CF Industries Holdings Inc

Previous wording

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.

Current wording

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. Products derived from ammonia that are most often used as nitrogen fertilizers include granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). AN is also used extensively by the commercial explosives industry as a component of explosives. Products derived from ammonia that are sold primarily to industrial customers include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia.

Previous wording

•six U.S. nitrogen manufacturing facilities located in Donaldsonville, Louisiana (the largest nitrogen complex in the world); Sergeant Bluff, Iowa (our Port Neal complex); Yazoo City, Mississippi; Claremore, Oklahoma (our Verdigris complex); Woodward, Oklahoma; and Waggaman, Louisiana. The Waggaman facility is wholly owned by us, and the other five U.S. nitrogen manufacturing facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc. (CHS) owns the remainder (see Note 14—Noncontrolling Interest for additional information on our strategic venture with CHS);

Current wording

•six U.S. manufacturing facilities located in Donaldsonville, Louisiana (the largest ammonia production complex in the world); Sergeant Bluff, Iowa (our Port Neal complex); Yazoo City, Mississippi; Claremore, Oklahoma (our Verdigris complex); Woodward, Oklahoma; and Waggaman, Louisiana. The Waggaman facility is wholly owned by us, and the other five U.S. manufacturing facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc. (CHS) owns the remainder (see Note 14—Noncontrolling Interest for additional information on our strategic venture with CHS);

Previous wording

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

Current wording

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

Previous wording

•a United Kingdom nitrogen manufacturing facility located in Billingham;

Current wording

•a United Kingdom manufacturing facility located in Billingham;

Previous wording

At our core, CF Industries is a producer of ammonia. We use the Haber-Bosch process to fix atmospheric nitrogen with hydrogen from natural gas to produce anhydrous ammonia, whose chemical composition is NH3. We sell the ammonia itself or upgrade it to products such as granular urea, urea ammonium nitrate solution (UAN) and diesel exhaust fluid (DEF). A majority of the ammonia and ammonia-derived products we manufacture are used as fertilizer, as the nitrogen content provides energy essential for crop growth. Other important uses of our products include emissions control.

Current wording

At our core, CF Industries is a producer of ammonia. We use the Haber-Bosch process to fix atmospheric nitrogen with hydrogen from natural gas to produce anhydrous ammonia, whose chemical composition is NH 3. We sell the ammonia itself or upgrade it to products such as granular urea, UAN and DEF. A majority of the ammonia and ammonia-derived products we manufacture are used as fertilizer, as the nitrogen content provides energy essential for crop growth. Other important uses of our products include emissions control.

Previous wording

Our strategy leverages our unique capabilities to accelerate the world’s transition to clean energy. We believe this strategy builds upon our leadership in ammonia production to capture emerging opportunities to produce ammonia with a lower carbon intensity than that of ammonia produced through traditional processes. These opportunities include traditional applications in agriculture to help reduce the carbon footprint of food production and the life cycle carbon intensity of ethanol production, enabling ammonia’s use as a sustainable aviation fuel, among other purposes. These opportunities also include new growth opportunities from energy-intensive industries, such as power generation and marine shipping, as ammonia represents an efficient mechanism to both ship and store hydrogen, as well as a clean energy fuel source in its own right as ammonia does not contain or emit carbon when combusted. Our strategy also strengthens our existing business.

Current wording

Our strategy leverages our unique capabilities to accelerate the world’s transition to clean energy. We believe this strategy builds upon our leadership in ammonia production to capture emerging opportunities to produce ammonia with a lower carbon intensity than that of ammonia produced through traditional processes. These opportunities include traditional applications in agriculture to help reduce the carbon footprint of food production and the life cycle carbon intensity of ethanol production, enabling production of sustainable aviation fuel, among other purposes. These opportunities also include new growth opportunities from energy-intensive industries, such as power generation and marine shipping, as ammonia represents an efficient mechanism to both ship and store hydrogen, as well as a clean energy fuel source in its own right as ammonia does not contain or emit carbon when combusted. Our strategy also strengthens our existing business.

Previous wording

We execute our strategy across four dimensions: decarbonizing our existing network to accelerate the availability of low-carbon ammonia and upgraded nitrogen products for traditional agricultural and industrial applications; evaluating new low-carbon ammonia capacity growth to supply emerging opportunities from power generation and marine shipping, among others; forging partnerships to accelerate our timeline, reducing risks and bridging gaps in areas where we do not have expertise; and collaborating to build understanding of ammonia’s clean energy capability, safety track record and regulatory environment.

Current wording

We execute our strategy across four dimensions:

Previous wording

Decarbonization projects in our existing network include our green ammonia project at our Donaldsonville, Louisiana, complex. Our green hydrogen production facility, consisting of a 20-megawatt alkaline water electrolysis plant to produce hydrogen, is mechanically complete, and commissioning activities are nearing completion. In the third quarter of 2024 and in anticipation of start-up, we entered into an agreement to procure 45V-compliant renewable energy certificates to pair with the electricity consumed by electrolyzer operation. As a result, the electrolyzer will generate green hydrogen that enables us to produce green ammonia, which refers to ammonia produced with hydrogen sourced from an electrolysis process that produces no carbon dioxide emissions. At full electrolyzer capacity, we will be able to produce approximately 20,000 tons of green ammonia per year. At the time of its startup, we believe that the Donaldsonville green ammonia project will represent North America’s first commercial-scale green ammonia capacity. Under current regulations, the hydrogen produced and used in our green ammonia production is expected to qualify under Section 45V of the Internal Revenue Code for tax credits based on the carbon intensity of the hydrogen produced.

Current wording

Decarbonization projects in our existing network include our green ammonia project at our Donaldsonville, Louisiana, complex. Green ammonia refers to ammonia produced with hydrogen sourced from an electrolysis process that produces no carbon dioxide emissions. Commissioning of our green hydrogen production facility, consisting of a 20-megawatt alkaline water electrolysis plant to produce hydrogen, continues. At full electrolyzer capacity, we will be able to produce approximately 20,000 tons of green ammonia per year. At the time of its startup, we believe that the Donaldsonville green ammonia project will represent North America’s first commercial-scale green ammonia capacity. Under proposed regulations, the hydrogen produced and used in our green ammonia production is expected to qualify for tax credits under Section 45V of the Internal Revenue Code.

Previous wording

We are also advancing decarbonization projects at our Donaldsonville and Yazoo City complexes that leverage carbon capture and sequestration (CCS) to enable the production of low-carbon ammonia. Low-carbon ammonia is ammonia produced by conventional processes but with approximately 60-98% of the process and flue gas carbon dioxide (CO 2) generated by ammonia production and currently emitted to the atmosphere removed through CCS. CCS requires the construction of CO 2 dehydration and compression units to enable CO 2 already captured from the ammonia production process to be transported and sequestered. Construction of the dehydration and compression unit at our Donaldsonville complex is in advanced stages, with an estimated total cost of approximately $200 million over the life of the project. Activities related to the construction of the dehydration and compression unit at our Yazoo City complex will commence in the second half of 2024 with an estimated total cost of $100 million over the life of the project. In addition, for each facility we have contracted with ExxonMobil to transport and sequester the captured CO 2 in permanent geologic storage. At Donaldsonville, CCS is expected to commence in 2025 and annually will capture up to approximately 2 million tonnes of CO 2. At Yazoo City, CCS is expected to commence in 2028 and annually will capture up to approximately 500,000 tonnes of CO 2. Under current regulations, each project is expected to qualify under Section 45Q of the Internal Revenue Code for tax credits per tonne of sequestered CO 2.

Current wording

We are also advancing decarbonization projects at our Donaldsonville and Yazoo City complexes that leverage carbon capture and sequestration (CCS) to enable the production of low-carbon ammonia. Low-carbon ammonia is ammonia produced by conventional processes but with approximately 60-98% of the process and flue gas carbon dioxide (CO 2) generated by ammonia production and currently emitted to the atmosphere removed through CCS. CCS requires the construction of CO 2 dehydration and compression units to enable CO 2 captured from the ammonia production process to be transported and sequestered. Construction of the dehydration and compression unit at our Donaldsonville complex is in advanced stages, with an estimated total cost of approximately $200 million over the life of the project. Construction of the dehydration and compression unit at our Yazoo City complex is expected to cost approximately $100 million over the life of the project. For each facility we have contracted with ExxonMobil to transport and sequester the captured CO 2 in permanent geologic storage. At Donaldsonville, CCS is expected to commence in 2025 and annually will capture up to approximately 2 million tonnes of CO 2. At Yazoo City, CCS is expected to commence in 2028 and annually will capture up to approximately 500,000 tonnes of CO 2. Each project is expected to qualify under Section 45Q of the Internal Revenue Code for tax credits per tonne of sequestered CO 2.

Previous wording

We are also evaluating the construction of export-oriented greenfield low-carbon ammonia capacity at our Blue Point complex in Ascension Parish, Louisiana. This evaluation includes assessing ammonia production technology options that will meet the carbon intensity requirements of end users. In the fourth quarter of 2023, we completed a front-end engineering and design (FEED) study on a potential approximately 1.2 million tonne capacity greenfield steam methane reforming (SMR) ammonia facility with CCS technologies that would enable sequestration of process CO 2 emissions. The FEED study estimates the cost of a project with these attributes to be in the range of $3 billion, with approximately $2.5 billion allocated to the ammonia facility and CCS technologies and approximately $500 million allocated to scalable common infrastructure for the Blue Point complex, such as ammonia storage and a vessel loading dock.

Current wording

We are also evaluating the construction of export-oriented greenfield low-carbon ammonia capacity at our Blue Point complex in Ascension Parish, Louisiana. This evaluation includes assessing ammonia production technology options that will meet the carbon intensity requirements of end users. In the fourth quarter of 2023, we completed a front-end engineering and design (FEED) study on a potential approximately 1.2 million tonne capacity greenfield steam methane reforming (SMR) ammonia facility with CCS technologies that would enable sequestration of process CO 2 emissions. The FEED study estimated the cost of a project with these attributes to be in the range of $3 billion, with approximately $2.5 billion allocated to the ammonia facility and CCS technologies and approximately $500 million allocated to scalable common infrastructure for the Blue Point complex, such as ammonia storage and a vessel loading dock.

Previous wording

We have entered into joint development agreements (JDAs) with two potential partners for the development of low-carbon ammonia capacity at our Blue Point complex, Mitsui & Co., Ltd. and JERA Co., Inc. (JERA), Japan’s largest power generator. The JDAs guide our evaluation of potential joint ventures to build a greenfield ammonia plant to supply low-carbon ammonia to developing energy markets in Japan and traditional ammonia markets where demand for low-carbon product is emerging. The JDA with JERA contemplates a project to build an approximately 1.4 million tonne capacity low-carbon ammonia plant, with JERA expected to own a 48% stake and offtake more than 500,000 tonnes of low-carbon ammonia annually for its proposed coal and ammonia co-firing project.

Current wording

We have entered into joint development agreements (JDAs) with two potential partners, Mitsui & Co., Ltd. and JERA Co., Inc. The JDAs guide our evaluation of potential joint ventures to build a greenfield ammonia plant to supply low-carbon ammonia to developing energy markets and traditional ammonia markets where demand for low-carbon product is emerging.

Previous wording

In addition to discussions with existing customers who have interest in using low-carbon ammonia for traditional applications, we are engaged in advanced discussions regarding the supply of low-carbon ammonia for new applications, such as JERA’s co-firing project discussed above. We are evaluating and are in various stages of discussions and agreements with other companies for long-term offtake and joint investment opportunities related to new applications of ammonia. These discussions continue to advance as we gain greater clarity regarding demand for low-carbon ammonia, including carbon intensity requirements, government incentives and regulatory developments.

Current wording

In addition to discussions with existing customers who have interest in using low-carbon ammonia for traditional applications, we are engaged in advanced discussions regarding the supply of low-carbon ammonia for new applications. We are evaluating and are in various stages of discussions and agreements with other companies for long-term offtake and joint investment opportunities related to new applications of ammonia. These discussions continue to advance as we gain greater clarity regarding demand for low-carbon ammonia, including carbon intensity requirements, government incentives and regulatory developments.

Previous wording

Sales volume in the second quarter of 2024 was 4.88 million tons compared to 4.94 million tons in the second quarter of 2023, which resulted in a decrease in net sales of approximately $38 million. Lower sales volume reflects the impact of lower supply availability resulting from lower beginning inventory entering the second quarter of 2024, partially offset by an increase in sales volume as a result of the Waggaman acquisition. Sales volume in the six months ended June 30, 2024 was 9.40 million tons compared to 9.47 million tons in the six months ended June 30, 2023. This resulted in a decrease in net sales of approximately $13 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Current wording

Sales volume in the third quarter of 2024 was 4.8 million tons compared to 4.7 million tons in the third quarter of 2023, which resulted in an increase in net sales of approximately $45 million. Higher sales volume reflects an increase in sales volume as a result of the Waggaman acquisition on December 1, 2023, as further described below, partially offset by lower supply availability resulting from lower beginning inventory entering the third quarter of 2024.

Previous wording

In January 2024, a winter storm produced extremely cold temperatures that impacted our operations, including the temporary shut-down and lost production at certain of our plants. Due to the impact of plant downtime resulting from the adverse weather and additional plant maintenance activity in the first quarter of 2024, we purchased and sold approximately 62,000 tons of ammonia and 48,000 tons of granular urea at near breakeven margins in order to fulfill sales commitments. The plant downtime led to approximately $75 million of additional costs in the first quarter of 2024 for maintenance, repairs and certain unabsorbed fixed costs.

Current wording

In January 2024, a winter storm produced extremely cold temperatures that impacted our operations, including the temporary shut-down and lost production at certain of our plants. Due to the impact of plant downtime resulting from the adverse weather and additional plant maintenance activity in the first quarter of 2024, we purchased and resold approximately 62,000 tons of ammonia and 48,000 tons of granular urea at near breakeven margins in order to fulfill sales commitments. The plant downtime led to approximately $75 million of additional costs in the first quarter of 2024 for maintenance, repairs and certain unabsorbed fixed costs.

Previous wording

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

Current wording

The Waggaman acquisition, which we completed on December 1, 2023, increased our ammonia sales volume in the third quarter and first nine months of 2024 by approximately 217,000 tons and 500,000 tons, respectively.

Previous wording

Natural gas is the principal raw material used to produce our nitrogen products. Natural gas is both a chemical feedstock and a fuel used to produce nitrogen products. Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 28% and 40% of our production costs in the first six months of 2024 and the year ended December 31, 2023, respectively. Most of our nitrogen manufacturing facilities are located in the United States and Canada. As a result, the price of natural gas in North America directly impacts a substantial portion of our operating expenses.

Current wording

Natural gas is the principal raw material used to produce our nitrogen products. Natural gas is both a chemical feedstock and a fuel used to produce nitrogen products. Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 27% and 40% of our production costs in the first nine months of 2024 and the year ended December 31, 2023, respectively. Most of our nitrogen manufacturing facilities are located in the United States and Canada. As a result, the price of natural gas in North America directly impacts a substantial portion of our operating expenses.

Previous wording

In the second quarter of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 31% to $1.90 per MMBtu from $2.75 per MMBtu in the second quarter of 2023. This decrease in natural gas costs resulted in an increase in gross margin of $81 million, excluding the impact of the Waggaman acquisition, compared to the second quarter of 2023. In the first half of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 45% to $2.53 per MMBtu from $4.56 per MMBtu in the first half of 2023. This decrease in natural gas costs resulted in an increase in gross margin of $350 million compared to the first half of 2023.

Current wording

In the third quarter of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 17% to $2.10 per MMBtu from $2.54 per MMBtu in the third quarter of 2023. This decrease in natural gas costs resulted in an increase in gross margin of $40 million, excluding the impact of the Waggaman acquisition, compared to the third quarter of 2023. In the first nine months of 2024, our cost of natural gas used for production, which includes the impact of realized natural gas derivatives, decreased 39% to $2.38 per MMBtu from $3.90 per MMBtu in the first nine months of 2023. This decrease in natural gas costs resulted in an increase in gross margin of $390 million, excluding the impact of the Waggaman acquisition, compared to the first nine months of 2023.

Previous wording

In the first quarter of 2024, warmer-than-normal average temperatures in North America drove lower heating demand for natural gas, in spite of a short-lived period of extremely cold temperatures in January 2024 that affected most of North America. North American natural gas supply remained strong through the quarter, with a decline in supply occurring near the end of the quarter as producers responded to the weaker price environment. In addition, although the higher cost for natural gas outside of North America incentivized liquefaction facilities in the United States to export domestic natural gas during the first quarter of 2024, an outage at the Freeport liquefied natural gas facility limited total gas exports, supporting domestic supply.

Current wording

In the first quarter of 2024, warmer-than-normal average temperatures in North America drove lower heating demand for natural gas, in spite of a short-lived period of extremely cold temperatures in January 2024 that affected most of North America. North American natural gas supply remained strong through the quarter, with a decline in supply occurring near the end of the quarter as producers responded to a weaker price environment. In addition, although the higher cost for natural gas outside of North America incentivized liquefaction facilities in the United States to export domestic natural gas during the first quarter of 2024, an outage at the Freeport liquefied natural gas facility limited total gas exports, supporting domestic supply.

Previous wording

During the second quarter of 2024, there was a decline in natural gas supply as producers responded to the weaker price environment, limiting the domestic supply available to be injected into storage during the quarter. In addition, natural gas demand for power generation reached record levels in the second quarter as higher-than-normal temperatures drove increased cooling demand. Despite lower supply availability and increased demand, North America ended the second quarter of 2024 with storage levels 10% higher compared to one year ago and 19% higher than the five-year average.

Current wording

During the second quarter of 2024, there was a decline in natural gas supply as producers responded to a weaker price environment, limiting the domestic supply available to be injected into storage during the quarter. In addition, natural gas demand for power generation reached record levels in the second quarter of 2024 as higher-than-normal temperatures drove increased cooling demand.

Previous wording

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

Current wording

We reported net earnings attributable to common stockholders of $276 million for the three months ended September 30, 2024 compared to $164 million for the three months ended September 30, 2023, an increase in net earnings of $112 million, or 68%. The increase in net earnings for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily reflects the following:

Previous wording

Diluted net earnings per share attributable to common stockholders decreased $0.40 per share, or 15%, to $2.30 per share, in the second quarter of 2024 compared to $2.70 per share in the second quarter of 2023, due primarily to lower net earnings, partially offset by lower weighted-average common shares outstanding as a result of shares repurchased under our share repurchase programs.

Current wording

Diluted net earnings per share attributable to common stockholders increased $0.70 per share, or 82%, to $1.55 per share in the third quarter of 2024 compared to $0.85 per share in the third quarter of 2023, due primarily to higher net earnings and lower weighted-average common shares outstanding as a result of shares repurchased under our share repurchase program. Diluted weighted-average common shares outstanding were 178.6 million shares for the three months ended September 30, 2024, a decrease of 7% compared to diluted weighted-average common shares outstanding of 192.9 million shares for the three months ended September 30, 2023.

Previous wording

For the three months ended June 30, 2024 and 2023, we reported net earnings attributable to common stockholders of $420 million and $527 million, respectively. For the six months ended June 30, 2024 and 2023, we reported net earnings attributable to common stockholders of $614 million and $1.09 billion, respectively. In addition to the impact of market conditions and the acquisition of the Waggaman ammonia production facility discussed above, certain items affected the comparability of our financial results for the three and six months ended June 30, 2024 and 2023. The following table and related discussion outline these items and their impact on the comparability of our financial results for these periods. The descriptions of items below that refer to amounts in the table refer to the pre-tax amounts unless otherwise noted.

Current wording

For the three months ended September 30, 2024 and 2023, we reported net earnings attributable to common stockholders of $276 million and $164 million, respectively. For the nine months ended September 30, 2024 and 2023, we reported net earnings attributable to common stockholders of $890 million and $1.25 billion, respectively. In addition to the impact of market conditions and the acquisition of the Waggaman ammonia production facility discussed above, certain items affected the comparability of our financial results for the three and nine months ended September 30, 2024 and 2023. The following table and related discussion outline these items and their impact on the comparability of our financial results for these periods. The descriptions of items below that refer to amounts in the table refer to the pre-tax amounts unless otherwise noted.

Previous wording

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

Current wording

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

Previous wording

Natural gas is the largest and most volatile single component of the manufacturing cost for our nitrogen-based products. At certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments. The derivatives that we use for this purpose are primarily natural gas fixed price swaps, basis swaps and options. We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting. This can result in volatility in reported earnings due to the unrealized mark-to-market adjustments that occur from changes in the value of the derivatives, which are reflected in cost of sales in our consolidated statements of operations. In the three months ended June 30, 2024, we recognized an unrealized net mark-to-market gain on natural gas derivatives of $1 million. In the six months ended June 30, 2024 and 2023, we recognized unrealized net mark-to-market gains on natural gas derivatives of $34 million and $72 million, respectively.

Current wording

Natural gas is the largest and most volatile single component of the manufacturing cost for our nitrogen-based products. At certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments. The derivatives that we use for this purpose are primarily natural gas fixed price swaps, basis swaps and options. We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting. This can result in volatility in reported earnings due to the unrealized mark-to-market adjustments that occur from changes in the value of the derivatives, which are reflected in cost of sales in our consolidated statements of operations. In the three months ended September 30, 2024 and 2023, we recognized unrealized net mark-to-market losses on natural gas derivatives of $1 million and $7 million, respectively. In the nine months ended September 30, 2024 and 2023, we recognized unrealized net mark-to-market gains on natural gas derivatives of $33 million and $65 million, respectively.

Previous wording

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

Current wording

Loss on foreign currency transactions, including intercompany loans

Previous wording

In the six months ended June 30, 2024 and 2023, we recognized a loss (gain) on foreign currency transactions of $1 million and $(2) million, respectively. (Gain) loss on foreign currency transactions consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that are not permanently invested.

Current wording

In the three months ended September 30, 2024 and 2023, we recognized a loss on foreign currency transactions of $1 million and $7 million, respectively. In the nine months ended September 30, 2024 and 2023, we recognized a loss on foreign currency transactions of $2 million and $5 million, respectively. Loss on foreign currency transactions consists of foreign currency exchange rate impacts on foreign currency denominated transactions, including the impact of changes in foreign currency exchange rates on intercompany loans that are not permanently invested.

Previous wording

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana, as described above under “Acquisition of Waggaman Ammonia Production Facility.” In the six months ended June 30, 2024 and 2023, we incurred $4 million and $16 million, respectively, of acquisition and integration costs related to the Waggaman acquisition.

Current wording

On December 1, 2023, we acquired an ammonia production facility located in Waggaman, Louisiana, as described above under “Acquisition of Waggaman Ammonia Production Facility.” In the nine months ended September 30, 2024, we incurred $4 million of integration costs related to the Waggaman acquisition. In the three and nine months ended September 30, 2023, we incurred $9 million and $25 million, respectively, of acquisition-related costs related to the Waggaman acquisition. In addition, we incurred $2 million of integration costs in both the three and nine months ended September 30, 2023. These costs are included in acquisition and integration costs in our consolidated statements of operations.

Previous wording

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

Current wording

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

Previous wording

Our total net sales decreased $203 million, or 11%, to $1.57 billion in the second quarter of 2024 compared to $1.78 billion in the second quarter of 2023. The change in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $59 million, and (ii) a $262 million, or 15%, decline in our net sales excluding the impact of the Waggaman acquisition, due to a decrease in our average selling price and lower sales volumes.

Current wording

Our total net sales increased $97 million, or 8%, to $1.37 billion in the third quarter of 2024 compared to $1.27 billion in the third quarter of 2023. The change in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $77 million, and (ii) a $20 million, or 2%, increase in our net sales excluding the impact of the Waggaman acquisition, due primarily to an increase in our average selling price.

Previous wording

Our average selling price decreased 10% to $322 per ton in the second quarter of 2024 compared to $359 per ton in the second quarter of 2023, due to lower average selling prices across most of our segments, as lower global energy costs reduced the global market clearing price required to meet global demand. The impact of lower average selling prices was a decrease in net sales of approximately $165 million for the second quarter of 2024 compared to the second quarter of 2023.

Current wording

Our average selling price increased 7% to $286 per ton in the third quarter of 2024 compared to $268 per ton in the third quarter of 2023, due to higher average selling prices across most of our segments. The impact of higher average selling prices was an increase in net sales of approximately $52 million for the third quarter of 2024 compared to the third quarter of 2023.

Previous wording

Our total sales volume was approximately 4.9 million product tons in both the second quarter of 2024 and 2023 as lower sales volume in our Ammonia, UAN and AN segments was partially offset by higher sales volume in our Granular Urea segment. The impact of lower sales volumes, excluding the impact of the Waggaman acquisition that increased our net sales by $59 million, was a decrease in net sales of approximately $97 million.

Current wording

Our total sales volume was approximately 4.8 million product tons in the third quarter of 2024 compared to 4.7 million in the third quarter of 2023 as higher sales volume in our Ammonia and Granular Urea segments was partially offset by lower sales volume in our UAN, Other and AN segments. Higher sales volume in our Ammonia segment includes the impact of the Waggaman acquisition of 217,000 product tons.

Previous wording

Gross ammonia production for the three and six months ended June 30, 2024 was 2.6 million tons and 4.8 million tons, respectively. We expect gross ammonia production for 2024 will be approximately 9.8 million tons.

Current wording

Gross ammonia production for the three and nine months ended September 30, 2024 was 2.4 million tons and 7.2 million tons, respectively. We expect gross ammonia production for 2024 will be approximately 9.8 million tons.

Previous wording

Our total cost of sales decreased $78 million, or 8%, to $893 million in the second quarter of 2024 from $971 million in the second quarter of 2023. The decrease in our cost of sales was due primarily to lower costs for natural gas, including the impact of realized derivatives, which decreased cost of sales by $81 million, excluding the impact of the Waggaman acquisition. The impact of the Waggaman acquisition increased our cost of sales by $47 million.

Current wording

Our total cost of sales increased $30 million, or 3%, to $926 million in the third quarter of 2024 from $896 million in the third quarter of 2023. The increase in our cost of sales was due primarily to the impact of the Waggaman acquisition, which increased our cost of sales by $50 million, and higher costs for maintenance activity, partially offset by lower costs for natural gas, including the impact of realized derivatives, which decreased cost of sales by $40 million, excluding the impact of the Waggaman acquisition, and lower sales volume, excluding the impact of the Waggaman acquisition, which decreased cost of sales by $20 million.

Previous wording

Selling, general and administrative expenses were $76 million in the second quarter of 2024, a 7% increase from $71 million in the second quarter of 2023. The increase was due primarily to higher amortization expense related to the customer relationships recorded in conjunction with the Waggaman acquisition on December 1, 2023.

Current wording

Selling, general and administrative expenses were $78 million in the third quarter of 2024, a 15% increase from $68 million in the third quarter of 2023. The increase was due primarily to an increase in amortization expense resulting from the customer relationships recognized in conjunction with the Waggaman acquisition on December 1, 2023.

Previous wording

Other operating—net was $22 million of income in the first six months of 2024 compared to $32 million of income in the first six months of 2023. The $22 million of income in the first six months of 2024 consists primarily of gains on sales of emission credits, partially offset by costs related to FEED studies for our clean energy initiatives. See “Our Strategy,” above, for additional information related to our clean energy initiatives. The $32 million of income in the first six months of 2023 consists primarily of gains on sales of emission credits.

Current wording

Other operating—net was $4 million of expense in the third quarter of 2024 compared to $13 million of expense in the third quarter of 2023. The $4 million of expense in the third quarter of 2024 consists primarily of costs related to FEED studies for our clean energy initiatives. The $13 million of expense in the third quarter of 2023 consists primarily of a loss on foreign currency transactions and costs related to FEED studies for our clean energy initiatives. See “Our Strategy,” above, for additional information related to our clean energy initiatives.

Previous wording

Net interest expense was $9 million of expense in the second quarter of 2024 compared to $4 million of income in the second quarter of 2023. The change of $13 million was due primarily to a decrease in interest income on short-term investments.

Current wording

Interest income was $32 million in the third quarter of 2024 compared to $45 million in the third quarter of 2023. The decrease of $13 million was due primarily to a decrease in interest income on short-term investments, partially offset by $3 million in interest income related to discretionary interest relief that is further described above under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter.”

Previous wording

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

Current wording

For the three months ended September 30, 2024, we recorded an income tax provision of $59 million on pre-tax income of $400 million, or an effective tax rate of 14.8%, compared to an income tax provision of $23 million on pre-tax income of $253 million, or an effective tax rate of 9.1%, for the three months ended September 30, 2023. For the three months ended September 30, 2024, our income tax provision includes a $9 million income tax benefit arising from the finalization of tax return filing positions. For the three months ended September 30, 2023, our income tax provision includes a $9 million income tax benefit arising from the finalization of tax return filing positions and adjustments to accrued withholding taxes as a result of changes reflected on our filed U.S. federal return. For the three months ended September 30, 2024 and 2023, these income tax benefits in relation to pre-tax income of $400 million and $253 million, respectively, contributed to a lower effective tax rate compared to the U.S. statutory rate of 21%.

Previous wording

Our effective tax rate is impacted by earnings attributable to the noncontrolling interest in CFN, as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interest. Our effective tax rate for the three months ended June 30, 2024 of 19.5%, which is based on pre-tax income of $629 million, including $86 million of earnings attributable to the noncontrolling interest, would be 3.1 percentage points higher, or 22.6%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $86 million. Our effective tax rate for the three months ended June 30, 2023 of 18.2%, which is based on pre-tax income of $740 million, including $79 million of earnings attributable to the noncontrolling interest, would be 2.1 percentage points higher, or 20.3%, if based on pre-tax income exclusive of the $79 million of earnings attributable to the noncontrolling interest. See Note 14—Noncontrolling Interest for additional information.

Current wording

Our effective tax rate is impacted by earnings attributable to the noncontrolling interest in CFN, as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interest. Our effective tax rate for the three months ended September 30, 2024 of 14.8%, which is based on pre-tax income of $400 million, including $65 million of earnings attributable to the noncontrolling interest, would be 2.9 percentage points higher, or 17.7%, if based on pre-tax income exclusive of the earnings attributable to the noncontrolling interest of $65 million. Our effective tax rate for the three months ended September 30, 2023 of 9.1%, which is based on pre-tax income of $253 million, including $66 million of earnings attributable to the noncontrolling interest, would be 3.2 percentage points higher, or 12.3%, if based on pre-tax income exclusive of the $66 million of earnings attributable to the noncontrolling interest. See Note 14—Noncontrolling Interest for additional information.

Previous wording

Diluted net earnings per share attributable to common stockholders decreased $0.40, or 15%, to $2.30 per share in the second quarter of 2024 from $2.70 per share in the second quarter of 2023. This decrease was due primarily to a decrease in gross margin, driven by lower average selling prices, partially offset by lower costs for natural gas. Additionally, diluted weighted-average common shares outstanding declined 6% from 195.0 million shares for the three months ended June 30, 2023 to 182.8 million shares for the three months ended June 30, 2024, due primarily to repurchases of common shares under our share repurchase programs.

Current wording

Diluted net earnings per share attributable to common stockholders increased $0.70, or 82%, to $1.55 per share in the third quarter of 2024 from $0.85 per share in the third quarter of 2023. This increase was due primarily to an increase in gross margin, driven by higher average selling prices and lower costs for natural gas, a reduction in interest expense, and a pre-tax impairment of our equity method investment in the third quarter of 2023 that did not recur in 2024. These factors were partially offset by an increase in the income tax provision resulting from higher profitability. Additionally, diluted weighted-average common shares outstanding declined 7% from 192.9 million shares for the three months ended September 30, 2023 to 178.6 million shares for the three months ended September 30, 2024, due primarily to repurchases of common shares under our share repurchase program.

Previous wording

Our total net sales decreased $0.75 billion, or 20%, to $3.04 billion in the first six months of 2024 compared to $3.79 billion in the first six months of 2023. The change in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $114 million, and (ii) a $0.86 billion, or 23%, decline in our net sales excluding the impact of the Waggaman acquisition, due primarily to a decrease in average selling prices of approximately 19%.

Current wording

Our total net sales decreased $648 million, or 13%, to $4.41 billion in the first nine months of 2024 compared to $5.06 billion in the first nine months of 2023. The change in our net sales reflects (i) the impact of the Waggaman acquisition completed on December 1, 2023, which increased our net sales by $191 million, and (ii) a $839 million, or 17%, decline in our net sales excluding the impact of the Waggaman acquisition, due primarily to a decrease in average selling prices of approximately 13%.