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

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Cost of sales 104 171 (67) (39) %

Gross margin $ 44 $ (4) $ 48 N/M $ 198 $ 22 $ 176 N/M

Gross margin $ 55 $ 52 $ 3 6 %

Gross margin percentage 34.6 % 23.3 % 11.3 %

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$ 1,242 $ 1,527 $ (285) (19) %

Gross margin per product ton $ 121 $ (10) $ 131 N/M $ 161 $ 16 $ 145 N/M

Gross margin per product ton $ 147 $ 121 $ 26 21 %

Gross margin per nutrient ton (1)

$ 355 $ (29) $ 384 N/M $ 473 $ 48 $ 425 N/M

$ 430 $ 356 $ 74 21 %

Depreciation and amortization $ 11 $ 17 $ (6) (35) %

Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ (1) $ — — % $ (18) $ (1) $ (17) N/M

Unrealized net mark-to-market gain on natural gas derivatives $ (3) $ (6) $ 3 50 %

_______________________________________________________________________________

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.

Third Quarter of 2022 Compared to Third Quarter of 2021

Shortly thereafter, we restarted production at our Billingham facility.

In June 2022, we approved and announced our proposed plan to restructure our U.K.

operations, including the permanent closure of our Ince facility.

In August 2022, the final restructuring plan was approved, and decommissioning activities were initiated.

See the discussion under “Market Conditions and Current Developments—United Kingdom Operations,” above, for further information.

Net sales in our AN segment increased $62 million, or 53%, to $180 million in the third quarter of 2022 from $118 million in the third quarter of 2021 due to a 71% increase in average selling prices, partially offset by a 11% decrease in sales volume.

Average selling prices increased to $496 per ton in the third quarter of 2022 compared to $290 per ton in the third quarter of 2021 due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” Sales volume declined due primarily to lower supply availability as a result of our Ince facility closure.

First Quarter of 2023 Compared to First Quarter of 2022

In September 2022, as a result of extremely high and volatile natural gas prices and the lack of a corresponding increase in global nitrogen product market prices, we temporarily idled ammonia production at our Billingham complex.

Since that time, we have imported ammonia for upgrade into AN and other nitrogen products at that location.

Net sales in our AN segment decreased $64 million, or 29%, to $159 million in the first quarter of 2023 from $223 million in the first quarter of 2022 due to an 18% decrease in average selling prices and a 13% decrease in sales volume.

Average selling prices decreased to $425 per ton in the first quarter of 2023 compared to $521 per ton in the first quarter of 2022 due primarily to an increase in global supply availability as lower global energy costs drove higher global operating rates.

Sales volume declined due primarily to weak domestic demand in the United Kingdom.

Cost of Sales.

Cost of sales in our AN segment averaged $375 per ton in the third quarter of 2022, a 25% increase from $300 per ton in the third quarter of 2021.

The increase was due primarily to higher realized natural gas costs.

Cost of sales in our AN segment averaged $278 per ton in the first quarter of 2023, a 31% decrease from $400 per ton in the first quarter of 2022.

The decrease was due primarily to lower production costs in the first quarter of 2023 as purchased ammonia was used for upgrading into AN as compared to the higher-cost natural gas used to produce ammonia to upgrade into AN in the first quarter of 2022.

Gross Margin .

Gross margin in our AN segment increased $48 million to $44 million in the third quarter of 2022 from a loss of $4 million in the third quarter of 2021, and our gross margin percentage was 24.4% in the third quarter of 2022 compared to (3.4)% in the third quarter of 2021.

The increase in gross margin was due primarily to a 71% increase in average selling prices, which increased gross margin by $77 million, favorable location product mix, which increased gross margin by $18 million, and a net decrease of $8 million in manufacturing, maintenance and other costs.

These factors that increased gross margin were partially offset by an increase in realized natural gas costs, which reduced gross margin by $55 million.

Gross margin in our AN segment increased $3 million to $55 million in the first quarter of 2023 from $52 million in the first quarter of 2022, and our gross margin percentage was 34.6% in the first quarter of 2023 compared to 23.3% in the first quarter of 2022.

The increase in gross margin reflects the following:

• a decrease in realized natural gas costs, due primarily to the idling of the Billingham ammonia plant, which increased gross margin by $55 million, partially offset by a net increase of $25 million in manufacturing, maintenance and other costs, driven by the cost for purchased ammonia for upgrade, partially offset by lower production costs;

• favorable location product mix, which increased gross margin by $2 million;

• a decrease in average selling prices of 18%, which decreased gross margin by $26 million;

CF INDUSTRIES HOLDINGS, INC.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales in our AN segment increased $297 million, or 83%, to $656 million in the nine months ended September 30, 2022 from $359 million in the nine months ended September 30, 2021 due primarily to a 100% increase in average selling prices, partially offset by a 9% decrease in sales volume.

Average selling prices increased to $535 per ton in the nine months ended September 30, 2022 compared to $267 per ton in the nine months ended September 30, 2021 due primarily to the impact of a tighter global nitrogen supply and demand balance, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” The decrease in sales volume was due primarily to lower supply availability as a result of our Ince facility closure.

Cost of Sales.

Cost of sales in our AN segment averaged $374 per ton in the nine months ended September 30, 2022, a 49% increase from $251 per ton in the nine months ended September 30, 2021.

The increase was due primarily to higher realized natural gas costs.

Gross Margin .

Gross margin in our AN segment increased by $176 million to $198 million in the nine months ended September 30, 2022 from $22 million in the nine months ended September 30, 2021, and our gross margin percentage was 30.2% in the nine months ended September 30, 2022 compared to 6.1% in the nine months ended September 30, 2021.

The increase in gross margin was due primarily to a 100% increase in average selling prices, which increased gross margin by $336 million, and favorable location product mix, which increased gross margin by $23 million.

These increases in gross margin were partially offset by an increase in realized natural gas costs, which decreased gross margin by $201 million, and a net increase of $1 million in manufacturing, maintenance and other costs.

Gross margin also includes the impact of a $18 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2022 compared to a $1 million gain in the nine months ended September 30, 2021.

• the impact of a $3 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2023 compared to a $6 million gain in the first quarter of 2022.

Other Segment

Our Other segment primarily includes the following products:

• Diesel exhaust fluid (DEF) is an aqueous urea solution typically made with 32.5% or 50% high-purity urea and the remainder deionized water.

• Urea liquor is a liquid product that we sell in concentrations of 40%, 50% and 70% urea as a chemical intermediate.

• Nitric acid is a nitrogen-based mineral acid that is used in the production of nitrate-based fertilizers, nylon precursors and other specialty chemicals.

• diesel exhaust fluid (DEF), an aqueous urea solution typically made with 32.5% or 50% high-purity urea and the remainder deionized water;

• urea liquor, a liquid product that we sell in concentrations of 40%, 50% and 70% urea as a chemical intermediate and

• nitric acid, a nitrogen-based mineral acid that is used in the production of nitrate-based fertilizers, nylon precursors and other specialty chemicals.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 v.

Three Months Ended March 31,

2023 2022 2023 v.

14 unchanged sentences

Depreciation and amortization $ 16 $ 19 $ (3) (16) %

Unrealized net mark-to-market gain on natural gas derivatives $ — $ (1) $ 1 100 % $ (7) $ (1) $ (6) N/M

Unrealized net mark-to-market gain on natural gas derivatives $ (7) $ (4) $ (3) (75) %

_______________________________________________________________________________

N/M—Not Meaningful

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

CF INDUSTRIES HOLDINGS, INC.

Third Quarter of 2022 Compared to Third Quarter of 2021

First Quarter of 2023 Compared to First Quarter of 2022

In June 2022, we approved and announced our proposed plan to restructure our U.K.

operations, including the permanent closure of our Ince facility.

operations, including the planned permanent closure of our Ince facility.

In August 2022, the final restructuring plan was approved, and decommissioning activities were initiated.

We produced compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium, only at our Ince facility, and closure of this facility has resulted in our discontinuation of the NPK product line.

Total sales of NPK products were $15 million in the first nine months of 2022 and $47 million in the year ended December 31, 2021.

See the discussion under “Market Conditions and Current Developments—United Kingdom Operations,” above, for further information.

Net sales in our Other segment increased by $61 million, or 49%, to $185 million in the third quarter of 2022 from $124 million in the third quarter of 2021 due to a 64% increase in average selling prices, partially offset by a 9% 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, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” The decrease in sales volume was due primarily to lower nitric acid and NPK sales volumes in the third quarter of 2022, as operations at our Ince manufacturing plant have ceased, partially offset by higher DEF sales volumes.

Cost of Sales.

Cost of sales in our Other segment averaged $218 per ton in the third quarter of 2022, a 13% increase from $193 per ton in the third quarter of 2021, due primarily to higher realized natural gas costs.

Gross Margin .

Gross margin in our Other segment increased by $58 million to $77 million in the third quarter of 2022 from $19 million in the third quarter of 2021, and our gross margin percentage was 41.6% in the third quarter of 2022 compared to 15.3% in the third quarter of 2021.

The increase in gross margin was due primarily to a 64% increase in average selling prices, which increased gross margin by $71 million, a net decrease of $13 million in manufacturing, maintenance and other costs, and an increase of $1 million due to favorable product mix.

These factors that increased gross margin were partially offset by an increase in realized natural gas costs, which reduced gross margin by $26 million.

Gross margin also includes the impact of a $1 million gain in the third quarter of 2021.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales in our Other segment increased by $266 million, or 75%, to $622 million in the nine months ended September 30, 2022 from $356 million in the nine months ended September 30, 2021 due primarily to a 91% increase in average selling prices partially offset by a 9% 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, reflecting in part the geopolitical factors described above under “Market Conditions and Current Developments—Geopolitical Environment.” The decrease in sales volume was due primarily to lower NPK and nitric acid sales volumes, as operations at our Ince manufacturing plant have ceased, and lower urea liquor sales volumes, partially offset by higher DEF sales volumes.

We produced compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium, only at our Ince facility, and closure of this facility resulted in our discontinuation of the NPK product line.

Since that time, we have imported ammonia for upgrade into AN and other nitrogen products at that location.

Net sales in our Other segment decreased by $74 million, or 33%, to $151 million in the first quarter of 2023 from $225 million in the first quarter of 2022 due to a 30% decrease in average selling prices and a 4% decrease in sales volume.

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

The decrease in sales volume was due primarily to lower nitric acid and NPK sales volumes in the first quarter of 2023, partially offset by higher DEF sales volumes.

Cost of Sales.

Cost of sales in our Other segment averaged $196 per ton in the nine months ended September 30, 2022, an 18% increase from $166 per ton in the nine months ended September 30, 2021, due primarily to higher realized natural gas costs.

Cost of sales in our Other segment averaged $175 per ton in the first quarter of 2023, an 8% decrease from $191 per ton in the first quarter of 2022, due primarily to the idling of the Billingham ammonia plant and its usage of purchased ammonia for upgrading, and lower other manufacturing costs.

CF INDUSTRIES HOLDINGS, INC.

Gross Margin .

Gross margin in our Other segment increased by $242 million, or 367%, to $308 million in the nine months ended September 30, 2022 from $66 million in the nine months ended September 30, 2021, and our gross margin percentage was 49.5% in the nine months ended September 30, 2022 compared to 18.5% in the nine months ended September 30, 2021.

The increase in gross margin was due to a 91% increase in average selling prices, which increased gross margin by $304 million, a net decrease of $14 million in manufacturing, maintenance and other costs, and a $1 million increase due primarily to favorable product mix.

These increases in gross margin were partially offset by an increase in realized natural gas costs, which decreased gross margin by $83 million.

Gross margin also includes the impact of a $7 million unrealized net mark-to-market gain on natural gas derivatives in the nine months ended September 30, 2022 compared to a $1 million gain in the nine months ended September 30, 2021.

Gross margin in our Other segment decreased by $62 million to $59 million in the first quarter of 2023 from $121 million in the first quarter of 2022, and our gross margin percentage was 39.1% in the first quarter of 2023 compared to 53.8% in the first quarter of 2022.

The decrease in gross margin reflects the following:

• a decrease in average selling prices of 30%, which decreased gross margin by $62 million;

• a net increase of $13 million in manufacturing, maintenance and other costs, driven by the cost for purchased ammonia for upgrade, partially offset by lower production costs, which net increase was partially offset by a decrease in realized natural gas costs, due primarily to the idling of the Billingham ammonia plant, which increased gross margin by $12 million;

• a decrease in sales volume of 4%, which decreased gross margin by $2 million;

• the impact of a $7 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2023 compared to a $4 million gain in the first quarter of 2022.

CF INDUSTRIES HOLDINGS, INC.

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Our working capital requirements are affected by several factors, including demand for our products, selling prices, raw material costs, freight costs and seasonal factors inherent in the business.

We may also utilize our cash to fund acquisitions.

In addition, we may from time to time seek to retire or purchase our outstanding debt through cash purchases, in open market or privately negotiated transactions or otherwise.

3 unchanged sentences

We may also from time to time access the capital markets or engage in borrowings under our revolving credit agreement.

As of September 30, 2022, our cash and cash equivalents balance was $2.19 billion, an increase of $564 million from $1.63 billion at December 31, 2021.

At September 30, 2022, we were in compliance with all applicable covenant requirements under our revolving credit agreement and senior notes, and unused borrowing capacity under our revolving credit agreement was $750 million.

See the discussion under “Debt,” below, for further information.

In the second and third quarter of 2022, quarterly dividends of $0.40 per common share were declared and paid, representing a 33% increase from the quarterly dividend of $0.30 per common share that was declared and paid in the first quarter of 2022.

As of March 31, 2023, our cash and cash equivalents balance was $2.83 billion, an increase of $502 million from $2.32 billion at December 31, 2022.

At March 31, 2023, we were in compliance with all applicable covenant requirements under our revolving credit agreement and senior notes, and unused borrowing capacity under our revolving credit agreement was $750 million.

Cash Equivalents

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On November 3, 2021, our Board of Directors (the Board) authorized the repurchase of up to $1.5 billion of CF Holdings common stock through December 31, 2024 (the 2021 Share Repurchase Program).

Repurchases under the 2021 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, through 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.

In the nine months ended September 30, 2022, we repurchased approximately 12.7 million shares under the 2021 Share Repurchase Program for $1.12 billion, of which $27 million was accrued and unpaid as of September 30, 2022.

On November 2, 2022, the Board authorized the repurchase of up to $3 billion of CF Holdings common stock commencing upon completion of the 2021 Share Repurchase Program and effective through December 31, 2025 (the 2022 Share Repurchase Program).

Repurchases under our share repurchase programs may be made from time to time in the open market, through privately negotiated transactions, through 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.

Shares repurchased, including those repurchased under share repurchase programs, are retired as approved by the Board.

In the three months ended March 31, 2023, we repurchased approximately 1.1 million shares under the 2021 Share Repurchase Program for $75 million, of which $21 million was accrued and unpaid as of March 31, 2023.

As of March 31, 2023, there was approximately $80 million of authorization remaining under the 2021 Share Repurchase Program.

Capital Spending

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

Capital expenditures totaled $319 million in the first nine months of 2022 compared to $382 million in the first nine months of 2021.

We currently anticipate that capital expenditures for the full year of 2022 will be approximately $500 million, which includes capital expenditures at our Donaldsonville complex related to green and blue ammonia projects.

We make capital expenditures to sustain our asset base, increase our capacity or capabilities, improve plant efficiency, comply with various environmental, health and safety requirements, and invest in our clean energy strategy.

Capital expenditures totaled $69 million in the first three months of 2023 compared to $63 million in the first three months of 2022.

We currently anticipate that capital expenditures for the full year 2023 will be in the range of $500 to $550 million, which includes capital expenditures related to green and blue ammonia projects.

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.

Agreement to Purchase Ammonia Production Facility

On March 20, 2023, we entered into an asset purchase agreement with DNLA and IPL.

Under the terms of the agreement, we will purchase DNLA’s ammonia production complex located in Waggaman, Louisiana for a purchase price of $1.675 billion, subject to adjustment.

The facility has a nameplate capacity of 880,000 tons of ammonia annually.

The parties will allocate $425 million of the purchase price to a long-term ammonia offtake agreement providing for us to supply up to

CF INDUSTRIES HOLDINGS, INC.

Canada Revenue Agency Competent Authority Matter and Transfer Pricing

In connection with the matter described above under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter,” in the third quarter of 2022, Canada Revenue Agency assessed, and we paid, additional tax and interest for tax years 2006 to 2011 of approximately $147 million.

In the fourth quarter of 2022, we expect provincial tax authorities will assess additional tax and interest for tax years 2006 to 2011 of approximately $80 million, based on current estimates and foreign currency exchange rates, which we expect will be due in the fourth quarter of 2022, and the Company will then file amended tax returns with U.S.

federal and state tax authorities for the relevant tax years, as a result of which we expect to receive net refunds of approximately $50 million, including tax and interest, in the next twelve months.

All such amounts have been reflected in our consolidated financial statements.

As described above under “Items Affecting Comparability of Results—Transfer pricing positions,” we have unrecognized tax benefits recorded in connection with certain tax years subsequent to 2011 that have been reassessed for transfer pricing matters by the Canadian tax authorities.

Prior to the end of 2022, we expect to make tax payments to the Canadian taxing authorities of approximately $300 million related to these reassessed tax years while we continue to dispute the reassessments.

The payments would be recorded as noncurrent income tax receivables and the associated letters of credit would be cancelled.

For the amounts ultimately owed and paid to the Canadian tax authorities upon resolution of these tax disputes, the Company would seek refunds of related taxes overpaid in the United States.

200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc.

We expect to fund the balance of the purchase price, representing the $1.675 billion purchase price, as adjusted, less $425 million, with cash on hand.

The agreement includes certain customary termination rights, including the right of either party to terminate the agreement if the closing has not occurred by March 20, 2025.

We have agreed to pay a termination fee of $75 million if the agreement is terminated in certain circumstances and certain regulatory approvals are not obtained.

United Kingdom Operations

As discussed under “Market Conditions and Current Developments—United Kingdom Operations,” above, during the third quarter of 2021, the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas, which impacted our U.K.

During the third quarter of 2021, the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas, which impacted our U.K.

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operations, including the permanent closure of our Ince facility and optimization of the remaining manufacturing operations at the Billingham facility.

As a result, we recognized $152 million of asset impairment charges, primarily related to property, plant and equipment at the Ince facility, and a $10 million charge for post-employment benefits related to contractual and statutory obligations, which are included in the U.K.

operations restructuring line item in our consolidated statements of operations.

In August 2022, the final restructuring plan was approved, and decommissioning activities were initiated.

As a result, in the third quarter of 2022, we incurred additional charges related to our U.K.

restructuring of $8 million, primarily related to one-time termination benefits.

In the third quarter of 2022, the United Kingdom continued to experience extremely high and volatile natural gas prices.

Russian natural gas pipeline flows to Europe via the Nord Stream 1 pipeline ceased, causing the United Kingdom to experience unprecedented natural gas prices.

In addition, the European Union announced a desire to cap the price that Europe would pay Russia for natural gas deliveries, further contributing to the uncertainty in European energy markets.

Given these factors and the lack of a corresponding increase in global nitrogen product market prices, in September 2022, we temporarily idled ammonia production at our Billingham complex.

As a result, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K.

operations, which resulted in asset impairment charges of $87 million, primarily related to property, plant and equipment and definite-lived intangible assets.

The factors that could lead to the resolution of the U.K.

energy crisis, and the timing of any such resolution, are unknown to us.

Production of AN continues at our Billingham facility using ammonia on site and ammonia that is imported from our other ammonia production sites.

Persistence of the current levels of energy costs in the United Kingdom could lead to the continued idling of ammonia production at our Billingham facility.

Production of AN and other nitrogen products continues at our Billingham facility using imported ammonia, a portion of which is imported from our other ammonia production sites.

There remains uncertainty regarding the future cost of natural gas and electricity, selling prices for the products we produce in the United Kingdom and U.K.

government policy, which could result in, among other things, additional funding to support the cash needs of our U.K.

government policy, which could necessitate, among other things, additional funding to support the cash needs of our U.K.

operations and recognition of further losses and could have a material adverse impact on our results of operations and cash flows.

CF INDUSTRIES HOLDINGS, INC.

Revolving Credit Agreement

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

As of September 30, 2022, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit.

There were no borrowings outstanding under the Revolving Credit Agreement as of September 30, 2022 or December 31, 2021, or during the nine months ended September 30, 2022.

As of March 31, 2023, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit.

There were no borrowings outstanding under the Revolving Credit Agreement as of March 31, 2023 or December 31, 2022, or during the three months ended March 31, 2023.

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

As of September 30, 2022, we were in compliance with all covenants under the Revolving Credit Agreement.

As of March 31, 2023, 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 $350 million of letters of credit, reflecting an increase of $100 million in May 2022.

As of September 30, 2022, approximately $197 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of September 30, 2022 and December 31, 2021 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate September 30, 2022 December 31, 2021

As of March 31, 2023, approximately $201 million of letters of credit were outstanding under this agreement.

CF INDUSTRIES HOLDINGS, INC.

Long-term debt presented on our consolidated balance sheets as of March 31, 2023 and December 31, 2022 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate March 31, 2023 December 31, 2022

Principal Carrying Amount (1)

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Public Senior Notes:

3.450% due June 2023 3.665% $ — $ — $ 500 $ 499

5.150% due March 2034 5.293% $ 750 $ 741 $ 750 $ 741

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

Total unamortized debt discount was $7 million and $8 million as of September 30, 2022 and December 31, 2021, respectively, and total deferred debt issuance costs were $28 million and $27 million as of September 30, 2022 and December 31, 2021, respectively.

Total unamortized debt discount was $7 million as of both March 31, 2023 and December 31, 2022, and total deferred debt issuance costs were $27 million and $28 million as of March 31, 2023 and December 31, 2022, respectively.

(2) Effective August 23, 2021, these notes are no longer secured, in accordance with the terms of the applicable indenture.

CF INDUSTRIES HOLDINGS, INC.

Public Senior Notes

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes, which was funded with cash on hand, was $513 million, including accrued interest.

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes, which was funded with cash on hand, was approximately $265 million, including accrued interest.

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

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.

Senior Secured Notes

The total aggregate redemption price paid on the 2021 Notes in connection with the redemption, which was funded with cash on hand, was $258 million, including accrued interest.

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

Under the terms of the indenture governing the 4.500% senior secured notes due 2026 (the 2026 Notes), the 2026 Notes are guaranteed by CF Holdings.

Until August 23, 2021, the 2026 Notes were guaranteed by certain subsidiaries of CF Industries.

Until August 23, 2021, the 2026 Notes were guaranteed by CF Holdings and certain subsidiaries of CF Industries.

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.

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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 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.

Interest on the Public Senior Notes and the 2026 Notes is payable semiannually, and the Public Senior Notes 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.

Forward Sales and Customer Advances

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

As of September 30, 2022 and December 31, 2021, we had $511 million and $700 million, respectively, in customer advances on our consolidated balance sheets.

CF INDUSTRIES HOLDINGS, INC.

As of March 31, 2023 and December 31, 2022, we had $284 million and $229 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.

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If the level of sales under our forward sales programs were to decrease in the future, our cash received from customer advances would likely decrease and our accounts receivable balances would likely increase.

CF INDUSTRIES HOLDINGS, INC.

Additionally, borrowing under the Revolving Credit Agreement could become necessary.

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

As of September 30, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 48.2 million MMBtus of natural gas.

As of March 31, 2023, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 18.9 million MMBtus of natural gas.

As of December 31, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 66.3 million MMBtus of natural gas.

Defined Benefit Pension Plans

We contributed $20 million to our pension plans in the nine months ended September 30, 2022.

Over the remainder of 2022, we expect to contribute approximately $6 million to our pension plans, which would result in our making a total of approximately $26 million of contributions to our pension plans for the full year 2022.

In addition, we expect to contribute a total of approximately £50 million (or $56 million) to our U.K.

plans in the three-year period from 2023 to 2025, as agreed with the plans’ trustees.

On July 15, 2022, we entered into an agreement with an insurance company to purchase a non-participating group annuity contract and transfer approximately $375 million of our primary U.S.

defined benefit pension plan’s projected benefit obligation, subject to customary closing conditions.

The transaction closed on July 22, 2022 and was funded with plan assets.

Under the transaction, the insurance company assumed responsibility for pension benefits and annuity administration for approximately 4,000 retirees or their beneficiaries.

As a result of this transaction, in the third quarter of 2022, we remeasured the plan's projected benefit obligation and plan assets and recognized a non-cash pre-tax pension settlement loss of $24 million, reflecting the unamortized net unrecognized postretirement benefit costs related to the settled obligations, with a corresponding offset to accumulated other comprehensive loss.

We contributed $7 million to our pension plans in the three months ended March 31, 2023.

Over the remainder of 2023, we expect to contribute approximately $36 million to our pension plans, which would result in our making total contributions of approximately $43 million to our pension plans for the full year 2023.

In addition, in the two-year period from 2024 to 2025, we expect to contribute a total of approximately £30 million (or $37 million) to our U.K.

plans, as agreed with the plans’ trustees.

Distribution to Noncontrolling Interest in CFN

On January 31, 2023, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended December 31, 2022 in accordance with CFN’s limited liability company agreement.

On January 31, 2023, CFN distributed $255 million to CHS for the distribution period ended December 31, 2022.

On July 31, 2022, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended June 30, 2022 in accordance with CFN’s limited liability company agreement, and on August 1, 2022, CFN distributed approximately $372 million to CHS for this distribution period.

The estimate of the partnership distribution earned by CHS, but not yet declared, for the third quarter of 2022 is approximately $106 million.

Net cash provided by operating activities during the first nine months of 2022 was $3.27 billion, an increase of $1.88 billion compared to $1.39 billion in the first nine months of 2021.

The increase in cash flow from operations was due primarily to higher net earnings, partially offset by changes in net working capital.

Net earnings for the first nine months of 2022 was $2.93 billion as compared to $401 million for the first nine months of 2021, an increase of $2.53 billion.

The increase in net earnings was due primarily to an increase in gross margin, driven by higher average selling prices, higher sales volume and a decrease in charges related to our U.K.

These increases were partially offset by increases in natural gas costs, an increase in the income tax provision and an increase in net earnings attributable to noncontrolling interest.

During the first nine months of 2022, net changes in working capital reduced cash flow from operations by $621 million, while in the first nine months of 2021 net changes in working capital reduced cash flow from operations by $53 million.

The decreased cash flow from working capital changes was attributable primarily to lower cash collections from customer advances and higher levels of accounts receivable in the first nine months of 2022 as compared to the first nine months of 2021.

The estimate of the partnership distribution earned by CHS, but not yet declared, for the first quarter of 2023 is approximately $110 million.

Net cash provided by operating activities during the first three months of 2023 was $947 million, a decrease of $444 million compared to $1.39 billion in the first three months of 2022.

The decrease in cash flow from operations was due primarily to lower net earnings, partially offset by changes in net working capital.

Net earnings for the first three months of 2023 was $650 million as compared to $1.05 billion for the first three months of 2022, a decrease of $401 million.

The decrease in net earnings was due primarily to a decrease in gross margin, driven by lower average selling prices and sales volume.

During the first three months of 2023, net changes in working capital increased cash flow from operations by $213 million, while in the first three months of 2022, net changes in working capital increased cash flow from operations by $110 million.

The increase in cash flow from working capital changes was attributable primarily to higher cash collections from customer advances and lower levels of accounts receivable in the first three months of 2023 as compared to the first three months of 2022.

Net cash used in investing activities was $34 million in the first three months of 2023 as compared to $62 million in the first three months of 2022.

The decrease was due primarily to an increase in proceeds from the sale of emission credits, as proceeds from the sale of emission credits was $35 million in the first three months of 2023 compared to $9 million in the first three months of 2022.

Capital expenditures totaled $69 million during the first three months of 2023 compared to $63 million in the first three months of 2022.

Net cash used in financing activities was $410 million in the first three months of 2023 compared to $339 million in the first three months of 2022.

The increase was due primarily to proceeds from issuances of common stock under employee stock plans of $97 million in the first three months of 2022 that did not recur in the first three months of 2023.

In addition, the increase reflects an increase in dividends, as the dividend declared and paid in the first quarter of 2023 was $0.40 per common share compared to $0.30 per common share in the first quarter of 2022.

Dividends paid on common stock was $79 million in the first three months of 2023 compared to $64 million in the first three months of 2022.

These factors were partially offset by a decrease in share repurchases.

In the first three months of 2023, we paid $54 million for share repurchases compared to $98 million for share repurchases in the first three months of 2022.

In the first three months of 2023, share repurchases totaled $75 million, of which $21 million was accrued and unpaid as of March 31, 2023.

CF INDUSTRIES HOLDINGS, INC.

Net cash used in investing activities was $308 million in the first nine months of 2022 as compared to $383 million in the first nine months of 2021.

Capital expenditures totaled $319 million during the first nine months of 2022 compared to $382 million in the first nine months of 2021.

Net cash used in financing activities was $2.37 billion in the first nine months of 2022 compared to $936 million in the first nine months of 2021.

The increase was due primarily to share repurchases in the first nine months of 2022 and higher distributions to noncontrolling interest.

In the first nine months of 2022, we paid $1.10 billion for share repurchases, including $1 million related to shares repurchased in late 2021 that were paid for in 2022, compared to $50 million for share repurchases in the first nine months of 2021.

In the first nine months of 2022, distributions to noncontrolling interest were $619 million compared to $194 million in the first nine months of 2021.

These increases in financing cash outflows were partially offset by higher proceeds from issuances of common stock under employee stock plans of $106 million in the first nine months of 2022 compared to $32 million in the first nine months of 2021.

Critical Accounting Estimates

During the first nine months of 2022, there were no material changes to our critical accounting estimates as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

CF INDUSTRIES HOLDINGS, INC.

During the first three months of 2023, there were no material changes to our critical accounting estimates as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Forward-Looking Statements

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Such factors include, among others:

• the risk that regulatory approvals required for the proposed transactions with Incitec Pivot Limited (IPL) are not obtained or that required approvals delay the transactions or cause the parties to abandon the transactions;

the risk that other conditions to the closing of the proposed transactions with IPL are not satisfied;

risks and uncertainties arising from the length of time necessary to consummate the proposed transactions with IPL and the possibility that the proposed transactions with IPL may be delayed or may not occur;

the risk of obstacles to realization of the benefits of the proposed transactions with IPL;

• the risk that the synergies from the proposed transactions with IPL may not be fully realized or may take longer to realize than expected;

the risk that the pendency or completion of the proposed transactions with IPL, including integration of the Waggaman ammonia production complex into the Company’s operations, disrupt current operations or harm relationships with customers, employees and suppliers;

the risk that integration of the Waggaman ammonia production complex with the Company’s current operations will be more costly or difficult than expected or may otherwise be unsuccessful;

diversion of management time and attention to issues relating to the proposed transactions with IPL;

unanticipated costs or liabilities associated with the IPL transactions;

• the cyclical nature of our business and the impact of global supply and demand on our selling prices;

• the global commodity nature of our nitrogen products, the conditions in the international market for nitrogen products, and the intense global competition from other producers;

• conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for agricultural products;

• conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for our fertilizer products;

• the volatility of natural gas prices in North America and the United Kingdom;

• weather conditions and the impact of severe adverse weather events;

• weather conditions and the impact of adverse weather events;

• the seasonality of the fertilizer business;

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• our reliance on a limited number of key facilities;

• risks associated with cyber security;

• risks associated with cybersecurity;

• acts of terrorism and regulations to combat terrorism;

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• our ability to manage our indebtedness and any additional indebtedness that may be incurred;

CF INDUSTRIES HOLDINGS, INC.

• our ability to maintain compliance with covenants under our revolving credit agreement and the agreements governing our indebtedness;

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• risks associated with changes in tax laws and disagreements with taxing authorities;

• risks involving derivatives and the effectiveness of our risk measurement and hedging activities;

• risks involving derivatives and the effectiveness of our risk management and hedging activities;

• potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements;

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• risks associated with the operation or management of the CHS strategic venture, risks and uncertainties relating to the market prices of the fertilizer products that are the subject of our supply agreement with CHS over the life of the supply agreement, and the risk that any challenges related to the CHS strategic venture will harm our other business relationships.

• the impact of the novel coronavirus disease 2019 (COVID-19) pandemic on our business and operations.

CF INDUSTRIES HOLDINGS, INC.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis