What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 474 added, 523 removed, 595 unchanged (63% of the section changed)

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

and its subsidiaries, except where the context makes clear that the reference is only to CF Industries Holdings, Inc.

itself and not its subsidiaries.

and its subsidiaries, except where the context makes clear that the reference is to CF Industries Holdings, Inc.

only and not its subsidiaries.

All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc.

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Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements.

For a discussion and analysis of the year ended December 31, 2021 compared to December 31, 2020, you should read Item 7.

For a discussion and analysis of the year ended December 31, 2022 compared to the year ended December 31, 2021, see Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 23, 2023.

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• Overview of CF Holdings

• Market Conditions and Current Developments

• Market Conditions

• Financial Executive Summary

• Acquisition of Waggaman Ammonia Production Facility

• Items Affecting Comparability of Results

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• Critical Accounting Estimates

• Recent Accounting Pronouncements

Overview of CF Holdings

Our mission is to provide clean energy to feed and fuel the world sustainably.

With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities.

With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and low-carbon hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities.

Our nitrogen manufacturing complexes in the United States, Canada and the United Kingdom, an extensive storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy.

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Claremore, Oklahoma (our Verdigris complex);

and Woodward, Oklahoma.

These facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc.

Woodward, Oklahoma;

and Waggaman, Louisiana.

The Waggaman facility is wholly owned by us, and the other five U.S.

nitrogen manufacturing facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc.

(CHS) owns the remainder (see Note 19—Noncontrolling Interest for additional information on our strategic venture with CHS);

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

• 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.

CF INDUSTRIES HOLDINGS, INC.

We previously operated a United Kingdom nitrogen manufacturing facility located in Ince.

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

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

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

We are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia.

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 byproduct removed through carbon capture and sequestration (CCS).

• 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.

Our strategy is to leverage our unique capabilities to accelerate the world’s transition to clean energy.

We believe this strategy builds upon the Company’s leadership in ammonia production to capture emerging opportunities available to ammonia produced with a lower carbon intensity than that of ammonia produced through traditional processes.

These opportunities include traditional applications in agriculture to help reduce the carbon footprint of food production and the life cycle carbon intensity of ethanol production, enabling its use for sustainable aviation fuel, among other purposes.

They also include new applications, such as power generation and marine shipping, that would use the hydrogen component of the ammonia molecule for clean energy given that ammonia does not contain or emit carbon when combusted.

We execute our strategy across four dimensions:

decarbonizing our existing network to accelerate the availability of low-carbon ammonia;

evaluating new low-carbon ammonia capacity growth;

forging partnerships to accelerate our timeline and bridge gaps in areas where we do not have expertise;

and collaborating to build understanding of ammonia’s clean energy capability, safety track record and regulatory environment.

Decarbonization projects in our existing network include our green ammonia project at our Donaldsonville, Louisiana complex.

Green ammonia refers to ammonia produced with hydrogen sourced through an electrolysis process that produces no carbon emissions.

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, and is expected to finish in 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 the Donaldsonville green ammonia project will be the largest of its kind in North America.

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

(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 acquired the land on the west bank of the Mississippi river in Ascension Parish, Louisiana, for the complex during the third quarter of 2022.

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

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

We have announced 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.

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.

The green hydrogen production facility is mechanically complete, and commissioning activities began in early 2024.

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

Decarbonization projects in our existing network also include the production of low-carbon ammonia.

Low-carbon ammonia is ammonia produced by conventional processes but with approximately 60-98% of the process and flue gas CO 2 generated by ammonia production removed through carbon capture and sequestration (CCS).

We are executing a project also at our Donaldsonville complex that will enable us to produce a significant volume of low-carbon ammonia.

At an estimated cost of $200 million, we are constructing a CO 2 dehydration and compression facility to enable CCS at the facility.

Engineering activities for the construction of the dehydration and compression unit continue to advance, all major equipment for the facility has been procured, fabrication of the CO 2 compressors is proceeding, and construction activities at the Donaldsonville site are underway.

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

Alongside these projects, we are also evaluating the construction of greenfield low-carbon ammonia capacity in Louisiana.

In the fourth quarter of 2023, we and Mitsui & Co., Ltd.

(Mitsui) completed a front-end engineering and design (FEED) study on a greenfield steam methane reforming (SMR) ammonia facility with CCS technologies.

The FEED study estimates the cost of a project with these attributes to be in the range of $3 billion, with approximately $2.5 billion allocated to the ammonia facility and CCS technologies and approximately $500 million allocated to scalable common infrastructure for the site, such as ammonia storage and vessel loading docks.

We and Mitsui are progressing two additional FEED studies focused on technologies with the potential to further reduce the carbon intensity of the proposed low-carbon ammonia facility, including a FEED study evaluating autothermal reforming (ATR) ammonia production technology and a FEED study assessing the cost and viability of adding flue gas capture to an SMR ammonia facility.

We expect to complete both FEED studies in the second half of 2024.

We and Mitsui are targeting the second half of 2024 for the final investment decision on the proposed greenfield low-carbon ammonia facility.

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 addition to ongoing discussions with existing customers who have interest in forthcoming availability of low-carbon ammonia for traditional applications, we are engaged in advanced discussions regarding the supply of low-carbon ammonia for

CF INDUSTRIES HOLDINGS, INC.

new applications.

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 are evaluating 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.

We are also evaluating and in various stages of developing discussions and agreements with other companies for clean ammonia long-term offtake opportunities related to new applications of ammonia.

Industry Factors

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Our products are globally traded commodities and are subject to price competition.

The customers for our products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer service and product quality.

The customers for our products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on reliability, customer service and product quality.

The selling prices of our products fluctuate in response to global market conditions, changes in supply and demand and cost factors.

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Short-term fertilizer demand growth may depend on global economic conditions, farm sector income, weather patterns, the level of global grain stocks relative to consumption, fertilizer application rates, and governmental regulations, including fertilizer subsidies or requirements mandating increased use of bio-fuels or industrial nitrogen products, such as DEF.

Geopolitical factors such as temporary disruptions in fertilizer trade related to government intervention or changes in the buying/selling patterns of key exporting/consuming countries, including China, India, Russia and Brazil, among others, often play a major role in shaping near-term market

CF INDUSTRIES HOLDINGS, INC.

fundamentals.

Geopolitical factors such as temporary disruptions in fertilizer trade related to government intervention, shipping delays and/or cost increases resulting from regional conflicts or changes in the buying/selling patterns of key exporting/consuming countries, including China, India, Russia and Brazil, among others, often play a major role in shaping near-term market fundamentals.

The economics of nitrogen-based fertilizer manufacturing play a key role in decisions to increase or reduce production capacity.

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Some of these factors include the relative cost to produce and deliver product, relative currency values, the availability of credit, agricultural supply and demand, industrial product demand and policies such as emissions abatement, government support for manufacturers or purchasers and governmental nitrogen product trade policies, including the imposition of duties, tariffs or quotas, that affect foreign trade or investment.

The development of additional natural gas reserves in North America over the last decade has decreased natural gas costs in North America relative to the rest of the world, making North American nitrogen fertilizer producers more competitive.

Government energy or carbon policies may also affect regional nitrogen supply and demand.

The development of additional natural gas reserves in North America has decreased natural gas costs in North America relative to the rest of the world, making North American nitrogen fertilizer producers more competitive.

Changes in currency values may also alter our cost competitiveness relative to producers in other regions of the world.

The North American nitrogen fertilizer market for certain nitrogen products is dependent on imports to balance supply and demand, and imports traditionally account for a significant portion of nitrogen fertilizer products consumed in North America.

Producers of nitrogen-based fertilizers located in the Middle East, Trinidad, North Africa and Russia have been major exporters to North America in recent years.

Producers of nitrogen-based fertilizers located in the Middle East, Trinidad, Africa and Russia have been major exporters to North America in recent years.

CF INDUSTRIES HOLDINGS, INC.

Farmers’ Economics

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Individual farmers make planting decisions based largely on prospective profitability of a harvest, while the specific varieties and amounts of fertilizer they apply depend on factors like their current liquidity, soil conditions, weather patterns, crop and fertilizer prices, fertilizer products used and timing of applications, expected yields and the types of crops planted.

Market Conditions and Current Developments

Market Conditions

Geopolitical Environment

Russia’s invasion of Ukraine in February 2022, and the resulting war between Russia and Ukraine, have 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 against Russia in response to the war.

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

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

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

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 and oilseeds, 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 2023, market participants continued to adjust trade flows and manufacturers have continued to adjust production levels in response to changing conditions resulting from these factors.

As of the date of filing of this report, nitrogen fertilizers have largely been explicitly exempted from sanctions against Russia by the United States and certain other governments, and as a result, there has been an increase in Russian fertilizer exports into the United States and other parts of the world.

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

Natural gas is a globally traded commodity that experiences price fluctuations based on supply and 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 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 a variety of government programs and policy changes.

These programs, some of which are evolving and may change over time, may reduce the costs of natural gas in the United Kingdom and, to some extent, the EU but the full impact of these programs remains to be seen.

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 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

CF INDUSTRIES HOLDINGS, INC.

from Russia through Ukraine for export has been a large contributor to reduced global exportable ammonia supply.

Natural gas is a globally traded commodity that experiences price fluctuations based on supply and demand balances and has been impacted by geopolitical events, including 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 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 September 2022, in response to the high prices for natural gas in the United Kingdom, we idled ammonia production at our Billingham complex and since that time have been importing ammonia from one of our other manufacturing facilities or from purchases in the open market for upgrade into AN and other nitrogen products at our Billingham complex.

In the third quarter of 2023, we approved our plan to permanently close the ammonia plant at our Billingham complex.

The geopolitical developments that began in 2022 relating to the war in Ukraine also led to some supply chain disruptions for Russian and other producers of fertilizer, contributing to reduced global nitrogen fertilizer supply.

In particular, disruptions in nitrogen exports from Russia, a leading exporter of nitrogen fertilizer products globally, and nitrogen production in Europe, as a result of higher and more volatile natural gas prices as Russian-sourced natural gas supply declined, contributed to reduced nitrogen supply globally.

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 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.

These events have further contributed to an already tight global supply and 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 remained high and 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 and demand balance of nitrogen fertilizer products globally and selling prices for our nitrogen fertilizer products, but the ultimate scope and duration of these impacts remain to be seen.

These geopolitical developments further contributed to an already tight global supply and demand balance for nitrogen fertilizers, causing 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 experienced significant volatility in 2022.

As Russian-sourced natural gas supply declined due to geopolitical factors, European purchasers of natural gas increased imports of liquefied natural gas (LNG) 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 normal winter in Europe, prices for natural gas fell during the first half of 2023 and then stabilized during the third quarter of 2023.

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

The increased global nitrogen product supply availability resulting from the increase in operating rates, in addition to new global production coming on line and an increase in imports of Russian UAN into the United States, resulted in an increase in supply and lower average selling prices in 2023 compared to average selling prices realized in 2022.

Russian exports of ammonia, which had been curtailed due to reduced pipeline flow, may also increase in 2024 as Russian producers develop alternative avenues to export product.

CF INDUSTRIES HOLDINGS, INC.

We expect that these 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 and demand balance of nitrogen fertilizer products globally and selling prices for our nitrogen fertilizer products.

In addition, beginning in the fourth quarter of 2023 and continuing into 2024, there have been escalating conflicts in the Middle East.

This has led to shipping disruptions as shippers avoid conflicts in the Red Sea, which increases shipping times and costs as both producers and customers adjust shipping routes and trade flows.

These regional conflicts could lead to more widespread geopolitical disruption.

Nitrogen Selling Prices and Sales Volume

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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.

The selling prices for all of our major products were higher in 2022 than in 2021, driven by the impact of a tighter global nitrogen supply and demand balance, as a result of strong global demand and 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.

The average selling price for our products for 2022 and 2021 was $610 per ton and $353 per ton, respectively.

The increase in average selling prices of 73% in 2022 from 2021 resulted in an increase in net sales of approximately $4.80 billion.

Our total sales volume was 1% lower in 2022 than in 2021 as lower sales volume in our Ammonia, Other and AN segments was mostly offset by higher sales volume in our Granular Urea and UAN segments.

Average selling prices for all of our major products were lower in 2023 than in 2022, as lower global energy costs reduced the global market clearing price required to meet global demand.

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

The average selling price for our products was $347 per ton in 2023 compared to $610 per ton in 2022.

The 43% decrease in the average selling prices for our products in 2023 compared to 2022 resulted in a year-over-year decrease in net sales of approximately $4.98 billion.

Our total sales volume was 4% higher in 2023 than in 2022, due primarily to higher sales volume in our UAN, Ammonia and Other segments.

We shipped 19.1 million tons of product in 2023 compared to 18.3 million tons in 2022.

The lower sales volume reflects the impact of our Ince facility closure, which is further discussed below.

The increase in total sales volume resulted in an increase in net sales of approximately $426 million.

The impact of the Waggaman acquisition, which is included in our operating results since the acquisition on December 1, 2023, increased our sales volume by 57,000 tons and our net sales by $28 million.

Sales volume for our products in 2023, 2022 and 2021 is shown in the table below.

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Total 19,130 $ 6,631 18,331 $ 11,186 18,501 $ 6,538

CF INDUSTRIES HOLDINGS, INC.

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

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

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

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:

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 40% and 50%, respectively, of our production costs in 2023 and 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:

Year ended December 31,

2023 2022 2021 2023 v.

Natural gas supplemental data (per MMBtu)

Average daily market price of natural gas Henry Hub (Louisiana) $ 2.53 $ 6.38 $ 3.82 $ (3.85) (60) % $ 2.56 67 %

Average daily market price of natural gas National Balancing Point (United Kingdom) $ 24.56 $ 15.50 $ 3.20 $ 9.06 58 % $ 12.30 384 %

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

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 2022 were higher on average than during 2021 due to tighter supply and demand conditions within the market.

Natural gas prices increased steadily through the first half of 2022 as the increase in demand for natural gas for 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 demand for natural gas for LNG exports and allowed natural gas injections to refill storage at an accelerated pace.

Record high temperatures in the United States in the summer 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.

Prices continued to decline during the fourth quarter of 2022 until late December when extreme cold weather covered much of the United States, increasing demand for natural gas for use in residential and commercial heating.

The average daily market price at the Henry Hub was $6.38 per MMBtu for 2022 compared to $3.82 per MMBtu for 2021, an increase of 67%.

During 2022, the daily closing price at the Henry Hub reached a low of $3.45 per MMBtu on November 10, 2022 and a high of $9.85 per MMBtu on August 23, 2022.

During the three-year period ended December 31, 2022, the daily closing price at the Henry Hub reached a low of $1.34 per MMBtu on September 22, 2020 and three consecutive days in October 2020 and a high of $23.61 per MMBtu on February 18, 2021.

The average daily market price of natural gas at the Henry Hub for January 2023 was $3.29 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 year ended December 31, 2021.

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 in the United States impacted global LNG supply.

In the third quarter of 2022, prices continued to increase when Russian natural gas 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 reached robust levels, although prices remained elevated compared to historical price levels.

This trend continued in the fourth quarter of 2022 as Europe experienced a mild start to winter and LNG deliveries to the continent remained elevated, decreasing the risk of natural gas shortages.

CF INDUSTRIES HOLDINGS, INC.

The major natural gas trading point for the United Kingdom is the NBP.

The average daily market price at the NBP was $24.56 per MMBtu for 2022 compared to $15.50 per MMBtu for 2021, an increase of 58%.

During 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.

During the three-year period ended December 31, 2022, the daily closing price at the NBP reached a low of $1.04 per MMBtu on May 22, 2020, and a high of $67.08 per MMBtu on March 8, 2022.

The average daily market price of natural gas at the NBP for January 2023 was $18.93 per MMBtu.

In 2022, the total cost of natural gas used for production at all of our locations, which includes the impact of realized natural gas derivatives, increased 71% to $7.18 from $4.21 per MMBtu in 2021.

The cost of natural gas used for production of $4.21 per MMBtu in 2021 does not include the $112 million gain from the net settlement of certain natural gas contracts in February 2021.

The increase in natural gas costs in 2022 as compared to 2021 resulted in a decrease in gross margin of approximately $1.05 billion.

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 following table summarizes the total impact of these factors for the years ended December 31, 2022 and 2021.

For the year ended December 31, 2020, no impairment or restructuring charges were recognized.

Year ended December 31,

2022 2021 2022 v.

(in millions)

goodwill impairment $ — $ 285 $ (285) (100) %

long-lived and intangible asset impairment 239 236 3 1 %

operations restructuring 19 — 19 N/M

Total $ 258 $ 521 $ (263) (50) %

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N/M—Not Meaningful

2021 Impairment

In the first half of 2021, natural gas prices in the United Kingdom had increased to levels that were considered high compared to historical prices, and prices then more than doubled in 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 the 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, and total long-lived and intangible asset impairment charges of $236 million.

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

In 2022, we recognized total impairment charges of $239 million and restructuring charges of $19 million, as described below.

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 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 planned permanent closure of our

Throughout 2023, there were several factors that led to lower average North American natural gas prices compared to 2022.

Warmer-than-normal temperatures in the

CF INDUSTRIES HOLDINGS, INC.

Ince facility and optimization of the remaining manufacturing operations at our 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, primarily consisting of impairment of property, plant and equipment at the Ince facility that is planned for abandonment, and impairment of certain trade name intangible assets;

• a charge for post-employment benefits of $10 million related to contractual and statutory obligations due to employees whose employment would be terminated in the proposed plan.

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

Russian natural gas 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 our continuing U.K.

As a result, in the third quarter of 2022, we recorded total charges of $95 million as follows:

• asset impairment charges of $87 million related to property, plant and equipment and definite-lived intangible assets at our Billingham complex;

• a charge for post-employment benefits of $8 million for additional charges primarily related to one-time termination benefits.

In the fourth quarter of 2022, we incurred additional charges related to our U.K.

restructuring of $1 million, primarily related to one-time termination benefits.

We continue to work with customers, vendors, regulators and others to finalize closure plans of our Ince complex.

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 year ended December 31, 2022, gross margin generated by our U.K.

operations represented approximately 2% 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.

See Note 5—United Kingdom Operations Restructuring and Impairment Charges for further information.

first quarter of 2023 drove lower heating demand for natural gas, while North American supply remained strong, as there were few weather-related production 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 2023, the outage at the Freeport LNG facility in the first quarter of 2023 as well as planned maintenance in 2023 at several other LNG facilities limited total gas exports, resulting in greater domestic supply availability.

In the fourth quarter of 2023, a warmer-than-average start to the winter season led to lower-than-expected heating demand, while North American natural gas production during the fourth quarter of 2023 was at historical highs.

As a result, injection rates into natural gas storage in the United States during the fourth quarter of 2023 exceeded historical averages, leading to end-of-year storage levels that were 19% higher than one year earlier and 13% higher than the five-year average.

Our Billingham U.K.

nitrogen manufacturing facility, prior to its ceasing ammonia production beginning in September 2022, was subject to fluctuations associated with the price of natural gas in Europe.

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.

The average daily market price of natural gas at the National Balancing Point (NBP), the major trading point for natural gas in the United Kingdom, was $24.56 for 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 idled ammonia production at our Billingham complex.

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

In the third quarter of 2023, we approved our plan to permanently close the ammonia plant at our Billingham complex.

As a result, we continue to import ammonia for upgrade.

The total cost of natural gas used for production at our manufacturing facilities, which includes the impact of realized natural gas derivatives, decreased 49% to $3.67 per MMBtu in 2023 from $7.18 per MMBtu in 2022.

The decrease in natural gas costs in 2023 as compared to 2022 resulted in an increase in gross margin of approximately $1.16 billion.

Financial Executive Summary

We reported net earnings attributable to common stockholders of $3.35 billion in 2022 compared to $917 million in 2021, an increase in net earnings of 265%, or $2.43 billion.

The increase in net earnings reflects an increase of $3.47 billion in gross margin to $5.86 billion for the year ended December 31, 2022, due primarily to higher average selling prices partially offset by higher natural gas costs.

Average selling prices increased 73% to $610 per ton in 2022 from $353 per ton in 2021, which increased gross margin by $4.80 billion.

The cost of natural gas used for production increased 71% to $7.18 per MMBtu from $4.21 per MMBtu in 2021, which reduced gross margin by approximately $1.05 billion.

The increase in average selling prices and higher natural gas costs are more fully described above under “Market Conditions and Current Developments.”

Partially offsetting the increase in gross margin was an increase in the income tax provision of $875 million for the year ended December 31, 2022, to $1.16 billion, due primarily to higher taxable income due to improved profitability.

The year ended December 31, 2022 also includes pre-tax impairment and restructuring charges related to our U.K.

operations of $258 million compared to $521 million in the year ended December 31, 2021, which are more fully described under “Market Conditions and Current Developments—United Kingdom Operations,” above.

Diluted net earnings per share attributable to common stockholders increased $12.14 per share, to $16.38 per share in 2022 compared to $4.24 per share in 2021.

We reported net earnings attributable to common stockholders of $1.53 billion in 2023 compared to $3.35 billion in 2022, a decrease in net earnings of 54%, or $1.82 billion.

The decrease in net earnings reflects a decrease in gross margin partially offset by the following:

a lower income tax provision, lower net interest expense, a decrease in net earnings attributable to the noncontrolling interest, and impairment charges related to our U.K.

operations in 2022 that did not recur in 2023.

Gross margin decreased by $3.32 billion to $2.55 billion for the year ended December 31, 2023 compared to the year ended December 31, 2022.

The decrease in gross margin was due primarily to a 43% decrease in average selling prices to $347 per ton in 2023 from $610 per ton in 2022, which decreased gross margin by $4.98 billion.

The impact of lower selling prices was partially offset by lower natural gas costs, which increased gross margin by $1.16 billion.

Lower gross margin was partially offset by the following:

a decrease in the income tax provision of $748 million due primarily to lower pre-tax earnings in 2023, a $287 million decrease in net interest expense, and a decrease of $278 million in net earnings attributable to the noncontrolling interest.

In addition, pre-tax impairment and restructuring charges of $258 million related to our U.K.

operations were recognized in 2022 compared to $10 million in 2023.

Diluted net earnings per share attributable to common stockholders decreased $8.51 per share, to $7.87 per share in 2023 compared to $16.38 per share in 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 programs.

Acquisition of Waggaman Ammonia Production Facility

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana from Dyno Nobel Louisiana Ammonia, LLC (DNLA), a U.S.

subsidiary of Australia-based Incitec Pivot Limited (IPL), pursuant to an asset purchase agreement with DNLA and IPL.

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

In connection with the acquisition, we entered into 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.

Under the terms of the asset purchase agreement, $425 million of the purchase price of $1.675 billion, subject to adjustment, was allocated by the parties to the ammonia offtake agreement.

We funded the balance of the purchase price with $1.223 billion of cash on hand.

The consideration transferred reflects an estimated net working capital adjustment and other adjustments to the purchase price, which is subject to further adjustment pursuant to the terms of the asset purchase agreement.

We expect any further purchase price adjustments required under the asset purchase agreement will be completed in 2024.

The financial results of the Waggaman facility are included in our consolidated statement of operations and in our

CF INDUSTRIES HOLDINGS, INC.

Ammonia segment from the acquisition date of December 1, 2023.

For the year ended December 31, 2023, the amount of net sales and net earnings of the Waggaman facility since the acquisition date was $28 million and $7 million, respectively.

In connection with recording the acquisition, we recognized, among other items, goodwill, intangible assets and a supply contract liability.

See Note 6—Acquisition of Waggaman Ammonia Production Facility for additional information.

Items Affecting Comparability of Results

During the years ended December 31, 2022 and 2021, we reported net earnings attributable to common stockholders of $3.35 billion and $917 million, respectively.

In addition to the impact of market conditions discussed above, certain items affected the comparability of our financial results during the years ended December 31, 2022 and 2021.

The following table and related discussion outline these items.

During the years ended December 31, 2023 and 2022, we reported net earnings attributable to common stockholders of $1.53 billion and $3.35 billion, respectively.

In addition to the impact of market conditions and the acquisition of the Waggaman ammonia production facility discussed above, certain items affected the comparability of our financial results during the years ended December 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.

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(in millions)

Unrealized net mark-to-market loss on natural gas derivatives (2)

Unrealized net mark-to-market (gain) loss on natural gas derivatives (2)

$ (39) $ (30) $ 41 $ 31

Loss on foreign currency transactions, including intercompany loans (3)

goodwill impairment — — 285 285

long-lived and intangible asset impairment — — 239 180

operations restructuring 10 8 19 14

Acquisition and integration costs 39 29 — —

Unrealized gain on embedded derivative liability (3)

— — (14) (11)

Impairment of equity method investment in PLNL (4)

Pension settlement loss and curtailment gains — net (5)

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______________________________________________________________________________

(1) The tax impact is calculated utilizing a marginal effective rate of 23.5% and 23.6% in 2022 and 2021, respectively, except for U.K.

long-lived and intangible asset impairments, which reflects the amount of income tax benefit recognized.

(1) The tax impact is calculated utilizing a marginal effective rate of 23.5% in both 2023 and 2022, except for acquisition and integration costs related to the Waggaman acquisition, which reflects a 26.2% marginal effective rate, and U.K.

long-lived and intangible asset impairment, which reflects the amount of income tax benefit recognized.

An income tax benefit for the U.K.

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

(4) Included in equity in (loss) earnings of operating affiliate in our consolidated statements of operations.

(5) Included in other non-operating—net in our consolidated statement of operations.

(5) For the year ended December 31, 2022, the after-tax income tax provision amount of $65 million reflects an income tax provision of $70 million, consisting of the $78 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $8 million of income tax benefit referenced below under “Transfer pricing positions,” net of $5 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 loss on natural gas derivatives

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

(6) The after-tax income tax provision amount of $65 million reflects an income tax provision of $70 million, consisting of the $78 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $8 million of income tax benefit referenced below under “Transfer pricing positions,” net of $5 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) loss on natural gas derivatives

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

At certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments.

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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 2022 and 2021, we recognized an unrealized net mark-to-market loss on natural gas derivatives of $41 million and $25 million, respectively.

Loss on foreign currency transactions, including intercompany loans

In 2022 and 2021, we recognized losses on foreign currency transactions of $28 million and $6 million, respectively, which consist of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.

In 2023 and 2022, we recognized an unrealized net mark-to-market (gain) loss on natural gas derivatives of $(39) million and $41 million, respectively.

CF INDUSTRIES HOLDINGS, INC.

In 2022, we recognized total charges related to our U.K.

operations of $258 million, consisting primarily of asset impairment charges related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets.

In 2021, we recognized impairment charges of $521 million, including a goodwill impairment charge of $285 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.

Loss on foreign currency transactions, including intercompany loans

In 2022, we recognized a loss on foreign currency transactions of $28 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.

In 2023, we recognized total charges of $10 million, consisting primarily of the recognition of an asset retirement obligation and post-employment benefits related to contractual and statutory obligations due to employees as a result of our approved plan to permanently close the ammonia plant at our Billingham complex.

In 2022, we recognized total charges of $258 million, consisting primarily of asset impairment charges related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets.

See Note 7—United Kingdom Operations Restructuring and Impairment Charges for further information.

Acquisition and integration costs

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana, as described above under “Acquisition of Waggaman Ammonia Production Facility.” In 2023, we incurred $39 million of acquisition and integration costs related to the Waggaman acquisition.

Unrealized gain on embedded derivative liability

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As a result of these upgrades, in the fourth quarter of 2022, there was a reduction in the fair value of the embedded derivative liability, and we recognized an unrealized gain of $14 million.

Impairment of equity method investment in PLNL

PLNL, our joint venture in Trinidad, operates an ammonia plant that relies on natural gas supplied, under a gas sales contract (the NGC Contract), by The National Gas Company of Trinidad and Tobago Limited (NGC).

The NGC Contract had an expiration date of September 2023.

In the third quarter of 2023, PLNL entered into a new gas sales contract with NGC (the New NGC Contract), which is effective October 2023 through December 2025.

In the third quarter of 2023 and due to the terms of the New NGC Contract, we assessed our investment in PLNL for impairment and determined that the carrying value of our equity method investment in PLNL exceeded its fair value.

As a result, we recorded an impairment of our equity method investment in PLNL of $43 million, which is reflected in equity in (loss) earnings of operating affiliate in our consolidated statement of operations for the year ended December 31, 2023.

Pension settlement loss and curtailment gains—net

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The settlement loss is reflected in other non-operating—net in our consolidated statement of operations for the year ended December 31, 2022.

CF INDUSTRIES HOLDINGS, INC.

In October 2022, we remeasured certain of our U.S.

and Canadian defined benefit pension plans due to plan amendments resulting from a revision to our North American retirement plan strategy.

As a result of these plan amendments, we recognized $4 million of curtailment gains, which are reflected in other non-operating—net in our consolidated statement of operations.

See Note 11—Pension and Other Postretirement Benefits for further information for the year ended December 31, 2022.

As a result of these plan amendments, we recognized $4 million of curtailment gains, which is reflected in other non-operating—net in our consolidated statement of operations for the year ended December 31, 2022.

See Note 13—Pension and Other Postretirement Benefits for further information.

Canada Revenue Agency Competent Authority Matter

In 2016, the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian affiliates asserting a disallowance of certain patronage deductions.

In 2016, the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian subsidiaries asserting a disallowance of certain patronage deductions.

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 served as security until the matter was resolved, as discussed below.

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 was subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years of approximately $129 million.

CF INDUSTRIES HOLDINGS, INC.

See Note 12—Income Taxes for additional information.

In 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 through 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $102 million, primarily reflecting the interest paid to Canada.

See “Liquidity and Capital Resources—Canada Revenue Agency Competent Authority Matter and Transfer Pricing,” below, for additional information.

Transfer pricing positions

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In 2022, the impact of these evaluations of transfer pricing positions on our consolidated statement of operations, including $21 million of net deferred income tax provision for other transfer pricing tax effects, was $8 million of income tax benefit and $39 million of net interest expense before tax ($44 million after tax).

See “Liquidity and Capital Resources—Canada Revenue Agency Competent Authority Matter and Transfer Pricing,” below, for additional information.

Loss on debt extinguishment

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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 for the 2023 Notes redeemed in September 2021 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.

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 March 2021 redemption of 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.

CF INDUSTRIES HOLDINGS, INC.

Consolidated Results of Operations

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

The following table presents our consolidated results of operations for the years ended December 31, 2023, 2022 and 2021:

Year ended December 31,

2022 2021 2020 (1)

2023 2022 2021 2023 v.

(in millions, except as noted)

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Selling, general and administrative expenses 289 290 223 (1) — % 67 30 %

goodwill impairment — 285 — (285) (100) % 285 N/M

long-lived and intangible asset impairment 239 236 — 3 1 % 236 N/M

goodwill impairment — — 285 — — % (285) (100) %

long-lived and intangible asset impairment — 239 236 (239) (100) % 3 1 %

operations restructuring 10 19 — (9) (47) % 19 N/M

Other operating—net 10 (39) (17) 49 N/M (22) (129) %

Acquisition and integration costs 39 — — 39 N/M — — %

Other operating—net (31) 10 (39) (41) N/M 49 N/M

Total other operating costs and expenses 307 558 705 (251) (45) % (147) (21) %

Equity in earnings of operating affiliate 94 47 11 47 100 % 36 327 %

Equity in (loss) earnings of operating affiliate (8) 94 47 (102) N/M 47 100 %

Operating earnings 2,230 5,397 1,729 (3,167) (59) % 3,668 212 %

Interest expense—net 279 183 161 96 52 % 22 14 %

Loss on debt extinguishment 8 19 — (11) (58) % 19 N/M

Interest expense 150 344 184 (194) (56) % 160 87 %

Interest income (158) (65) (1) (93) (143) % (64) N/M

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

Other non-operating—net (10) 15 (16) (25) N/M 31 N/M

Earnings before income taxes 2,248 5,095 1,543 (2,847) (56) % 3,552 230 %

Income tax provision 1,158 283 31 875 309 % 252 N/M

Income tax provision 410 1,158 283 (748) (65) % 875 309 %

Net earnings 1,838 3,937 1,260 (2,099) (53) % 2,677 212 %

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Dividends declared per common share $ 1.60 $ 1.50 $ 1.20 $ 0.10 7 % $ 0.30 25 %

______________________________________________________________________________

N/M—Not Meaningful

CF INDUSTRIES HOLDINGS, INC.

The following table presents certain supplemental data for the years ended December 31, 2023, 2022 and 2021:

Year ended December 31,

2023 2022 2021 2023 v.

Natural gas supplemental data (per MMBtu)

Cost of natural gas used for production in COS (2)

Natural gas costs in COS (1)

$ 3.26 $ 7.16 $ 4.21 $ (3.90) (54) % $ 2.95 70 %

Realized derivatives loss in COS (2)

0.41 0.02 — 0.39 N/M 0.02 N/M

Cost of natural gas used for production in COS $ 3.67 $ 7.18 $ 4.21 $ (3.51) (49) % $ 2.97 71 %

Average daily market price of natural gas Henry Hub (Louisiana) $ 2.53 $ 6.38 $ 3.82 $ (3.85) (60) % $ 2.56 67 %

Average daily market price of natural gas National Balancing Point (United Kingdom) $ 24.56 $ 15.50 $ 3.20 $ 9.06 58 % $ 12.30 384 %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 41 $ 25 $ (6) $ 16 64 % $ 31 N/M

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ (39) $ 41 $ 25 $ (80) N/M $ 16 64 %

Depreciation and amortization $ 869 $ 850 $ 888 $ 19 2 % $ (38) (4) %

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N/M—Not Meaningful

(1) For a discussion and analysis of the year ended December 31, 2020, see Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022.

(1) Includes the cost of natural gas 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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(3) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.

CF INDUSTRIES HOLDINGS, INC.

The following is a discussion and analysis of our consolidated results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022.

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Sales incentives are reported as a reduction in net sales.

Our net sales increased $4.65 billion, or 71%, to $11.19 billion in 2022 compared to $6.54 billion in 2021 due to a 73% increase in average selling prices, partially offset by a 1% decrease in sales volume.

Average selling prices were $610 per ton in 2022 compared to $353 per ton in 2021, an increase of 73%, 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 and 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 sales volume of 18.3 million product tons in 2022 was 1% lower compared to 18.5 million product tons in 2021, as lower sales volume in our Ammonia, Other and AN segments was mostly offset by higher sales volume in our Granular Urea and UAN segments.

Gross ammonia production for 2022 was approximately 9.8 million tons compared to 9.3 million tons in 2021, reflecting a return to a typical level of planned maintenance activities compared to 2021.

We expect gross ammonia production for 2023 will be approximately 9.5 million tons, which could be higher or lower depending on operating rates at our Billingham complex.

Our net sales decreased $4.56 billion, or 41%, to $6.63 billion in 2023 compared to $11.19 billion in 2022.

The decrease in our net sales reflects (i) the impact of the Waggaman acquisition, which is included in our operating results since the acquisition on December 1, 2023, and increased our net sales by $28 million, and (ii) a $4.58 billion, or 41%, decline in our net sales excluding the impact of the Waggaman acquisition, due to a 43% decrease in average selling prices, partially offset by a 4% increase in sales volume.

Our average selling price was $347 per ton in 2023 compared to $610 per ton in 2022, a decrease of 43%, due to lower average selling prices across all of our segments, as lower global energy costs reduced the global market clearing price required to meet global demand.

The impact of lower average selling prices was a decrease in net sales of approximately $4.98 billion for 2023 compared to 2022.

Our sales volume of 19.1 million product tons in 2023 was 4% higher compared to 18.3 million product tons in 2022, due primarily to higher sales volume in our UAN, Ammonia and Other segments.

The impact of the Waggaman acquisition increased our ammonia sales volume by 57,000 tons.

CF INDUSTRIES HOLDINGS, INC.

Gross ammonia production for 2023 decreased to approximately 9.5 million tons compared to 9.8 million tons in 2022, due primarily to our Billingham ammonia plant, which was idled in late 2022 and permanently closed in 2023.

We expect gross ammonia production for 2024 will be approximately 10 million tons.

The expected increase in gross ammonia production for 2024 compared to 2023 reflects the inclusion of the Waggaman facility, which we acquired on December 1, 2023.

Cost of Sales

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Storage costs consist of costs incurred prior to final shipment to customers.

Our cost of sales increased $1.17 billion, or 28%, to $5.33 billion in 2022 as compared to $4.15 billion in 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 $1.05 billion, and higher costs for ammonia purchased from PLNL, our joint venture in Trinidad.

In addition, cost of sales in 2021 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 averaged $290 per ton in 2022, a 29% increase from $224 per ton in 2021.

The cost of natural gas used for production, including the impact of realized derivatives, increased 71% to $7.18 per MMBtu in 2022 from $4.21 per MMBtu in 2021.

The cost of natural gas used for production of $4.21 per MMBtu in 2021 does not include the $112 million gain from the net settlement of certain natural gas contracts in February 2021.

Our cost of sales decreased $1.24 billion, or 23%, to $4.09 billion in 2023 as compared to $5.33 billion in 2022.

The decrease in our cost of sales reflects (i) the impact of the Waggaman acquisition, which increased our cost of sales by $14 million, (ii) lower costs for natural gas including the impact of realized derivatives, excluding the impact of the Waggaman acquisition, which decreased cost of sales by $1.16 billion, and (iii) lower costs for ammonia purchased from PLNL, our joint venture in Trinidad.

Lower natural gas costs include the benefit of ceasing ammonia production in the United Kingdom and the corresponding reduction in natural gas purchases.

operations, the decrease in our cost of sales from lower natural gas costs was partially offset by the cost to import ammonia for upgrading into AN and other nitrogen products.

Cost of sales also includes the impact of a $39 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $41 million loss in 2022.

Cost of sales averaged $214 per ton in 2023, a 26% decrease from $290 per ton in 2022.

Our cost of natural gas, including the impact of realized derivatives, decreased 49% to $3.67 per MMBtu in 2023 from $7.18 per MMBtu in 2022.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses consist primarily of corporate office expenses such as salaries and other payroll-related costs for our executive, administrative, legal, financial, IT, and sales functions, as well as certain taxes and insurance and other professional service fees, including those for corporate initiatives.

Selling, general and administrative expenses increased $67 million, or 30%, to $290 million in 2022 from $223 million in 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 as well as costs related to our clean energy strategy.

In addition, the increase in selling, general and administrative expenses includes an increase in

Selling, general and administrative expenses were $289 million in 2023 as compared to $290 million in 2022.

The decrease was due primarily to charitable contributions in 2022 for the initial funding of the CF Industries Foundation formed in December 2022 that did not recur in 2023, partially offset by higher costs related to certain corporate initiatives, including higher amortization due to our recently implemented enterprise resource planning (ERP) system.

In 2023, related to our U.K.

operations, we recognized total charges of $10 million, consisting primarily of the recognition of an asset retirement obligation and post-employment benefits related to contractual and statutory obligations due to employees as a result of our approved plan to permanently close the ammonia plant at our Billingham complex.

In 2022, related to our U.K.

operations, we recognized total charges of $258 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 $19 million of restructuring charges primarily related to post-employment benefits related to contractual and statutory obligations and one-time termination benefits.

See Note 7—United Kingdom Operations Restructuring and Impairment Charges for further information.

Acquisition and Integration Costs

CF INDUSTRIES HOLDINGS, INC.

charitable contributions for the initial funding of the CF Industries Foundation and higher stock-based compensation.

The CF Industries Foundation is a not-for-profit corporation that we formed in December 2022 to advance our philanthropic goals and develop programs that further our charitable objectives.

In 2022, we recognized total charges related to our U.K.

operations of $258 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 $19 million of restructuring charges primarily related to post-employment benefits related to contractual and statutory obligations and one-time termination benefits.

In 2021, we recognized total charges related to our U.K.

operations of $521 million, consisting of goodwill impairment of $285 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 includes administrative costs that do not relate directly to our central operations.

Costs included in “other operating costs” can include foreign currency transaction gains and losses, unrealized gains and losses on foreign currency derivatives, litigation expenses, gains and losses on the disposal of fixed assets and FEED study costs related to a greenfield ammonia production facility.

Other operating—net was $10 million of expense in 2022 compared to $39 million of income in 2021.

Other operating—net was $31 million of income in 2023 compared to $10 million of expense in 2022.

The income in 2023 consists primarily of gains on sales of emission credits, partially offset by FEED study costs for our clean energy initiatives.

See “Our Strategy,” above, for additional information related to our clean energy initiatives.

The expense in 2022 primarily includes a loss on foreign currency transactions of $28 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.

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See “Items Affecting Comparability of Results—Unrealized gain on embedded derivative liability,” above, for further information.

The income in 2021 includes a gain of $29 million on sales of emission credits.

In addition, other operating—net in 2021 includes the amount received under the terms of an agreement with the U.K.

government associated with the restart of our Billingham facility, partially offset by a loss on foreign currency transactions of $6 million.

Equity in Earnings of Operating Affiliate

Equity in earnings of operating affiliate consists of our 50% ownership interest in PLNL.

Equity in (Loss) Earnings of Operating Affiliate

Equity in (loss) earnings of operating affiliate consists of our 50% ownership interest in PLNL.

We include our share of the net earnings from our equity method investment in PLNL as an element of earnings from operations because this investment provides additional production and is integrated with our other supply chain and sales activities.

Our share of the net earnings includes the amortization of the increased basis of property, plant and equipment revalued as part of the application of purchase accounting at acquisition.

Equity in earnings of operating affiliate was $94 million in 2022 compared to $47 million in 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

Our interest expense—net represents the net of our interest expense and interest income.

Equity in (loss) earnings of operating affiliate was an $8 million loss in 2023 compared to $94 million of earnings in 2022.

The $8 million loss in 2023 includes an impairment of our equity method investment in PLNL of $43 million recognized in the third quarter of 2023.

See “Items Affecting Comparability of Results—Impairment of equity method investment in PLNL,” above, for further discussion.

Lower equity in earnings of operating affiliate also reflects a decrease in the operating results of PLNL as a result of lower ammonia selling prices, partially offset by lower natural gas costs.

Interest Expense

Interest expense includes interest on our long-term debt, amortization of the related fees required to execute financing agreements, annual fees pursuant to our revolving credit agreement and interest on tax liabilities.

Capitalized interest relating to the construction of major capital projects reduces interest expense as the interest is capitalized and amortized over the estimated useful lives of the related assets.

Interest expense was $150 million in 2023 compared to $344 million in 2022.

The decrease of $194 million was due primarily to $184 million of tax-related interest expense recorded in 2022, including $170 million of interest expense related to income tax matters described under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter” and “Items Affecting Comparability of Results—Transfer pricing positions,” above.

The decrease in interest expense was also due in part to lower interest expense on borrowings due to the redemption in full of all of the $500 million principal amount of the 2023 Notes in April 2022 prior to their scheduled maturity.

Interest Income

Interest income includes amounts earned on our cash, cash equivalents, and investments and any interest earned related to income tax refunds.

Net interest expense increased by $96 million to $279 million in 2022 from $183 million in 2021.

The increase was due primarily to $141 million of net interest expense recorded in 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.

This increase was partially offset by $33 million of higher interest income on investments and a $20 million decrease in interest on borrowings due to the redemption of senior notes described under “Liquidity and Capital Resources,” below.

CF INDUSTRIES HOLDINGS, INC.

Interest income was $158 million in 2023 compared to $65 million in 2022.

The increase of $93 million reflects a $102 million increase in interest income on short-term investments in 2023 due primarily to higher interest rates.

Partially offsetting this effect of higher interest rates was interest income recorded in 2022 that did not recur in 2023, which was related to income tax matters described under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter” and “Items Affecting Comparability of Results—Transfer pricing positions,” above.

Loss on Debt Extinguishment

Loss on debt extinguishment of $8 million and $19 million in 2022 and in 2021, respectively, is described under “Items Affecting Comparability of Results—Loss on Debt Extinguishment,” above.

Loss on debt extinguishment of $8 million in 2022 is described under “Items Affecting Comparability of Results—Loss on debt extinguishment,” above.

CF INDUSTRIES HOLDINGS, INC.

Other Non-Operating—Net

Other non-operating—net was $15 million of expense in 2022 compared to $16 million of income in 2021.

The $15 million of expense in 2022 was due primarily to a pension settlement loss of $21 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 and curtailment gains of $4 million related to the remeasurement of certain of our North American defined benefit pension plans due to plan amendments.

The pension settlement loss and curtailment gains are described under “Items Affecting Comparability of Results—Pension settlement loss and curtailment gains—net,” above.

The $16 million of income in 2021 was due primarily to a gain of $20 million on the sale of EU emission credits that, due to Brexit, could no longer be utilized by our U.K.

operations for carbon emission obligations in the United Kingdom.

Other non-operating—net was $10 million of income in 2023 compared to $15 million of expense in 2022.

The variance was due primarily to the impact of defined benefit pension plan transactions in 2022, including a pension settlement loss of $21 million and curtailment gains of $4 million, which are described under “Items Affecting Comparability of Results—Pension settlement loss and curtailment gains—net,” above.

Income Tax Provision

Our income tax provision for 2022 was $1.16 billion on pre-tax income of $5.10 billion, or an effective tax rate of 22.7%, compared to an income tax provision of $283 million on pre-tax income of $1.54 billion, or an effective tax rate of 18.3%, in 2021.

For 2022, our income tax provision includes $22 million of income tax expense to record a valuation allowance in the United Kingdom, $23 million of income tax benefit for the excess tax benefit related to certain share-based compensation activity and $78 million of income tax provision related to the Canada Revenue Agency Competent Authority Matter, which is described above under “Items Affecting Comparability of Results.”

For 2021, we did not record an income tax benefit related to the goodwill impairment charges described in Note 5—United Kingdom Operations Restructuring and Impairment Charges, as the goodwill impairment charges are non-deductible for income tax purposes.

Our income tax provision for 2021 includes a $26 million benefit reflecting the impact of agreement on certain issues related to U.S.

federal income tax audits, including a discrete income tax benefit of approximately $15 million due to the reversal of an accrual for unrecognized tax benefits as a result of the effective settlement of the U.S.

federal income tax audit for the tax years 2012 through 2016.

Our income tax provision for 2023 was $410 million on pre-tax income of $2.25 billion, or an effective tax rate of 18.3%, compared to an income tax provision of $1.16 billion on pre-tax income of $5.10 billion, or an effective tax rate of 22.7%, in 2022.

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.

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Our effective tax rate for 2022 of 22.7%, which is based on pre-tax income of $5.10 billion, would be 3.0 percentage points higher, or 25.7%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $591 million.

Both 2023 and 2022 were impacted by additional discrete tax items.

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Net earnings attributable to noncontrolling interest includes the net earnings attributable to the approximately 11% CHS minority equity interest in CFN, a subsidiary of CF Holdings.

Net earnings attributable to noncontrolling interest increased $248 million, or 72%, to $591 million in 2022 compared to $343 million in 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 $278 million, or 47%, to $313 million in 2023 compared to $591 million in 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 286% to $16.38 per diluted share in 2022 from $4.24 per diluted share in 2021.

This increase is due primarily to higher average selling prices, 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 6% reduction in the diluted weighted-average common shares outstanding, which declined from 216.2 million shares for 2021 to 204.2 million shares for 2022, due primarily to repurchases of common shares under our share repurchase programs.

Net earnings per share attributable to common stockholders decreased 52% to $7.87 per diluted share in 2023 from $16.38 per diluted share in 2022.

This decrease was due primarily to a decrease in gross margin, driven by lower average selling prices, partially offset by lower costs for natural gas.

Lower gross margin was partially offset by a decrease in the income tax provision resulting from lower profitability, a decrease in interest expense due primarily to interest expense on tax liabilities in 2022 related to Canadian-U.S.

transfer pricing matters that did not recur in 2023, a decrease in net earnings attributable to the noncontrolling interest of $278 million, and pre-tax impairment and restructuring charges related to our U.K.

operations of $258 million in 2022 compared to $10 million in 2023.

Additionally, diluted weighted-average common shares outstanding declined 5% from 204.2 million shares for 2022 to 193.8 million shares for 2023, due primarily to repurchases of common shares under our share repurchase programs.

CF INDUSTRIES HOLDINGS, INC.

Operating Results by Business Segment

Our reportable segment structure reflects how our chief operating decision maker, as defined in U.S.

Our reportable segment structure reflects how our chief operating decision maker, as defined in accounting principles generally accepted in the United States (U.S.

GAAP), assesses the performance of our reportable segments and makes decisions about resource allocation.

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

See Note 15—Derivative Financial Instruments for additional information.

(1) The financial results of the Waggaman facility are included in the Ammonia segment from the Waggaman acquisition date of December 1, 2023.

See “Acquisition of Waggaman Ammonia Production Facility” for additional information.

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

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Depreciation and amortization $ 171 $ 166 $ 209 $ 5 3 % $ (43) (21) %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 13 $ 7 $ (2) $ 6 86 % $ 9 N/M

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ (11) $ 13 $ 7 $ (24) N/M $ 6 86 %

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N/M—Not Meaningful

(1) The financial results of the Waggaman facility are included in the Ammonia segment from the Waggaman acquisition date of December 1, 2023.

See “Acquisition of Waggaman Ammonia Production Facility” for additional information.

(2) Ammonia represents 82% nitrogen content.

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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Net sales in our Ammonia segment increased by $1.30 billion, or 73%, to $3.09 billion in 2022 from $1.79 billion in 2021 due primarily to an 88% increase in average selling prices, partially offset by an 8% decrease in sales volume.

Average selling prices increased to $936 per ton in 2022 compared to $498 per ton in 2021.

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.” Sales volume was lower in 2022 due primarily to more typical fall ammonia applications in 2022 compared to a stronger prior year fall ammonia season.

Net sales in our Ammonia segment decreased by $1.41 billion, or 46%, to $1.68 billion in 2023 from $3.09 billion in 2022.

The decrease in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased net sales by $28 million, and (ii) a $1.44 billion, or 47%, decline in our net sales excluding the impact of the Waggaman acquisition, due to a 49% decrease in average selling prices, partially offset by a 6% increase in sales volume.

Average selling prices decreased to $473 per ton in 2023 compared to $936 per ton in 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.

Sales volume was higher in 2023 due primarily to higher supply availability resulting from higher beginning inventory.

Cost of Sales.

Cost of sales in our Ammonia segment averaged $451 per ton in 2022, a 39% increase from $324 per ton in 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 in 2021 on the net settlement of certain natural gas contracts as a result of Winter Storm Uri.

Cost of sales in our Ammonia segment averaged $320 per ton in 2023, a 29% decrease from $451 per ton in 2022.

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

The impact of the Waggaman acquisition on our cost of sales per ton in our Ammonia segment was not material.

Gross Margin .

Gross margin in our Ammonia segment increased by $974 million to $1.60 billion in 2022 from $625 million in 2021, and our gross margin percentage was 51.7% in 2022 compared to 35.0% in 2021.

The increase in gross margin was due to an 88% increase in average selling prices, which increased gross margin by $1.51 billion.

The increase in average selling prices was partially offset by an increase in realized natural gas costs, which decreased gross margin by $307 million, an 8% decrease in sales volume, which decreased gross margin by $76 million, and a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $34 million.

In addition, the impact of the $112 million gain on the net settlement of certain natural gas contracts is included in gross margin in 2021.

Gross margin also includes the impact of a $13 million unrealized net mark-to-market loss on natural gas derivatives in 2022 compared to a $7 million loss in 2021.

Gross margin in our Ammonia segment decreased by $1.06 billion to $541 million in 2023 from $1.60 billion in 2022, and our gross margin percentage was 32.2% in 2023 compared to 51.7% in 2022.

These results reflect (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased gross margin by $14 million, and (ii) a decrease in gross margin of $1.07 billion excluding the impact of the Waggaman acquisition, due primarily to a 49% decrease in average selling prices, which decreased gross margin by $1.60 billion.

The decrease in average selling prices was partially offset by a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $293 million, a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $167 million, and a 6% increase in sales volume, which increased gross margin by $40 million.

Gross margin also includes the impact of an $11 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $13 million loss in 2022.

CF INDUSTRIES HOLDINGS, INC.

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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, Port Neal and Medicine Hat nitrogen complexes.

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

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

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Depreciation and amortization $ 285 $ 272 $ 235 $ 13 5 % $ 37 16 %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 13 $ 6 $ (2) $ 7 117 % $ 8 N/M

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ (11) $ 13 $ 6 $ (24) N/M $ 7 117 %

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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Net sales in our Granular Urea segment increased $1.01 billion, or 54%, to $2.89 billion in 2022 compared to $1.88 billion in 2021 due primarily to a 45% increase in average selling prices and a 7% increase in sales volume.

Average selling prices increased to $633 per ton in 2022 compared to $438 per ton in 2021.

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

Net sales in our Granular Urea segment decreased $1.07 billion, or 37%, to $1.82 billion in 2023 compared to $2.89 billion in 2022 due primarily to a 37% decrease in average selling prices.

Average selling prices decreased to $399 per ton in 2023 compared to $633 per ton in 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.

Cost of Sales.

Cost of sales in our Granular Urea segment averaged $291 per ton in 2022, a 26% increase from $231 per ton in 2021, due primarily to higher realized natural gas costs.

Cost of sales in our Granular Urea segment averaged $221 per ton in 2023, a 24% decrease from $291 per ton in 2022, due primarily to lower realized natural gas costs, including the impact of realized derivatives.

Gross Margin .

Gross margin in our Granular Urea segment increased by $676 million to $1.56 billion in 2022 from $888 million in 2021, and our gross margin percentage was 54.1% in 2022 compared to 47.2% in 2021.

The increase in gross margin was driven by a 45% increase in average selling prices, which increased gross margin by approximately $857 million and a 7% increase in sales volume, which increased gross margin by $113 million.

These factors that increased gross margin were partially offset by higher realized natural gas costs, which decreased gross margin by $250 million, and a net increase in manufacturing, maintenance and other costs, which reduced gross margin by $37 million.

Gross margin also includes the impact of a $13 million unrealized net mark-to-market loss on natural gas derivatives in 2022 compared to a $6 million loss in 2021.

Gross margin in our Granular Urea segment decreased by $751 million to $813 million in 2023 from $1.56 billion in 2022, and our gross margin percentage was 44.6% in 2023 compared to 54.1% in 2022.

The decrease in gross margin was driven by a 37% decrease in average selling prices, which decreased gross margin by approximately $1.10 billion, and a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $3 million.

These factors that decreased gross margin were partially offset by lower realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $262 million, and the impact of changes in sales volume and mix, which increased gross margin by $68 million.

Gross margin also includes the impact of an $11 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $13 million loss in 2022.

CF INDUSTRIES HOLDINGS, INC.

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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 Courtright, Donaldsonville, Port Neal, Verdigris, Woodward, and Yazoo City nitrogen complexes.

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

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

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Gross margin per nutrient ton (1)

$ 970 $ 322 $ 53 $ 648 201 % $ 269 N/M

$ 358 $ 970 $ 322 $ (612) (63) % $ 648 201 %

Depreciation and amortization $ 288 $ 269 $ 259 $ 19 7 % $ 10 4 %

Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 14 $ 5 $ (2) $ 9 180 % $ 7 N/M

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ (11) $ 14 $ 5 $ (25) N/M $ 9 180 %

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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Net sales in our UAN segment increased $1.78 billion, or 100%, to $3.57 billion in 2022 compared to $1.79 billion in 2021 due primarily to a 93% increase in average selling prices and a 3% increase in sales volume.

Average selling prices increased to $526 per ton in 2022 compared to $272 per ton in 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 increase in sales volume was due primarily to greater supply availability from higher beginning inventory.

Net sales in our UAN segment decreased $1.50 billion, or 42%, to $2.07 billion in 2023 compared to $3.57 billion in 2022 due primarily to a 46% decrease in average selling prices, partially offset by a 7% increase in sales volume.

Average selling prices decreased to $286 per ton in 2023 compared to $526 per ton in 2022 due primarily to lower global energy costs reducing the global market clearing price required to meet global demand and an increase in imports of Russian UAN into the United States.

The increase in sales volume was due primarily to strong customer participation in our post-application season sales program as well as higher supply availability resulting from higher production.

Cost of Sales.

Cost of sales in our UAN segment averaged $219 per ton in 2022, a 29% increase from $170 per ton in 2021, due primarily to the impact of higher realized natural gas costs and higher export freight costs.

Cost of sales in our UAN segment averaged $173 per ton in 2023, a 21% decrease from $219 per ton in 2022, due primarily to the impact of lower realized natural gas costs, including the impact of realized derivatives.

Gross Margin.

Gross margin in our UAN segment increased by $1.41 billion to $2.08 billion in 2022 from $669 million in 2021, and our gross margin percentage was 58.3% in 2022 compared to 37.4% in 2021.

The increase in gross margin was due to a 93% increase in average selling prices, which increased gross margin by $1.77 billion.

The impact of higher average selling prices was partially offset by higher realized natural gas costs, which decreased gross margin by $245 million, a net increase in manufacturing, maintenance and other costs, including freight, which reduced gross margin by $95 million, and a change in location product mix, which reduced gross margin by $9 million.

Gross margin includes the impact of a $14 million unrealized net mark-to-market loss on natural gas derivatives in 2022 compared to a $5 million loss in 2021.

Gross margin in our UAN segment decreased by $1.27 billion to $817 million in 2023 from $2.08 billion in 2022, and our gross margin percentage was 39.5% in 2023 compared to 58.3% in 2022.

The decrease in gross margin was due primarily to a 46% decrease in average selling prices, which decreased gross margin by $1.73 billion.

This decrease in gross margin was partially offset by lower realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $287 million, a 7% increase in sales volume, which increased gross margin by $146 million and a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $10 million.

Gross margin also includes the impact of an $11 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $14 million loss in 2022.

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 Yazoo City and Billingham nitrogen complexes.

AN is produced at our Yazoo City and Billingham complexes.

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

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Depreciation and amortization $ 48 $ 61 $ 77 $ (13) (21) % $ (16) (21) %

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ (2) $ 4 $ — $ (6) N/M $ 4 N/M

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ (2) $ (2) $ 4 $ — — % $ (6) N/M

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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

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 planned permanent closure of our Ince facility.

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

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.

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

Net sales in our AN segment increased $335 million, or 66%, to $845 million in 2022 from $510 million in 2021 due primarily to a 78% increase in average selling prices, partially offset by a 7% decrease in sales volume.

Average selling prices increased to $530 per ton in 2022 compared to $297 per ton in 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 decreased due primarily to lower supply availability as a result of our Ince facility closure.

Since that time, we have imported ammonia for upgrade at our Billingham complex into AN and other nitrogen products, which are included in our Other segment.

In the third quarter of 2023, we approved our plan to permanently close the ammonia plant at our Billingham complex.

Net sales in our AN segment decreased $348 million, or 41%, to $497 million in 2023 from $845 million in 2022 due primarily to a 40% decrease in average selling prices.

Average selling prices decreased to $316 per ton in 2023 compared to $530 per ton in 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.

Cost of Sales.

Cost of sales in our AN segment averaged $374 per ton in 2022, a 35% increase from $277 per ton in 2021, due primarily to higher realized natural gas costs.

Cost of sales in our AN segment averaged $228 per ton in 2023, a 39% decrease from $374 per ton in 2022.

The decrease was due primarily to lower production costs for our Billingham complex in 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 2022.

In addition, the decrease in cost of sales per ton reflects lower realized natural gas costs in North America in 2023 compared to 2022.

Gross Margin .

Gross margin in our AN segment increased by $213 million to $248 million in 2022 from $35 million in 2021, and our gross margin percentage was 29.3% in 2022 compared to 6.9% in 2021.

The increase in gross margin was due primarily to a 78% increase in average selling prices, which increased gross margin by $382 million, and favorable location product mix, which increased gross margin by $28 million.

These factors that increased gross margin were partially offset by an increase in realized natural gas costs, which decreased gross margin by $175 million and a net increase in manufacturing, maintenance and other costs, which reduced gross margin by $28 million.

Gross margin also includes the impact of a $2 million

Gross margin in our AN segment decreased by $110 million to $138 million in 2023 from $248 million in 2022, and our gross margin percentage was 27.8% in 2023 compared to 29.3% in 2022.

The decrease in gross margin reflects the following:

• a 40% decrease in average selling prices, which decreased gross margin by $286 million, and a 1% decrease in sales volume, which decreased gross margin by $10 million;

• a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $207 million, due primarily to the closure of the ammonia plant at our Billingham complex, partially offset by a net increase of $21 million in manufacturing, maintenance and other costs, driven by the cost for purchased ammonia for upgrade at our Billingham complex.

CF INDUSTRIES HOLDINGS, INC.

unrealized net mark-to-market gain on natural gas derivatives in 2022 compared to a $4 million loss on natural gas derivatives in 2021.

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;

• 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:

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Depreciation and amortization $ 64 $ 67 $ 87 $ (3) (4) % $ (20) (23) %

Unrealized net mark-to-market loss on natural gas derivatives $ 3 $ 3 $ — $ — — % $ 3 N/M

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

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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 year ended December 31, 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 $214 million, or 37%, to $787 million in 2022 from $573 million in 2021 due to a 53% increase in average selling prices, partially offset by a 10% decrease in sales volume.

Average selling prices increased to $379 per ton in 2022 compared to $247 per ton in 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 NPK and nitric acid sales volumes, as operations at our Ince manufacturing plant have ceased.

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, which was included in our Other segment.

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

Since that time, we have imported ammonia for upgrade at our Billingham complex into AN and other nitrogen products, including nitric acid and aqua ammonia, which are included in our Other segment.

In the third quarter of 2023, we approved our plan to permanently close the ammonia plant at our Billingham complex.

Net sales in our Other segment decreased $223 million, or 28%, to $564 million in 2023 from $787 million in 2022 due to a 32% decrease in average selling prices, partially offset by a 6% increase in sales volume.

Average selling prices decreased to $256 per ton in 2023 compared to $379 per ton in 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.

The increase in sales volume was due primarily to higher DEF sales volume.

Cost of Sales.

Cost of sales in our Other segment averaged $202 per ton in 2022, a 16% increase from $174 per ton in 2021, due primarily to higher realized natural gas costs.

Gross Margin .

Gross margin in our Other segment increased by $197 million to $367 million in 2022 from $170 million in 2021, and our gross margin percentage was 46.6% in 2022 compared to 29.7% in 2021.

The increase in gross margin was due primarily to a 53% increase in average selling prices, which increased gross margin by $282 million, and a net

Cost of sales in our Other segment averaged $149 per ton in 2023, a 26% decrease from $202 per ton in 2022, due primarily to lower production costs for our Billingham complex in 2023, as purchased ammonia was used for upgrading into other nitrogen products as compared to the higher-cost natural gas used to produce ammonia to upgrade into other nitrogen products in 2022.

In addition, the decrease in cost of sales per ton reflects lower realized natural gas costs in North America in 2023 compared to 2022.

CF INDUSTRIES HOLDINGS, INC.

decrease in manufacturing, maintenance and other costs, which increased gross margin by $3 million.

These factors that increased gross margin were partially offset by an increase in realized natural gas costs, which reduced gross margin by $75 million, and a 10% decrease in sales volume, which reduced gross margin by $13 million.

Gross Margin .

Gross margin in our Other segment decreased by $131 million to $236 million in 2023 from $367 million in 2022, and our gross margin percentage was 41.8% in 2023 compared to 46.6% in 2022.

The decrease in gross margin reflects the following:

• a 32% decrease in average selling prices, which decreased gross margin by $263 million, partially offset by a 6% increase in sales volume, which increased gross margin by $29 million;

• a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $106 million, partially offset by a net increase of $10 million in manufacturing, maintenance and other costs, driven by the cost for purchased ammonia for upgrade at our Billingham complex;

• the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $3 million loss in 2022.

Liquidity and Capital Resources

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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.

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

Our cash and cash equivalents balance was $2.32 billion at December 31, 2022, an increase of $695 million from $1.63 billion at December 31, 2021.

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana.

See “Acquisition of Waggaman Ammonia Production Facility,” below, for additional information.

As of December 31, 2023, our cash and cash equivalents balance was $2.03 billion, a decrease of $291 million from $2.32 billion at December 31, 2022.

At December 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.

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.

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

In the second, third and fourth quarters 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.

On January 31, 2024, our Board of Directors (the Board) declared a quarterly dividend of $0.50 per common share, representing an increase from the quarterly dividend of $0.40 per common share that was declared and paid in the fourth quarter of 2023.

The dividend will be paid on February 29, 2024 to stockholders of record as of February 15, 2024.

Cash Equivalents

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and those guaranteed by entities affiliated with governmental entities.

Capital Spending

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 $499 million in 2023 compared to $453 million in 2022.

Capital expenditures in 2024 are estimated to be in the range of $550 million.

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

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Acquisition of Waggaman Ammonia Production Facility

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana from Dyno Nobel Louisiana Ammonia, LLC (DNLA), a U.S.

subsidiary of Australia-based Incitec Pivot Limited (IPL), pursuant to an asset purchase agreement with DNLA and IPL.

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

In connection with the acquisition, we entered into 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.

Under the terms of the asset purchase agreement, $425 million of the purchase price of $1.675 billion, subject to adjustment, was allocated by the parties to the ammonia offtake agreement.

We funded the balance of the purchase price with $1.223 billion of cash on hand.

We expect any further purchase price adjustments required under the asset purchase agreement will be completed in 2024.

The financial results of the Waggaman facility are included in our consolidated statement of operations and in our Ammonia segment from the acquisition date of December 1, 2023.

See Note 6—Acquisition of Waggaman Ammonia Production Facility for additional information.

Share Repurchase Programs

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).

On November 3, 2021, 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).

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.

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

As of December 31, 2022, we repurchased 14.9 million shares under the 2021 Share Repurchase Program for $1.35 billion.

We held no shares of treasury stock as of December 31, 2022.

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was enacted into law.

The IRA made several changes to the U.S.

tax code effective after December 31, 2022, including, but not limited to, an excise tax of 1% tax on the fair market value of net stock repurchases made after December 31, 2022, which will be accounted for in treasury stock.

The impact of this provision will be dependent on the extent of share repurchases made in future periods.

Capital Spending

Capital expenditures totaled $453 million in 2022 compared to $514 million in 2021 reflecting lower turnaround activity in 2022.

The following table summarizes the share repurchases under the 2022 Share Repurchase Program and 2021 Share Repurchase Program.

2022 Share Repurchase Program 2021 Share Repurchase Program

Shares Amounts (1)

(in millions)

Shares repurchased in 2022:

First quarter — $ — 1.3 $ 100

Second quarter — — 5.3 490

Third quarter — — 6.1 532

Fourth quarter — — 2.2 223

Total shares repurchased in 2022 — — 14.9 1,345

Shares repurchased as of December 31, 2022 — $ — 14.9 $ 1,345

Shares repurchased in 2023:

First quarter — $ — 1.1 $ 75

Second quarter 0.8 50 1.2 80

Third quarter 1.9 150 — —

Fourth quarter 2.9 225 — —

Total shares repurchased in 2023 5.6 425 2.3 155

Shares repurchased as of December 31, 2023

5.6 $ 425 17.2 $ 1,500

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(1) As defined in the share repurchase programs, amounts reflect the price paid for the shares of common stock repurchased, excluding commissions paid to brokers and excise taxes.

In the first half of 2023, we completed the 2021 Share Repurchase Program with the repurchase of approximately 2.3 million shares for $155 million.

In 2023, we repurchased 5.6 million shares under the 2022 Share Repurchase Program for $425 million.

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Capital expenditures in 2023 are estimated to be in the range of $500 to $550 million, which includes capital expenditures related to green and blue ammonia projects.

Government Policies

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The impact of changes in governmental policies or laws or the political or social objectives of a country could have a material impact on fertilizer demand and selling prices and therefore could impact our liquidity.

Canada Revenue Agency Competent Authority Matter and Transfer Pricing

In connection with the Canada Revenue Agency Competent Authority Matter, which is described above under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter,” in the second half of 2022, we were assessed, and we paid additional tax and interest for tax years 2006 through 2011 of $224 million.

As a result, letters of credit we had posted were cancelled.

Due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, we will file amended tax returns with U.S.

federal and state tax authorities for the relevant tax years.

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.

In order to mitigate the assessment of future Canadian interest on these Canadian transfer pricing positions, in the fourth quarter of 2022, we made payments to the Canadian taxing authorities of CAD $363 million (approximately $267 million) related to these reassessed tax years while we continue to dispute the reassessments and for certain years that are open for examination.

The payments were recorded as noncurrent income tax receivables.

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

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.

Shortly thereafter, our Billingham facility resumed operations.

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

operations, including the planned permanent closure of our Ince facility and optimization of the remaining manufacturing operations at our 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 and fourth quarters of 2022, we incurred additional charges related to our U.K.

restructuring of $9 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 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

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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 and other nitrogen products continues at our Billingham facility using imported ammonia, a portion of which 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.

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.

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

Repatriation of Foreign Earnings and Income Taxes

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Historically, the estimated additional U.S.

and foreign income taxes due upon repatriation of the earnings of these foreign operations to the U.S.

were recognized in our consolidated financial statements as the earnings were recognized, unless the earnings were considered to be permanently reinvested based upon our then current plans.

and foreign income taxes due upon repatriation of the earnings of these foreign operations to the United States were recognized in our consolidated financial statements as the earnings were recognized, unless the earnings were considered to be permanently reinvested based upon our then current plans.

However, the cash payment of the income tax liabilities associated with repatriation of earnings from foreign operations occurred at the time of the repatriation.

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As of December 31, 2023, approximately $205 million of our consolidated cash and cash equivalents balance of $2.03 billion was held by our Canadian and United Kingdom subsidiaries.

As of December 31, 2022, we recorded a deferred tax liability of $12 million on the undistributed earnings of our Canadian affiliates for which the Company does not have an indefinite reinvestment assertion.

We have not provided for deferred taxes on the remainder of undistributed earnings from our foreign affiliates because such earnings would not give rise to additional tax liabilities upon repatriation or are considered to be indefinitely reinvested.

As of December 31, 2023, we recorded a deferred tax liability of $9 million on the undistributed earnings of our Canadian subsidiaries for which the Company does not have an indefinite reinvestment assertion.

We have not provided for deferred taxes on the remainder of undistributed earnings from our foreign subsidiaries because such earnings would not give rise to additional tax liabilities upon repatriation or are considered to be indefinitely reinvested.

Revolving Credit Agreement

We have a senior unsecured revolving credit agreement (the Revolving Credit Agreement), which provides for a revolving credit facility of up to $750 million with a maturity of December 5, 2024.

The Revolving Credit Agreement includes a letter of credit sub-limit of $125 million.

Borrowings under the Revolving Credit Agreement may be used for working capital, capital expenditures, acquisitions, share repurchases and other general corporate purposes.

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

dollars, Canadian dollars, euros and British pounds, and bear interest at a per annum rate equal to an applicable eurocurrency rate or base rate plus, in either case, a specified margin.

We are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees.

On October 26, 2023, we entered into a new senior unsecured revolving credit agreement (the New Revolving Credit Agreement), which replaced our prior senior unsecured revolving credit agreement (the Prior Revolving Credit Agreement) that was scheduled to mature on December 5, 2024.

The Prior Revolving Credit Agreement provided for a revolving credit facility of up to $750 million and included a letter of credit sub-limit of $125 million.

The New Revolving Credit Agreement provides for a revolving credit facility of up to $750 million with a maturity of October 26, 2028 and includes a letter of credit sub-limit of $125 million.

Borrowings under the New Revolving Credit Agreement may be used for working capital, capital expenditures, acquisitions, share repurchases and other general corporate purposes.

CF Industries is the lead borrower, and CF Holdings is the sole guarantor, under the New Revolving Credit Agreement.

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

dollars, Canadian dollars, euros and British pounds.

Borrowings in U.S.

dollars bear interest at a per annum rate equal to, at our option, an applicable adjusted term Secured Overnight Financing Rate or base rate plus, in either case, a specified margin.

We are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the New Revolving Credit Agreement and customary letter of credit fees.

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

CF Industries is the lead borrower, and CF Holdings is the sole guarantor, under the Revolving Credit Agreement.

The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants customary for a financing of this type.

The financial covenants applicable to CF Holdings and its subsidiaries in the Revolving Credit Agreement:

(i) require that the interest coverage ratio (as defined in the Revolving Credit Agreement) be not less than 2.75:1.00 as of the last day of each fiscal quarter and

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(ii) require that the total net leverage ratio (as defined in the Revolving Credit Agreement) be not greater than 3.75:1.00 (the Maximum Total Net Leverage Ratio) as of the last day of each fiscal quarter, provided that, if any borrower or subsidiary consummates a material acquisition during any fiscal quarter, CF Industries may elect to increase the Maximum Total Net Leverage Ratio to 4.25:1.00 for the period of four consecutive fiscal quarters commencing with such fiscal quarter (and no further such election may be made unless and until the Maximum Total Net Leverage Ratio is less than or equal to 3.75:1.00 as of the end of two consecutive fiscal quarters after the end of such period).

As of December 31, 2022, we were in compliance with all covenants under the Revolving Credit Agreement.

The Revolving Credit Agreement contains events of default (with notice requirements and cure periods, as applicable) customary for a financing of this type, including, but not limited to, non-payment of principal, interest or fees;

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

The financial covenant requires that the total net leverage ratio (as defined in the New Revolving Credit Agreement) be not greater than 3.75:1.00 (the Maximum Total Net Leverage Ratio) as of the last day of each fiscal quarter, provided that, if any borrower or subsidiary consummates a material acquisition during any fiscal quarter, CF Industries may elect to increase the Maximum Total Net Leverage Ratio to 4.25:1.00 for the period of four consecutive fiscal quarters commencing with such fiscal quarter (and no further such election may be made unless and until the Maximum Total Net Leverage Ratio is less than or equal to 3.75:1.00 as of the end of two consecutive fiscal quarters after the end of such period).

As of December 31, 2023, we were in compliance with all covenants under the New Revolving Credit Agreement.

The New Revolving Credit Agreement contains events of default (with notice requirements and cure periods, as applicable) customary for a financing of this type, including, but not limited to, non-payment of principal, interest or fees;

inaccuracy of representations and warranties in any material respect;

and failure to comply with specified covenants.

Upon the occurrence and during the continuance of an event of default under the Revolving Credit Agreement and after any applicable cure period, subject to specified exceptions, the administrative agent may, and at the request of the requisite lenders is required to, accelerate the loans under the Revolving Credit Agreement or terminate the lenders’ commitments under the Revolving Credit Agreement.

As of December 31, 2022, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit.

In addition, there were no borrowings outstanding under the Revolving Credit Agreement as of December 31, 2022 or 2021, or during the year ended December 31, 2022.

Letters of Credit

In addition to the letters of credit that may be issued under the Revolving Credit Agreement, as described above, we have capacity to issue up to $350 million of letters of credit, reflecting an increase of $100 million in May 2022, under a bilateral agreement.

Upon the occurrence and during the continuance of an event of default under the New Revolving Credit Agreement and after any applicable cure period, subject to specified exceptions, the administrative agent may, and at the request of the requisite lenders is required to, accelerate the loans under the New Revolving Credit Agreement or terminate the lenders’ commitments under the New Revolving Credit Agreement.

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

As of December 31, 2023 and 2022, and during the years then ended, there were no borrowings outstanding under either the Prior Revolving Credit Agreement or the New Revolving Credit Agreement.

Letters of Credit Under Bilateral Agreement

We are party to a bilateral agreement providing for the issuance of up to $425 million (reflecting an increase of $75 million in December 2023) of letters of credit.

As of December 31, 2023, approximately $291 million of letters of credit were outstanding under this agreement.

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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 December 31, 2022 and 2021, respectively, and total deferred debt issuance costs were $28 million and $27 million as of December 31, 2022 and 2021, respectively.

Total unamortized debt discount was $7 million as of both December 31, 2023 and 2022, and total deferred debt issuance costs were $25 million and $28 million as of December 31, 2023 and 2022, respectively.

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

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Public Senior Notes

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The total aggregate redemption price paid in connection with the redemption of the $250 million principal amount of the 2023 Notes, which was funded with cash on hand, was approximately $265 million, including accrued interest.

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.

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.

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Senior Secured Notes

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, which was funded with cash on hand, was $258 million, including accrued interest.

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 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.

Prior to the investment grade rating event, subject to certain exceptions, the obligations under the 2026 Notes and related guarantees were secured by a first priority security interest in collateral consisting of substantially all of the assets of CF Industries, CF Holdings and the subsidiary guarantors.

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.

Under the indenture governing the 2026 Notes, specified changes of control involving CF Holdings or CF Industries, when accompanied by a ratings downgrade, as defined with respect to the 2026 Notes, constitute change of control repurchase events.

Upon the occurrence of a change of control repurchase event with respect to the 2026 Notes, unless CF Industries has

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exercised its option to redeem such notes, CF Industries will be required to offer to repurchase them at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

Upon the occurrence of a change of control repurchase event with respect to the 2026 Notes, unless CF Industries has exercised its option to redeem such notes, CF Industries will be required to offer to repurchase them at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

The indenture governing the 2026 Notes contains covenants that limit, among other things, the ability of CF Holdings and its subsidiaries, including CF Industries, to incur liens on certain assets to secure debt, to engage in sale and leaseback transactions, to merge or consolidate with other entities and to sell, lease or transfer all or substantially all of the assets of CF Holdings and its subsidiaries to another entity.

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Under the indenture governing the 2026 Notes, in the case of an event of default arising from one of the specified events of bankruptcy or insolvency, the 2026 Notes would become due and payable immediately, and, in the case of any other event of default (other than an event of default related to CF Industries’ and CF Holdings’ reporting obligations), the trustee or the holders of at least 25% in aggregate principal amount of the 2026 Notes then outstanding may declare all of such notes to be due and payable immediately.

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Forward Sales and Customer Advances

We offer our customers the opportunity to purchase products from us on a forward basis at prices and on delivery dates we propose.

Therefore, our reported nitrogen selling prices and margins may differ from market spot prices and margins available at the time of shipment.

Therefore, our reported fertilizer selling prices and margins may differ from market spot prices and margins available at the time of shipment.

Customer advances, which typically represent a portion of the contract’s value, are received shortly after the contract is executed, with any remaining unpaid amount generally being collected by the time control transfers to the customer, thereby reducing or eliminating the accounts receivable related to such sales.

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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.

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

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

Due to the volatility inherent in our business and changing customer expectations, we cannot estimate the amount of future forward sales activity.

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

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

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

We use natural gas both as a chemical feedstock and as a fuel to produce ammonia, granular urea, UAN, AN and other products.

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As a result of these factors, natural gas prices have a significant impact on our operating expenses and can thus affect our liquidity.

Natural gas costs in our cost of sales, including the impact of realized natural gas derivatives, increased 71% to $7.18 per MMBtu in 2022 from $4.21 per MMBtu in 2021.

Natural gas costs in our cost of sales, including the impact of realized natural gas derivatives, decreased 49% to $3.67 per MMBtu in 2023 from $7.18 per MMBtu in 2022.

We enter into agreements for a portion of our future natural gas supply and related transportation.

As of December 31, 2022, our natural gas purchase agreements have terms that range from one to three years and a total minimum commitment of approximately $1.68 billion, and our natural gas transportation agreements have terms that range from one to ten years and a total minimum commitment of approximately $126 million.

As of December 31, 2023, our natural gas purchase agreements have terms that range from four months to three years and a total minimum commitment of approximately $736 million, and our natural gas transportation agreements have terms that range from one to ten years and a total minimum commitment of approximately $106 million.

Our minimum commitments to purchase and transport natural gas are based on prevailing market-based forward prices excluding reductions for plant maintenance and turnaround activities.

CF INDUSTRIES HOLDINGS, INC.

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

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

During 2022, the daily closing price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, reached a low of $3.45 per MMBtu on November 10, 2022 and a high of $9.85 per MMBtu on August 23, 2022.

Our Billingham U.K.

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

The major natural gas trading point for the United Kingdom is the NBP.

During 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.

During the three-year period ended December 31, 2022, the daily closing price at the NBP reached a low of $1.04 per MMBtu on May 22, 2020, and a high of $67.08 per MMBtu on March 8, 2022.

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

therefore, our natural gas purchases in the United Kingdom have been insignificant.

During 2023, the daily closing price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, reached a low of $1.72 per MMBtu on three consecutive days in June 2023 and a high of $3.81 per MMBtu on January 5, 2023.

During the three-year period ended December 31, 2023, the daily closing price at the Henry Hub reached a low of $1.72 per MMBtu on three consecutive days in June 2023 and a high of $23.61 per MMBtu on February 18, 2021.

Derivative Financial Instruments

We use derivative financial instruments to reduce our exposure to changes in prices for natural gas that will be purchased in the future.

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

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

From time to time, we may also use derivative financial instruments to reduce our exposure to changes in foreign currency exchange rates.

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

In 2022 and 2021, we recognized an unrealized net mark-to-market loss on natural gas derivatives of $41 million and $25 million, respectively, which is reflected in cost of sales in our consolidated statements of operations.

In 2023 and 2022, we recognized an unrealized net mark-to-market (gain) loss on natural gas derivatives of $(39) million and $41 million, respectively, which is reflected in cost of sales in our consolidated statements of operations.

CF INDUSTRIES HOLDINGS, INC.

Derivatives expose us to counterparties and the risks associated with their ability to meet the terms of the contracts.

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We contributed $44 million to our pension plans in 2023.

In 2023, we expect to contribute approximately $42 million to our pension plans.

In addition, we expect to contribute a total of approximately £30 million (or $36 million) to our U.K.

plans in the two-year period from 2024 to 2025, as agreed with the plans’ trustees.

CF INDUSTRIES HOLDINGS, INC.

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.

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.

In the fourth quarter of 2022, the final settlement of the non-participating group annuity contract resulted in a refund of $4 million, which decreased the settlement loss by $3 million to $21 million.

In October 2022, we remeasured certain of our defined benefit pension plans due to plan amendments resulting from a revision to our North American retirement plan strategy.

The plan curtailments resulted in a reduction in our benefit obligations of $20 million and curtailment gains of $4 million.

See Note 11—Pension and Other Postretirement Benefits for further information.

In 2024 and 2025, we expect to contribute approximately $27 million and $11 million, respectively, to our U.K.

pension plans as currently agreed with the plans’ trustees.

Distributions on Noncontrolling Interest in CFN

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Third quarter of 2021 Six months ended June 30, 2021 130

Net cash provided by operating activities in 2022 was $3.86 billion as compared to $2.87 billion in 2021, an increase of $982 million.

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

Net cash provided by operating activities in 2023 was $2.76 billion, a decrease of $1.10 billion compared to $3.86 billion in 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 in 2023 was $1.84 billion compared to $3.94 billion in 2022.

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

These factors that increased gross margin 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 2022, net changes in working capital reduced cash flow from operations by $900 million, while in 2021, net changes in working capital contributed $448 million to cash flow from operations.

The decrease in cash flow from working capital changes was attributable primarily to lower levels of customer advances, higher levels of accounts receivable and an increase in income tax payments in 2022 as compared to 2021.

Net cash used in investing activities was $440 million in 2022 compared to $466 million in 2021, or a decrease of $26 million.

The decrease in net earnings was due primarily to a decrease in gross margin, driven by lower average selling prices, partially offset by lower natural gas costs, a lower income tax provision, lower net interest expense, a decrease in net earnings attributable to noncontrolling interest, and impairment charges related to our U.K.

operations in 2022 that did not recur in 2023.

During 2023, net changes in working capital increased cash flow from operations by $20 million, while in 2022, net changes in working capital reduced cash flow from operations by $900 million.

The difference in the impact of changes in working capital on cash flow from operations in 2023 as compared to 2022 was attributable primarily to favorable changes in 2023 as compared to 2022 in accounts receivable, inventory, customer advances and income tax liabilities.

Net cash used in investing activities was $1.68 billion in 2023 compared to $440 million in 2022, or an increase of $1.24 billion.

The increase was due primarily to the consideration paid of $1.223 billion for the Waggaman acquisition.

See “Acquisition of Waggaman Ammonia Production Facility,” above for additional information.

During 2023, capital expenditures totaled $499 million compared to $453 million in 2022.

Net cash used in financing activities was $2.70 billion in 2022 compared to $1.46 billion in 2021.

The increase was due primarily to share repurchases in 2022 and higher distributions to noncontrolling interest.

In 2022, we paid $1.35 billion for share repurchases, including $1 million related to shares repurchased in late 2021 that were paid for in 2022, compared to $539 million for share repurchases in 2021.

In 2022, distributions to noncontrolling interest were $619 million compared to $194 million in 2021.

CF INDUSTRIES HOLDINGS, INC.

Net cash used in financing activities was $1.37 billion in 2023 compared to $2.70 billion in 2022.

The decrease was due primarily to a decrease in share repurchases and lower distributions to the noncontrolling interest.

In 2023, we paid $580 million for share repurchases compared to $1.35 billion for share repurchases in 2022.

In 2023, distributions to the noncontrolling interest were $459 million compared to $619 million in 2022.

In addition, we paid $507 million in connection with the redemption of the 2023 Notes in 2022.

Critical Accounting Estimates

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The following discussion presents information about our most critical accounting estimates.

Acquisition of Waggaman Ammonia Production Facility

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana from DNLA, a U.S.

Subsidiary of Australia-based IPL, pursuant to an asset purchase agreement with DNLA and IPL.

We accounted for the acquisition as a business combination.

In connection with the acquisition, we entered into 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.

subsidiary (the Supply Contract).

In connection with recording the acquisition, we recognized, among other items, property, plant and equipment, goodwill, intangible assets consisting primarily of customer relationships, and a supply contract liability.

See Note 6—Acquisition of Waggaman Ammonia Production Facility for additional information.

The valuation of the assets acquired and liabilities assumed as a result of our acquisition of the Waggaman ammonia production facility on December 1, 2023, requires us to make significant estimates and assumptions.

We estimated the fair value of the customer relationships of $455 million using the multi-period excess earnings method of the income approach, which incorporated the estimated future cash flows associated with the net earnings attributable to the acquired customer relationships.

The estimated future cash flows were discounted to their present value using an appropriate risk-adjusted discount rate from the perspective of a market participant.

Key assumptions used in estimating future cash flows include forecasted product selling prices, future production and sales volumes, probability of renewal, projected natural gas costs, operating rates, operating expenses, inflation, tax rates, capital spending, and contributory asset charges, among other factors.

The discount rate utilized in estimating the fair value of the customer relationships was 9.0% and was derived using a capital asset pricing model and publicly available data for comparable companies to estimate the cost of equity financing.

We used Moody’s Baa corporate bonds as a benchmark to estimate the cost of debt.

Additional assumptions utilized in the valuation of the customer relationships included the duration of the forecasted cash flows and the tax amortization benefit, among other factors.

The terms of the Supply Contract were determined to be unfavorable compared to market as of the acquisition date.

Therefore, we estimated the fair value of the Supply Contract liability of $757 million using the with and without method of the income approach.

This method included estimating the future cash flows by applying both a market price and the contract price in determining the respective forecasted sales.

The difference in the estimated future cash flows using the resulting forecasted sales was then discounted to present value at the date of acquisition using an appropriate risk-adjusted discount rate from the perspective of a market participant.

Key assumptions used in estimating future cash flows include forecasted product selling price, specifically the market price in excess of the contract price, future production and sales volumes, probability of renewal, and inflation, among other factors.

The discount rate utilized in estimating the fair value of the Supply Contract liability was 6.2% and was derived based on the historical cost of our issued debt and treasury and corporate bond yields as of the acquisition date.

Additional assumptions utilized in the valuation of the Supply Contract liability included the duration of the forecasted cash flows, among other factors.

Due to the inherent uncertainties involved in making estimates and assumptions, actual results may differ from those assumed in our forecasts.

Of the factors discussed above, the following assumptions are more sensitive than others:

• forecasted product selling prices included in the estimated future cash flows utilized in the valuation of the customer relationships and the Supply Contract liability,

CF INDUSTRIES HOLDINGS, INC.

• projected natural gas costs included in the estimated future cash flows utilized in the valuation of the customer relationships, and

• the discount rate utilized in each of these valuations to discount the cash flows in arriving at the fair values.

Assuming that all other assumptions and estimates utilized in our valuation of the customer relationships and Supply Contract liability remain unchanged, a change in each of these inputs would have the following effect on the estimated fair value used to allocate the purchase price in the Waggaman acquisition as of December 1, 2023:

Increase/(Decrease) in Fair Value

Customer Relationships Supply Contract Liability

Assumption (in millions)

+$5.00 -$5.00 +$5.00 -$5.00

Average Selling Price per Product Ton $ 26 $ (25) $ 16 $ (15)

+$0.05 -$0.05

Natural Gas Cost per MMBtu $ (9) $ 9 n/a n/a

+50 bps -50 bps +50 bps -50 bps

Discount Rate $ (25) $ 27 $ (35) $ 38

_______________________________________________________________________________

n/a—not applicable

Recoverability of Long-Lived Assets, Goodwill and Investment in Unconsolidated Affiliate

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The impairment loss is measured as the amount by which the carrying value exceeds the fair value of the long-lived assets.

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

energy crisis, including further increases and volatility in natural gas prices due in part to geopolitical events as a result of Russia’s invasion of Ukraine in February 2022, triggered a 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, which consisted of U.K.

Ammonia, U.K.

Previous impairments of these U.K.

asset groups had been recognized in 2021, when the U.K.

energy crisis began.

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 result, in the second quarter of 2022, we approved and announced our proposed plan to restructure our U.K.

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

Pursuant to our proposed plan to restructure our U.K.

operations and dispose of the Ince facility assets before we originally intended, we concluded that an evaluation of our long-lived assets and an additional impairment test was required.

Our assessment then identified the U.K.

CF INDUSTRIES HOLDINGS, INC.

asset groups as U.K.

Ammonia, U.K.

Other, comprising our ongoing U.K.

operations, and Ince, U.K.

In response to this impairment indicator, we compared the undiscounted cash flows expected to result from the use and eventual disposition of the Ince, U.K.

asset group to its carrying amount and concluded the carrying amount was not recoverable and should be adjusted to its fair value.

As a result, we recorded asset impairment charges related to the Ince, U.K.

asset group totaling $152 million, which are included in the U.K.

long-lived and intangible asset impairment line item in our consolidated statement of operations for the year ended December 31, 2022 and are further described under “Market Conditions and Current Developments—United Kingdom Operations,” above.

There was no additional asset impairment indicated for the three asset groups that comprise the continuing U.K.

operations as the undiscounted estimated future cash flows were in excess of the carrying values for each of these asset groups.

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

Russian natural gas 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.

The results of our impairment test indicated that the carrying values for our U.K.

Ammonia and U.K.

AN asset groups exceeded the undiscounted estimated future cash flows.

As a result, we recognized 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 for the year ended December 31, 2022.

The expected cash flows used in the long-lived asset impairment analysis reflected assumptions about product selling prices and natural gas costs, as well as estimates of future production and sales volumes, operating rates, operating expenses, inflation, tax rates, capital spending and the impact that future market dynamics and geopolitical events could have on these factors.

For the asset groups that comprise the continuing U.K.

operations, the fair value of our property, plant and equipment utilized in the long-lived asset impairment analyses was estimated using the indirect method of the cost approach by determining the reproduction cost new, or replacement cost, of the assets and applying appropriate adjustments for depreciation including an inutility adjustment based on the cash flows expected to be generated by those asset groups.

For property, plant and equipment within the Ince, U.K.

asset group, an asset group planned for abandonment, we first considered use of a market or income-based valuation method.

However, given that a secondary market did not exist and the assets had been idled with a planned abandonment and therefore would not generate future cash flows from operations, we estimated the fair value of the asset group by determining the replacement cost of the underlying assets, which included inflationary adjustments to original asset costs, and then adjusting each of the asset categories to an estimated salvage value utilizing industry recognized price publications.

See “Liquidity and Capital Resources—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.

PLNL is our joint venture investment in Trinidad and operates an ammonia plant that relies on natural gas supplied, under a Gas Sales Contract (the NGC Contract), by the National Gas Company of Trinidad and Tobago Limited (NGC).

PLNL is our joint venture investment in Trinidad and operates an ammonia plant that relies on natural gas supplied, under a gas sales contract, by the National Gas Company of Trinidad and Tobago Limited (NGC).

The joint venture is accounted for under the equity method.

The joint venture experienced past curtailments in the supply of natural gas from NGC, which reduced the ammonia production at PLNL.

The NGC Contract had an initial expiration date of September 2018 and was extended on the same terms until September 2023.

Any NGC commitment to supply gas beyond September 2023 will be based on new agreements.

The prior gas sales contract had an expiration date of September 2023.

In the third quarter of 2023, PLNL entered into a new gas sales contract with NGC (the New NGC Contract), which is effective October 2023 through December 2025.

Any NGC commitment to supply gas beyond December 2025 will be based on new agreements.

As a result, we recorded an impairment of our equity method investment in PLNL of $43 million, which is reflected in equity in (loss) earnings of operating affiliate on our consolidated statement of operations for the year ended December 31, 2023.

If NGC does not make sufficient quantities of natural gas available to PLNL at prices that permit profitable operations, PLNL may cease operating its facility and we would write off the remaining investment in PLNL.

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Declines in comparable bond yields would increase our PBO.

For our United Kingdom plans, the 3.2% RPI used to

CF INDUSTRIES HOLDINGS, INC.

calculate our PBO is developed using a U.K.

For our United Kingdom plans, the 3.0% RPI used to calculate our PBO is developed using a U.K.

government gilt prices only retail price inflation curve, which is based on the difference between yields on fixed interest government bonds and index-linked government bonds.

For North America qualified pension plans, our PBO was $274 million as of December 31, 2022, which was $1 million higher than pension plan assets.

For North America qualified pension plans, our PBO was $292 million as of December 31, 2023, which was $21 million lower than pension plan assets.

For our United Kingdom pension plans, our PBO was $367 million as of December 31, 2023, which was $7 million higher than pension plan assets.

The tables below estimate the impact of a 50 basis point increase or decrease in the key assumptions on our December 31, 2022 PBO:

The table below estimates the impact of a 50 basis point increase or decrease in the key assumptions on our December 31, 2023 PBO:

Increase/(Decrease) in December 31, 2023 PBO

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RPI n/a n/a 9 (9)

_______________________________________________________________________________

n/a—not applicable

See Note 13—Pension and Other Postretirement Benefits for further discussion of our pension plans.

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As of December 31, 2023, we have recorded a reserve for unrecognized tax benefits, including penalties and interest, of $273 million.

CF INDUSTRIES HOLDINGS, INC.

We also engage in a significant amount of cross border transactions.

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We work closely with regulators to reach a common understanding and conclusion regarding the taxability of cross border transactions.

Recent Accounting Pronouncements

See Note 3—New Accounting Standards for a discussion of recent accounting pronouncements.

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-K

Item 7. Management’s Discussion and Analysis