What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-22 · 297 added, 439 removed, 630 unchanged (54% of the section changed)

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

References to tons refer to short tons and references to tonnes refer to metric tons.

References to tons refer to short tons.

Notes referenced in this discussion and analysis refer to the notes to consolidated financial statements that are found in Item 8.

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

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

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

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

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

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

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

Our core product is anhydrous ammonia (ammonia), which contains 82% nitrogen and 18% hydrogen.

Our nitrogen products that are upgraded from ammonia are granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN).

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

Products derived from ammonia that are most often used as nitrogen fertilizers include granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN).

AN is also used extensively by the commercial explosives industry as a component of explosives.

Products derived from ammonia that are sold primarily to industrial customers include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia.

Our principal assets as of December 31, 2024 include:

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

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

Sergeant Bluff, Iowa (our Port Neal complex);

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

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

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

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

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

• a United Kingdom nitrogen manufacturing facility located in Billingham;

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

• a United Kingdom manufacturing facility located in Billingham;

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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 NH 3 .

We sell the ammonia itself or upgrade it to products such as granular urea, UAN and 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 is to leverage our unique capabilities to accelerate the world’s transition to clean energy.

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

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

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

We believe this strategy builds upon our leadership in ammonia production to capture emerging opportunities to produce ammonia with a lower carbon intensity (“low-carbon ammonia”) 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 production of 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 and bridge gaps in areas where we do not have expertise;

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

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

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

In April 2021, we signed an engineering and procurement contract with thyssenkrupp to supply a 20 MW alkaline water electrolysis plant to produce green hydrogen at our Donaldsonville complex.

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 began in early 2024.

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

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

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

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

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

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

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 greenfield steam methane reforming (SMR) ammonia facility with CCS technologies.

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

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

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

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

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

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

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

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

• 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;

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

At our Donaldsonville and Yazoo City complexes, our decarbonization projects are leveraging carbon capture and sequestration (CCS) to enable us to convert a portion of our existing ammonia production to low-carbon ammonia.

CCS requires the construction of carbon dioxide (CO 2 ) dehydration and compression units to enable process CO 2 captured from the ammonia production process to be transported and sequestered, which prevents approximately 60% of the CO 2 generated by ammonia production from being emitted to the atmosphere.

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.

Construction of the dehydration and compression unit at our Yazoo City complex is expected to cost approximately $100 million over the life of the project.

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 sequester up to approximately 2 million metric tons of CO 2 that would otherwise have been emitted to the atmosphere.

At Yazoo City, CCS is expected to commence in 2028 and annually will sequester up to approximately 500,000 metric tons of CO 2 that would otherwise have been emitted to the atmosphere.

Each project is expected to qualify under Section 45Q of the Internal Revenue Code for tax credits per metric ton of sequestered CO 2 .

Decarbonization projects in our existing network also include our electrolyzer project at our Donaldsonville complex to produce ammonia with hydrogen sourced from an electrolysis process that produces no CO 2 emissions.

Commissioning of the 20-megawatt alkaline water electrolysis plant to produce hydrogen was suspended due to an issue experienced in the fourth quarter of 2024.

Upon identification and remediation of the issue, we expect to resume commissioning activities.

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

Our decarbonization projects also include front-end engineering and design (FEED) studies to inform our evaluation of whether, and how best, to invest in export-oriented, low-carbon ammonia capacity at our Blue Point complex in Ascension Parish, Louisiana, to supply developing clean energy markets and traditional ammonia markets where demand for low-carbon product is emerging.

In the fourth quarter of 2024, we received results from a FEED study evaluating the use of autothermal reforming (ATR) ammonia production technology alongside CCS to enable the production of low-carbon ammonia.

ATR technology, when combined with CCS to capture and sequester process CO 2 emissions, is expected to reduce CO 2 emissions from the ammonia

CF INDUSTRIES HOLDINGS, INC.

new applications.

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

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

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

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

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

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

production process by more than 90% compared to conventional ammonia plants.

The FEED study results estimate the costs of a project with these attributes to be approximately $4 billion for the approximately 1.4 million metric ton capacity greenfield ATR ammonia facility and CCS technologies.

Additionally, we estimate approximately $500 million would be required for the scalable common infrastructure for our Blue Point complex, such as ammonia storage and a vessel loading dock.

We have entered into joint development agreements (JDAs) with two potential partners, Mitsui & Co., Ltd.

and JERA Co., Inc.

for the development of the greenfield low-carbon ammonia capacity.

Our evaluation includes assessing whether the ammonia production technology under consideration will satisfy carbon intensity and other requirements for potential end users.

Should a positive 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 a positive FID.

In addition to discussions with existing customers who have interest in using low-carbon ammonia for traditional applications, we are engaged in discussions regarding the supply of low-carbon ammonia for new applications.

We are evaluating and are in various stages of discussions with other companies for long-term offtake and/or potential joint investments related to new and traditional applications for low-carbon ammonia.

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

Industry Factors

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Global Supply and Demand Factors

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

Our products are global commodities or derived from global commodities and are subject to price competition.

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

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

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

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

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

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Market Conditions

Geopolitical Environment

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

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

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

During 2022 and 2023, market participants continued to adjust trade flows and manufacturers have continued to adjust production levels in response to changing conditions resulting from these factors.

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

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

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

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

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

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

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

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

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

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

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

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

These geopolitical developments further contributed to an already tight global supply and demand balance for nitrogen fertilizers, causing changes in global trade flows as both manufacturers and customers reacted to the changing market dynamics.

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

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

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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

These regional conflicts could lead to more widespread geopolitical disruption.

Nitrogen Selling Prices and Sales Volume

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

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

The average selling price for our products was $313 per ton in 2024 compared to $347 per ton in 2023.

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

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

The 10% decrease in the average selling price for our products in 2024 compared to 2023 resulted in a year-over-year decrease in net sales of approximately $716 million.

Our total sales volume was 1% lower in 2024 than in 2023, due primarily to lower sales volume in our UAN, AN and Other segments, partially offset by higher sales volume in our Ammonia segment as a result of the Waggaman acquisition on December 1, 2023.

We shipped 18.9 million tons of product in 2024 compared to 19.1 million tons in 2023.

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

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

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 resold 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.

The acquisition of the Waggaman ammonia production facility closed on December 1, 2023, and therefore provided incremental net sales in the first eleven months of 2024.

As a result, the Waggaman acquisition increased our 2024 sales volume by 644,000 tons and increased our net sales by $249 million due to the incremental eleven months of ownership compared to 2023.

Sales volume for our products in 2024, 2023 and 2022 is shown in the table below.

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AN 1,464 419 1,571 497 1,594 845

Other 2,206 564 2,077 787 2,318 573

2,101 503 2,206 564 2,077 787

Total 18,943 $ 5,936 19,130 $ 6,631 18,331 $ 11,186

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(1) Other segment products primarily include DEF, urea liquor, nitric acid and aqua ammonia.

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

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Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 28% and 40%, respectively, of our production costs in 2024 and 2023.

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:

CF INDUSTRIES HOLDINGS, INC.

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.

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.

North American natural gas supply remained strong through the quarter, with a decline in supply occurring near the end of the quarter as producers responded to a weaker price environment.

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.

During the second quarter of 2024, there was a decline in natural gas supply as producers responded to a 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 of 2024 as higher-than-normal temperatures drove increased cooling demand.

In the third quarter of 2024, the decline in natural gas supply continued as producers curtailed production in response to low natural gas prices.

Natural gas demand from the power generation sector set records despite increased solar and wind generation, as low natural gas prices increased demand for gas-fired power.

Liquefied natural gas exports were steady through the quarter as delays on commissioning of new facilities and maintenance activities at existing plants held exports at levels reached during the second quarter of 2024.

Natural gas in storage remained above historical levels despite continued below-average injections into storage during the third quarter.

During the fourth quarter of 2024, natural gas supply increased as producers responded to higher prices by restarting previously curtailed production.

After a warm start to the quarter, December temperatures turned colder-than-normal, raising demand for heat and power generation.

Liquefied natural gas exports increased to the highest level of the year due to strong global demand for natural gas and the startup of a new liquefaction facility in the U.S.

The higher demand decreased the storage surplus compared to historical levels.

The average daily market price of natural gas at the Henry Hub, the most heavily-traded natural gas pricing point in North America, was $4.25 per MMBtu for the period from January 1, 2025 through February 14, 2025.

The following table presents the average daily market price of natural gas at the Henry Hub for the years ended December 31, 2024, 2023 and 2022:

Year ended December 31,

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Average daily market price of natural gas Henry Hub (Louisiana) $ 2.25 $ 2.53 $ 6.38 $ (0.28) (11) % $ (3.85) (60) %

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.

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

Warmer-than-normal temperatures in the

CF INDUSTRIES HOLDINGS, INC.

first quarter of 2023 drove lower heating demand for natural gas, while North American supply remained strong, as there were few weather-related production disruptions.

In addition, although the higher cost for natural gas outside of North America incentivized liquefaction facilities in the United States to export domestic natural gas during 2023, the outage at the Freeport LNG facility in the first quarter of 2023 as well as planned maintenance in 2023 at several other LNG facilities limited total gas exports, resulting in greater domestic supply availability.

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

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

Our Billingham U.K.

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

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

The average daily market price of natural gas at the National Balancing Point (NBP), the major trading point for natural gas in the United Kingdom, was $24.56 for 2022.

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

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

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

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

The total cost of natural gas used for production at our manufacturing facilities, which includes the impact of realized natural gas derivatives, decreased 35% to $2.40 per MMBtu in 2024 from $3.67 per MMBtu in 2023.

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

The decrease in natural gas costs in 2024 as compared to 2023 resulted in an increase in gross margin of approximately $436 million, excluding the impact of the Waggaman acquisition.

Financial Executive Summary

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

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

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

operations in 2022 that did not recur in 2023.

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

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

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

Lower gross margin was partially offset by the following:

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

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

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

We reported net earnings attributable to common stockholders of $1.22 billion in 2024 compared to $1.53 billion in 2023, a decrease in net earnings of 20%, or $307 million.

The decrease in net earnings primarily reflects a decrease in gross margin partially offset by a lower income tax provision and a decrease in net earnings attributable to the noncontrolling interest.

Gross margin decreased by $489 million, or 19%, to $2.06 billion for the year ended December 31, 2024 compared to $2.55 billion for the year ended December 31, 2023.

The decrease in gross margin was due primarily to a 10% decrease in average selling prices to $313 per ton in 2024 from $347 per ton in 2023, which decreased gross margin by $716 million, excluding the impact of the Waggaman acquisition, and a decrease in sales volume, which decreased gross margin by $123 million, excluding the impact of the Waggaman acquisition.

These factors that decreased gross margin were partially offset by (i) lower natural gas costs, which increased gross margin by $436 million, excluding the impact of the Waggaman acquisition, and (ii) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our 2024 gross margin by $57 million due to the incremental eleven months of ownership compared to 2023.

Lower gross margin was partially offset by a decrease in the income tax provision of $125 million due primarily to lower pre-tax earnings in 2024 and a decrease of $54 million in net earnings attributable to the noncontrolling interest.

CF INDUSTRIES HOLDINGS, INC.

Diluted net earnings per share attributable to common stockholders decreased $1.13 per share, to $6.74 per share in 2024 compared to $7.87 per share in 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.

Diluted weighted-average common shares outstanding were 180.7 million shares for the year ended December 31, 2024, a decrease of 7% compared to diluted weighted-average common shares outstanding of 193.8 million shares for the year ended December 31, 2023.

Acquisition of Waggaman Ammonia Production Facility

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

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

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

Our acquisition of the Waggaman facility expanded our ammonia manufacturing and distribution capacity.

In connection with the acquisition, we entered into a long-term ammonia offtake agreement providing for us to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc.

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

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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.

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(in millions)

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

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

$ (35) $ (27) $ (39) $ (30)

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

long-lived and intangible asset impairment — — 239 180

Impact of employee benefit plan policy change (3)

(16) (13) — —

operations restructuring — — 10 8

Acquisition and integration costs 4 3 39 29

Unrealized gain on embedded derivative liability (3)

— — (14) (11)

Impairment of equity method investment in PLNL (4)

Pension settlement loss and curtailment gains — net (5)

Canada Revenue Agency Competent Authority Matter and Transfer pricing positions:

Interest expense — — 170 168

Interest income — — (29) (22)

Income tax provision (6)

Loss on debt extinguishment — — 8 6

Canada Revenue Agency Competent Authority Matter:

Interest expense (income)—net (5)

(39) (38) — —

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

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

An income tax benefit for the U.K.

goodwill impairment was not recorded as it is nondeductible for income tax purposes.

______________________________________________________________________________

(1) The tax impact is calculated utilizing a marginal effective rate of 23.6% and 23.5% in 2024 and 2023, respectively, except for acquisition and integration costs related to the Waggaman acquisition, which reflects a 24.0% and 26.2% marginal effective rate in 2024 and 2023, respectively.

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

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

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

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

(6) The after-tax income tax provision amount of $65 million reflects an income tax provision of $70 million, consisting of the $78 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $8 million of income tax benefit referenced below under “Transfer pricing positions,” net of $5 million of income tax provision that is reflected in the after-tax interest expense and interest income amounts shown in this table.

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

(3) Included in cost of sales and selling, general and administrative expenses in our consolidated statement of operations.

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

(5) Included in interest expense and interest income in our consolidated statement of operations.

CF INDUSTRIES HOLDINGS, INC.

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

Loss on foreign currency transactions, including intercompany loans

In 2022, we recognized a loss on foreign currency transactions of $28 million, which consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.

In 2024 and 2023, we recognized unrealized net mark-to-market gains on natural gas derivatives of $35 million and $39 million, respectively.

Impact of employee benefit plan policy change

In 2024, we recognized income of $16 million pertaining to a policy change to an employee benefit plan that is included in both cost of sales and selling, general and administrative expenses in our consolidated statement of operations.

operations restructuring

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

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

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

Acquisition and integration costs

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

Unrealized gain on embedded derivative liability

Under the terms of our strategic venture with CHS, if our credit rating as determined by two of three specified credit rating agencies is below certain levels, we are required to make a non-refundable yearly payment of $5 million to CHS until the earlier of the date that our credit rating is upgraded to above such levels by two of the three specified credit rating agencies or February 1, 2026.

This obligation is recorded at fair value and has been recognized on our consolidated balance sheets as an embedded derivative.

Beginning in 2016, our credit ratings were below such levels and, as a result, under the terms of the strategic venture, we made an annual payment of $5 million to CHS in the fourth quarter of each year from 2016 through 2021.

Our credit rating was upgraded above certain levels in July 2022 by one of the specified credit rating agencies and in October 2022 by another one of the specified credit rating agencies.

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

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 2024, we incurred approximately $4 million of integration costs related to the Waggaman acquisition.

In 2023, we incurred $36 million of acquisition-related costs and $3 million of integration costs related to the Waggaman acquisition.

These costs are included in acquisition and integration costs in our consolidated statements of operations.

Impairment of equity method investment in PLNL

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

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

Pension settlement loss and curtailment gains—net

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

defined benefit pension plan’s projected benefit obligation.

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

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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

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

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

Canada Revenue Agency Competent Authority Matter

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

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

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

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

In the second quarter of 2021, the Company submitted the transfer pricing aspect of the matter into the arbitration process under the terms of the Treaty.

In February 2022, we were informed that a decision was reached by the arbitration panel for tax years 2006 through 2011.

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

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

See Note 12—Income Taxes for additional information.

In 2022, as a result of the impact of these events on our Canadian and U.S.

federal and state income taxes, we recognized an income tax provision of $78 million, reflecting the net impact of $129 million of accrued income taxes payable to Canada for tax years 2006 through 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $102 million, primarily reflecting the estimated interest payable to Canada.

Transfer pricing positions

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

Based on this evaluation, we recorded the following in 2022:

• liabilities for unrecognized tax benefits of $159 million, with a corresponding income tax provision, and accrued interest of $59 million related to the liabilities for unrecognized tax benefits, and

• noncurrent income tax receivables of $188 million, with a corresponding income tax benefit, and accrued interest income of $20 million related to the noncurrent income tax receivables.

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

Loss on debt extinguishment

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

The total aggregate redemption price paid in connection with the April 2022 redemption of the 2023 Notes was $513 million, including accrued interest.

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

In the second half of 2022, as a result of the conclusion of arbitration proceedings and the settlement provisions between the United States and Canadian competent authorities related to tax years 2006 through 2011, we paid additional income taxes and related interest of $124 million and $100 million, respectively, to the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA).

In the third quarter of 2024, we were informed that the CRA granted us discretionary interest relief for certain tax years from 2006 through 2011.

In the fourth quarter of 2024, we received the CRA portion of the interest relief consisting of interest refunds of $21 million and related interest of $2 million.

The interest relief from the Alberta TRA is estimated to be approximately $16 million, consisting of interest refunds of $15 million and related interest of $1 million, based on current estimates and foreign currency exchange rates as of December 31, 2024.

As a result, in our consolidated statement of operations for the year ended December 31, 2024, we recognized $39 million of income consisting of a $36 million reduction in interest expense and $3 million of interest income.

CF INDUSTRIES HOLDINGS, INC.

Consolidated Results of Operations

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

The following table presents our consolidated results of operations and certain supplemental data for the years ended December 31, 2024, 2023 and 2022:

Year ended December 31,

6 unchanged sentences

Selling, general and administrative expenses 320 289 290 31 11 % (1) — %

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

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

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

operations restructuring — 10 19 (10) (100) % (9) (47) %

Acquisition and integration costs 4 39 — (35) (90) % 39 N/M

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

Other operating—net (10) (31) 10 21 68 % (41) N/M

Total other operating costs and expenses 314 307 558 7 2 % (251) (45) %

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

Equity in earnings (loss) of operating affiliate 4 (8) 94 12 N/M (102) N/M

Operating earnings 1,746 2,230 5,397 (484) (22) % (3,167) (59) %

Interest expense 121 150 344 (29) (19) % (194) (56) %

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

Interest income (123) (158) (65) 35 22 % (93) (143) %

Loss on debt extinguishment — — 8 — — % (8) (100) %

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

Other non-operating—net (14) (10) 15 (4) (40) % (25) N/M

Earnings before income taxes 1,762 2,248 5,095 (486) (22) % (2,847) (56) %

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Dividends declared per common share $ 2.00 $ 1.60 $ 1.50 $ 0.40 25 % $ 0.10 7 %

______________________________________________________________________________

N/M—Not Meaningful

CF INDUSTRIES HOLDINGS, INC.

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

Year ended December 31,

2023 2022 2021 2023 v.

Natural gas supplemental data (per MMBtu)

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Realized derivatives loss in COS (2)

0.41 0.02 — 0.39 N/M 0.02 N/M

0.12 0.41 0.02 (0.29) (71) % 0.39 N/M

Cost of natural gas used for production in COS $ 2.40 $ 3.67 $ 7.18 $ (1.27) (35) % $ (3.51) (49) %

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UAN (32%) (4)

6,753 6,852 6,706 (99) (1) % 146 2 %

AN 1,392 1,520 1,517 (128) (8) % 3 — %

CF INDUSTRIES HOLDINGS, INC.

______________________________________________________________________________

N/M—Not Meaningful

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

(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.

(2) Includes realized gains and losses on natural gas derivatives settled during the period.

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

(4) UAN product tons assume a 32% nitrogen content basis for production volume.

The following is a discussion and analysis of our consolidated results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023.

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Sales incentives are reported as a reduction in net sales.

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

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

Our total net sales decreased $695 million, or 10%, to $5.94 billion in 2024 compared to $6.63 billion in 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 $249 million, and (ii) a $944 million, or 14%, decline in our net sales excluding the impact of the Waggaman acquisition, due to a 10% decrease in average selling prices and a 4% decrease in sales volume.

Our average selling price was $313 per ton in 2024 compared to $347 per ton in 2023, a decrease of 10%, due to lower average selling prices across all of our segments, as lower global energy costs reduced the global market clearing price required to meet global demand.

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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

The impact of lower average selling prices, excluding the impact of the Waggaman acquisition, was a decrease in net sales of approximately $716 million for 2024 compared to 2023.

Our total sales volume of 18.9 million product tons in 2024 was 1% lower compared to 19.1 million product tons in 2023, due primarily to lower sales volume in our UAN, AN and Other segments, partially offset by higher sales volume in our Ammonia segment driven by the impact of the Waggaman acquisition, which increased our 2024 sales volume by 644,000 tons due to the incremental eleven months of ownership compared to 2023.

Excluding the impact of the Waggaman acquisition, the impact of lower sales volume was a decrease in net sales of approximately $228 million.

Gross ammonia production for 2024 increased to approximately 9.8 million tons compared to 9.5 million tons in 2023.

We expect gross ammonia production for 2025 will be approximately 10 million tons.

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

Cost of Sales

Our cost of sales includes manufacturing costs, purchased product costs, distribution costs and storage costs.

Our cost of sales includes manufacturing costs, purchased product costs, distribution and storage costs, and freight.

Manufacturing costs, the most significant element of cost of sales, consist primarily of raw materials, realized and unrealized gains and losses on natural gas derivatives, maintenance, direct labor, depreciation and other plant overhead expenses.

Purchased product costs primarily include the cost to purchase nitrogen fertilizers to augment or replace production at our facilities.

Distribution costs consist of the cost of freight required to transport finished products from our plants to our distribution facilities, which are recognized in cost of sales when the product is sold to our customers.

Distribution costs consist of the cost of freight required to transport finished products from our manufacturing facilities to our distribution facilities, which are recognized in cost of sales when the product is sold to our customers.

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

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

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

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

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

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

Freight consists of shipping and handling costs incurred by us to deliver the product to our customer’s intended destination.

Our total cost of sales decreased $206 million, or 5%, to $3.88 billion in 2024 as compared to $4.09 billion in 2023.

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

The impact of lower realized natural gas costs decreased cost of sales by $436 million, excluding the impact of the Waggaman acquisition.

The impact of lower realized natural gas costs was partially offset by higher costs for planned and unplanned maintenance and repair activities in 2024, including the impact of the adverse weather in January 2024, as discussed above under “Nitrogen Selling Prices and Sales Volume,” and the impact of the Waggaman acquisition, which increased our cost of sales by $192 million due to the incremental eleven months of ownership compared to 2023.

Cost of sales also includes the impact of a $35 million unrealized net mark-to-market gain on natural gas derivatives in 2024 compared to a $39 million gain in 2023.

CF INDUSTRIES HOLDINGS, INC.

Cost of sales averaged $204 per ton in 2024, a 5% decrease from $214 per ton in 2023.

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

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

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

Selling, general and administrative expenses increased $31 million to $320 million in 2024 compared to $289 million in 2023.

The increase was due primarily to an increase of $21 million in amortization expense related to the customer relationships recognized in conjunction with the Waggaman acquisition on December 1, 2023, and an increase in costs related to certain corporate initiatives.

Operations Restructuring

In 2023, related to our U.K.

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

In 2022, related to our U.K.

operations, we recognized total charges of $258 million, consisting of $239 million of asset impairment charges primarily related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets and $19 million of restructuring charges primarily related to post-employment benefits related to contractual and statutory obligations and one-time termination benefits.

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

See Note 7—United Kingdom Operations Restructuring and Impairment Charges for further discussion of the Billingham ammonia plant closure.

Acquisition and Integration Costs

CF INDUSTRIES HOLDINGS, INC.

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 2024, we incurred $4 million of integration costs related to the Waggaman acquisition.

In 2023, we incurred $36 million of acquisition-related costs and $3 million of integration costs.

Other Operating—Net

Other operating—net includes administrative costs that do not relate directly to our central operations.

Costs included in “other operating costs” can include foreign currency transaction gains and losses, unrealized gains and losses on foreign currency derivatives, litigation expenses, gains and losses on the disposal of fixed assets and FEED study costs related to our clean energy initiatives.

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

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

Other operating—net includes administrative costs that do not relate directly to our central operations and can include foreign currency transaction gains and losses, unrealized gains and losses on foreign currency derivatives, litigation expenses, gains and losses on the disposal of fixed assets and FEED study costs related to our clean energy initiatives.

Other operating—net was $10 million of income in 2024 compared to $31 million of income in 2023.

In both 2024 and 2023, the income recognized consists primarily of gains on sales of emission credits, partially offset by FEED study costs for our clean energy initiatives.

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

The expense in 2022 primarily includes a loss on foreign currency transactions of $28 million, which consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.

The loss on foreign currency transactions in 2022 was partially offset by an unrealized gain of $14 million related to an embedded derivative liability.

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

Equity in (Loss) Earnings of Operating Affiliate

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

Equity in Earnings (Loss) of Operating Affiliate

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

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

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

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

Equity in earnings (loss) of operating affiliate was $4 million of earnings in 2024 compared to an $8 million loss in 2023, which includes an impairment of our equity method investment in PLNL of $43 million recognized in the third quarter of 2023.

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

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

Lower equity in earnings of operating affiliate in 2024 compared to 2023, excluding the impact from the impairment charge, primarily 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, lower ammonia selling prices, higher natural gas costs and lower operating rates at PLNL due to lower availability of natural gas.

Interest Expense

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Interest expense was $121 million in 2024 compared to $150 million in 2023.

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

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

The decrease of $29 million was due primarily to a reduction in interest on tax liabilities driven by a $36 million reduction in interest expense recognized in 2024 related to discretionary interest relief granted to us by Canadian taxing authorities that is further described above under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter.”

CF INDUSTRIES HOLDINGS, INC.

Interest Income

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Interest income was $123 million in 2024 compared to $158 million in 2023.

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

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

Loss on Debt Extinguishment

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

CF INDUSTRIES HOLDINGS, INC.

Other Non-Operating—Net

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

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

The decrease of $35 million was due primarily to a $52 million decrease in interest income on short-term investments in 2024, partially offset by $3 million of interest income in 2024 related to discretionary interest relief that is further described above under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter.”

Income Tax Provision

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

Our income tax provision for 2024 was $285 million on pre-tax income of $1.76 billion, or an effective tax rate of 16.2%, compared to an income tax provision of $410 million on pre-tax income of $2.25 billion, or an effective tax rate of 18.3%, in 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.

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Our effective tax rate for 2023 of 18.3%, which is based on pre-tax income of $2.25 billion, would be 2.9 percentage points higher, or 21.2%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $313 million.

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

Both 2024 and 2023 were impacted by additional discrete tax items.

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

Net earnings attributable to noncontrolling interest decreased $278 million, or 47%, to $313 million in 2023 compared to $591 million in 2022 due to lower earnings of CFN driven by lower average selling prices as described above under “Net Sales.”

Net earnings attributable to noncontrolling interest decreased $54 million, or 17%, to $259 million in 2024 compared to $313 million in 2023 due to lower earnings of CFN driven by lower average selling prices as described above under “Net Sales,” partially offset by lower natural gas costs.

Diluted Net Earnings Per Share Attributable to Common Stockholders

Net earnings per share attributable to common stockholders decreased 14% to $6.74 per diluted share in 2024 from $7.87 per diluted share in 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, a decrease in interest expense due primarily to interest expense on tax liabilities in 2022 related to Canadian-U.S.

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

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

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

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 the noncontrolling interest.

Additionally, diluted weighted-average common shares outstanding declined 7% from 193.8 million shares for 2023 to 180.7 million shares for 2024, due primarily to repurchases of common shares under our share repurchase programs.

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

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

(2) The cost of ammonia and other products that are upgraded in the production of Granular Urea, UAN, AN and Other products is transferred at cost into the results of those products.

The following is a discussion and analysis of our operating results by business segment for the year ended December 31, 2024 compared to the year ended December 31, 2023.

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Year ended December 31,

2022 2021 2023 v.

(in millions, except as noted)

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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

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

Net sales in our Ammonia segment increased by $57 million, or 3%, to $1.74 billion in 2024 from $1.68 billion in 2023.

The increase in our net sales reflects a 15% increase in sales volume, including the impact of the Waggaman acquisition completed on December 1, 2023, partially offset by a 10% decrease in average selling prices.

Average selling prices decreased to $425 per ton in 2024 compared to $473 per ton in 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

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

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 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 resold 62,000 tons of ammonia at near breakeven margins in order to fulfill sales commitments.

Ammonia sales volume in 2024 was 4.1 million tons, an increase of 15% compared to 3.5 million tons in 2023.

The increase in sales volume reflects both the impact of the Waggaman acquisition completed on December 1, 2023, which increased our ammonia sales volume in 2024 by 644,000 tons due to the incremental eleven months of ownership compared to 2023, and 62,000 tons of ammonia purchased and resold as described above, partially offset by lower demand due to lower spring ammonia applications in North America compared to the prior year as a result of unfavorable weather.

Cost of Sales.

Cost of sales in our Ammonia segment averaged $304 per ton in 2024, a 5% decrease from $320 per ton in 2023.

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

The 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.

Gross Margin .

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

Gross Margin .

Gross margin in our Ammonia segment decreased by $48 million, or 9%, to $493 million in 2024 from $541 million in 2023, and our gross margin percentage was 28.4% in 2024 compared to 32.2% in 2023.

The decrease in gross margin was due primarily to a 10% decrease in average selling prices, which decreased gross margin by $160 million, a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $121 million, and, excluding the impact of the Waggaman acquisition, a decrease in sales volume, which decreased gross margin by $8 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 $182 million, and the impact of the Waggaman acquisition, which increased gross margin by $57 million.

Gross margin also includes the impact of a $13 million unrealized net mark-to-market gain on natural gas derivatives in 2024 compared to an $11 million gain in 2023.

Granular Urea Segment

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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

Net sales in our Granular Urea segment decreased $223 million, or 12%, to $1.60 billion in 2024 compared to $1.82 billion in 2023 due primarily to an 11% decrease in average selling prices.

Average selling prices decreased to $354 per ton in 2024 compared to $399 per ton in 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Sales volume in 2024 was 4.5 million tons, a decrease of 1% compared to 4.6 million tons in 2023.

Lower sales volume in the first quarter of 2024, which was 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, was largely offset by higher sales volume in the second and third quarters of 2024 due primarily to a production mix that favored granular urea production.

Sales volume in 2024 includes the impact of 48,000 tons of granular urea purchased and resold in the first quarter of 2024 due to the impact of the severe weather described above.

Cost of Sales.

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

Cost of sales in our Granular Urea segment averaged $205 per ton in 2024, a 7% decrease from $221 per ton in 2023, due primarily to lower realized natural gas costs, including the impact of realized derivatives, partially offset by higher costs associated with maintenance activity in 2024.

Gross Margin .

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

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

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

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

Gross margin in our Granular Urea segment decreased by $139 million, or 17%, to $674 million in 2024 from $813 million in 2023, and our gross margin percentage was 42.1% in 2024 compared to 44.6% in 2023.

CF INDUSTRIES HOLDINGS, INC.

decrease in gross margin was driven by an 11% decrease in average selling prices, which decreased gross margin by approximately $185 million, a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $37 million, and a 1% decrease in sales volume, which decreased gross margin by $21 million.

These factors that decreased gross margin were partially offset by lower realized natural gas costs, including the impact of realized derivatives, which increased gross margin by $106 million.

Gross margin also includes the impact of a $9 million unrealized net mark-to-market gain on natural gas derivatives in 2024 compared to an $11 million gain in 2023.

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

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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

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

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

Net sales in our UAN segment decreased $390 million, or 19%, to $1.68 billion in 2024 compared to $2.07 billion in 2023 due primarily to a 13% decrease in average selling prices and a 6% decrease in sales volume.

Average selling prices decreased to $248 per ton in 2024 compared to $286 per ton in 2023 due primarily to lower global energy costs reducing the global market clearing price required to meet global demand.

The decrease in sales volume was due primarily to lower supply availability resulting from lower beginning inventory entering 2024 and the impact of a production mix that favored granular urea production.

Cost of Sales.

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Gross Margin.

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

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

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

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

Gross margin in our UAN segment decreased by $208 million, or 25%, to $609 million in 2024 from $817 million in 2023, and our gross margin percentage was 36.3% in 2024 compared to 39.5% in 2023.

The decrease in gross margin was due primarily to a 13% decrease in average selling prices, which decreased gross margin by $274 million, and a 6% decrease in sales volume, which decreased gross margin by $57 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 $113 million, and a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $11 million.

Gross margin also includes the impact of a $10 million unrealized net mark-to-market gain on natural gas derivatives in 2024 compared to an $11 million gain in 2023.

CF INDUSTRIES HOLDINGS, INC.

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AN, which has a nitrogen content between 29% and 35%, is produced by combining anhydrous ammonia and nitric acid.

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

AN is used as nitrogen fertilizer and is also used extensively by the commercial explosives industry as a component of explosives.

AN is produced at our Yazoo City and Billingham complexes.

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Cost of sales 340 359 597 (19) (5) % (238) (40) %

Gross margin $ 138 $ 248 $ 35 $ (110) (44) % $ 213 N/M

Gross margin $ 79 $ 138 $ 248 $ (59) (43) % $ (110) (44) %

Gross margin percentage 18.9 % 27.8 % 29.3 % (8.9) % (1.5) %

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$ 836 $ 924 $ 1,550 $ (88) (10) % $ (626) (40) %

Gross margin per product ton $ 88 $ 156 $ 20 $ (68) (44) % $ 136 N/M

Gross margin per product ton $ 54 $ 88 $ 156 $ (34) (39) % $ (68) (44) %

Gross margin per nutrient ton (1)

$ 257 $ 455 $ 60 $ (198) (44) % $ 395 N/M

$ 158 $ 257 $ 455 $ (99) (39) % $ (198) (44) %

Depreciation and amortization $ 39 $ 48 $ 61 $ (9) (19) % $ (13) (21) %

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

Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ (2) $ (2) $ 1 50 % $ — — %

_______________________________________________________________________________

N/M—Not Meaningful

(1) AN represents between 29% and 35% of nitrogen content.

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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

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

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

Net sales in our AN segment decreased $78 million, or 16%, to $419 million in 2024 from $497 million in 2023 due primarily to a 9% decrease in average selling prices and a 7% decrease in sales volume.

Average selling prices decreased to $286 per ton in 2024 compared to $316 per ton in 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

Sales volume declined due primarily to lower supply availability resulting from lower production in 2024.

Cost of Sales.

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

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

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

Cost of sales in our AN segment averaged $232 per ton in 2024, a 2% increase from $228 per ton in 2023.

The increase was due primarily to higher costs for maintenance activity in North America, which was partially offset by the impact of lower realized natural gas costs, including the impact of realized derivatives, and, for our United Kingdom operations, a lower cost per ton for purchased ammonia used for upgrading into AN.

Gross Margin .

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

The decrease in gross margin reflects the following:

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

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

Gross margin in our AN segment decreased by $59 million, or 43%, to $79 million in 2024 from $138 million in 2023, and our gross margin percentage was 18.9% in 2024 compared to 27.8% in 2023.

The decrease in gross margin was due primarily to a 9% decrease in average selling prices, which decreased gross margin by $65 million, and a 7% decrease in sales volume, which decreased gross margin by $14 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 $12 million, and a net decrease in manufacturing, maintenance and other costs, which increased gross margin by $9 million.

The net decrease in manufacturing, maintenance and other costs primarily reflects lower costs for purchased ammonia in the United Kingdom, partially offset by higher costs for maintenance activity in North America.

Gross margin also includes the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in 2024 compared to a $2 million gain in 2023.

CF INDUSTRIES HOLDINGS, INC.

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

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

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

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

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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

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

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

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

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

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

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

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

Net sales in our Other segment decreased $61 million, or 11%, to $503 million in 2024 from $564 million in 2023 due to a 7% decrease in average selling prices and a 5% decrease in sales volume.

Average selling prices decreased to $239 per ton in 2024 compared to $256 per ton in 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.

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

The decrease in sales volume was due primarily to lower DEF sales volume, partially offset by higher nitric acid sales volume.

Cost of Sales.

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

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

CF INDUSTRIES HOLDINGS, INC.

Cost of sales in our Other segment averaged $143 per ton in 2024, a 4% decrease from $149 per ton in 2023, 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 Other segment decreased by $131 million to $236 million in 2023 from $367 million in 2022, and our gross margin percentage was 41.8% in 2023 compared to 46.6% in 2022.

The decrease in gross margin reflects the following:

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

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

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

Gross margin in our Other segment decreased by $35 million, or 15%, to $201 million in 2024 from $236 million in 2023, and our gross margin percentage was 40.0% in 2024 compared to 41.8% in 2023.

The decrease in gross margin was due primarily to a 7% decrease in average selling prices, which decreased gross margin by $32 million, a 5% decrease in sales volume, which decreased gross margin by $23 million, and a net increase in manufacturing, maintenance and other costs, which decreased gross margin by $1 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 $23 million.

Gross margin includes the impact of a $2 million unrealized net mark-to-market gain on natural gas derivatives in 2024 compared to a $4 million gain in 2023.

CF INDUSTRIES HOLDINGS, INC.

Liquidity and Capital Resources

Our primary uses of cash are generally for operating costs, working capital, capital expenditures, debt service, investments, taxes, share repurchases, and dividends.

Our primary uses of cash are generally for operating costs, working capital, capital expenditures, debt service, investments, taxes, share repurchases, dividends, and our clean energy initiatives.

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

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

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

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

As of December 31, 2024, our cash and cash equivalents balance was $1.61 billion, a decrease of $418 million from $2.03 billion at December 31, 2023.

At December 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 an increase from the quarterly dividend of $0.40 per common share that was declared and paid in the fourth quarter of 2023.

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

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

Cash Equivalents

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Capital expenditures totaled $518 million in 2024 compared to $499 million in 2023.

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

Capital expenditures in 2025 are estimated to be in the range of $500 million to $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.

Any of these changes in planned capital expenditures, individually or in the aggregate, could have a material impact on our results of operations and cash flows.

In addition, our decarbonization projects include FEED studies to inform our evaluation of whether, and how best, to invest in an export-oriented, low-carbon ammonia capacity at our Blue Point complex in Ascension Parish, Louisiana, to supply developing energy markets and traditional ammonia markets where demand for low-carbon product is emerging.

Our estimated capital expenditures for 2025, which are described above, exclude any amounts that would be required in connection with this project, and such amounts could be significant.

See “Overview of CF Holdings—Our Strategy,” above, for additional information on our clean energy initiatives.

Acquisition of Waggaman Ammonia Production Facility

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

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

In connection with the acquisition, we entered into a long-term ammonia offtake agreement providing for us to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc.

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

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

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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.

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

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.

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

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

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

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

2022 Share Repurchase Program 2021 Share Repurchase Program

Shares Amounts (1)

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

Shares Amounts (1)

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Shares repurchased in 2023:

First quarter — $ — 1.3 $ 100

Second quarter 0.8 $ 50

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Total shares repurchased in 2023 5.6 $ 425

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

Shares repurchased in 2024:

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______________________________________________________________________________

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

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

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

CF INDUSTRIES HOLDINGS, INC.

(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 2024, we repurchased approximately 18.8 million shares under the 2022 Share Repurchase Program for approximately $1.51 billion, of which $10 million was accrued and unpaid as of December 31, 2024.

In 2024, we retired approximately 18.7 million shares of repurchased stock, and we held approximately 0.4 million shares of treasury stock as of December 31, 2024.

In 2023, we completed the 2021 Share Repurchase Program with the repurchase of approximately 2.3 million shares for $155 million, and we repurchased 5.6 million shares under the 2022 Share Repurchase Program for $425 million.

Government Policies

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

In addition, changing political leadership, including the new U.S.

presidential administration and regulatory leadership, have proposed, and may propose further, policy, regulatory, and enforcement changes, which are and may continue to be subject to administrative and judicial challenges, that create additional uncertainty for our business.

CF INDUSTRIES HOLDINGS, INC.

Canada Revenue Agency Competent Authority Matter

In connection with the matter described above under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter,” in the third quarter of 2024, we were informed that the CRA granted us discretionary interest relief for certain tax years from 2006 through 2011.

In the fourth quarter of 2024, we received interest relief from the CRA consisting of interest refunds of $21 million and related interest of $2 million.

In addition, interest relief from the Alberta TRA is estimated to be approximately $16 million, consisting of interest refunds of $15 million and related interest of $1 million, based on current estimates and foreign currency exchange rates as of December 31, 2024.

We expect to receive the interest refunds from the Alberta TRA in the first half of 2025.

Repatriation of Foreign Earnings and Income Taxes

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As of December 31, 2024, we recorded a deferred tax liability of $14 million on the undistributed earnings of our Canadian subsidiaries for which the Company does not have an indefinite reinvestment assertion.

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

Revolving Credit Agreement

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

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

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

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

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

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

We have a senior unsecured revolving credit agreement (the Revolving Credit Agreement), which provides for a revolving credit facility of up to $750 million with a maturity of October 26, 2028 and includes a letter of credit sub-limit of $125 million.

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

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

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

dollars, Canadian dollars, euros and British pounds.

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

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

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

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

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

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

As of December 31, 2024, we were in compliance with all covenants under the Revolving Credit Agreement.

CF INDUSTRIES HOLDINGS, INC.

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

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

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

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

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

inaccuracy of representations and warranties in any material respect;

and failure to comply with specified covenants.

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

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

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

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

As of December 31, 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.

As of December 31, 2024 and 2023, and during the years then ended, there were no borrowings outstanding under the Revolving Credit Agreement.

Letters of Credit Under Bilateral Agreement

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

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

As of December 31, 2024, approximately $324 million of letters of credit were outstanding under this agreement.

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

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

Total unamortized debt discount was $6 million and $7 million as of December 31, 2024 and 2023, respectively, and total deferred debt issuance costs were $23 million and $25 million as of December 31, 2024 and 2023, respectively.

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

CF INDUSTRIES HOLDINGS, INC.

Public Senior Notes

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

The total aggregate redemption price paid in connection with the April 2022 redemption of the 2023 Notes, which was funded with cash on hand, was $513 million, including accrued interest.

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

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

CF INDUSTRIES HOLDINGS, INC.

Under each of the indentures governing the Public Senior Notes, specified changes of control involving CF Holdings or CF Industries, when accompanied by a ratings downgrade, as defined with respect to the applicable series of Public Senior Notes, constitute change of control repurchase events.

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

CF INDUSTRIES HOLDINGS, INC.

Forward Sales and Customer Advances

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

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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

As of December 31, 2024, our natural gas purchase agreements have remaining terms that range from five months to five years and a total minimum commitment of approximately $2.64 billion, and our natural gas transportation agreements have terms that range from one to eight years and a total minimum commitment of approximately $62 million.

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

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

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

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

During the three-year period ended December 31, 2024, the daily closing price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, reached a low of $1.23 per MMBtu on four consecutive days in November 2024 and a high of $12.97 per MMBtu on four consecutive days in January 2024.

Derivative Financial Instruments

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

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

CF INDUSTRIES HOLDINGS, INC.

In 2024 and 2023, we recognized unrealized net mark-to-market gains on natural gas derivatives of $35 million and $39 million, respectively, which is reflected in cost of sales in our consolidated statements of operations.

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

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In the event of certain defaults or termination events, our counterparties may request early termination and net settlement of certain derivative trades or may require us to collateralize derivatives in a net liability position.

As of December 31, 2023 and 2022, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $34 million and $73 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates.

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.

As of December 31, 2024 and 2023, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was zero and $34 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates.

As of December 31, 2024, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 16.0 million MMBtus.

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.

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Defined Benefit Pension Plans

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

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

pension plans as currently agreed with the plans’ trustees.

Distributions on Noncontrolling Interest in CFN

We made cash contributions of $22 million to our pension plans in 2024.

We expect to contribute approximately $6 million in total to our U.S.

pension plans in 2025, and, as currently agreed with the plans’ trustees, approximately $13 million to our U.K.

pension plans in 2026.

CF INDUSTRIES HOLDINGS, INC.

Distributions to Noncontrolling Interest in CFN

The CFN Board of Managers approved semi-annual distribution payments for the years ended December 31, 2024, 2023 and 2022, in accordance with CFN’s limited liability company agreement, as follows:

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Third quarter of 2022 Six months ended June 30, 2022 372

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

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

Net earnings in 2023 was $1.84 billion compared to $3.94 billion in 2022.

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

operations in 2022 that did not recur in 2023.

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

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

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

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

Net cash provided by operating activities in 2024 was $2.27 billion, a decrease of $486 million compared to $2.76 billion in 2023.

The decrease in cash flow from operations was due primarily to lower net earnings.

Net earnings in 2024 was $1.48 billion, a decrease of $361 million compared to $1.84 billion in 2023.

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

During 2024, net changes in working capital also impacted cash flow from operations by contributing $63 million more toward net cash from operations in 2024 than in 2023.

These changes primarily occurred in changes in accounts payable, accrued expenses and customer advances, partially offset by changes in inventories.

Net cash used in investing activities was $469 million in 2024 compared to $1.68 billion in 2023, or a decrease of $1.21 billion.

The decrease was due primarily to the consideration paid of $1.223 billion for the Waggaman acquisition in 2023.

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

During 2024, capital expenditures totaled $518 million compared to $499 million in 2023.

CF INDUSTRIES HOLDINGS, INC.

Net cash used in financing activities was $2.21 billion in 2024 compared to $1.37 billion in 2023.

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

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

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

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

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

In 2024, we paid $1.51 billion for share repurchases compared to $580 million for share repurchases in 2023.

In 2024, dividends paid on common stock were $364 million compared to $311 million in 2023.

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

In 2024, distributions to the noncontrolling interest were $308 million compared to $459 million in 2023 due to lower earnings of CFN.

Critical Accounting Estimates

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

Acquisition of Waggaman Ammonia Production Facility

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

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

We accounted for the acquisition as a business combination.

In connection with the acquisition, we entered into a long-term ammonia offtake agreement providing for us to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc.

subsidiary (the Supply Contract).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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

Increase/(Decrease) in Fair Value

Customer Relationships Supply Contract Liability

Assumption (in millions)

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

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

+$0.05 -$0.05

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

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

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

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n/a—not applicable

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

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The factors we use are consistent with those used in our internal planning process.

The recoverability of the values associated with our goodwill, long-lived assets and our investment in an unconsolidated affiliate is dependent upon future operating performance of the specific businesses to which they are attributed.

Certain of the operating assumptions are particularly sensitive to the cyclical nature of the fertilizer business.

CF INDUSTRIES HOLDINGS, INC.

they are attributed.

Certain of the operating assumptions are particularly sensitive to the cyclical nature of the fertilizer industry.

Adverse changes in demand for our products, increases in supply and the availability and costs of key raw materials could significantly affect the results of our review.

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

CF INDUSTRIES HOLDINGS, INC.

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

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

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

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

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

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

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For North America qualified pension plans, our PBO was $278 million as of December 31, 2024, which was $21 million lower than pension plan assets.

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

For our United Kingdom pension plans, our PBO was $317 million as of December 31, 2024, which was $28 million lower than pension plan assets.

The table below estimates the impact of a 50 basis point increase or decrease in the key assumptions on our December 31, 2024 PBO:

CF INDUSTRIES HOLDINGS, INC.

Increase/(Decrease) in December 31, 2024 PBO

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As of December 31, 2024, we have recorded a reserve for unrecognized tax benefits, including penalties and interest, of $285 million.

CF INDUSTRIES HOLDINGS, INC.

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

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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-K

Item 7. Management’s Discussion and Analysis