CF Industries Holdings, Inc. Reports Third Quarter Net Earnings of $91 Million and Reported EBITDA of $256 Million
Strategic Transformation is On-Track to Expand Production Capacity by
65 Percent
OCI Deal Receives U.S. Antitrust Clearance
New Donaldsonville Urea Plant Mechanically Complete; Commissioning
Process Has Begun
CF Industries Holdings, Inc. (NYSE: CF), a global leader in nitrogen
fertilizer manufacturing and distribution, today announced results for
its fiscal third quarter ended September 30, 2015.
Third Quarter Highlights
Operations
-
New record-best 12-month safety incident rate of 0.80
-
Reported EBITDA(1) of $256 million
-
Net earnings of $91 million or $0.39 per diluted share
-
Repurchased 358,000 shares during the third quarter; 233 million
shares outstanding
-
Completed a 106-day turnaround and refurbishment of the Woodward,
Oklahoma, facility, of which 75 days were in the third quarter
-
Entered into long-term natural gas hedges for the 2016 through 2018
period
-
Separated Ammonium Nitrate from Other segment to form a new reportable
segment
Strategic
-
The company entered into an agreement to combine with OCI N.V.'s (OCI)
European, North American and global distribution businesses.
Subsequent to the end of the quarter, the company announced the
expiration of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976
-
New urea plant at Donaldsonville, LA is mechanically complete and in
the process of being commissioned
-
Entered into an agreement with CHS Inc. (CHS) for their purchase of a
minority equity position in CF Industries Nitrogen, LLC, a
wholly-owned subsidiary of CF Industries Holdings, Inc., and also
entered into a long-term supply agreement
-
Completed the acquisition of the remaining 50 percent interest in
GrowHow UK Limited (GrowHow) from Yara International ASA on July 31,
2015
-
Capacity expansions: Continued progress at both facilities; total
capital cost forecast to increase approximately 10 percent from the
previous $4.2 billion projection
-
Completed private placement of $1.0 billion in debt financing
Year to Date Highlights
-
Reported EBITDA(1) of $1.41 billion
-
Net earnings of $673 million or $2.84 per diluted share
-
Repurchased 8.9 million shares during 2015
_______________________________________________________________________________
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(1)
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|
Earnings Before Interest, Taxes, Depreciation and Amortization. See
reconciliation of EBITDA in the table accompanying this release.
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|
|
|
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Overview of Results
CF Industries Holdings, Inc., today announced third quarter 2015
reported EBITDA of $256 million and net earnings attributable to common
stockholders of $91 million, or $0.39 per diluted share. These results
compare to third quarter 2014 EBITDA of $338 million and net earnings
attributable to common stockholders of $131 million, or $0.52 per
diluted share. Certain items impacting the company's pre-tax income and
after-tax earnings per diluted share for the third quarter are
highlighted below:
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Three months ended September 30, 2015
|
|
Three months ended September 30, 2014
|
|
|
|
|
Pre-tax Impact
|
|
After-tax EPS Impact
|
|
Pre-tax Impact
|
|
After-tax EPS Impact
|
|
|
|
|
(in millions, except per share amounts)
|
|
Loss (gain) on mark-to-market - natural gas
|
|
|
$
|
125.9
|
|
|
$
|
0.34
|
|
|
$
|
(12.1
|
)
|
|
$
|
(0.03
|
)
|
|
Loss on foreign currency derivatives
|
|
|
0.2
|
|
|
—
|
|
|
27.2
|
|
|
0.07
|
|
|
Expansion project expenses
|
|
|
14.9
|
|
|
0.04
|
|
|
6.8
|
|
|
0.02
|
|
|
Transaction costs
|
|
|
37.4
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
|
Gain on re-measurement of GrowHow investment
|
|
|
(94.4
|
)
|
|
(0.40
|
)
|
|
—
|
|
|
—
|
|
|
Financing costs related to bridge loan commitment fee(2)
|
|
|
5.9
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
Pension settlement charge
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
|
0.01
|
|
|
Loss/expense sub-total
|
|
|
$
|
89.9
|
|
|
$
|
0.10
|
|
|
$
|
25.3
|
|
|
$
|
0.07
|
|
_______________________________________________________________________________
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(2)
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Not included in the calculation of EBITDA.
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|
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|
|
First nine months 2015 EBITDA was $1.41 billion and net earnings
attributable to common stockholders was $673 million, or $2.84 per
diluted share, compared to EBITDA of $2.21 billion and net earnings
attributable to common stockholders of $1.15 billion, or $4.43 per
diluted share, for the comparable period in 2014. Certain items
impacting the company's pre-tax income and after-tax earnings per
diluted share for the first nine months of the year are highlighted
below:
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Nine months ended September 30, 2015
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Nine months ended September 30, 2014
|
|
|
|
|
Pre-tax Impact
|
|
After-tax EPS Impact
|
|
Pre-tax Impact
|
|
After-tax EPS Impact
|
|
|
|
|
(in millions, except per share amounts)
|
|
Loss on mark-to-market - natural gas
|
|
|
$
|
78.8
|
|
|
$
|
0.21
|
|
|
$
|
39.1
|
|
|
$
|
0.10
|
|
|
Loss on foreign currency derivatives
|
|
|
18.9
|
|
|
0.05
|
|
|
27.4
|
|
|
0.07
|
|
|
Expansion project expenses
|
|
|
36.6
|
|
|
0.10
|
|
|
21.9
|
|
|
0.05
|
|
|
Loss on sale of equity method investments
|
|
|
42.8
|
|
|
0.13
|
|
|
—
|
|
|
—
|
|
|
Transaction costs
|
|
|
37.4
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
|
Gain on re-measurement of GrowHow investment
|
|
|
(94.4
|
)
|
|
(0.40
|
)
|
|
—
|
|
|
—
|
|
|
Financing costs related to bridge loan commitment fee(2)
|
|
|
5.9
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
Pension settlement charge
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
|
0.01
|
|
|
Gain on sale of phosphate business
|
|
|
—
|
|
|
—
|
|
|
(747.1
|
)
|
|
(1.77
|
)
|
|
Loss/expense/(gain/income) sub-total
|
|
|
$
|
126.0
|
|
|
$
|
0.21
|
|
|
$
|
(655.3
|
)
|
|
$
|
(1.54
|
)
|
_______________________________________________________________________________
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(2)
|
|
Not included in the calculation of EBITDA.
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|
|
Nitrogen product segments(3) net sales increased in the third
quarter of 2015 to $927.4 million from $921.4 million in the same period
last year. The increase was primarily due to the impact of the GrowHow
acquisition which accounted for approximately $84 million in incremental
sales revenue in the third quarter of 2015 when compared to 2014. A
higher volume of exports and domestic spot sales of ammonia as well as
growth in the Other segment helped to partially offset lower average
realized prices across the ammonia, UAN, granular urea, and AN segments.
Between June 19, 2015, and October 19, 2015, the company completed an
extensive turnaround and refurbishment of its Woodward, Oklahoma,
nitrogen facility. The facility was out of service for approximately 106
days, of which 75 days were in the third quarter. This impacted the
company's third quarter year-over-year production results by
approximately 198,000 product tons, of which, based on the typical
product mix for the Woodward facility, approximately 173,000 tons would
have been UAN, 20,000 tons would have been merchant ammonia, and 5,000
tons would have been DEF. In addition, the facility incurred $17 million
of fixed cost absorption. These costs would normally be inventoried and
appear in cost of sales; however, they were immediately expensed due to
lack of production during the time period when the plant was not fully
operational. The facility returned to full production rates in
mid-October.
Cost of sales increased 23 percent in the third quarter of 2015 compared
to the third quarter of 2014 due primarily to the unrealized mark to
market loss on the company's natural gas hedges for the 2015 through
2018 periods. This was partially offset by lower realized natural gas
costs.
In the third quarter of 2015, the average realized cost of natural gas
purchased by the company in North America was $2.77 per MMBtu, a 37
percent decline year-over-year. The average realized cost of natural gas
purchased by the company in the United Kingdom in the third quarter of
2015, following the July 31, 2015 acquisition of GrowHow, was $6.43 per
MMBtu. The overall average realized cost of natural gas purchased by the
company in the third quarter of 2015 was $3.07 per MMBtu.
During the third quarter, the company did not enter into additional
hedges for the balance of 2015, but added to existing hedges for 2016
and 2017 in addition to initiating hedges for 2018. Please reference the
gas table in the appendix for further detail on the company's natural
gas hedged positions.
Over the last 12 months, natural gas prices have declined and there has
been a great deal of volatility in the company's unrealized
mark-to-market gains and losses given the size of its natural gas hedged
positions.
_______________________________________________________________________________
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(3)
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|
The company's nitrogen product segments consist of the ammonia,
granular urea, UAN, AN and Other segments as described in this
release.
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|
Transformational Strategic Initiatives
During the last several months, CF Industries has announced several
significant strategic steps:
-
On July 31, 2015, the company closed the transaction that made
GrowHow, a wholly-owned subsidiary.
-
On August 6, 2015, the company announced that it had entered into a
definitive agreement under which it will combine with OCI’s European,
North American and global distribution businesses. On November 3, 2015
the company announced the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) in
connection with this combination. Expiration of the waiting period
under the HSR Act satisfies one of the conditions necessary for the
combination. The proposed transaction remains subject to approval by
the shareholders of CF and OCI, as well as other customary closing
conditions. The transaction is expected to close in mid-2016.
-
On August 12, 2015, the company announced that it has agreed to enter
into a strategic venture with CHS. CHS will make a $2.8 billion equity
investment in CF Industries Nitrogen, LLC, a wholly-owned subsidiary
of CF Holdings. The company and CHS also entered into a long-term
supply agreement. The deal is expected to close February 1, 2016.
“These transactions, along with significant progress on our capacity
expansions, will solidify CF’s position as the world’s leading nitrogen
producer with an unmatched tangible growth profile,” said Tony Will,
president and chief executive officer, CF Industries Holdings, Inc.
Business Environment and Outlook
In the third quarter, the global nitrogen market continued to be
supply-driven, with significant availability of internationally-sourced
product and lower global demand pressuring prices.
During the third quarter the Chinese government announced
reimplementation of a 13 percent value-added tax on fertilizers, and
announced it would let the yuan devalue. Along with a decrease in coal
prices, the net impact of these items was to lower Chinese urea costs of
production by approximately $10 to $15 per ton. Along with lower ocean
freight costs, the costs of urea for the marginal Chinese producer (i.e.
anthracite coal-based) are now estimated in the $250 to $285 range per
ton delivered to the U.S. Gulf.
Chinese supply remains steady, but recently lower prices have reduced
export volumes. When compared to the previous year, CF Industries
projects that the rate of Chinese exports for the remainder of the year
will slow with the decline in urea prices, resulting in 2015 exports at
an estimated 12 million metric tonnes, compared to 13.6 million metric
tonnes in 2014. This decline has also been evidenced in the last three
India urea tenders which saw lower Chinese producer participation. This
was caused by India looking for prices less than the marginal cost of
most Chinese anthracite coal-based producers. There have also been
recent industry reports about curtailments at several Chinese factories.
The Brazilian real continued to weaken during the third quarter to
levels not seen in the history of the currency, impacting importers
throughout 2015 with Brazilian urea imports down 38 percent
year-over-year. Additionally, the devaluation of the currency impacted
the ability of Brazilian importers and distributors to purchase new
products or to repay debts denominated in U.S. dollars.
In the U.S., farmers focused on the fall harvest during the third
quarter, and the industry experienced the slow demand that is typical
this time of the year as manufacturers build inventories in anticipation
of the fall ammonia application and spring fertilizer seasons.
North American natural gas continues to provide the company a
substantial cost advantage compared to other global producers. Despite
the decreased rig count, gas production continued at record levels
during the third quarter, mainly due to growth in natural gas production
from Marcellus/Utica shale offsetting declines experienced elsewhere in
North America. The natural gas storage balance increased steadily above
the five-year average throughout the third quarter due to strong
production and a relatively normal summer cooling season. Experts are
calling for a record storage balance near 4.0 TCF at the end of the
injection season, which is likely to occur later than normal due to a
mild November weather forecast for North America.
Nitrogen capacity is expanding in low cost regions with additional
capacity coming on-line this year and in 2016. Beginning in 2017, there
are fewer projects starting up that will add capacity to the global
system. Historically, global nitrogen demand has grown steadily at about
2 percent per year. This demand growth drives a need for approximately
four to five new ammonia/urea complexes each year.
North American ammonia demand for the fourth quarter of 2015 is
projected to increase about 15 percent as compared to the fourth quarter
of 2014, which experienced a weak demand due to wet and cold weather.
Urea and UAN demand is projected to be in-line with 2014.
In North America, nitrogen fertilizer demand is expected to be
approximately 1.2 percent higher in 2016 than in 2015. Current returns
for the 2016 crop, based on new crop futures, favor corn plantings. As a
result, CF now expects 2016 corn planting to be approximately 90.5
million acres, which is 2.1 million acres higher than the current year.
CF Industries entered the fourth quarter with a solid order book for
ammonia and UAN, supporting an expectation of 2016 fertilizer demand
slightly ahead of 2015 levels.
Capital Deployment Activities
During the third quarter, CF Industries continued to invest capital to
grow the business and increase total shareholder return.
Share Repurchases
In the third quarter, the company repurchased 358,000 shares for
approximately $22.5 million, bringing shares outstanding down to 233
million as of September 30, 2015. Including shares repurchased during
the first two quarters, this brings the company’s year-to-date share
repurchases to 8.9 million shares for approximately $527 million.
Capacity Expansion Projects Update
The company’s capacity expansion projects at Donaldsonville, Louisiana,
and Port Neal, Iowa, continued to make progress during the quarter.
The urea plant at Donaldsonville, Louisiana is mechanically complete and
the commissioning process has begun. The UAN plant is on track to start
up late in the fourth quarter of 2015 with the ammonia plant to follow
in early 2016. The ammonia and urea plants at Port Neal continue to be
on schedule for start-up in mid-2016. The total capital cost forecast
for the projects is approximately 10 percent higher than the previous
$4.2 billion projection. The increases are mainly attributable to
additional quantities of concrete, steel and piping needed, and the
associated labor. Including these increases, the projects are still
expected to generate unlevered, after tax returns in the mid-teens, well
above our cost of capital.
For the full year 2015, the company expects total cash capital
expenditures of approximately $2.6 billion. This consists of
approximately $2.0 billion for the capacity expansion projects and
approximately $600 million of sustaining and other capital expenditures.
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|
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|
|
Consolidated Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
927.4
|
|
|
$
|
921.4
|
|
|
$
|
3,192.5
|
|
|
$
|
3,526.7
|
|
|
Cost of sales
|
|
|
762.4
|
|
|
620.3
|
|
|
1,925.8
|
|
|
2,192.5
|
|
|
Gross margin
|
|
|
$
|
165.0
|
|
|
$
|
301.1
|
|
|
$
|
1,266.7
|
|
|
$
|
1,334.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
17.8
|
%
|
|
32.7
|
%
|
|
39.7
|
%
|
|
37.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
$
|
256.3
|
|
|
$
|
338.3
|
|
|
$
|
1,411.9
|
|
|
$
|
2,211.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to common stockholders
|
|
|
$
|
90.9
|
|
|
$
|
130.9
|
|
|
$
|
673.4
|
|
|
$
|
1,152.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share(1)
|
|
|
$
|
0.39
|
|
|
$
|
0.52
|
|
|
$
|
2.84
|
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tons of product sold (000s):
|
|
|
|
|
|
|
|
|
|
|
Nitrogen product segments
|
|
|
3,213
|
|
|
2,947
|
|
|
9,736
|
|
|
9,755
|
|
|
Phosphate segment
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
487
|
|
|
Total tons of product sold
|
|
|
3,213
|
|
|
2,947
|
|
|
9,736
|
|
|
10,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas:
|
|
|
|
|
|
|
|
|
|
|
Purchased natural gas costs (per MMBtu)(2)
|
|
|
$
|
3.02
|
|
|
$
|
4.05
|
|
|
$
|
2.86
|
|
|
$
|
4.65
|
|
|
Realized derivatives loss (gain) (per MMBtu)(3)
|
|
|
0.05
|
|
|
0.34
|
|
|
0.21
|
|
|
(0.34
|
)
|
|
Cost of natural gas (per MMBtu)
|
|
|
$
|
3.07
|
|
|
$
|
4.39
|
|
|
$
|
3.07
|
|
|
$
|
4.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily market price of natural gas
|
|
|
|
|
|
|
|
|
|
|
Henry Hub (per MMBtu)
|
|
|
$
|
2.75
|
|
|
$
|
3.94
|
|
|
$
|
2.78
|
|
|
$
|
4.52
|
|
|
National Balancing Point UK (per MMBtu)
|
|
|
$
|
6.44
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
$
|
759.4
|
|
|
$
|
587.7
|
|
|
$
|
1,791.3
|
|
|
$
|
1,272.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production volume by product tons (000s):
|
|
|
|
|
|
|
|
|
|
|
Ammonia(4)
|
|
|
1,915
|
|
|
1,711
|
|
|
5,575
|
|
|
5,258
|
|
|
Granular urea
|
|
|
544
|
|
|
565
|
|
|
1,762
|
|
|
1,757
|
|
|
UAN (32%)
|
|
|
1,372
|
|
|
1,379
|
|
|
4,286
|
|
|
4,313
|
|
|
AN
|
|
|
365
|
|
|
251
|
|
|
796
|
|
|
714
|
|
_______________________________________________________________________________
|
(1)
|
|
On June 17, 2015, CF Industries common stock split 5 for 1. The per
share amounts for all prior periods have been restated to reflect
the stock split.
|
|
(2)
|
|
Includes the cost of natural gas purchased during the period for use
in production.
|
|
(3)
|
|
Includes the realized gains and losses on natural gas derivatives
settled during the period. Excludes unrealized mark-to-market gains
and losses on natural gas derivatives.
|
|
(4)
|
|
Gross ammonia production including amounts subsequently upgraded
into other products.
|
|
|
|
|
CF Industries recognized revenue from the phosphate business as recently
as the early part of the second quarter of 2014 due to sales of
phosphate inventory that remained in its distribution system after the
sale of the phosphate business to The Mosaic Company in the first
quarter of 2014. Because of the sale of the phosphate business, the
phosphate segment ceased to have reported results after the second
quarter of 2014. The phosphate segment will continue to be shown only
until there are no prior year-to-date results from this segment.
Comparison of 2015 to 2014 Third Quarter periods:
-
Net sales for the nitrogen product segments increased primarily due to
the addition of NPK, AN, and ammonia sales resulting from the GrowHow
acquisition as well as increased ammonia sales and growth in the Other
segment. This was offset by decreased North American sales volumes in
granular urea, UAN and AN as well as lower average selling prices due
to a competitive global pricing environment.
-
EBITDA declined due to a higher cost of sales driven by an unrealized
net mark-to-market loss of $125.9 million on natural gas derivatives
compared to an unrealized gain of $12.1 million in 2014, transaction
costs of $37.4 million, and lower average selling prices for nitrogen
products. This was partially offset by lower realized natural gas
costs, and a gain of $94.4 million on the re-measurement of the
GrowHow investment.
Segment Results
Ammonia Segment
CF Industries’ ammonia segment produces anhydrous ammonia (ammonia),
which is the company’s most concentrated nitrogen fertilizer, containing
82 percent nitrogen. The results of the ammonia segment consist of sales
of ammonia to external customers. In addition, ammonia is the “basic”
nitrogen product that the company upgrades into other nitrogen
fertilizers such as urea and UAN solution.
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
260.9
|
|
|
$
|
232.1
|
|
|
$
|
1,147.6
|
|
|
$
|
1,109.3
|
|
|
Cost of sales
|
|
|
206.7
|
|
|
168.6
|
|
|
634.5
|
|
|
693.1
|
|
|
Gross margin
|
|
|
$
|
54.2
|
|
|
$
|
63.5
|
|
|
$
|
513.1
|
|
|
$
|
416.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
20.8
|
%
|
|
27.4
|
%
|
|
44.7
|
%
|
|
37.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume by product tons (000s)
|
|
|
585
|
|
|
444
|
|
|
2,176
|
|
|
2,133
|
|
|
Sales volume by nutrient tons (000s)(1)
|
|
|
480
|
|
|
364
|
|
|
1,785
|
|
|
1,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per product ton
|
|
|
$
|
446
|
|
|
$
|
523
|
|
|
$
|
527
|
|
|
$
|
520
|
|
|
Average selling price per nutrient ton(1)
|
|
|
544
|
|
|
638
|
|
|
643
|
|
|
634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin per product ton
|
|
|
$
|
93
|
|
|
$
|
143
|
|
|
$
|
236
|
|
|
$
|
195
|
|
|
Gross margin per nutrient ton(1)
|
|
|
113
|
|
|
174
|
|
|
287
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
$
|
31.4
|
|
|
$
|
16.7
|
|
|
$
|
74.9
|
|
|
$
|
53.5
|
|
_______________________________________________________________________________
|
(1)
|
|
Nutrient tons represent the tons of nitrogen within the product tons.
|
|
|
|
|
Comparison of 2015 to 2014 Third Quarter periods:
-
Ammonia sales volume increased in the third quarter of 2015 from the
third quarter of 2014 due to the acquisition of GrowHow as well as
fewer tons being upgraded to other products, primarily at the
company's Donaldsonville and Yazoo City facilities. Additionally,
there were lower production volumes in 2014 resulting from unplanned
plant outages. These were partially offset by the reduction of
available ammonia because of the turnaround and refurbishment at the
Woodward, Oklahoma facility.
-
Average selling prices decreased in the third quarter of 2015 compared
to 2014 primarily due to increased global supply.
-
Ammonia gross margin and gross margin per ton decreased in 2015 from
2014 due to a higher cost of sales driven by an unrealized net
mark-to-market loss on natural gas derivatives and lower average
selling prices resulting from increased global supply. This was
partially offset by lower realized natural gas costs.
Granular Urea Segment
CF Industries’ granular urea segment produces granular urea, which
contains 46 percent nitrogen. Produced from ammonia and carbon dioxide,
it has the highest nitrogen content of any of the company’s solid
nitrogen fertilizers.
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
170.7
|
|
|
$
|
199.6
|
|
|
$
|
593.9
|
|
|
$
|
683.4
|
|
|
Cost of sales
|
|
|
131.8
|
|
|
120.7
|
|
|
324.3
|
|
|
378.1
|
|
|
Gross margin
|
|
|
$
|
38.9
|
|
|
$
|
78.9
|
|
|
$
|
269.6
|
|
|
$
|
305.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
22.8
|
%
|
|
39.5
|
%
|
|
45.4
|
%
|
|
44.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume by product tons (000s)
|
|
|
539
|
|
|
558
|
|
|
1,755
|
|
|
1,813
|
|
|
Sales volume by nutrient tons (000s)(1)
|
|
|
248
|
|
|
257
|
|
|
807
|
|
|
834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per product ton
|
|
|
$
|
317
|
|
|
$
|
358
|
|
|
$
|
338
|
|
|
$
|
377
|
|
|
Average selling price per nutrient ton(1)
|
|
|
688
|
|
|
777
|
|
|
736
|
|
|
819
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin per product ton
|
|
|
$
|
72
|
|
|
$
|
141
|
|
|
$
|
154
|
|
|
$
|
168
|
|
|
Gross margin per nutrient ton(1)
|
|
|
157
|
|
|
307
|
|
|
334
|
|
|
366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
$
|
10.4
|
|
|
$
|
9.1
|
|
|
$
|
30.7
|
|
|
$
|
27.0
|
|
_______________________________________________________________________________
|
(1)
|
|
Nutrient tons represent the tons of nitrogen within the product tons.
|
|
|
|
|
Comparison of 2015 to 2014 Third Quarter periods:
-
Granular urea sales volume decreased as scheduled turnarounds at the
Donaldsonville, Louisiana, facility impacted production.
-
Granular urea average price per ton decreased due to an abundance of
global supply.
-
Gross margin per ton decreased due to a higher cost of sales driven by
an unrealized net mark-to-market loss on natural gas derivatives as
well as lower average selling prices. These were partially offset by
lower realized natural gas costs.
UAN Segment
CF Industries’ UAN segment produces urea ammonium nitrate solution
(UAN). UAN is a liquid fertilizer product with nitrogen content that
typically ranges from 28 percent to 32 percent and is produced by
combining urea and ammonium nitrate in solution.
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
349.3
|
|
|
$
|
392.9
|
|
|
$
|
1,112.4
|
|
|
$
|
1,249.3
|
|
|
Cost of sales
|
|
|
276.5
|
|
|
257.2
|
|
|
678.3
|
|
|
730.2
|
|
|
Gross margin
|
|
|
$
|
72.8
|
|
|
$
|
135.7
|
|
|
$
|
434.1
|
|
|
$
|
519.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
20.8
|
%
|
|
34.5
|
%
|
|
39.0
|
%
|
|
41.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume by product tons (000s)
|
|
|
1,445
|
|
|
1,518
|
|
|
4,266
|
|
|
4,495
|
|
|
Sales volume by nutrient tons (000s)(1)
|
|
|
458
|
|
|
482
|
|
|
1,347
|
|
|
1,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per product ton
|
|
|
$
|
242
|
|
|
$
|
259
|
|
|
$
|
261
|
|
|
$
|
278
|
|
|
Average selling price per nutrient ton(1)
|
|
|
763
|
|
|
815
|
|
|
826
|
|
|
880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin per product ton
|
|
|
$
|
50
|
|
|
$
|
89
|
|
|
$
|
102
|
|
|
$
|
115
|
|
|
Gross margin per nutrient ton(1)
|
|
|
159
|
|
|
282
|
|
|
322
|
|
|
366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
$
|
42.9
|
|
|
$
|
41.6
|
|
|
$
|
139.7
|
|
|
$
|
138.2
|
|
_______________________________________________________________________________
|
(1)
|
|
Nutrient tons represent the tons of nitrogen within the product tons.
|
|
|
|
|
Comparison of 2015 to 2014 Third Quarter periods:
-
UAN sales volume decreased due to the turnaround and refurbishment at
the Woodward, Oklahoma, facility.
-
UAN average price per ton decreased due to a combination of excess
global supply availability as well as a long global urea market
putting pressure on other nitrogen prices.
-
UAN gross margin per ton decreased due to a higher cost of sales
driven by an unrealized net mark-to-market loss on natural gas
derivatives as well as lower average selling prices resulting from
increased global supply. Additionally, gross margin was negatively
impacted by fixed cost absorption from the turnaround and
refurbishment of the Woodward, Oklahoma, facility. These were
partially offset by lower realized natural gas costs.
AN Segment
CF Industries' AN segment produces ammonium nitrate (AN). AN is used as
a nitrogen fertilizer, and also is used by industrial customers for
commercial explosives and blasting systems. AN is produced at the
company's Yazoo City, Mississippi; Billingham, United Kingdom; and Ince,
United Kingdom, complexes.
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
79.5
|
|
|
$
|
54.9
|
|
|
$
|
178.9
|
|
|
$
|
187.0
|
|
|
Cost of sales
|
|
|
96.7
|
|
|
46.0
|
|
|
179.1
|
|
|
140.3
|
|
|
Gross margin
|
|
|
$
|
(17.2
|
)
|
|
$
|
8.9
|
|
|
$
|
(0.2
|
)
|
|
$
|
46.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
(21.6
|
)%
|
|
16.2
|
%
|
|
(0.1
|
)%
|
|
25.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume by product tons (000s)
|
|
|
347
|
|
|
230
|
|
|
795
|
|
|
714
|
|
|
Sales volume by nutrient tons (000s)(1)
|
|
|
117
|
|
|
79
|
|
|
271
|
|
|
245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per product ton
|
|
|
$
|
229
|
|
|
$
|
239
|
|
|
$
|
225
|
|
|
$
|
262
|
|
|
Average selling price per nutrient ton(1)
|
|
|
679
|
|
|
695
|
|
|
660
|
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin per product ton
|
|
|
$
|
(50
|
)
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
Gross margin per nutrient ton(1)
|
|
|
(147
|
)
|
|
113
|
|
|
(1
|
)
|
|
191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
$
|
19.1
|
|
|
$
|
13.3
|
|
|
$
|
43.6
|
|
|
$
|
34.1
|
|
_______________________________________________________________________________
|
(1)
|
|
Nutrient tons represent the tons of nitrogen within the product tons.
|
|
|
|
|
Comparison of 2015 to 2014 Third Quarter periods:
-
AN segment volume was higher due to the impact of GrowHow sales in
2015. This was offset by lower North American sales volume and average
selling prices as a result of weak domestic agricultural demand.
-
AN segment gross margin decreased primarily due to a higher cost of
sales driven by an unrealized net mark-to-market loss on natural gas
derivatives. Additionally, the margin on AN sales from GrowHow was
constrained due to the write-up of GrowHow's existing inventory at
July 31, 2015 to a value based on then current market prices in
connection with the GrowHow acquisition, resulting in a higher cost of
sales when that inventory was later sold. These were partially offset
by lower realized natural gas costs.
Other Segment
CF Industries’ Other segment includes Diesel Exhaust Fluid (DEF), urea
liquor, nitric acid and compound fertilizer products (NPKs).
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
67.0
|
|
|
$
|
41.9
|
|
|
$
|
159.7
|
|
|
$
|
129.3
|
|
|
Cost of sales
|
|
|
50.7
|
|
|
27.8
|
|
|
109.6
|
|
|
92.5
|
|
|
Gross margin
|
|
|
$
|
16.3
|
|
|
$
|
14.1
|
|
|
$
|
50.1
|
|
|
$
|
36.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
24.3
|
%
|
|
33.7
|
%
|
|
31.4
|
%
|
|
28.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume by product tons (000s)
|
|
|
297
|
|
|
197
|
|
|
744
|
|
|
600
|
|
|
Sales volume by nutrient tons (000s)(1)
|
|
|
56
|
|
|
38
|
|
|
144
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per product ton
|
|
|
$
|
226
|
|
|
$
|
213
|
|
|
$
|
215
|
|
|
$
|
216
|
|
|
Average selling price per nutrient ton(1)
|
|
|
1,196
|
|
|
1,103
|
|
|
1,109
|
|
|
1,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin per product ton
|
|
|
$
|
55
|
|
|
$
|
72
|
|
|
$
|
67
|
|
|
$
|
61
|
|
|
Gross margin per nutrient ton(1)
|
|
|
291
|
|
|
371
|
|
|
348
|
|
|
315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
$
|
10.6
|
|
|
$
|
5.0
|
|
|
$
|
25.7
|
|
|
$
|
15.5
|
|
_______________________________________________________________________________
|
(1)
|
|
Nutrient tons represent the tons of nitrogen within the product tons.
|
|
|
|
|
Comparison of 2015 to 2014 Third Quarter periods:
-
Other segment volume was higher due to the impact of the GrowHow
acquisition as well as an increase in DEF sales into North America.
-
Other segment average selling price increased due to the GrowHow
acquisition.
-
Other segment cost of sales increased primarily due to an unrealized
net mark-to-market loss on natural gas derivatives. This was partially
offset by lower realized natural gas costs.
Environmental, Health & Safety Performance
As of September 30, 2015, CF Industries' 12-month rolling average
recordable incidence rate was 0.80 incidents per 200,000 work-hours, the
company's lowest level ever. The most recently available one-year
average for the company's broad set of fertilizer producer peer
companies is 2.2 incidents per 200,000 work hours.
“The safety of our employees, contractors and the communities in which
we do business is our first thought each day,” said Mr. Will. “These
results are evidence of the leadership of our plants and terminals, and
their focus on the company's 'Do it Right' safety principles.”
Balance Sheet and Cash Flow Items
As of September 30, 2015, CF Industries had total liquidity of $2.9
billion including its undrawn revolving credit facility. Total long-term
debt was $5.6 billion. Net interest expense was $29.7 million in the
third quarter of 2015 compared to $46.2 million in the third quarter of
2014. The $16.5 million decrease was due primarily to higher amounts of
capitalized interest related to the company's capacity expansion
projects.
During the quarter, the company completed a $1.0 billion private
placement of senior notes comprising $250 million aggregate principal
amount of 4.49 percent senior notes due 2022, $500 million aggregate
principal amount of 4.93 percent senior notes due 2025 and $250 million
aggregate principal amount of 5.03 percent senior notes due 2027. CF
Industries intends to use the net proceeds from the offering of senior
notes to fund its capital expenditure programs and for other general
corporate purposes.
The company's revolving credit facility was amended to a $2.0 billion
facility, up from the prior $1.5 billion facility, and has a five-year
term from September 18, 2015. As of September 30, 2015, $1.995 billion
was available and undrawn under the revolving credit facility.
The company entered into a $4.0 billion bridge loan facility with a $1
billion tranche and a $3 billion tranche. The $1 billion tranche was
terminated on September 24, 2015 in connection with the completion of
the company's $1 billion debt private placement of senior notes. The
remaining tranche provides for up to $3.0 billion in financing to fund
certain cash needs associated with the OCI transaction and, in an amount
up to $1.3 billion, for general corporate purposes.
Total cash capital expenditures during the quarter were $759.4 million.
Of this, $541.0 million was related to the capacity expansion projects,
bringing project announcement-to-date cash expenditures to $3.1 billion.
The company also has accrued payables related to the expansion projects
of $407.2 million. Capital expenditures during the third quarter
included sustaining items of approximately $174.8 million and
capitalized interest of $43.6 million. For the first nine months of the
year, the company had total cash capital expenditures of $1.8 billion
with $365.8 million for sustaining items and capitalized interest of
$112.5 million.
During the third quarter, the company repurchased 358,000 shares for
$22.5 million, bringing the company's shares outstanding down to 233
million shares as of September 30, 2015. For the first nine months of
the year, the company has repurchased 8.9 million shares for $527
million. As a result of the share repurchases and high-return
investments in production growth, the company's nitrogen capacity per
thousand shares has increased by 173 percent, from approximately 11 tons
prior to the 2010 acquisition of Terra Industries to more than 30 tons
today.
Dividend Payment
On October 14, 2015, CF Industries’ Board of Directors declared a
quarterly dividend of $0.30 per common share. The dividend will be paid
on November 30, 2015, to stockholders of record as of November 16, 2015.
Conference Call
CF Industries will hold a conference call to discuss these third quarter
and year-to-date results at 9:00 a.m. ET on Thursday, November 5, 2015.
Investors can access the call and find dial-in information on the
Investor Relations section of the company’s website at www.cfindustries.com.
About CF Industries Holdings, Inc.
CF Industries Holdings, Inc., headquartered in Deerfield, Illinois,
through its subsidiaries is a global leader in the manufacturing and
distribution of nitrogen products, serving both agricultural and
industrial customers. CF Industries operates world-class nitrogen
manufacturing complexes in the central United States, Canada and the
United Kingdom, and distributes plant nutrients through a system of
terminals, warehouses, and associated transportation equipment located
primarily in the Midwestern United States. The company also owns a 50
percent interest in an ammonia facility in The Republic of Trinidad and
Tobago. CF Industries routinely posts investor announcements and
additional information on the company’s website at www.cfindustries.com
and encourages those interested in the company to check there frequently.
Note Regarding Non-GAAP Financial Measures
The company reports its financial results in accordance with U.S.
generally accepted accounting principles (GAAP). Management believes
that EBITDA, a non-GAAP financial measure, provides additional
meaningful information regarding the company's performance and financial
strength. Non-GAAP financial measures should be viewed in addition to,
and not as an alternative for, the company's reported results prepared
in accordance with GAAP. In addition, because not all companies use
identical calculations, EBITDA included in this release may not be
comparable to similarly titled measures of other companies.
Reconciliations of EBITDA to GAAP are provided in the tables
accompanying this release under “CF Industries Holdings, Inc.-Selected
Financial Information-Non-GAAP Disclosure Items.”
Safe Harbor Statement
All statements in this communication by CF Industries Holdings, Inc.
(together with its subsidiaries, the “Company”), other than those
relating to historical facts, are forward-looking statements.
Forward-looking statements can generally be identified by their use of
terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “plan,” “predict” or “project” and similar terms and
phrases, including references to assumptions. Forward-looking statements
are not guarantees of future performance and are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
Company’s control, which could cause actual results to differ materially
from such statements. These statements may include, but are not limited
to, statements about the benefits, expected timing of closing and other
aspects of the proposed acquisition (the “OCI Transaction”) by the
Company from OCI N.V. ("OCI") of OCI’s European, North American and
global distribution businesses and certain other assets (the “Business”)
and the proposed strategic venture (the “CHS Strategic Venture”) with
CHS Inc. (“CHS”); statements about future strategic plans; and
statements about future financial and operating results. Important
factors that could cause actual results to differ materially from those
in the forward-looking statements include, among others, the volatility
of natural gas prices in North America and Europe; the cyclical nature
of the Company’s business and the agricultural sector; the global
commodity nature of the Company’s fertilizer products, the impact of
global supply and demand on the Company’s selling prices, and the
intense global competition from other fertilizer producers; conditions
in the U.S. and European agricultural industry; difficulties in securing
the supply and delivery of raw materials, increases in their costs or
delays or interruptions in their delivery; reliance on third party
providers of transportation services and equipment; the significant
risks and hazards involved in producing and handling the Company’s
products against which the Company not be fully insured; risks
associated with cyber security; weather conditions; the Company’s
ability to complete its production capacity expansion projects on
schedule as planned and on budget or at all; risks associated with other
expansions of the Company’s business, including unanticipated adverse
consequences and the significant resources that could be required; an
inability to achieve, or a delay in achieving, the expected benefits of
the GrowHow transaction as contemplated; difficulties associated with
the integration of GrowHow; unanticipated costs or liabilities
associated with the GrowHow transaction; and the risk that disruptions
from the GrowHow transaction as contemplated will harm relationships
with customers, employees and suppliers; potential liabilities and
expenditures related to environmental and health and safety laws and
regulations; the Company’s potential inability to obtain or maintain
required permits and governmental approvals or to meet financial
assurance requirements from governmental authorities; future regulatory
restrictions and requirements related to greenhouse gas emissions; the
seasonality of the fertilizer business; the impact of changing market
conditions on the Company’s forward sales programs; risks involving
derivatives and the effectiveness of the Company’s risk measurement and
hedging activities; the Company’s reliance on a limited number of key
facilities; risks associated with joint ventures; acts of terrorism and
regulations to combat terrorism; risks associated with international
operations; losses on the Company’s investments in securities;
deterioration of global market and economic conditions; and the
Company’s ability to manage its indebtedness. Other important factors,
relating to the OCI Transaction, that could cause actual results to
differ materially from those in the forward-looking statements include,
among others: risks and uncertainties relating to the ability to obtain
the requisite approvals of stockholders of the Company and OCI with
respect to the OCI Transaction; the risk that the Company, OCI and the
new holding company (“New CF”) for the OCI Transaction are unable to
obtain governmental and regulatory approvals required for the OCI
Transaction, or that required governmental and regulatory approvals
delay the OCI Transaction or result in the imposition of conditions that
could reduce the anticipated benefits from the OCI Transaction or cause
the parties to abandon the OCI Transaction; the risk that a condition to
closing of the OCI Transaction may not be satisfied; the length of time
necessary to consummate the OCI Transaction; the risk that the
businesses of the Company and the Business will not be integrated
successfully; the risk that the cost savings and any other synergies
from the OCI Transaction may not be fully realized or may take longer to
realize than expected; the risk that access to financing, including for
refinancing of indebtedness of the Business or the Company, may not be
available on a timely basis and on reasonable terms; the risk that the
Business is unable to complete its current production capacity
development and improvement projects on schedule as planned and on
budget or at all; the risk that the OCI Transaction or the prospect of
the OCI Transaction disrupts or makes it more difficult to maintain
existing relationships or impedes establishment of new relationships
with customers, employees or suppliers; diversion of management time on
transaction-related issues; the risk that New CF, the Company and the
Business are unable to retain and hire key personnel; the effect of
future regulatory or legislative actions on New CF, the Company and the
Business; the risk that the OCI Transaction is not accorded the tax and
accounting treatment anticipated by the Company; unanticipated costs or
liabilities associated with the OCI Transaction-related financing; and
the risk that the credit ratings of New CF and the Company, including
such ratings taking into account the OCI Transaction and related
financing, may differ from the Company’s expectations. Other important
factors, relating to the CHS Strategic Venture, that could cause actual
results to differ materially from those in the forward-looking
statements include, among others: risks and uncertainties arising from
the possibility that the consummation of the CHS Strategic Venture as
contemplated may be delayed or may not occur; difficulties associated
with the operation or management of the CHS Strategic Venture; risks and
uncertainties relating to the market prices of the fertilizer products
that are the subject of the supply agreement over the life of the supply
agreement and risks that disruptions from the CHS Strategic Venture as
contemplated will harm the Company’s other business relationships. More
detailed information about factors that may affect the Company’s
performance and could cause actual results to differ materially from
those in any forward-looking statements may be found in CF Industries
Holdings, Inc.’s filings with the Securities and Exchange Commission,
including CF Industries Holdings, Inc.’s most recent periodic reports
filed on Form 10-K and Form 10-Q, which are available in the Investor
Relations section of the Company’s web site. Forward-looking statements
are given only as of the date of this communication and the Company
disclaims any obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law.
No Offer or Solicitation
This communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of any vote or approval in any jurisdiction pursuant to or
in connection with the proposed transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. No offer of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended, and otherwise
in accordance with applicable law.
Additional Information
New CF will file with the SEC a registration statement on Form S-4 that
will include the proxy statement of CF Industries and the shareholders
circular of OCI that also constitute prospectuses of New CF. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS,
THE SHAREHOLDERS CIRCULAR/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED
OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
will be able to obtain free copies of the proxy statement/prospectus,
the shareholders circular and other documents filed with the SEC by New
CF and CF Industries through the website maintained by the SEC at www.sec.gov.
In addition, investors and security holders will be able to obtain free
copies of the proxy statement/prospectus, the shareholders circular and
other documents filed by CF Industries and New CF with the SEC by
contacting CF Industries Investor Relations at: CF Industries Holdings,
Inc., c/o Corporate Communications, 4 Parkway North, Suite 400,
Deerfield, Illinois, 60015 or by calling (847) 405-2542.
Participants in the Solicitation
CF Industries and its directors and executive officers and OCI and its
executive directors and non-executive directors may be deemed to be
participants in the solicitation of proxies from the stockholders of CF
Industries in connection with the proposed transaction. Information
regarding the persons who may, under the rules of the SEC, be deemed
participants in the solicitation of the stockholders of CF Industries in
connection with the proposed transaction, including a description of
their direct or indirect interests, by security holdings or otherwise,
will be set forth in the proxy statement/prospectus when it is filed
with the SEC. Information regarding the directors and executive officers
of CF Industries is contained in CF Industries’ proxy statement for its
2015 annual meeting of stockholders, filed with the SEC on April 2,
2015, and CF Industries’ Current Report on Form 8-K filed with the SEC
on June 25, 2015. Information about the executive directors and
non-executive directors of OCI is contained in OCI’s annual report for
the year ended December 31, 2014, available on OCI’s web site at www.oci.nl.
|
|
|
|
|
CF INDUSTRIES HOLDINGS, INC.
|
|
SELECTED FINANCIAL INFORMATION
|
|
RESULTS OF OPERATIONS
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except per share amounts)
|
|
Net sales
|
|
|
$
|
927.4
|
|
|
$
|
921.4
|
|
|
$
|
3,192.5
|
|
|
$
|
3,526.7
|
|
|
Cost of sales
|
|
|
762.4
|
|
|
620.3
|
|
|
1,925.8
|
|
|
2,192.5
|
|
|
Gross margin
|
|
|
165.0
|
|
|
301.1
|
|
|
1,266.7
|
|
|
1,334.2
|
|
|
Selling, general and administrative expenses
|
|
|
41.6
|
|
|
38.2
|
|
|
119.6
|
|
|
119.4
|
|
|
Transaction costs
|
|
|
37.4
|
|
|
—
|
|
|
37.4
|
|
|
—
|
|
|
Other operating—net
|
|
|
33.1
|
|
|
25.7
|
|
|
73.7
|
|
|
41.5
|
|
|
Total other operating costs and expenses
|
|
|
112.1
|
|
|
63.9
|
|
|
230.7
|
|
|
160.9
|
|
|
Gain on sale of phosphate business
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
747.1
|
|
|
Equity in earnings of operating affiliates
|
|
|
5.6
|
|
|
9.4
|
|
|
20.0
|
|
|
27.3
|
|
|
Operating earnings
|
|
|
58.5
|
|
|
246.6
|
|
|
1,056.0
|
|
|
1,947.7
|
|
|
Interest expense
|
|
|
30.3
|
|
|
46.4
|
|
|
93.2
|
|
|
137.1
|
|
|
Interest income
|
|
|
(0.6
|
)
|
|
(0.2
|
)
|
|
(1.2
|
)
|
|
(0.7
|
)
|
|
Other non-operating—net
|
|
|
4.2
|
|
|
(0.1
|
)
|
|
4.7
|
|
|
0.5
|
|
Earnings before income taxes and equity in earnings of non-operating
affiliates
|
|
|
24.6
|
|
|
200.5
|
|
|
959.3
|
|
|
1,810.8
|
|
|
Income tax provision
|
|
|
20.1
|
|
|
70.5
|
|
|
333.5
|
|
|
640.9
|
|
|
Equity in earnings of non-operating affiliates—net of taxes
|
|
|
92.9
|
|
|
10.6
|
|
|
72.3
|
|
|
15.8
|
|
|
Net earnings
|
|
|
97.4
|
|
|
140.6
|
|
|
698.1
|
|
|
1,185.7
|
|
|
Less: Net earnings attributable to noncontrolling interest
|
|
|
6.5
|
|
|
9.7
|
|
|
24.7
|
|
|
33.7
|
|
|
Net earnings attributable to common stockholders
|
|
|
$
|
90.9
|
|
|
$
|
130.9
|
|
|
$
|
673.4
|
|
|
$
|
1,152.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share attributable to common stockholders(1):
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.39
|
|
|
$
|
0.53
|
|
|
$
|
2.85
|
|
|
$
|
4.45
|
|
|
Diluted
|
|
|
$
|
0.39
|
|
|
$
|
0.52
|
|
|
$
|
2.84
|
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding(1):
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
233.1
|
|
|
248.4
|
|
|
236.0
|
|
|
259.0
|
|
|
Diluted
|
|
|
234.0
|
|
|
249.3
|
|
|
236.9
|
|
|
259.9
|
|
_______________________________________________________________________________
|
(1)
|
|
On June 17, 2015, CF Industries common stock split 5 for 1. The
share and per share amounts for all prior periods have been restated
to reflect the stock split.
|
|
|
|
|
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
|
|
|
(in millions)
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
943.2
|
|
|
$
|
1,996.6
|
|
Restricted cash
|
|
|
25.9
|
|
|
86.1
|
|
Accounts receivable—net
|
|
|
251.9
|
|
|
191.5
|
|
Inventories
|
|
|
329.8
|
|
|
202.9
|
|
Deferred income taxes
|
|
|
67.8
|
|
|
84.0
|
|
Prepaid income taxes
|
|
|
111.0
|
|
|
34.8
|
|
Other current assets
|
|
|
34.6
|
|
|
18.6
|
|
Total current assets
|
|
|
1,764.2
|
|
|
2,614.5
|
|
Property, plant and equipment—net
|
|
|
7,939.6
|
|
|
5,525.8
|
|
Investments in and advances to affiliates
|
|
|
359.8
|
|
|
861.5
|
|
Goodwill
|
|
|
2,407.2
|
|
|
2,092.8
|
|
Other assets
|
|
|
399.0
|
|
|
243.6
|
|
Total assets
|
|
|
$
|
12,869.8
|
|
|
$
|
11,338.2
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
$
|
825.4
|
|
|
$
|
589.9
|
|
Income taxes payable
|
|
|
4.2
|
|
|
16.0
|
|
Customer advances
|
|
|
381.9
|
|
|
325.4
|
|
Other current liabilities
|
|
|
62.1
|
|
|
48.4
|
|
Total current liabilities
|
|
|
1,273.6
|
|
|
979.7
|
|
Long-term debt
|
|
|
5,592.6
|
|
|
4,592.5
|
|
Deferred income taxes
|
|
|
909.5
|
|
|
818.6
|
|
Other liabilities
|
|
|
626.6
|
|
|
374.9
|
|
Equity:
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
4,112.0
|
|
|
4,209.7
|
|
Noncontrolling interest
|
|
|
355.5
|
|
|
362.8
|
|
Total equity
|
|
|
4,467.5
|
|
|
4,572.5
|
|
Total liabilities and equity
|
|
|
$
|
12,869.8
|
|
|
$
|
11,338.2
|
|
|
|
|
|
CF INDUSTRIES HOLDINGS, INC.
|
|
SELECTED FINANCIAL INFORMATION
|
|
STATEMENTS OF CASH FLOWS
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions)
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
$
|
97.4
|
|
|
$
|
140.6
|
|
|
$
|
698.1
|
|
|
$
|
1,185.7
|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
128.7
|
|
|
95.4
|
|
|
348.0
|
|
|
298.5
|
|
|
Deferred income taxes
|
|
|
(0.6
|
)
|
|
14.5
|
|
|
(6.3
|
)
|
|
15.6
|
|
|
Stock-based compensation expense
|
|
|
5.2
|
|
|
3.6
|
|
|
13.3
|
|
|
13.6
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
(0.6
|
)
|
|
(3.5
|
)
|
|
(2.4
|
)
|
|
(8.7
|
)
|
|
Unrealized loss on derivatives
|
|
|
113.7
|
|
|
6.2
|
|
|
70.5
|
|
|
67.6
|
|
|
Gain on re-measurement of GrowHow investment
|
|
|
(94.4
|
)
|
|
—
|
|
|
(94.4
|
)
|
|
—
|
|
|
Loss on sale of equity method investments
|
|
|
—
|
|
|
—
|
|
|
42.8
|
|
|
—
|
|
|
Gain on sale of phosphate business
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(747.1
|
)
|
|
Loss on disposal of property, plant and equipment
|
|
|
4.5
|
|
|
1.5
|
|
|
18.1
|
|
|
2.5
|
|
|
Undistributed earnings of affiliates—net of taxes
|
|
|
14.5
|
|
|
(24.1
|
)
|
|
(1.7
|
)
|
|
(39.2
|
)
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable—net
|
|
|
18.7
|
|
|
109.2
|
|
|
15.0
|
|
|
97.1
|
|
|
Inventories
|
|
|
(63.8
|
)
|
|
(50.4
|
)
|
|
(71.8
|
)
|
|
13.6
|
|
|
Accrued and prepaid income taxes
|
|
|
(99.0
|
)
|
|
(92.6
|
)
|
|
(68.6
|
)
|
|
(70.0
|
)
|
|
Accounts payable and accrued expenses
|
|
|
64.8
|
|
|
23.2
|
|
|
31.6
|
|
|
(7.2
|
)
|
|
Customer advances
|
|
|
364.6
|
|
|
397.4
|
|
|
56.5
|
|
|
340.2
|
|
|
Other—net
|
|
|
19.0
|
|
|
0.6
|
|
|
22.8
|
|
|
14.7
|
|
|
Net cash provided by operating activities
|
|
|
572.7
|
|
|
621.6
|
|
|
1,071.5
|
|
|
1,176.9
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(759.4
|
)
|
|
(587.7
|
)
|
|
(1,791.3
|
)
|
|
(1,272.7
|
)
|
|
Proceeds from sale of property, plant and equipment
|
|
|
1.1
|
|
|
4.3
|
|
|
9.1
|
|
|
10.2
|
|
|
Proceeds from sale of equity method investment
|
|
|
—
|
|
|
—
|
|
|
12.8
|
|
|
—
|
|
|
Proceeds from sale of phosphate business
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,353.6
|
|
|
Purchase of GrowHow, net of cash acquired
|
|
|
(553.9
|
)
|
|
—
|
|
|
(553.9
|
)
|
|
—
|
|
|
Sales and maturities of short-term and auction rate securities
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
5.0
|
|
|
Deposits to restricted cash funds
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(505.0
|
)
|
|
Withdrawals from restricted cash funds
|
|
|
28.1
|
|
|
499.4
|
|
|
60.2
|
|
|
513.4
|
|
|
Other—net
|
|
|
(13.4
|
)
|
|
0.6
|
|
|
(35.8
|
)
|
|
17.4
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(1,297.5
|
)
|
|
(78.4
|
)
|
|
(2,298.9
|
)
|
|
121.9
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term borrowings
|
|
|
1,000.0
|
|
|
—
|
|
|
1,000.0
|
|
|
1,494.2
|
|
|
Proceeds from short-term borrowings
|
|
|
367.0
|
|
|
—
|
|
|
367.0
|
|
|
—
|
|
|
Payments of short-term borrowings
|
|
|
(367.0
|
)
|
|
—
|
|
|
(367.0
|
)
|
|
—
|
|
|
Financing fees
|
|
|
(26.3
|
)
|
|
—
|
|
|
(28.3
|
)
|
|
(16.0
|
)
|
|
Purchases of treasury stock
|
|
|
(33.2
|
)
|
|
—
|
|
|
(556.3
|
)
|
|
(1,591.2
|
)
|
|
Dividends paid on common stock
|
|
|
(69.9
|
)
|
|
(74.2
|
)
|
|
(212.4
|
)
|
|
(181.4
|
)
|
|
Distributions to noncontrolling interest
|
|
|
(10.9
|
)
|
|
(14.3
|
)
|
|
(32.0
|
)
|
|
(37.8
|
)
|
|
Issuances of common stock under employee stock plans
|
|
|
0.9
|
|
|
2.3
|
|
|
8.3
|
|
|
12.0
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
0.6
|
|
|
3.5
|
|
|
2.4
|
|
|
8.7
|
|
|
Other—net
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43.0
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
861.2
|
|
|
(82.7
|
)
|
|
181.7
|
|
|
(354.5
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(3.1
|
)
|
|
(3.4
|
)
|
|
(7.7
|
)
|
|
(3.9
|
)
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
133.3
|
|
|
457.1
|
|
|
(1,053.4
|
)
|
|
940.4
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
809.9
|
|
|
2,194.1
|
|
|
1,996.6
|
|
|
1,710.8
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
943.2
|
|
|
$
|
2,651.2
|
|
|
$
|
943.2
|
|
|
$
|
2,651.2
|
|
|
|
|
|
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
SEGMENT DATA
|
|
Phosphate Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
168.4
|
|
|
Cost of sales
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158.3
|
|
|
Gross margin
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume by product tons (000s)(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price per product ton
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin per product ton
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
_______________________________________________________________________________
|
(1)
|
|
Represents DAP and MAP product sales.
|
|
|
|
|
|
|
|
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL
INFORMATION
NON-GAAP DISCLOSURE ITEMS
Reconciliation of net earnings to EBITDA:
EBITDA is defined as net earnings attributable to common stockholders
plus interest expense (income)-net, income taxes, and depreciation and
amortization. Other adjustments include the elimination of loan fee
amortization that is included in both interest and amortization, and the
portion of depreciation that is included in noncontrolling interest. The
company has presented EBITDA because management uses the measure to
track performance and believes that it is frequently used by securities
analysts, investors and other interested parties in the evaluation of
companies in the fertilizer industry.
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
(in millions)
|
|
Net earnings attributable to common stockholders
|
|
|
$
|
90.9
|
|
|
$
|
130.9
|
|
|
$
|
673.4
|
|
|
$
|
1,152.0
|
|
|
Interest expense (income)—net
|
|
|
29.7
|
|
|
46.2
|
|
|
92.0
|
|
|
136.4
|
|
|
Income taxes(1)
|
|
|
20.1
|
|
|
70.5
|
|
|
322.6
|
|
|
640.9
|
|
|
Depreciation and amortization
|
|
|
128.7
|
|
|
95.4
|
|
|
348.0
|
|
|
298.5
|
|
|
Less: other adjustments
|
|
|
(13.1
|
)
|
|
(4.7
|
)
|
|
(24.1
|
)
|
|
(16.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
$
|
256.3
|
|
|
$
|
338.3
|
|
|
$
|
1,411.9
|
|
|
$
|
2,211.0
|
|
_______________________________________________________________________________
|
(1)
|
|
Includes the tax benefit on loss on sale of non-operating equity
method investment for $10.9 million for the nine months ended
September 30, 2015.
|
|
|
|
|
Notes:
Net earnings and EBITDA for the three months ended September 30, 2015
include a $125.9 million unrealized net mark-to-market loss on natural
gas derivatives, $0.2 million loss on foreign currency derivatives,
$94.4 million gain on the re-measurement of GrowHow investment,
$37.4 million of transaction costs, and $14.9 million of expansion
project expenses.
Net earnings and EBITDA for the nine months ended September 30, 2015
include a $78.8 million unrealized net mark-to-market loss on natural
gas derivatives, $18.9 million loss on foreign currency derivatives,
$42.8 million loss on sale of equity method investments, $94.4 million
gain on the re-measurement of GrowHow investment, $37.4 million of
transaction costs, and $36.6 million of expansion project expenses.
Net earnings and EBITDA for the three months ended September 30, 2014
include a $12.1 million unrealized net mark-to-market gain on natural
gas derivatives, $27.2 million loss on foreign currency derivatives and
$6.8 million of expansion project expenses.
Net earnings for the nine months ended September 30, 2014 includes a
$461.0 million net of tax gain on the sale of the phosphate business.
EBITDA for the nine months ended September 30, 2014 includes a
$747.1 million pre-tax gain on sale of the phosphate business.
Net earnings and EBITDA for the nine months ended September 30, 2014
include a $39.1 million unrealized net mark-to-market loss on natural
gas derivatives, $27.4 million loss on foreign currency derivatives and
$21.9 million of expansion project expenses.
CF INDUSTRIES HOLDINGS, INC.
NATURAL GAS HEDGES
Natural Gas Hedges
During the third quarter of 2015, the company did not enter into
additional hedges for the balance of 2015, but added to existing hedges
for 2016 and 2017 in addition to initiating hedges for 2018 as detailed
in the table below.
|
Gas Hedging Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
(Oct. - Dec.)
|
|
2016
|
|
2017
|
|
2018
|
|
Total for
All Periods Shown
|
|
NYMEX Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMBtu's Hedged ('000s)
|
|
|
35,660
|
|
|
248,000
|
|
|
148,200
|
|
|
32,400
|
|
|
464,260
|
|
|
|
Approximate Percent Hedged of Production Requirements(1)
|
|
|
53
|
%
|
|
80
|
%
|
|
45
|
%
|
|
10
|
%
|
|
45
|
%
|
|
|
Weighted Average Price
|
|
|
$
|
2.96
|
|
|
$
|
3.02
|
|
|
$
|
3.28
|
|
|
$
|
3.21
|
|
|
$
|
3.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collars(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMBtu's Hedged ('000s)
|
|
|
13,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,400
|
|
|
|
Approximate Percent Hedged of Production Requirements(1)
|
|
|
20
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|
|
Weighted Average Price(3)
|
|
|
$
|
2.38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
2.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average (NYMEX Swaps and Collars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MMBtu's Hedged ('000s)
|
|
|
49,060
|
|
|
248,000
|
|
|
148,200
|
|
|
32,400
|
|
|
477,660
|
|
|
|
Approximate Percent Hedged of Production Requirements(1)
|
|
|
74
|
%
|
|
80
|
%
|
|
45
|
%
|
|
10
|
%
|
|
46
|
%
|
|
|
Weighted Average Price
|
|
|
$
|
2.80
|
|
|
$
|
3.02
|
|
|
$
|
3.28
|
|
|
$
|
3.21
|
|
|
$
|
3.09
|
|
|
(1)
|
|
Approximate percentage hedged of production requirements estimated
as of October 29, 2015 (subject to change) does not include natural
hedges associated with the company's product supply agreements.
|
|
(2)
|
|
Collars with a floor price of $2.30/MMBtu and a ceiling price of
$3.20/MMBtu.
|
|
(3)
|
|
Natural gas collar weighted average price is based on the settlement
price of $2.563/MMBtu and $2.033/MMBtu for October and November
2015, respectively, and a NYMEX future price of $2.257/MMBtu for
December 2015, as of October 29, 2015.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006966/en/
Copyright Business Wire 2015
