What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-02 · 354 added, 213 removed, 462 unchanged (55% of the section changed)

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

Our principal assets as of March 31, 2024 include:

Our principal assets as of June 30, 2024 include:

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

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• 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.

At our core, CF Industries is a producer of ammonia.

We use the Haber-Bosch process to fix atmospheric nitrogen with hydrogen from natural gas to produce anhydrous ammonia, whose chemical composition is NH3.

We sell the ammonia itself or upgrade it to products such as granular urea, urea ammonium nitrate solution (UAN) and diesel exhaust fluid (DEF).

A majority of the ammonia and ammonia-derived products we manufacture are used as fertilizer, as the nitrogen content provides energy essential for crop growth.

Other important uses of our products include emissions control.

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

We believe this strategy builds upon our leadership in ammonia production to capture emerging opportunities to produce ammonia 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 ammonia’s use as a sustainable aviation fuel, among other purposes.

These opportunities also include new growth opportunities from energy-intensive industries, such as power generation and marine shipping, as ammonia represents an efficient mechanism to both ship and store hydrogen, as well as a clean energy fuel source in its own right as ammonia does not contain or emit carbon when combusted.

Our strategy also strengthens our existing business.

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, reduce risks and bridge gaps in areas where we do not have expertise;

decarbonizing our existing network to accelerate the availability of low-carbon ammonia and upgraded nitrogen products for traditional agricultural and industrial applications;

evaluating new low-carbon ammonia capacity growth to supply emerging opportunities from power generation and marine shipping, among others;

forging partnerships to accelerate our timeline, reducing risks and bridging 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.

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.

The green hydrogen production facility is mechanically complete, and commissioning activities are nearing completion.

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 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 of the cooling tower required for the unit 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 process CO 2 , thereby converting a portion of our existing ammonia production to low-carbon ammonia.

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 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 potential 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 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.

We and our partners are progressing two additional FEED studies focused on technologies that would further reduce the carbon intensity of the proposed low-carbon ammonia facility, namely 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 the greenfield SMR ammonia facility.

We expect to obtain results from both FEED studies in the second half of 2024.

Our green hydrogen production facility, consisting of a 20-megawatt alkaline water electrolysis plant to produce hydrogen, is mechanically complete, and commissioning activities are nearing completion.

In the third quarter of 2024 and in anticipation of start-up, we entered into an agreement to procure 45V-compliant renewable energy certificates to pair with the electricity consumed by electrolyzer operation.

As a result, the electrolyzer will generate green hydrogen that enables us to produce green ammonia, which refers to ammonia produced with hydrogen sourced from an electrolysis process that produces no carbon dioxide emissions.

At full electrolyzer capacity, we will be able to produce approximately 20,000 tons of green ammonia per year.

At the time of its startup, we believe that the Donaldsonville green ammonia project will represent North America’s first commercial-scale green ammonia capacity.

Under current regulations, the hydrogen produced and used in our green ammonia production is expected to qualify under Section 45V of the Internal Revenue Code for tax credits based on the carbon intensity of the hydrogen produced.

We are also advancing decarbonization projects at our Donaldsonville and Yazoo City complexes that leverage carbon capture and sequestration (CCS) to enable 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 carbon dioxide (CO 2 ) generated by ammonia production and currently emitted to the atmosphere removed through CCS.

CCS requires the construction of CO 2 dehydration and compression units to enable CO 2 already captured from the ammonia production process to be transported and sequestered.

Construction of the dehydration and compression unit at our Donaldsonville complex is in advanced stages, with an estimated total cost of approximately $200 million over the life of the project.

Activities related to the construction of the dehydration and compression unit at our Yazoo City complex will commence in the second half of 2024 with an estimated total cost of $100 million over the life of the project.

In addition, for each facility we have contracted with ExxonMobil to transport and sequester the captured CO 2 in permanent geologic storage.

At Donaldsonville, CCS is expected to commence in 2025 and annually will capture up to approximately 2 million tonnes of CO 2 .

At Yazoo City, CCS is expected to commence in 2028 and annually will capture up to approximately 500,000 tonnes of CO 2 .

Under current regulations, each project is expected to qualify under Section 45Q of the Internal Revenue Code for tax credits per tonne of sequestered CO 2 .

We are also evaluating the construction of export-oriented greenfield low-carbon ammonia capacity at our Blue Point complex in Ascension Parish, Louisiana.

This evaluation includes assessing ammonia production technology options that will meet the carbon intensity requirements of end users.

In the fourth quarter of 2023, we completed a front-end engineering and design (FEED) study on a potential approximately 1.2 million tonne capacity greenfield steam methane reforming (SMR) ammonia facility with CCS technologies that would enable sequestration of process CO 2 emissions.

The FEED study estimates

CF INDUSTRIES HOLDINGS, INC.

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 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.

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.

On April 17, 2024, we and JERA announced a joint development agreement (JDA) to jointly assess a greenfield production facility at our Blue Point complex, which includes the supply of low-carbon ammonia to JERA’s co-firing project.

The JDA will guide JERA and our evaluation of a joint venture agreement to build an approximately 1.4 million tonne capacity low-carbon ammonia plant.

The parties are contemplating JERA owning a 48% stake in the project as well as an agreement to procure more than 500,000 tonnes of low-carbon ammonia annually to meet demand for low-carbon fuels in Japan.

We and JERA aim to reach a final investment decision on the proposed project within a year for commencing production in 2028.

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.

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 Blue Point complex, such as ammonia storage and a vessel loading dock.

We, along with our partners, are also progressing two additional FEED studies focused on technologies that would further reduce the ammonia product’s carbon intensity.

The first is assessing the cost and viability of integrating flue gas CO 2 capture on a SMR ammonia facility.

The second is evaluating autothermal reforming (ATR) ammonia production technology.

We expect to obtain results from both FEED studies in the fourth quarter of 2024.

We have entered into joint development agreements (JDAs) with two potential partners for the development of low-carbon ammonia capacity at our Blue Point complex, Mitsui & Co., Ltd.

and JERA Co., Inc.

(JERA), Japan’s largest power generator.

The JDAs guide our evaluation of potential joint ventures to build a greenfield ammonia plant to supply low-carbon ammonia to developing energy markets in Japan and traditional ammonia markets where demand for low-carbon product is emerging.

The JDA with JERA contemplates a project to build an approximately 1.4 million tonne capacity low-carbon ammonia plant, with JERA expected to own a 48% stake and offtake more than 500,000 tonnes of low-carbon ammonia annually for its proposed coal and ammonia co-firing project.

In addition to discussions with existing customers who have interest in using low-carbon ammonia for traditional applications, we are engaged in advanced discussions regarding the supply of low-carbon ammonia for new applications, such as JERA’s co-firing project discussed above.

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

These discussions continue to advance as we gain greater clarity regarding demand for low-carbon ammonia, including carbon intensity requirements, government incentives and regulatory developments.

Should a final investment decision (FID) be reached to construct greenfield low-carbon ammonia capacity at our Blue Point complex, construction and commissioning is expected to take approximately four years from FID.

Market Conditions

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

In the first quarter of 2024, the average selling price for our products was $325 per ton, a decrease of 27% compared to $444 per ton in the first quarter of 2023, reflecting lower average selling prices across all our segments, which resulted in a decrease in net sales of approximately $567 million in the first quarter of 2024 compared to the first quarter of 2023.

Average selling prices for all our major products were lower in the first quarter of 2024 than in the first quarter of 2023, as lower global energy costs reduced the global market clearing price required to meet global demand.

In the second quarter of 2024, the average selling price for our products was $322 per ton, a decrease of 10% compared to $359 per ton in the second quarter of 2023, reflecting lower average selling prices across most of our segments, as lower global energy costs reduced the global market clearing price required to meet global demand.

Lower average selling prices resulted in a decrease in net sales of approximately $165 million in the second quarter of 2024 compared to the second quarter of 2023.

In the six months ended June 30, 2024, the average selling price for our products was $324 per ton, or 19% lower compared to $400 per ton in the six months ended June 30, 2023.

This resulted in a decrease in net sales of approximately $732 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Nitrogen Sales Volume

Sales volume in the first quarter of 2024 was 4.52 million tons compared to 4.54 million tons in the first quarter of 2023.

Lower sales volume reflects the impact of lower production in the first quarter of 2024 as a result of an increase in maintenance activity due in part to a winter storm early in the quarter, partially offset by an increase in sales volume as a result of the Waggaman acquisition.

In January 2024, a winter storm produced extremely cold temperatures that impacted our operations, including the temporary shut-down of certain of our plants.

As a result of the adverse weather, we incurred additional maintenance costs and lost production in the first quarter.

Gross ammonia production for the first three months of 2024 was 2.1 million tons, a 9% decrease from the 2.4 million tons in the first three months of 2023, due primarily to maintenance activity resulting from the adverse weather in January as well as an increase in non-weather-related maintenance activity, including turnarounds, compared to the first quarter of 2023.

Due to the impact of plant downtime resulting from the adverse weather and additional plant maintenance activity in the first quarter of 2024 that limited production, we purchased and sold approximately 62,000 tons of ammonia and 48,000 tons of granular urea at near breakeven margins in order to fulfill sales commitments.

Sales volume in the second quarter of 2024 was 4.88 million tons compared to 4.94 million tons in the second quarter of 2023, which resulted in a decrease in net sales of approximately $38 million.

Lower sales volume reflects the impact of lower supply availability resulting from lower beginning inventory entering the second quarter of 2024, partially offset by an increase in sales volume as a result of the Waggaman acquisition.

Sales volume in the six months ended June 30, 2024 was 9.40 million tons compared to 9.47 million tons in the six months ended June 30, 2023.

This resulted in a decrease in net sales of approximately $13 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

In January 2024, a winter storm produced extremely cold temperatures that impacted our operations, including the temporary shut-down and lost production at certain of our plants.

Due to the impact of plant downtime resulting from the adverse weather and additional plant maintenance activity in the first quarter of 2024, we purchased and sold approximately 62,000 tons of ammonia and 48,000 tons of granular urea at near breakeven margins in order to fulfill sales commitments.

The plant downtime led to approximately $75 million of additional costs in the first quarter of 2024 for maintenance, repairs and certain unabsorbed fixed costs.

Additionally, the Waggaman acquisition, which we completed on December 1, 2023, increased our ammonia sales volume in the first quarter of 2024 by approximately 122,000 tons.

CF INDUSTRIES HOLDINGS, INC.

Additionally, the Waggaman acquisition, which we completed on December 1, 2023, increased our ammonia sales volume in the second quarter and first six months of 2024 by approximately 161,000 tons and 283,000 tons, respectively.

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

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

Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 32% and 40%, respectively, of our production costs in the first three months of 2024 and the year ended December 31, 2023.

Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 28% and 40% of our production costs in the first six months of 2024 and the year ended December 31, 2023, respectively.

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.

CF INDUSTRIES HOLDINGS, INC.

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:

Three Months Ended March 31,

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

2024 2023 2024 v.

Average daily market price of natural gas Henry Hub (Louisiana) (per MMBtu) $ 2.04 $ 2.12 $ (0.08) (4) % $ 2.24 $ 2.40 $ (0.16) (7) %

In the first quarter of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 52% to $3.19 per MMBtu from $6.62 per MMBtu in the first quarter of 2023.

This decrease in natural gas costs resulted in an increase in gross margin of $269 million compared to the first quarter of 2023.

In the second quarter of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 31% to $1.90 per MMBtu from $2.75 per MMBtu in the second quarter of 2023.

This decrease in natural gas costs resulted in an increase in gross margin of $81 million, excluding the impact of the Waggaman acquisition, compared to the second quarter of 2023.

In the first half of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 45% to $2.53 per MMBtu from $4.56 per MMBtu in the first half of 2023.

This decrease in natural gas costs resulted in an increase in gross margin of $350 million compared to the first half of 2023.

In the first quarter of 2024, warmer-than-normal average temperatures in North America drove lower heating demand for natural gas, in spite of a short-lived period of extremely cold temperatures in January 2024 that affected most of North America.

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In addition, although the higher cost for natural gas outside of North America incentivized liquefaction facilities in the United States to export domestic natural gas during the first quarter of 2024, an outage at the Freeport liquefied natural gas facility limited total gas exports, supporting domestic supply.

As a result, North American gas withdrawals from storage during the first quarter of 2024 were lower than normal, leading to 23% higher storage levels as of March 31, 2024, compared to one year ago and 39% higher than the five-year average.

During the second quarter of 2024, there was a decline in natural gas supply as producers responded to the weaker price environment, limiting the domestic supply available to be injected into storage during the quarter.

In addition, natural gas demand for power generation reached record levels in the second quarter as higher-than-normal temperatures drove increased cooling demand.

Despite lower supply availability and increased demand, North America ended the second quarter of 2024 with storage levels 10% higher compared to one year ago and 19% higher than the five-year average.

Financial Executive Summary

We reported net earnings attributable to common stockholders of $194 million for the three months ended March 31, 2024 compared to $560 million for the three months ended March 31, 2023, a decrease in net earnings of $366 million.

The decrease in net earnings for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily reflects a decrease in gross margin, partially offset by a lower income tax provision in the first quarter of 2024 as compared to the first quarter of 2023.

Gross margin decreased by $454 million to $409 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The decrease in gross margin was due primarily to a 27% decrease in average selling prices to $325 per ton in the first quarter of 2024 from $444 per ton in the first quarter of 2023, which decreased gross margin by $567 million.

The impact of lower selling prices was partially offset by lower natural gas costs, which increased gross margin by $269 million.

The lower gross margin was partially offset by a decrease of $107 million in the income tax provision due primarily to lower pre-tax earnings in the first quarter of 2024 compared to the first quarter of 2023 and a decrease of $46 million in net earnings attributable to noncontrolling interest.

Diluted net earnings per share attributable to common stockholders decreased $1.82 per share, to $1.03 per share, in the first quarter of 2024 compared to $2.85 per share in the first quarter of 2023, 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.

We reported net earnings attributable to common stockholders of $420 million for the three months ended June 30, 2024 compared to $527 million for the three months ended June 30, 2023, a decrease in net earnings of $107 million, or 20%.

The decrease in net earnings for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily reflects a decrease in gross margin.

Gross margin decreased by $125 million, or 16%, to $679 million for the three months ended June 30, 2024 compared to $804 million for the three months ended June 30, 2023.

The decrease in gross margin was due primarily to a 10% decrease in average selling prices to $322 per ton in the second quarter of 2024 from $359 per ton in the second quarter of 2023, which decreased gross margin by $165 million, and including the impact of the Waggaman acquisition, a decrease in sales volume, which decreased gross margin by $59 million.

The impact of lower selling prices was partially offset by lower natural gas costs, which increased gross margin by $81 million, excluding the impact of the Waggaman acquisition.

Diluted net earnings per share attributable to common stockholders decreased $0.40 per share, or 15%, to $2.30 per share, in the second quarter of 2024 compared to $2.70 per share in the second quarter of 2023, 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.

CF INDUSTRIES HOLDINGS, INC.

Acquisition of Waggaman Ammonia Production Facility

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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 not be material and will be completed in the second quarter of 2024.

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

The consideration transferred on the acquisition date reflected an estimated net working capital adjustment and other adjustments to the purchase price, which was subject to further adjustment pursuant to the terms of the asset purchase agreement.

The purchase price adjustments required under the asset purchase agreement were finalized in the second quarter of 2024, which resulted in a $2 million reduction in the purchase price with a corresponding reduction in goodwill.

As a result, the final purchase price was $1.221 billion.

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

CF INDUSTRIES HOLDINGS, INC.

Items Affecting Comparability of Results

For the three months ended March 31, 2024 and 2023, we reported net earnings attributable to common stockholders of $194 million and $560 million, 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 for the three months ended March 31, 2024 and 2023.

For the three months ended June 30, 2024 and 2023, we reported net earnings attributable to common stockholders of $420 million and $527 million, respectively.

For the six months ended June 30, 2024 and 2023, we reported net earnings attributable to common stockholders of $614 million and $1.09 billion, respectively.

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

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

Three Months Ended March 31,

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

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

2024 2023 2024 2023

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

(in millions)

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$ (1) $ (1) $ — $ — $ (34) $ (26) $ (72) $ (56)

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

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

— — (1) — 1 1 (2) (1)

operations restructuring — — — — — — 2 2

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

In the three months ended March 31, 2024 and 2023, we recognized unrealized net mark-to-market gains on natural gas derivatives of $33 million and $72 million, respectively.

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

In the three months ended March 31, 2024 and 2023, we recognized a loss (gain) on foreign currency transactions of $1 million and $(1) million, respectively.

Loss (gain) on foreign currency transactions consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that are not permanently invested.

In the three months ended June 30, 2024, we recognized an unrealized net mark-to-market gain on natural gas derivatives of $1 million.

In the six months ended June 30, 2024 and 2023, we recognized unrealized net mark-to-market gains on natural gas derivatives of $34 million and $72 million, respectively.

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

In the six months ended June 30, 2024 and 2023, we recognized a loss (gain) on foreign currency transactions of $1 million and $(2) million, respectively.

(Gain) loss on foreign currency transactions consists of foreign currency exchange

CF INDUSTRIES HOLDINGS, INC.

rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that are not permanently invested.

operations restructuring

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

In the six months ended June 30, 2023, we incurred restructuring costs of $2 million related to the permanent closure of our Ince facility in the United Kingdom.

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 the three months ended March 31, 2024 and 2023, we incurred $3 million and $13 million, respectively, of acquisition and integration costs related to the Waggaman acquisition.

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 the three months ended June 30, 2024 and 2023, we incurred $1 million and $3 million, respectively, of acquisition and integration costs related to the Waggaman acquisition.

In the six months ended June 30, 2024 and 2023, we incurred $4 million and $16 million, respectively, of acquisition and integration costs related to the Waggaman acquisition.

CF INDUSTRIES HOLDINGS, INC.

Consolidated Results of Operations

The following table presents our consolidated results of operations and supplemental data for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table presents our consolidated results of operations and certain supplemental data for the three and six months ended June 30, 2024 and 2023:

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

2024 2023 2024 v.

2023 2024 2023 2024 v.

(dollars in millions, except per share and per MMBtu amounts)

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Total other operating costs and expenses 38 77 (39) (51) % 146 131 15 11 %

Equity in earnings of operating affiliate 2 17 (15) (88) %

Equity in (losses) earnings of operating affiliate (3) 7 (10) N/M (1) 24 (25) N/M

Operating earnings 638 734 (96) (13) % 941 1,560 (619) (40) %

Interest expense—net 7 10 (3) (30) %

Interest expense (income)—net 9 (4) 13 N/M 16 6 10 167 %

Other non-operating—net — (2) 2 100 % (4) (5) 1 20 %

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Average daily market price of natural gas Henry Hub (Louisiana) $ 2.04 $ 2.12 $ (0.08) (4) % $ 2.24 $ 2.40 $ (0.16) (7) %

Unrealized net mark-to-market gain on natural gas derivatives $ (33) $ (72) $ 39 54 %

Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ — $ (1) N/M $ (34) $ (72) $ 38 53 %

Depreciation and amortization $ 222 $ 221 $ 1 — % $ 475 $ 427 $ 48 11 %

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N/M—Not Meaningful

CF INDUSTRIES HOLDINGS, INC.

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

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

CF INDUSTRIES HOLDINGS, INC.

First Quarter of 2024 Compared to First Quarter of 2023

Our total net sales decreased $542 million, or 27%, to $1.47 billion in the first three months of 2024 compared to $2.01 billion in the first three months of 2023.

The decrease in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $55 million, and (ii) a $597 million, or 30%, decline in our net sales excluding the impact of the Waggaman acquisition, due primarily to a decrease in average selling prices of approximately 27%.

Our average selling price was $325 per ton in the first three months of 2024 compared to $444 per ton in the first three months of 2023, due to lower average selling prices across all 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 $567 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

In January 2024, a winter storm produced extremely cold temperatures that impacted our operations, including the temporary shut-down of certain of our plants.

As a result of the adverse weather, we incurred additional maintenance costs and lost production.

Gross ammonia production for the first three months of 2024 was 2.1 million tons, a 9% decrease from 2.4 million tons of gross ammonia production in the first three months of 2023, due primarily to an increase in maintenance activity, including the unplanned maintenance due to the adverse weather.

Second Quarter of 2024 Compared to Second Quarter of 2023

Our total net sales decreased $203 million, or 11%, to $1.57 billion in the second quarter of 2024 compared to $1.78 billion in the second quarter of 2023.

The change in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $59 million, and (ii) a $262 million, or 15%, decline in our net sales excluding the impact of the Waggaman acquisition, due to a decrease in our average selling price and lower sales volumes.

Our average selling price decreased 10% to $322 per ton in the second quarter of 2024 compared to $359 per ton in the second quarter of 2023, due to lower average selling prices across most 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 $165 million for the second quarter of 2024 compared to the second quarter of 2023.

Our total sales volume was approximately 4.9 million product tons in both the second quarter of 2024 and 2023 as lower sales volume in our Ammonia, UAN and AN segments was partially offset by higher sales volume in our Granular Urea segment.

The impact of lower sales volumes, excluding the impact of the Waggaman acquisition that increased our net sales by $59 million, was a decrease in net sales of approximately $97 million.

Gross ammonia production for the three and six months ended June 30, 2024 was 2.6 million tons and 4.8 million tons, respectively.

We expect gross ammonia production for 2024 will be approximately 9.8 million tons.

Cost of Sales

Our total cost of sales decreased $88 million, or 8%, to $1.06 billion in the first three months of 2024 from $1.15 billion in the first three months of 2023.

Our total cost of sales decreased $78 million, or 8%, to $893 million in the second quarter of 2024 from $971 million in the second quarter of 2023.

The decrease in our cost of sales was due primarily to lower costs for natural gas, including the impact of realized derivatives, which decreased cost of sales by $81 million, excluding the impact of the Waggaman acquisition.

The impact of the Waggaman acquisition increased our cost of sales by $47 million.

Cost of sales averaged $183 per ton in the second quarter of 2024 compared to $196 per ton in the second quarter of 2023.

Our cost of natural gas, including the impact of realized derivatives, decreased 31% to $1.90 per MMBtu in the second quarter of 2024 from $2.75 per MMBtu in the second quarter of 2023.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $76 million in the second quarter of 2024, a 7% increase from $71 million in the second quarter of 2023.

The increase was due primarily to higher amortization expense related to the customer relationships recorded in conjunction with the Waggaman acquisition on December 1, 2023.

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 the three months ended June 30, 2024 and 2023, we incurred $1 million and $3 million, respectively, of acquisition and integration costs related to the Waggaman acquisition.

Other Operating—Net

Other operating—net was $39 million of income in the second quarter of 2024 compared to $3 million of expense in the second quarter of 2023.

The $39 million of income in the second quarter of 2024 consists primarily of gains on sales of emission credits, partially offset by costs related to FEED studies for our clean energy initiatives.

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

CF INDUSTRIES HOLDINGS, INC.

Equity in (Losses) Earnings of Operating Affiliate

Equity in (losses) earnings of operating affiliate was a $3 million loss in the second quarter of 2024 compared to $7 million of earnings in the second quarter of 2023.

Lower equity in earnings of operating affiliate reflects a decrease in the operating results of PLNL as a result of a plant turnaround in the second quarter of 2024 at the PLNL facility in Trinidad and lower ammonia selling prices.

Interest Expense (Income)—Net

Net interest expense was $9 million of expense in the second quarter of 2024 compared to $4 million of income in the second quarter of 2023.

The change of $13 million was due primarily to a decrease in interest income on short-term investments.

Income Tax Provision

For the three months ended June 30, 2024, we recorded an income tax provision of $123 million on pre-tax income of $629 million, or an effective tax rate of 19.5%, compared to an income tax provision of $134 million on pre-tax income of $740 million, or an effective tax rate of 18.2%, for the three months ended June 30, 2023.

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

Our effective tax rate for the three months ended June 30, 2024 of 19.5%, which is based on pre-tax income of $629 million, including $86 million of earnings attributable to the noncontrolling interest, would be 3.1 percentage points higher, or 22.6%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $86 million.

Our effective tax rate for the three months ended June 30, 2023 of 18.2%, which is based on pre-tax income of $740 million, including $79 million of earnings attributable to the noncontrolling interest, would be 2.1 percentage points higher, or 20.3%, if based on pre-tax income exclusive of the $79 million of earnings attributable to the noncontrolling interest.

See Note 14—Noncontrolling Interest for additional information.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest increased $7 million to $86 million in the second quarter of 2024 compared to $79 million in the second quarter of 2023 due to higher earnings of CFN driven by lower natural gas costs.

Diluted Net Earnings Per Share Attributable to Common Stockholders

Diluted net earnings per share attributable to common stockholders decreased $0.40, or 15%, to $2.30 per share in the second quarter of 2024 from $2.70 per share in the second quarter of 2023.

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.

Additionally, diluted weighted-average common shares outstanding declined 6% from 195.0 million shares for the three months ended June 30, 2023 to 182.8 million shares for the three months ended June 30, 2024, due primarily to repurchases of common shares under our share repurchase programs.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Our total net sales decreased $0.75 billion, or 20%, to $3.04 billion in the first six months of 2024 compared to $3.79 billion in the first six months of 2023.

The change in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $114 million, and (ii) a $0.86 billion, or 23%, decline in our net sales excluding the impact of the Waggaman acquisition, due primarily to a decrease in average selling prices of approximately 19%.

Our average selling price was $324 per ton in the first six months of 2024 compared to $400 per ton in the first six months of 2023, due to lower average selling prices across all 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 $732 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Our total sales volume was 9.4 million product tons in the first six months of 2024 compared to 9.5 million in the first six months of 2023, respectively, as lower sales volume in our Granular Urea and UAN segments was partially offset by higher sales volume in our Ammonia segment.

The impact of lower sales volume, excluding the impact of the Waggaman acquisition, was a decrease in net sales of approximately $127 million.

CF INDUSTRIES HOLDINGS, INC.

Cost of Sales

Our total cost of sales decreased $166 million, or 8%, to $1.95 billion in the first six months of 2024 from $2.12 billion in the first six months of 2023.

The decrease in our cost of sales primarily reflects lower costs for natural gas, including the impact of realized derivatives.

The impact of lower natural gas costs decreased cost of sales by $350 million, excluding the impact of the Waggaman acquisition.

The impact of lower natural gas costs was partially offset by higher costs for planned and unplanned maintenance activities in the first quarter of 2024, including as a result of the adverse weather, as discussed above.

The impact of lower natural gas costs was partially offset by higher costs for planned and unplanned maintenance and repair activities in the first six months of 2024, including as a result of the adverse weather in January 2024, as discussed above under “Nitrogen Sales Volume,” which increased cost of sales by approximately $75 million.

The impact of the Waggaman acquisition increased our cost of sales by $108 million.

Cost of sales also includes the impact of a $33 million unrealized net mark-to-market gain on natural gas derivatives in the first three months of 2024 compared to a $72 million gain in the first three months of 2023.

Cost of sales averaged $235 per ton in the first three months of 2024 compared to $254 per ton in the first three months of 2023.

Our cost of natural gas decreased 52% to $3.19 per MMBtu in the first three months of 2024 from $6.62 per MMBtu in the first three months of 2023.

Cost of sales also includes the impact of a $34 million unrealized net mark-to-market gain on natural gas derivatives in the first six months of 2024 compared to a $72 million gain in the first six months of 2023.

Cost of sales averaged $208 per ton in the first six months of 2024 compared to $224 per ton in the first six months of 2023.

Our cost of natural gas, including the impact of realized derivatives, decreased 45% to $2.53 per MMBtu in the first six months of 2024 from $4.56 per MMBtu in the first six months of 2023.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $14 million to $88 million in the first three months of 2024 compared to $74 million in the first three months of 2023.

The increase was due primarily to higher amortization expense related to the customer relationships recorded in conjunction with the Waggaman acquisition and an increase in costs related to other corporate initiatives.

Selling, general and administrative expenses increased $19 million to $164 million in the first six months of 2024 compared to $145 million in the first six months of 2023.

The increase was due primarily to higher amortization expense related to the customer relationships recorded in conjunction with the Waggaman acquisition on December 1, 2023, and an increase in costs related to certain corporate initiatives.

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 the six months ended June 30, 2024 and 2023, we incurred $4 million and $16 million, respectively, of acquisition and integration costs related to the Waggaman acquisition.

Other Operating—Net

Other operating—net was $17 million of expense in the first three months of 2024 compared to $35 million of income in the first three months of 2023.

The $17 million of expense in the first three months of 2024 consists primarily of costs related to FEED studies for our clean energy initiatives and losses on the disposal of property, plant and equipment.

Other operating—net was $22 million of income in the first six months of 2024 compared to $32 million of income in the first six months of 2023.

The $22 million of income in the first six months of 2024 consists primarily of gains on sales of emission credits, partially offset by costs related to FEED studies for our clean energy initiatives.

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

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

CF INDUSTRIES HOLDINGS, INC.

Equity in Earnings of Operating Affiliate

Equity in earnings of operating affiliate was $2 million in the first three months of 2024 compared to $17 million in the first three months of 2023.

Lower equity in earnings of operating affiliate reflects a decrease in the operating results of PLNL as a result of lower ammonia selling prices and lower operating rates at PLNL due to lower available natural gas.

The $32 million of income in the first six months of 2023 consists primarily of gains on sales of emission credits.

Equity in (Losses) Earnings of Operating Affiliate

Equity in (losses) earnings of operating affiliate was a $1 million loss in the first six months of 2024 compared to $24 million of earnings in the first six months of 2023.

Interest Expense—Net

Net interest expense was $7 million in the first three months of 2024 compared to $10 million in the first three months of 2023.

The decrease of $3 million was due primarily to a decrease in interest on tax liabilities.

Net interest expense was $16 million in the first six months of 2024 compared to $6 million in the first six months of 2023.

The increase of $10 million was due primarily to a decrease in interest income on short-term investments, partially offset by a decrease in interest on tax liabilities.

Income Tax Provision

For the three months ended March 31, 2024, we recorded an income tax provision of $62 million on pre-tax income of $300 million, or an effective tax rate of 20.7%, compared to an income tax provision of $169 million on pre-tax income of $819 million, or an effective tax rate of 20.6%, for the three months ended March 31, 2023.

For the six months ended June 30, 2024, we recorded an income tax provision of $185 million on pre-tax income of $929 million, or an effective tax rate of 19.9%, compared to an income tax provision of $303 million on pre-tax income of $1.56 billion, or an effective tax rate of 19.5%, for the six months ended June 30, 2023.

Our effective tax rate for the three months ended March 31, 2024 of 20.7%, which is based on pre-tax income of $300 million, including $44 million of earnings attributable to the noncontrolling interest, would be 3.6 percentage points higher, or 24.3%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $44 million.

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

Our effective tax rate for the six months ended June 30, 2024 of 19.9%, which is based on pre-tax income of $929 million, including $130 million of earnings attributable to the noncontrolling interest, would be 3.2 percentage points higher, or 23.1%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $130 million.

Our effective tax rate for the six months ended June 30, 2023 of 19.5%, which is based on pre-tax income of $1.56 billion, including $169 million of

CF INDUSTRIES HOLDINGS, INC.

earnings attributable to the noncontrolling interest, would be 2.3 percentage points higher, or 21.8%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $169 million.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest decreased $46 million to $44 million in the first three months of 2024 compared to $90 million in the first three months of 2023 due to lower earnings of CFN driven by lower average selling prices, partially offset by lower natural gas costs.

Net earnings attributable to noncontrolling interest decreased $39 million to $130 million in the first six months of 2024 compared to $169 million in the first six months of 2023 due to lower earnings of CFN driven by lower average selling prices, partially offset by lower natural gas costs.

Diluted Net Earnings Per Share Attributable to Common Stockholders

Diluted net earnings per share attributable to common stockholders decreased $1.82 to $1.03 per share in the first three months of 2024 from $2.85 per share in the first three months of 2023.

Diluted net earnings per share attributable to common stockholders decreased $2.24, or 40%, to $3.31 per share in the first six months of 2024 from $5.55 per share in the first six months of 2023.

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 and a decrease in net earnings attributable to noncontrolling interest.

Additionally, diluted weighted-average common shares outstanding declined 4% from 196.9 million shares for the three months ended March 31, 2023 to 188.1 million shares for the three months ended March 31, 2024, due primarily to repurchases of common shares under our share repurchase programs.

CF INDUSTRIES HOLDINGS, INC.

Additionally, diluted weighted-average common shares outstanding declined 5% from 195.9 million shares for the six months ended June 30, 2023 to 185.5 million shares for the six months ended June 30, 2024, due primarily to repurchases of common shares under our share repurchase programs.

Operating Results by Business Segment

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(dollars in millions)

Three months ended March 31, 2024

Three months ended June 30, 2024

Net sales $ 409 $ 457 $ 475 $ 98 $ 133 $ 1,572

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Gross margin percentage 35.9 % 49.7 % 45.5 % 23.5 % 49.6 % 43.2 %

Three months ended March 31, 2023

Three months ended June 30, 2023

Net sales $ 525 $ 460 $ 548 $ 104 $ 138 $ 1,775

2 unchanged sentences

Gross margin percentage 42.3 % 51.7 % 47.3 % 22.1 % 44.9 % 45.3 %

Six months ended June 30, 2024

Net sales $ 811 $ 864 $ 900 $ 212 $ 255 $ 3,042

Cost of sales 599 483 541 180 151 1,954

Gross margin $ 212 $ 381 $ 359 $ 32 $ 104 $ 1,088

Gross margin percentage 26.1 % 44.1 % 39.9 % 15.1 % 40.8 % 35.8 %

Six months ended June 30, 2023

Net sales $ 949 $ 1,071 $ 1,215 $ 263 $ 289 $ 3,787

Cost of sales 583 549 635 185 168 2,120

Gross margin $ 366 $ 522 $ 580 $ 78 $ 121 $ 1,667

Gross margin percentage 38.6 % 48.7 % 47.7 % 29.7 % 41.9 % 44.0 %

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

Three Months Ended March 31,

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

2023 2024 (1)

(dollars in millions, except per ton amounts)

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

First Quarter of 2024 Compared to First Quarter of 2023

Net sales in our Ammonia segment decreased by $22 million, or 5%, to $402 million in the three months ended March 31, 2024 from $424 million in the three months ended March 31, 2023.

The decrease in our net sales reflects a 33% decrease in average selling prices, partially offset by a 41% increase in sales volume, including the impact of the Waggaman acquisition completed on December 1, 2023.

Average selling prices decreased to $438 per ton in the three months ended March 31, 2024 compared to $650 per ton in the three months ended March 31, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Second Quarter of 2024 Compared to Second Quarter of 2023

Net sales in our Ammonia segment decreased by $116 million, or 22%, to $409 million in the second quarter of 2024 from $525 million in the second quarter of 2023.

The decrease in our net sales reflects a 16% decrease in average selling prices and a 7% decrease in sales volume, including the impact of the Waggaman acquisition completed on December 1, 2023.

Average selling prices decreased to $418 per ton in the second quarter of 2024 compared to $499 per ton in the second quarter of 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Ammonia sales volume in the second quarter of 2024 was approximately 979,000 tons, a decrease of 7% compared to the second quarter of 2023.

The decrease in sales volume was due primarily to lower supply availability resulting from lower beginning inventory and, due to unfavorable weather, lower spring ammonia applications in North America compared to the second quarter of 2023, partially offset by the impact of the Waggaman acquisition completed on December 1, 2023, which increased our ammonia sales volume in the second quarter of 2024 by approximately 161,000 tons.

Cost of Sales.

Cost of sales in our Ammonia segment averaged $268 per ton in the second quarter of 2024, a 7% decrease from $288 per ton in the second quarter of 2023.

The decrease was due primarily to lower realized natural gas costs, including the impact of realized derivatives, partially offset by higher costs for maintenance activity.

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 decreased by $75 million to $147 million in the second quarter of 2024 from $222 million in the second quarter of 2023, and our gross margin percentage was 35.9% in the second quarter of 2024 compared to 42.3% in the second quarter of 2023 .

The decrease in gross margin was due primarily to a 16% decrease in average selling prices, which decreased gross margin by $60 million and, excluding the impact of the Waggaman acquisition completed on December 1, 2023, a decrease in sales volume, which decreased gross margin by $62 million and a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $15 million.

These factors that decreased gross margin were partially offset by a decrease in realized natural gas costs, including the impact of realized derivatives, which

CF INDUSTRIES HOLDINGS, INC.

increased gross margin by $50 million, and the impact of the Waggaman acquisition, which increased gross margin by $12 million.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net sales in our Ammonia segment decreased by $138 million, or 15%, to $811 million in the six months ended June 30, 2024 from $949 million in the six months ended June 30, 2023.

The decrease in our net sales reflects a 23% decrease in average selling prices, partially offset by an 11% increase in sales volume, including the impact of the Waggaman acquisition completed on December 1, 2023.

Average selling prices decreased to $428 per ton in the six months ended June 30, 2024 compared to $557 per ton in the six months ended June 30, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

In January 2024, a winter storm produced extremely cold temperatures that impacted our operations, including the temporary shut-down of certain of our plants.

As a result of the adverse weather, we incurred additional maintenance costs and lost production in the first quarter.

Due to the impact of plant downtime resulting from the adverse weather and additional plant maintenance activity in the first quarter of 2024 that limited production, we purchased and sold approximately 62,000 tons of ammonia at near breakeven margins in order to fulfill sales commitments.

Ammonia sales volume in the first quarter of 2024 was 918,000 tons, an increase of 266,000 tons, or 41%, compared to 652,000 tons in the first quarter of 2023.

The increase in sales volume reflects the impact of the Waggaman acquisition completed on December 1, 2023, which increased our ammonia sales volume in the first quarter of 2024 by approximately 122,000 tons, approximately 62,000 tons of purchased ammonia described above, and spring ammonia applications in North America being pulled into the first quarter of 2024 due to favorable weather.

As a result of the adverse weather, we incurred additional maintenance costs in the first quarter of 2024.

Due to the impact of plant downtime resulting from the adverse weather and additional plant maintenance activity in the first quarter of 2024, we purchased and sold approximately 62,000 tons of ammonia at near breakeven margins in order to fulfill sales commitments.

Ammonia sales volume in the six months ended June 30, 2024 was 1.9 million tons, an increase of 11% compared to 1.7 million tons in the six months ended June 30, 2023.

The increase in sales volume reflects the impact of the Waggaman acquisition completed on December 1, 2023, which increased our ammonia sales volume in the six months ended June 30, 2024 by approximately 283,000 tons, and approximately 62,000 tons of ammonia purchased and sold as described above, partially offset by lower supply availability resulting from lower beginning inventory, and, due to unfavorable weather, lower spring ammonia applications in North America compared to the six months ended June 30, 2023.

Cost of Sales.

Cost of sales in our Ammonia segment averaged $367 per ton in the three months ended March 31, 2024, a 14% decrease from $429 per ton in the three months ended March 31, 2023.

Cost of sales in our Ammonia segment averaged $316 per ton in the six months ended June 30, 2024, an 8% decrease from $342 per ton in the six months ended June 30, 2023.

The decrease was due primarily to lower realized natural gas costs, including the impact of realized derivatives, partially offset by higher costs for maintenance, repairs and certain unabsorbed fixed costs as a result of plant downtime, including the impact of the adverse weather in January 2024 as discussed above.

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

CF INDUSTRIES HOLDINGS, INC.

Gross Margin .

Gross margin in our Ammonia segment decreased by $79 million to $65 million in the three months ended March 31, 2024 from $144 million in the three months ended March 31, 2023, and our gross margin percentage was 16.2% in the three months ended March 31, 2024 compared to 34.0% in the three months ended March 31, 2023 .

The decrease in gross margin was due primarily to a 33% decrease in average selling prices, which decreased gross margin by $160 million a nd a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $48 million.

These factors that decreased gross margin were partially offset by the impact of a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $99 million, and including the impact of the Waggaman acquisition completed on December 1, 2023, a 41% increase in sales volume, which increase d gross margin by $39 million.

Gross margin also includes the impact of a $12 million unrealized net mark-to-market gain on natural gas derivatives in the three months ended March 31, 2024 compared to a $21 million gain in the three months ended March 31, 2023.

Gross margin in our Ammonia segment decreased by $154 million to $212 million in the six months ended June 30, 2024 from $366 million in the six months ended June 30, 2023, and our gross margin percentage was 26.1% in the six months ended June 30, 2024 compared to 38.6% in the six months ended June 30, 2023 .

The decrease in gross margin was due primarily to a 23% decrease in average selling prices, which decreased gross margin by $220 million, a net increase in manufacturing, maintenance and other costs, which decrease d gross margin by $63 million, and, excluding the impact of the Waggaman acquisition, a decrease in sales volume, which decreased gross margin by $17 million.

These factors that decreased gross margin were partially offset by the impact of a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $149 million, and the impact of the Waggaman acquisition, which increased gross margin by $6 million.

Gross margin also includes the impact of a $12 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2024 compared to a $21 million gain in the six months ended June 30, 2023.

CF INDUSTRIES HOLDINGS, INC.

Granular Urea Segment

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

Three Months Ended March 31,

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

2024 2023 2024 v.

2023 2024 2023 2024 v.

(dollars in millions, except per ton amounts)

17 unchanged sentences

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

First Quarter of 2024 Compared to First Quarter of 2023

Net sales in our Granular Urea segment decreased $204 million, or 33%, to $407 million in the three months ended March 31, 2024 from $611 million in the three months ended March 31, 2023 due primarily to a 19% decrease in average selling prices and a 17% decrease in sales volume.

Average selling prices decreased to $373 per ton in the three months ended March 31, 2024 compared to $462 per ton in the three months ended March 31, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Sales volume includes the impact of approximately 48,000 tons of granular urea purchased and sold in the first quarter of 2024 due to a winter storm that produced extremely cold temperatures that impacted our operations, including the temporary shut-down of certain of our plants.

Sales volume for the three months ended March 31, 2024 was 1.1 million tons compared to 1.3 million tons in the three months ended March 31, 2023 due primarily to lower supply availability as a result of lower production due to the adverse weather and other maintenance activities.

Second Quarter of 2024 Compared to Second Quarter of 2023

Net sales in our Granular Urea segment decreased $3 million, or 1%, to $457 million in the second quarter of 2024 from $460 million in the second quarter of 2023 due primarily to a 9% decrease in average selling prices, partially offset by a 9% increase in sales volume.

Average selling prices decreased to $365 per ton in the second quarter of 2024 compared to $401 per ton in the second quarter of 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Sales volume was higher due primarily to higher supply availability resulting from increased production in the second quarter of 2024 compared to the second quarter of 2023.

Cost of Sales.

Cost of sales in our Granular Urea segment averaged $232 per ton in the three months ended March 31, 2024 compared to $247 per ton in the three months ended March 31, 2023.

The decrease was due primarily to lower realized natural gas costs, including the impact of realized derivatives, partially offset by higher costs associated with maintenance activity in the first quarter of 2024.

Cost of sales in our Granular Urea segment averaged $184 per ton in the second quarter of 2024 compared to $194 per ton in the second quarter of 2023.

Gross Margin .

Gross margin in our Granular Urea segment decreased by $130 million to $154 million in the three months ended March 31, 2024 from $284 million in the three months ended March 31, 2023, and our gross margin percentage

Gross margin in our Granular Urea segment decreased by $11 million to $227 million in the second quarter of 2024 from $238 million in the second quarter of 2023, and our gross margin percentage was 49.7% in the second quarter of 2024 compared to 51.7% in the second quarter of 2023.

The decrease in gross margin was due primarily to a 9% decrease in average selling prices, which decreased gross margin by $43 million.

These factors that decreased gross margin were partially offset by a 9% increase in sales volume, which increased gross margin by $19 million and a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $13 million.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net sales in our Granular Urea segment decreased $207 million, or 19%, to $864 million in the six months ended June 30, 2024 from $1.07 billion in the six months ended June 30, 2023 due primarily to a 15% decrease in average selling prices and a 5% decrease in sales volume.

Average selling prices decreased to $369 per ton in the six months ended June 30, 2024 compared to $434 per ton in the six months ended June 30, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Sales volume for the six months ended June 30, 2024 was 2.3 million tons compared to 2.5 million tons in the six months ended June 30, 2023 due primarily to a reduction in ammonia available for upgrade and lower supply availability from the impact of severe weather that caused urea plant outages in the first quarter of

CF INDUSTRIES HOLDINGS, INC.

was 37.8% in the three months ended March 31, 2024 compared to 46.5% in the three months ended March 31, 2023.

Cost of Sales.

Cost of sales in our Granular Urea segment averaged $206 per ton in the six months ended June 30, 2024 compared to $223 per ton in the six months ended June 30, 2023.

Gross Margin .

Gross margin in our Granular Urea segment decreased by $141 million to $381 million in the six months ended June 30, 2024 from $522 million in the six months ended June 30, 2023, and our gross margin percentage was 44.1% in the six months ended June 30, 2024 compared to 48.7% in the six months ended June 30, 2023.

The decrease in gross margin was due primarily to a 15% decrease in average selling prices, which decreased gross margin by $137 million, a 5% decrease in sales volume, which decreased gross margin by $39 million and a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $33 million.

These factors that decreased gross margin were partially offset by a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $79 million.

Gross margin also includes the impact of a $9 million unrealized net mark-to-market gain on natural gas derivatives in the three months ended March 31, 2024 compared to a $20 million gain in the three months ended March 31, 2023.

Gross margin also includes the impact of a $9 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2024 compared to a $20 million gain in the six months ended June 30, 2023.

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

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

Three Months Ended March 31,

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

2024 2023 2024 v.

2023 2024 2023 2024 v.

(dollars in millions, except per ton amounts)

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

First Quarter of 2024 Compared to First Quarter of 2023

Net sales in our UAN segment decreased $242 million, or 36%, to $425 million in the three months ended March 31, 2024 from $667 million in the three months ended March 31, 2023 due primarily to a 34% decrease in average selling prices and a 3% decrease in sales volume.

Average selling prices decreased to $264 per ton in the three months ended March 31, 2024 compared to $401 per ton in the three months ended March 31, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Second Quarter of 2024 Compared to Second Quarter of 2023

Net sales in our UAN segment decreased $73 million, or 13%, to $475 million in the second quarter of 2024 from $548 million in the second quarter of 2023 due to a 10% decrease in average selling prices, and a 3% decrease in sales volume.

Average selling prices decreased to $272 per ton in the second quarter of 2024 compared to $303 per ton in the second quarter of 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Cost of Sales.

Cost of sales in our UAN segment averaged $175 per ton in the three months ended March 31, 2024, a 16% decrease from $208 per ton in the three months ended March 31, 2023, due primarily to the impact of lower realized natural gas costs, including the impact of realized derivatives.

Cost of sales in our UAN segment averaged $148 per ton in the second quarter of 2024, an 8% decrease from $160 per ton in the second quarter of 2023, due primarily to the impact of lower realized natural gas costs, including the impact of realized derivatives.

CF INDUSTRIES HOLDINGS, INC.

Gross Margin .

Gross margin in our UAN segment decreased by $178 million to $143 million in the three months ended March 31, 2024 from $321 million in the three months ended March 31, 2023, and our gross margin percentage was 33.6% in the three months ended March 31, 2024 compared to 48.1% in the three months ended March 31, 2023.

The decrease in gross margin was due primarily to a 34% decrease in average selling prices, which decreased gross margin by $228 million, a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $10 million, and a 3% decrease in sales volume, which decreased gross margin by $6 million.

Gross margin in our UAN segment decreased by $43 million to $216 million in the second quarter of 2024 from $259 million in the second quarter of 2023, and our gross margin percentage was 45.5% in the second quarter of 2024 compared to 47.3% in the second quarter of 2023.

The decrease in gross margin was due primarily to a 10% decrease in average selling prices, which decreased gross margin by $50 million and a 3% decrease in sales volume, which decreased gross margin by $16 million.

These factors that decreased gross margin were partially offset by a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $16 million and a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $7 million.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net sales in our UAN segment decreased $315 million, or 26%, to $900 million in the six months ended June 30, 2024 from $1.22 billion in the six months ended June 30, 2023 due primarily to a 23% decrease in average selling prices and a 3% decrease in sales volume.

Average selling prices decreased to $268 per ton in the six months ended June 30, 2024 compared to $350 per ton in the six months ended June 30, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Cost of Sales.

Cost of sales in our UAN segment averaged $161 per ton in the six months ended June 30, 2024, a 12% decrease from $183 per ton in the six months ended June 30, 2023, 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 decreased by $221 million to $359 million in the six months ended June 30, 2024 from $580 million in the six months ended June 30, 2023, and our gross margin percentage was 39.9% in the six months ended June 30, 2024 compared to 47.7% in the six months ended June 30, 2023.

The decrease in gross margin was due primarily to a 23% decrease in average selling prices, which decreased gross margin by $278 million, a 3% decrease in sales volume, which decreased gross margin by $22 million, 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 a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $93 million.

Gross margin also includes the impact of a $10 million unrealized net mark-to-market gain on natural gas derivatives in the three months ended March 31, 2024 compared to a $21 million gain in the three months ended March 31, 2023.

CF INDUSTRIES HOLDINGS, INC.

Gross margin also includes the impact of a $10 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2024 compared to a $21 million gain in the six months ended June 30, 2023.

Our AN segment produces ammonium nitrate (AN).

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

Three Months Ended March 31,

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

2024 2023 2024 v.

2023 2024 2023 2024 v.

(dollars in millions, except per ton amounts)

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

First Quarter of 2024 Compared to First Quarter of 2023

Net sales in our AN segment decreased $45 million, or 28%, to $114 million in the three months ended March 31, 2024 from $159 million in the three months ended March 31, 2023 due to a 31% decrease in average selling prices partially offset by a 4% increase in sales volume.

Average selling prices decreased to $292 per ton in the three months ended March 31, 2024 compared to $425 per ton in the three months ended March 31, 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

CF INDUSTRIES HOLDINGS, INC.

Second Quarter of 2024 Compared to Second Quarter of 2023

Net sales in our AN segment decreased $6 million, or 6%, to $98 million in the second quarter of 2024 from $104 million in the second quarter of 2023 due to an 8% decrease in sales volume, partially offset by a 2% increase in average selling prices.

Sales volume declined due primarily to lower supply availability resulting from lower beginning inventory.

Average selling prices were $288 per ton in the second quarter of 2024 compared to $282 per ton in the second quarter of 2023.

Cost of Sales.

Cost of sales in our AN segment averaged $269 per ton in the three months ended March 31, 2024, a 3% decrease from $278 per ton in the three months ended March 31, 2023.

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

Cost of sales per ton in our AN segment averaged $220 per ton in both the second quarter of 2024 and the second quarter of 2023 as higher costs for maintenance activity were offset by the impact of lower realized natural gas costs, including the impact of realized derivatives.

Gross Margin .

Gross margin in our AN segment decreased $46 million to $9 million in the three months ended March 31, 2024 from $55 million in the three months ended March 31, 2023, and our gross margin percentage was 7.9% in the three months ended March 31, 2024 compared to 34.6% in the three months ended March 31, 2023.

The decrease in gross margin was due primarily to a 31% decrease in average selling prices, which decreased gross margin by $60 million.

The decrease in average selling prices was partially offset by a decrease in realized natural gas costs, which increased gross margin by $10 million, a 4% increase in sales volume, which increased gross margin by $4 million, and a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $2 million.

Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the three months ended March 31, 2024 compared to a $3 million gain in the three months ended March 31, 2023.

Gross margin in our AN segment was $23 million in both the second quarter of 2024 and the second quarter of 2023, and our gross margin percentage was 23.5% in the second quarter of 2024 compared to 22.1% in the second quarter of 2023.

The factors that decreased gross margin were an 8% decrease in sales volume, which decreased gross margin by $10 million, and unfavorable product mix, which decreased gross margin by $7 million.

These factors that decreased gross margin were offset by a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $17 million.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net sales in our AN segment decreased $51 million, or 19%, to $212 million in the six months ended June 30, 2024 from $263 million in the six months ended June 30, 2023 due to an 18% decrease in average selling prices and a 2% decrease in sales volume.

Average selling prices decreased to $290 per ton in the six months ended June 30, 2024 compared to $354 per ton in the six months ended June 30, 2023 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 $246 per ton in the six months ended June 30, 2024, a 1% decrease from $249 per ton in the six months ended June 30, 2023.

The decrease was due primarily to the impact of lower realized natural gas costs, including the impact of realized derivatives, partially offset by higher costs for maintenance activity.

Gross Margin .

Gross margin in our AN segment decreased $46 million to $32 million in the six months ended June 30, 2024 from $78 million in the six months ended June 30, 2023, and our gross margin percentage was 15.1% in the six months ended June 30, 2024 compared to 29.7% in the six months ended June 30, 2023.

The decrease in gross margin was due primarily to an 18% decrease in average selling prices, which decreased gross margin by $67 million and a 2% decrease in sales volume, which decreased gross margin by $6 million.

These factors that decreased gross margin were partially offset by a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $19 million and a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $10 million.

Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2024 compared to a $3 million gain in the six months ended June 30, 2023.

CF INDUSTRIES HOLDINGS, INC.

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

Three Months Ended March 31,

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

2024 2023 2024 v.

2023 2024 2023 2024 v.

(dollars in millions, except per ton amounts)

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Depreciation and amortization $ 13 $ 17 $ (4) (24) % $ 33 $ 33 $ — — %

Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ (7) $ 6 86 %

Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ — $ (1) N/M $ (2) $ (7) $ 5 71 %

_______________________________________________________________________________

N/M—Not Meaningful

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

First Quarter of 2024 Compared to First Quarter of 2023

Net sales in our Other segment decreased by $29 million, or 19%, to $122 million in the three months ended March 31, 2024 from $151 million in the three months ended March 31, 2023 due to a 17% decrease in average selling prices and a 2% decrease in sales volume.

Second Quarter of 2024 Compared to Second Quarter of 2023

Net sales in our Other segment decreased by $5 million, or 4%, to $133 million in the second quarter of 2024 from $138 million in the second quarter of 2023 due to a 3% decrease in average selling prices and a 1% decrease in sales volume.

The decrease in average selling prices was due primarily to lower global energy costs reducing the global market clearing price required to meet global demand.

Cost of Sales.

Cost of sales in our Other segment averaged $164 per ton in the three months ended March 31, 2024, a 6% decrease from $175 per ton in the three months ended March 31, 2023, due primarily to the impact of lower realized natural gas costs, including the impact of realized derivatives.

Cost of sales in our Other segment averaged $121 per ton in the second quarter of 2024, a 10% decrease from $135 per ton in the second quarter of 2023, due primarily to lower costs for maintenance activity and the impact of lower realized natural gas costs, including the impact of realized derivatives.

Gross Margin .

Gross margin in our Other segment decreased by $21 million to $38 million in the three months ended March 31, 2024 from $59 million in the three months ended March 31, 2023, and our gross margin percentage was 31.1% in the three months ended March 31, 2024 compared to 39.1% in the three months ended March 31, 2023.

The decrease in gross margin was due primarily to a 17% decrease in average selling prices, which decreased gross margin by $25 million, a 2% decrease in sales volume, which decreased gross margin by $4 million, 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 a decrease in realized natural gas costs, which increased gross margin by $17 million.

Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the three months ended March 31, 2024 compared to a $7 million gain in the three months ended March 31, 2023.

Gross margin in our Other segment increased by $4 million to $66 million in the second quarter of 2024 from $62 million in the second quarter of 2023, and our gross margin percentage was 49.6% in the second quarter of 2024 compared to 44.9% in the second quarter of 2023.

The increase in gross margin was due primarily to a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $8 million, and a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $2 million.

These factors that increased gross margin were partially offset by a 3% decrease in average selling prices, which decreased gross margin by $5 million, and a 1% decrease in sales volume, which decreased gross margin by $2 million.

Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the second quarter of 2024.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Net sales in our Other segment decreased by $34 million, or 12%, to $255 million in the six months ended June 30, 2024 from $289 million in the six months ended June 30, 2023 due to an 11% decrease in average selling prices and a

CF INDUSTRIES HOLDINGS, INC.

1% decrease in sales volume.

The decrease in average selling prices was due primarily to lower global energy costs reducing the global market clearing price required to meet global demand.

Cost of Sales.

Cost of sales in our Other segment averaged $141 per ton in the six months ended June 30, 2024, a 9% decrease from $155 per ton in the six months ended June 30, 2023, due primarily to the impact of lower realized natural gas costs, including the impact of realized derivatives.

Gross Margin .

Gross margin in our Other segment decreased by $17 million to $104 million in the six months ended June 30, 2024 from $121 million in the six months ended June 30, 2023, and our gross margin percentage was 40.8% in the six months ended June 30, 2024 compared to 41.9% in the six months ended June 30, 2023.

The decrease in gross margin was due primarily to an 11% decrease in average selling prices, which decreased gross margin by $30 million and a 1% decrease in sales volume, which decreased gross margin by $6 million.

These factors that decreased gross margin were partially offset by a decrease in realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $19 million and a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $5 million.

Gross margin also includes the impact of a $2 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2024 compared to a $7 million gain in the six months ended June 30, 2023.

Liquidity and Capital Resources

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

As of March 31, 2024, our cash and cash equivalents balance was $1.77 billion, a decrease of $259 million from $2.03 billion at December 31, 2023.

The decrease in cash and cash equivalents reflects favorable cash generated by operations offset by cash used for share repurchases, the semi-annual distribution to the noncontrolling interest and capital expenditures, as described below under “Cash Flows.” At March 31, 2024, 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 January 31, 2024, our Board of Directors (the Board) declared a quarterly dividend of $0.50 per common share, representing a 25% increase from the quarterly dividend of $0.40 per common share that was declared and paid in the fourth quarter of 2023.

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

As of June 30, 2024, our cash and cash equivalents balance was $1.82 billion, a decrease of $213 million from $2.03 billion at December 31, 2023.

The decrease in cash and cash equivalents primarily reflects cash used for share repurchases, the semi-annual distribution to the noncontrolling interest, the payment of dividends and capital expenditures, partially offset by cash generated by operations, as described below under “Cash Flows.” At June 30, 2024, 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.

In the first and second quarters of 2024, quarterly dividends of $0.50 per common share were declared and paid, representing a 25% increase from the quarterly dividend of $0.40 per common share that was declared and paid in the fourth quarter of 2023.

Cash Equivalents

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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 $98 million in the first three months of 2024 compared to $69 million in the first three months of 2023.

The increase in capital expenditures was due primarily to higher plant turnaround activity in the first three months of 2024.

Capital expenditures totaled $182 million in the first six months of 2024 compared to $164 million in the first six months of 2023.

We currently anticipate that capital expenditures for the full year 2024 will be approximately $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.

CF INDUSTRIES HOLDINGS, INC.

Acquisition of Waggaman Ammonia Production Facility

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

Our acquisition of the Waggaman facility is intended to expand our ammonia manufacturing and distribution capacity, including our ability to enable low-carbon ammonia production.

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 not be material and will be completed in the second quarter of 2024.

CF INDUSTRIES HOLDINGS, INC.

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

As a result, the final purchase price was $1.221 billion.

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.

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Share Repurchase Programs

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 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).

The 2021 Share Repurchase Program was completed in the second quarter of 2023.

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First quarter 4.3 347

Second quarter 4.0 305

Total shares repurchased in 2024 8.3 652

Shares repurchased as of March 31, 2024 9.9 $ 772

Shares repurchased as of June 30, 2024 13.9 $ 1,077

______________________________________________________________________________

(1) As defined in the 2022 Share Repurchase Program, amounts reflect the price paid for the shares of common stock repurchased, excluding commissions paid to brokers and excise taxes.

In the three months ended March 31, 2024, we repurchased approximately 4.3 million shares under the 2022 Share Repurchase Program for $347 million, of which $14 million was accrued and unpaid as of March 31, 2024.

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

In the six months ended June 30, 2024, we repurchased approximately 8.3 million shares under the 2022 Share Repurchase Program for $652 million, of which $14 million was accrued and unpaid as of June 30, 2024.

In the six months ended June 30, 2023, we completed the 2021 Share Repurchase Program with the repurchase of approximately 2.3 million

CF INDUSTRIES HOLDINGS, INC.

shares for $155 million, and we repurchased approximately 0.8 million shares under the 2022 Share Repurchase Program for $50 million.

Revolving Credit Agreement

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

CF INDUSTRIES HOLDINGS, INC.

As of March 31, 2024, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit under the Revolving Credit Agreement.

There were no borrowings outstanding under the Revolving Credit Agreement as of March 31, 2024 or December 31, 2023, or during the three months ended March 31, 2024.

As of June 30, 2024, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit under the Revolving Credit Agreement.

There were no borrowings outstanding under the Revolving Credit Agreement as of June 30, 2024 or December 31, 2023, or during the six months ended June 30, 2024.

Letters of Credit Under Bilateral Agreement

We are party to a bilateral agreement providing for the issuance of up to $425 million of letters of credit.

As of March 31, 2024, approximately $302 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of March 31, 2024 and December 31, 2023 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate March 31, 2024 December 31, 2023

As of June 30, 2024, approximately $340 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of June 30, 2024 and December 31, 2023 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate June 30, 2024 December 31, 2023

Principal Carrying Amount (1)

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

Total unamortized debt discount was $6 million and $7 million as of March 31, 2024 and December 31, 2023, respectively, and total deferred debt issuance costs were $25 million as of both March 31, 2024 and December 31, 2023.

Total unamortized debt discount was $6 million and $7 million as of June 30, 2024 and December 31, 2023, respectively, and total deferred debt issuance costs were $24 million and $25 million as of June 30, 2024 and December 31, 2023, 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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Interest on the Public Senior Notes and the 2026 Notes is payable semiannually, and the Public Senior Notes and the 2026 Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices.

CF INDUSTRIES HOLDINGS, INC.

Forward Sales and Customer Advances

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

As of March 31, 2024 and December 31, 2023, we had $104 million and $130 million, respectively, in customer advances on our consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, we had $8 million and $130 million, respectively, in customer advances on our consolidated balance sheets.

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

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

CF INDUSTRIES HOLDINGS, INC.

Under our forward sales programs, a customer may delay delivery of an order due to weather conditions or other factors.

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

As of March 31, 2024, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 8.0 million MMBtus of natural gas.

As of June 30, 2024, our open natural gas derivative contracts consisted of natural gas basis swaps for 9.0 million MMBtus of natural gas.

As of December 31, 2023, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 49.0 million MMBtus of natural gas.

Defined Benefit Pension Plans

We contributed $7 million to our pension plans in the three months ended March 31, 2024.

We contributed $21 million to our pension plans in the six months ended June 30, 2024.

Over the remainder of 2024, we expect to contribute approximately $1 million to our pension plans, which would result in our making total contributions of approximately $22 million to our pension plans for the full year 2024.

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Distribution to Noncontrolling Interest in CFN

On January 31, 2024, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended December 31, 2023 in accordance with CFN’s limited liability company agreement, and on January 31, 2024, CFN distributed $144 million to CHS for this distribution period.

The estimate of the partnership distribution earned by CHS, but not yet declared, for the first quarter of 2024 is approximately $79 million.

Net cash provided by operating activities during the first three months of 2024 was $445 million, a decrease of $502 million, compared to $947 million in the first three months of 2023.

On January 31, 2024, CFN distributed $144 million to CHS for the distribution period ended December 31, 2023.

On July 31, 2024, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended June 30, 2024 in accordance with CFN’s limited liability company agreement, and CFN distributed $165 million to CHS for this distribution period.

Net cash provided by operating activities during the first six months of 2024 was $920 million, a decrease of $739 million, compared to $1.66 billion in the first six months of 2023.

The decrease in cash flow from operations was due primarily to lower net earnings and changes in net working capital.

Net earnings for the first three months of 2024 was $238 million compared to $650 million for the first three months of 2023, a decrease of $412 million.

Net earnings for the first six months of 2024 was $744 million compared to $1.26 billion for the first six months of 2023, a decrease of $512 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.

During the first three months of 2024, net changes in working capital reduced cash flow from operations by $17 million, while in the first three months of 2023, net changes in working capital increased cash flow from operations by $213 million.

The decrease in cash flow from working capital changes was attributable primarily to movements in accounts receivable and customer advances in the first three months of 2024 as compared to the first three months of 2023.

Net cash used in investing activities was $100 million in the first three months of 2024 compared to $34 million in the first three months of 2023.

Capital expenditures totaled $98 million during the first three months of 2024 compared to $69 million in the first three months of 2023.

Proceeds from the sale of emission credits was $35 million in the first three months of 2023.

Net cash used in financing activities was $602 million in the first three months of 2024 compared to $410 million in the first three months of 2023.

The increase was due primarily to an increase in share repurchases, partially offset by a decrease in distributions to noncontrolling interest.

In the first three months of 2024, we paid $339 million for share repurchases compared to $54 million paid for share repurchases in the first three months of 2023.

In the first three months of 2024, distributions to the noncontrolling interest were $144 million compared to $255 million in the first three months of 2023.

During the first six months of 2024, net changes in working capital reduced cash flow from operations by $136 million, while in the first six months of 2023, net changes in working capital increased cash flow from operations by $146 million.

The decrease in cash flow from working capital changes was attributable primarily to movements in accounts

CF INDUSTRIES HOLDINGS, INC.

receivable as the first six months of 2024 was a net cash outflow of $45 million as compared to a net cash inflow of $198 million the first six months of 2023.

Net cash used in investing activities was $134 million in the first six months of 2024 compared to $127 million in the first six months of 2023.

Capital expenditures totaled $182 million during the first six months of 2024 compared to $164 million in the first six months of 2023.

Proceeds from the sale of emission credits was $47 million in the first six months of 2024 compared to $36 million in the first six months of 2023.

Net cash used in financing activities was $998 million in the first six months of 2024 compared to $639 million in the first six months of 2023.

The increase was due primarily to an increase in share repurchases and dividends paid, partially offset by a decrease in distributions to noncontrolling interest.

In the first six months of 2024, we paid $644 million for share repurchases compared to $205 million paid for share repurchases in the first six months of 2023.

In the first six months of 2024, dividends paid on common stock was $188 million compared to $158 million in the first six months of 2023.

The increase in dividends paid on common stock reflects quarterly dividends of $0.50 per common share declared and paid in the first two quarters of 2024, compared to quarterly dividends of $0.40 per common share that were declared and paid in the first two quarters of 2023.

In the first six months of 2024, distributions to the noncontrolling interest were $144 million compared to $255 million in the first six months of 2023.

Critical Accounting Estimates

During the first three months of 2024, there were no material changes to our critical accounting estimates as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

During the first six months of 2024, there were no material changes to our critical accounting estimates as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Recent Accounting Pronouncements

See Note 2—New Accounting Standards for a discussion of recent accounting pronouncements.

CF INDUSTRIES HOLDINGS, INC.

Forward-Looking Statements

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• difficulties in securing the supply and delivery of raw materials or utilities, increases in their costs or delays or interruptions in their delivery;

CF INDUSTRIES HOLDINGS, INC.

• reliance on third party providers of transportation services and equipment;

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis