Item 1. FINANCIAL STATEMENTS.

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Item 1. FINANCIAL STATEMENTS.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended March 31,
		2024		2023
		(in millions, except per share amounts)
Net sales		$	1,470	$	2,012
Cost of sales		1,061		1,149
Gross margin		409		863
Selling, general and administrative expenses		88		74




U.K. operations restructuring		—		2
Acquisition and integration costs		3		13
Other operating—net		17		(35)
Total other operating costs and expenses		108		54

Equity in earnings of operating affiliate		2		17
Operating earnings		303		826
Interest expense		37		40
Interest income		(30)		(30)

Other non-operating—net		(4)		(3)
Earnings before income taxes		300		819
Income tax provision		62		169

Net earnings		238		650
Less: Net earnings attributable to noncontrolling interest		44		90
Net earnings attributable to common stockholders		$	194	$	560
Net earnings per share attributable to common stockholders:
Basic		$	1.03	$	2.86
Diluted		$	1.03	$	2.85
Weighted-average common shares outstanding:
Basic		187.6		196.2
Diluted		188.1		196.9
Dividends declared per common share		$	0.50	$	0.40

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended March 31,
		2024		2023
		(in millions)
Net earnings		$	238	$	650
Other comprehensive (loss) income:
Foreign currency translation adjustment—net of taxes		(16)		7


Defined benefit plans—net of taxes		—		(1)
		(16)		6
Comprehensive income		222		656
Less: Comprehensive income attributable to noncontrolling interest		44		90
Comprehensive income attributable to common stockholders		$	178	$	566

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
	March 31, 2024		December 31, 2023
	(in millions, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	1,773	$	2,032

Accounts receivable—net	535		505
Inventories	271		299

Prepaid income taxes	102		167
Other current assets	38		47
Total current assets	2,719		3,050
Property, plant and equipment—net	6,982		7,141
Investment in affiliate	29		26
Goodwill	2,495		2,495
Intangible assets—net	532		538
Operating lease right-of-use assets	240		259
Other assets	864		867
Total assets	$	13,861	$	14,376
Liabilities and Equity
Current liabilities:

Accounts payable and accrued expenses	$	501	$	520
Income taxes payable	—		12
Customer advances	104		130
Current operating lease liabilities	77		96

Other current liabilities	8		42
Total current liabilities	690		800
Long-term debt	2,969		2,968
Deferred income taxes	985		999
Operating lease liabilities	171		168
Supply contract liability	747		754
Other liabilities	303		314
Equity:
Stockholders’ equity:
Preferred stock—$0.01 par value, 50,000,000 shares authorized	—		—
Common stock—$0.01 par value, 500,000,000 shares authorized, 2024—188,905,959 shares issued and 2023—188,188,401 shares issued	2		2
Paid-in capital	1,403		1,389
Retained earnings	4,634		4,535
Treasury stock—at cost, 2024—4,561,599 shares and 2023—0 shares	(374)		—
Accumulated other comprehensive loss	(225)		(209)
Total stockholders’ equity	5,440		5,717
Noncontrolling interest	2,556		2,656
Total equity	7,996		8,373
Total liabilities and equity	$	13,861	$	14,376

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Common Stockholders
	$0.01 Par Value Common Stock		Treasury Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
	(in millions, except per share amounts)




















Balance as of December 31, 2023	$	2	$	—	$	1,389	$	4,535	$	(209)	$	5,717	$	2,656	$	8,373
Net earnings	—		—		—		194		—		194		44		238
Other comprehensive loss	—		—		—		—		(16)		(16)		—		(16)
Purchases of treasury stock	—		(351)		—		—		—		(351)		—		(351)

Acquisition of treasury stock under employee stock plans	—		(23)		—		—		—		(23)		—		(23)
Issuance of $0.01 par value common stock under employee stock plans	—		—		1		—		—		1		—		1

Stock-based compensation expense	—		—		13		—		—		13		—		13

Dividends and dividend equivalents ($0.50 per share)	—		—		—		(95)		—		(95)		—		(95)



Distribution declared to noncontrolling interest	—		—		—		—		—		—		(144)		(144)

Balance as of March 31, 2024	$	2	$	(374)	$	1,403	$	4,634	$	(225)	$	5,440	$	2,556	$	7,996

























Balance as of December 31, 2022	$	2	$	—	$	1,412	$	3,867	$	(230)	$	5,051	$	2,802	$	7,853



Net earnings	—		—		—		560		—		560		90		650
Other comprehensive income	—		—		—		—		6		6		—		6
Purchases of treasury stock	—		(75)		—		—		—		(75)		—		(75)

Acquisition of treasury stock under employee stock plans	—		(22)		—		—		—		(22)		—		(22)


Stock-based compensation expense	—		—		12		—		—		12		—		12

Dividends and dividend equivalents ($0.40 per share)	—		—		—		(79)		—		(79)		—		(79)



Distribution declared to noncontrolling interest	—		—		—		—		—		—		(255)		(255)

Balance as of March 31, 2023	$	2	$	(97)	$	1,424	$	4,348	$	(224)	$	5,453	$	2,637	$	8,090

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended March 31,
	2024		2023
	(in millions)
Operating Activities:
Net earnings	$	238	$	650
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	253		206
Deferred income taxes	(11)		(26)
Stock-based compensation expense	13		12


Unrealized net gain on natural gas derivatives	(33)		(72)





Gain on sale of emission credits	—		(35)
Loss on disposal of property, plant and equipment	5		—
Undistributed earnings of affiliate—net of taxes	(2)		(7)
Changes in assets and liabilities:
Accounts receivable—net	(50)		101
Inventories	20		39
Accrued and prepaid income taxes	61		153
Accounts payable and accrued expenses	(23)		(135)
Customer advances	(25)		55
Other—net	(1)		6
Net cash provided by operating activities	445		947
Investing Activities:
Additions to property, plant and equipment	(98)		(69)







Purchase of emission credits	(2)		—
Proceeds from sale of emission credits	—		35

Net cash used in investing activities	(100)		(34)
Financing Activities:





Dividends paid on common stock	(97)		(79)

Distributions to noncontrolling interest	(144)		(255)
Purchases of treasury stock	(339)		(54)
Proceeds from issuances of common stock under employee stock plans	1		—
Cash paid for shares withheld for taxes	(23)		(22)

Net cash used in financing activities	(602)		(410)
Effect of exchange rate changes on cash and cash equivalents	(2)		(1)
(Decrease) increase in cash and cash equivalents	(259)		502
Cash and cash equivalents at beginning of period	2,032		2,323
Cash and cash equivalents at end of period	$	1,773	$	2,825

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Background and Basis of Presentation

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. 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.

All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is to CF Industries Holdings, Inc. only and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc.

The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2023, in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments, that are necessary for the fair representation of the information for the periods presented. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period.

The accompanying unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related disclosures included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 22, 2024. The preparation of the unaudited interim consolidated financial statements requires us to make use of estimates and assumptions that may significantly affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited interim consolidated financial statements and the reported revenues and expenses for the periods presented. Such estimates and assumptions are used for, but are not limited to, net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, plant closure and asset retirement obligations, the cost of emission credits required to meet environmental regulations, the cost of customer incentives, the fair values utilized in the allocation of purchase price in an acquisition, useful lives of property and identifiable intangible assets, the evaluation of potential impairments of property, investments, identifiable intangible assets and goodwill, income tax reserves and the assessment of the realizability of deferred tax assets, the determination of the funded status and annual expense of defined benefit pension and other postretirement plans and the valuation of stock-based compensation awards granted to employees.

2. New Accounting Standards

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU is intended to improve reportable segment disclosures through enhanced disclosures about significant segment expenses. The guidance in this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact that our adoption of this ASU will have on the disclosures in our consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU adds new guidance that further enhances income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact that our adoption of this ASU will have on the disclosures in our consolidated financial statements.

CF INDUSTRIES HOLDINGS, INC.

3. Revenue Recognition

We track our revenue by product and by geography. See Note 16—Segment Disclosures for the revenue of each of our reportable segments, which are Ammonia, Granular Urea, UAN, AN and Other. The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three months ended March 31, 2024 and 2023:


	Ammonia		Granular Urea		UAN		AN		Other		Total
	(in millions)










Three months ended March 31, 2024
North America	$	334	$	403	$	373	$	48	$	102	$	1,260
Europe and other	68		4		52		66		20		210

Total revenue	$	402	$	407	$	425	$	114	$	122	$	1,470
Three months ended March 31, 2023
North America	$	330	$	575	$	519	$	74	$	126	$	1,624
Europe and other	94		36		148		85		25		388
Total revenue	$	424	$	611	$	667	$	159	$	151	$	2,012

As of March 31, 2024 and December 31, 2023, we had $104 million and $130 million, respectively, in customer advances on our consolidated balance sheets. The revenue recognized during the three months ended March 31, 2024 and 2023 that was included in our customer advances at the beginning of each respective period amounted to approximately $110 million and $160 million, respectively.

We offer cash incentives to certain customers generally based on the volume of their purchases over the fertilizer year ending June 30. Our cash incentives do not provide an option to the customer for additional product. The balances of customer incentives accrued as of March 31, 2024 and December 31, 2023 were not material.

We have certain customer contracts with performance obligations where if the customer does not take the required amount of product specified in the contract, then the customer is required to make a payment to us, the amount of which payment may vary based upon the terms and conditions of the applicable contract. As of March 31, 2024, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts were approximately $2.1 billion. We expect to recognize approximately 23% of these performance obligations as revenue in the remainder of 2024, approximately 19% as revenue during 2025-2027, approximately 16% as revenue during 2028-2030, and the remainder as revenue thereafter. Subject to the terms and conditions of the applicable contracts, if these customers do not satisfy their purchase obligations under such contracts, the minimum amount that they would be required to pay to us under such contracts, in the aggregate, was approximately $1.3 billion as of March 31, 2024. Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially filled at December 31, 2023 will be satisfied in 2024.

CF INDUSTRIES HOLDINGS, INC.

4. Net Earnings Per Share

Net earnings per share were computed as follows:


	Three months ended March 31,
		2024		2023
		(in millions, except per share amounts)
Net earnings attributable to common stockholders		$	194	$	560
Basic earnings per common share:
Weighted-average common shares outstanding		187.6		196.2
Net earnings attributable to common stockholders		$	1.03	$	2.86
Diluted earnings per common share:
Weighted-average common shares outstanding		187.6		196.2
Dilutive common shares—stock-based awards		0.5		0.7
Diluted weighted-average common shares outstanding		188.1		196.9
Net earnings attributable to common stockholders		$	1.03	$	2.85

Diluted earnings per common share is calculated using weighted-average common shares outstanding, including the dilutive effect of stock-based awards as determined under the treasury stock method. In the computation of diluted earnings per common share, potentially dilutive stock-based awards are excluded if the effect of their inclusion is anti-dilutive. Shares for anti-dilutive stock-based awards not included in the computation of diluted earnings per common share were zero in both the three months ended March 31, 2024 and 2023.

5. Acquisition of Waggaman Ammonia Production Facility

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana, from Dyno Nobel Louisiana Ammonia, LLC (DNLA), a U.S. subsidiary of Australia-based Incitec Pivot Limited (IPL), pursuant to an asset purchase agreement with DNLA and IPL. The facility has a nameplate production capacity of 880,000 tons of ammonia annually. Our acquisition of the Waggaman facility is intended to expand our ammonia manufacturing and distribution capacity, including our ability to enable low-carbon ammonia production.

In connection with the acquisition, we entered into a long-term ammonia offtake agreement providing for us to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc. subsidiary (the Supply Contract). Under the terms of the asset purchase agreement, $425 million of the purchase price of $1.675 billion, subject to adjustment, was allocated by the parties to the ammonia offtake agreement. We funded the balance of the purchase price with $1.223 billion of cash on hand.

The consideration transferred reflects an estimated net working capital adjustment and other adjustments to the purchase price, which is subject to further adjustment pursuant to the terms of the asset purchase agreement. We expect any further purchase price adjustments required under the asset purchase agreement will not be material and will be completed in the second quarter of 2024.

In the three months ended March 31, 2024 and 2023, we incurred $3 million of integration costs and $13 million of acquisition-related costs, respectively, related to the Waggaman acquisition, which are included in acquisition and integration costs in our consolidated statements of operations.

6. Inventories

Inventories consist of the following:


	March 31, 2024		December 31, 2023
	(in millions)
Finished goods	$	226	$	256
Raw materials, spare parts and supplies	45		43
Total inventories	$	271	$	299

CF INDUSTRIES HOLDINGS, INC.

7. Property, Plant and Equipment—Net

Property, plant and equipment—net consists of the following:


	March 31, 2024		December 31, 2023
	(in millions)
Land	$	114	$	114
Machinery and equipment	13,679		13,716
Buildings and improvements	1,015		1,020
Construction in progress	412		394
Property, plant and equipment(1)	15,220		15,244
Less: Accumulated depreciation and amortization	8,238		8,103
Property, plant and equipment—net	$	6,982	$	7,141

(1)As of March 31, 2024 and December 31, 2023, we had property, plant and equipment that was accrued but unpaid of approximately $72 million and $68 million, respectively. As of March 31, 2023 and December 31, 2022, we had property, plant and equipment that was accrued but unpaid of approximately $45 million and $53 million, respectively.

Depreciation and amortization related to property, plant and equipment was $252 million and $204 million for the three months ended March 31, 2024 and 2023, respectively.

Plant turnarounds—Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facilities during a full plant shutdown are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized in property, plant and equipment when incurred.

Scheduled replacements and overhauls of plant machinery and equipment during a plant turnaround include the dismantling, repair or replacement and installation of various components including piping, valves, motors, turbines, pumps, compressors and heat exchangers and the replacement of catalysts when a full plant shutdown occurs. Scheduled inspections, including required safety inspections which entail the disassembly of various components such as steam boilers, pressure vessels and other equipment requiring safety certifications, are also conducted during full plant shutdowns. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized.

The following is a summary of capitalized plant turnaround costs:


	Three months ended March 31,
	2024		2023
	(in millions)
Net capitalized turnaround costs as of January 1	$	352	$	312
Additions	24		7

Depreciation	(52)		(31)

Effect of exchange rate changes and other	(1)		—
Net capitalized turnaround costs as of March 31	$	323	$	288

8. Equity Method Investment

We have a 50% ownership interest in Point Lisas Nitrogen Limited (PLNL), which operates an ammonia production facility in the Republic of Trinidad and Tobago. We include our share of the net earnings from this equity method investment as an element of earnings from operations because PLNL provides additional production to our operations and is integrated with our other supply chain and sales activities in the Ammonia segment.

As of March 31, 2024, the total carrying value of our equity method investment in PLNL was $29 million.

We have transactions in the normal course of business with PLNL reflecting our obligation to purchase 50% of the ammonia produced by PLNL at current market prices. Our ammonia purchases from PLNL totaled $30 million and $59 million for the three months ended March 31, 2024 and 2023, respectively.

CF INDUSTRIES HOLDINGS, INC.

9. Fair Value Measurements

Our cash and cash equivalents and other investments consist of the following:


	March 31, 2024
	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(in millions)
Cash	$	190	$	—	$	—	$	190
Cash equivalents:
U.S. and Canadian government obligations	1,277		—		—		1,277
Other debt securities	306		—		—		306
Total cash and cash equivalents	$	1,773	$	—	$	—	$	1,773

Nonqualified employee benefit trusts	16		1		—		17


	December 31, 2023
	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(in millions)
Cash	$	208	$	—	$	—	$	208
Cash equivalents:
U.S. and Canadian government obligations	1,488		—		—		1,488
Other debt securities	336		—		—		336
Total cash and cash equivalents	$	2,032	$	—	$	—	$	2,032

Nonqualified employee benefit trusts	16		1		—		17

Under our short-term investment policy, we may invest our cash balances, either directly or through mutual funds, in several types of investment-grade securities, including notes and bonds issued by governmental entities or corporations and also in bank deposits. Securities issued by governmental entities include those issued directly by the U.S. and Canadian federal governments; those issued by state, local or other governmental entities; and those guaranteed by entities affiliated with governmental entities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities included in our consolidated balance sheets as of March 31, 2024 and December 31, 2023 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:


	March 31, 2024
	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	1,583	$	1,583	$	—	$	—

Nonqualified employee benefit trusts	17		17		—		—
Derivative assets	1		—		1		—
Derivative liabilities	(2)		—		(2)		—

CF INDUSTRIES HOLDINGS, INC.


	December 31, 2023
	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	1,824	$	1,824	$	—	$	—

Nonqualified employee benefit trusts	17		17		—		—
Derivative assets	1		—		1		—
Derivative liabilities	(35)		—		(35)		—

Cash Equivalents

Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. As of March 31, 2024 and December 31, 2023, our cash equivalents consisted primarily of U.S. and Canadian government obligations and money market mutual funds that invest in U.S. government obligations and other investment-grade securities.

Nonqualified Employee Benefit Trusts

We maintain trusts associated with certain nonqualified supplemental pension plans. The fair values of the trust assets are based on daily quoted prices in an active market, which represent the net asset values of the shares held in the trusts, and are included on our consolidated balance sheets in other assets. Debt securities are accounted for as available-for-sale securities, and changes in fair value are reported in other comprehensive income. Changes in the fair value of available-for-sale equity securities in the trust assets are recognized through earnings.

Derivative Instruments

The derivative instruments that we use are primarily natural gas fixed price swaps, basis swaps and options traded in the over-the-counter markets with multi-national commercial banks, other major financial institutions or large energy companies. The natural gas derivative contracts represent anticipated natural gas needs for future periods, and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods. The natural gas derivative contracts settle using primarily a NYMEX futures price index. To determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward curves supplied by an industry-recognized independent third party. See Note 13—Derivative Financial Instruments for additional information.

Financial Instruments

The carrying amount and estimated fair value of our financial instruments are as follows:


	March 31, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Long-term debt	$	2,969	$	2,838	$	2,968	$	2,894

The fair value of our long-term debt was based on quoted prices for identical or similar liabilities in markets that are not active or valuation models in which all significant inputs and value drivers are observable and, as a result, they are classified as Level 2 inputs.

The carrying amounts of cash and cash equivalents, as well as any instruments included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair values because of their short-term maturities.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We also have assets and liabilities that may be measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment, when there is allocation of purchase price in an acquisition or when a new liability is being established that requires fair value measurement. These include long-lived assets, goodwill and other

CF INDUSTRIES HOLDINGS, INC.

intangible assets and investments in unconsolidated subsidiaries, such as equity method investments, which may be written down to fair value as a result of impairment. The fair value measurements related to assets and liabilities measured at fair value on a nonrecurring basis rely primarily on Company-specific inputs. Since certain of the Company’s assumptions would involve inputs that are not observable, these fair values would reside within Level 3 of the fair value hierarchy.

10. Income Taxes

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

Our effective tax rate for the three months ended March 31, 2024 of 20.7%, which is based on pre-tax income of $300 million, including $44 million of earnings attributable to the noncontrolling interest, would be 3.6 percentage points higher if based on pre-tax income exclusive of the $44 million of earnings attributable to the noncontrolling interest. Our effective tax rate for the three months ended March 31, 2023 of 20.6%, which is based on pre-tax income of $819 million, including $90 million of earnings attributable to the noncontrolling interest, would be 2.6 percentage points higher if based on pre-tax income exclusive of the $90 million of earnings attributable to the noncontrolling interest.

11. Financing Agreements

Revolving Credit Agreement

We have a senior unsecured revolving credit agreement (the Revolving Credit Agreement), which provides for a revolving credit facility of up to $750 million with a maturity of 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. Borrowings in U.S. dollars bear interest at a per annum rate equal to, at our option, an applicable adjusted term Secured Overnight Financing Rate or base rate plus, in either case, a specified margin. We are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees. The specified margin and the amount of the commitment fee depended on CF Holdings’ credit rating at the time.

As of March 31, 2024, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit under the Revolving Credit Agreement. There were no borrowings outstanding under the Revolving Credit Agreement as of March 31, 2024 or December 31, 2023, or during the three months ended March 31, 2024.

The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including a financial covenant. As of March 31, 2024, we were in compliance with all covenants 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 of letters of credit. As of March 31, 2024, approximately $302 million of letters of credit were outstanding under this agreement.

CF INDUSTRIES HOLDINGS, INC.

Senior Notes

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


	Effective Interest Rate		March 31, 2024						December 31, 2023
		Principal			Carrying Amount(1)			Principal			Carrying Amount(1)
			(in millions)
Public Senior Notes:



5.150% due March 2034	5.293%		750			742			750			741
4.950% due June 2043	5.040%		750			742			750			742
5.375% due March 2044	5.478%		750			741			750			741
Senior Secured Notes:

4.500% due December 2026(2)	4.783%		750			744			750			744
Total long-term debt			$	3,000		$	2,969		$	3,000		$	2,968

(1)Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $6 million and $7 million as of March 31, 2024 and December 31, 2023, respectively, and total deferred debt issuance costs were $25 million as of both March 31, 2024 and December 31, 2023.

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

Under the indentures (including the applicable supplemental indentures) governing the senior notes due 2034, 2043 and 2044 identified in the table above (the Public Senior Notes), each series of Public Senior Notes is guaranteed by CF Holdings. Under the terms of the indenture governing the 4.500% senior secured notes due December 2026 (the 2026 Notes) identified in the table above, the 2026 Notes are guaranteed by CF Holdings.

Interest on the Public Senior Notes and the 2026 Notes is payable semiannually, and the Public Senior Notes and the 2026 Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices.

12. Interest Expense

Details of interest expense are as follows:


	Three months ended March 31,
		2024		2023
		(in millions)
Interest on borrowings(1)		$	37	$	37
Fees on financing agreements(1)		2		2
Interest on tax liabilities		—		2
Interest capitalized		(2)		(1)
Total interest expense		$	37	$	40

(1)See Note 11—Financing Agreements for additional information.

CF INDUSTRIES HOLDINGS, INC.

13. Derivative Financial Instruments

We use derivative financial instruments to reduce our exposure to changes in prices for natural gas that will be purchased in the future. Natural gas is the largest and most volatile component of our manufacturing cost for nitrogen-based products. From time to time, we may also use derivative financial instruments to reduce our exposure to changes in foreign currency exchange rates. The derivatives that we use to reduce our exposure to changes in prices for natural gas are primarily natural gas fixed price swaps, basis swaps and options traded in the over-the-counter markets. These natural gas derivatives settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time. We enter into natural gas derivative contracts with respect to natural gas to be consumed by us in the future, and settlements of those derivative contracts are scheduled to coincide with our anticipated purchases of natural gas used to manufacture nitrogen products during those future periods. We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting. As a result, changes in fair value of these contracts are recognized in earnings. As of March 31, 2024, we had natural gas derivative contracts covering certain periods through March 2025.

As of March 31, 2024, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 8.0 million MMBtus of natural gas. As of December 31, 2023, we had open natural gas derivative contracts consisting of natural gas fixed price swaps, basis swaps and options for 49.0 million MMBtus of natural gas. For the three months ended March 31, 2024, we used derivatives to cover approximately 55% of our natural gas consumption.

The effect of derivatives in our consolidated statements of operations is shown in the table below.


	Gain (loss) recognized in income
		Three months ended March 31,
	Location		2024		2023
			(in millions)


Unrealized net gains on natural gas derivatives	Cost of sales		$	33	$	72
Realized net losses on natural gas derivatives	Cost of sales		(37)		(118)

Net derivative losses			$	(4)	$	(46)

The fair values of derivatives on our consolidated balance sheets are shown below. As of March 31, 2024 and December 31, 2023, none of our derivative instruments were designated as hedging instruments. See Note 9—Fair Value Measurements for additional information on derivative fair values.


	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	March 31, 2024		December 31, 2023		Balance Sheet Location	March 31, 2024		December 31, 2023
		(in millions)					(in millions)


Natural gas derivatives	Other current assets	$	1	$	1	Other current liabilities	$	(2)	$	(35)

Most of our International Swaps and Derivatives Association (ISDA) agreements contain credit-risk-related contingent features such as cross default provisions. In the event of certain defaults or termination events, our counterparties may request early termination and net settlement of certain derivative trades or, under certain ISDA agreements, may require us to collateralize derivatives in a net liability position. As of March 31, 2024 and December 31, 2023, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $1 million 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. The credit support documents executed in connection with certain of our ISDA agreements generally provide us and our counterparties the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event. As of March 31, 2024 and December 31, 2023, we had no cash collateral on deposit with counterparties for derivative contracts.

CF INDUSTRIES HOLDINGS, INC.

The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of March 31, 2024 and December 31, 2023:


	Amounts presented in consolidated balance sheets(1)			Gross amounts not offset in consolidated balance sheets
			Financial instruments			Cash collateral received (pledged)			Net amount
	(in millions)
March 31, 2024
Total derivative assets	$	1		$	—		$	—		$	1
Total derivative liabilities	(2)			—			—			(2)
Net derivative liabilities	$	(1)		$	—		$	—		$	(1)
December 31, 2023
Total derivative assets	$	1		$	—		$	—		$	1
Total derivative liabilities	(35)			—			—			(35)
Net derivative liabilities	$	(34)		$	—		$	—		$	(34)

(1)We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented are the same.

We do not believe the contractually allowed netting, close-out netting or setoff of amounts owed to, or due from, the counterparties to our ISDA agreements would have a material effect on our financial position.

14. Noncontrolling Interest

We have a strategic venture with CHS Inc. (CHS) under which CHS owns an equity interest in CFN, a subsidiary of CF Holdings, which represents approximately 11% of the membership interests of CFN. We own the remaining membership interests. Under the terms of CFN’s limited liability company agreement, each member’s interest will reflect, over time, the impact of the profitability of CFN, any member contributions made to CFN and withdrawals and distributions received from CFN. For financial reporting purposes, the assets, liabilities and earnings of the strategic venture are consolidated into our financial statements. CHS’ interest in the strategic venture is recorded in noncontrolling interest in our consolidated financial statements.

A reconciliation of the beginning and ending balances of noncontrolling interest and distributions payable to the noncontrolling interest in our consolidated balance sheets is provided below.



	2024		2023

	(in millions)
Noncontrolling interest:
Balance as of January 1	$	2,656	$	2,802

Earnings attributable to noncontrolling interest	44		90
Declaration of distributions payable	(144)		(255)


Balance as of March 31	$	2,556	$	2,637
Distributions payable to noncontrolling interest:
Balance as of January 1	$	—	$	—
Declaration of distributions payable	144		255
Distributions to noncontrolling interest	(144)		(255)

Balance as of March 31	$	—	$	—

CHS also receives deliveries pursuant to a supply agreement under which CHS has the right to purchase annually from CFN up to approximately 1.1 million tons of granular urea and 580,000 tons of UAN at market prices. As a result of its equity interest in CFN, CHS is entitled to semi-annual cash distributions from CFN. We are also entitled to semi-annual cash distributions from CFN. The amounts of distributions from CFN to us and CHS are based generally on the profitability of CFN and determined based on the volume of granular urea and UAN sold by CFN to us and CHS pursuant to supply agreements, less a formula driven amount based primarily on the cost of natural gas used to produce the granular urea and UAN, and adjusted for the allocation of items such as operational efficiencies and overhead amounts.

CF INDUSTRIES HOLDINGS, INC.

15. Stockholders’ Equity

Common Stock

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). Repurchases under our share repurchase programs may be made from time to time in the open market, through privately negotiated transactions, through block transactions, through accelerated share repurchase programs, or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors.

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


	2022 Share Repurchase Program
	Shares	Amounts(1)
	(in millions)








Shares repurchased in 2023:
First quarter	—	$	—
Second quarter	0.8	50
Third quarter	1.9	150
Fourth quarter	2.9	225
Total shares repurchased in 2023	5.6	425

Shares repurchased in 2024:
First quarter	4.3	347



Total shares repurchased in 2024	4.3	347
Shares repurchased as of March 31, 2024	9.9	$	772

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

In the three months ended March 31, 2024, we repurchased approximately 4.3 million shares under the 2022 Share Repurchase Program for $347 million, of which $14 million was accrued and unpaid as of March 31, 2024. In the three months ended March 31, 2023, we repurchased approximately 1.1 million shares under the 2021 Share Repurchase Program for $75 million, of which $21 million was accrued and unpaid as of March 31, 2023.

Accumulated Other Comprehensive Loss

Changes to accumulated other comprehensive loss and the impact on other comprehensive income (loss) are as follows:


	Foreign Currency Translation Adjustment		Unrealized Gain on Derivatives		Defined Benefit Plans		Accumulated Other Comprehensive Income (Loss)
	(in millions)









Balance as of December 31, 2023	$	(146)	$	3	$	(66)	$	(209)






Effect of exchange rate changes and deferred taxes	(16)		—		—		(16)
Balance as of March 31, 2024	$	(162)	$	3	$	(66)	$	(225)

Balance as of December 31, 2022	$	(179)	$	3	$	(54)	$	(230)


Effect of exchange rate changes and deferred taxes	7		—		(1)		6
Balance as of March 31, 2023	$	(172)	$	3	$	(55)	$	(224)

CF INDUSTRIES HOLDINGS, INC.

16. Segment Disclosures

Our reportable segments consist of Ammonia, Granular Urea, UAN, AN and Other. These segments are differentiated by products. Our management uses gross margin to evaluate segment performance and allocate resources. Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes) are centrally managed and are not included in the measurement of segment profitability reviewed by management. Segment data for sales, cost of sales and gross margin for the three months ended March 31, 2024 and 2023 are presented in the table below.



	Ammonia		Granular Urea(1)		UAN(1)		AN(1)		Other(1)		Consolidated
	(in millions)















Three months ended March 31, 2024
Net sales	$	402	$	407	$	425	$	114	$	122	$	1,470
Cost of sales	337		253		282		105		84		1,061
Gross margin	$	65	$	154	$	143	$	9	$	38	409
Total other operating costs and expenses											108
Equity in earnings of operating affiliate											2
Operating earnings											$	303
Three months ended March 31, 2023
Net sales	$	424	$	611	$	667	$	159	$	151	$	2,012
Cost of sales	280		327		346		104		92		1,149
Gross margin	$	144	$	284	$	321	$	55	$	59	863
Total other operating costs and expenses											54

Equity in earnings of operating affiliate											17
Operating earnings											$	826

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

CF INDUSTRIES HOLDINGS, INC.

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