CF Industries (NYSE: CF) reported Q4 EPS of $4.82, may not compare to the analyst estimate of $5.08. Revenue for the quarter came in at $1.22 billion versus the consensus estimate of $1.16 billion.

Outlook

CF Industries continues to forecast 90 million acres of corn will be planted in 2015. Given the shortened fall ammonia application season across the northern U.S. and Canada, a significant volume of nitrogen will still need to be applied in the first half of 2015 to catch up to the overall levels needed to support the expected planted acres. The demand is reflected in the company's strong order book as shown by the increase in advance customer payments compared to the end of 2013.

Since November, retailers, wholesalers and distributors have been placing advance orders to secure ammonia availability for what is expected to be a strong spring application season. The company is pleased with its order book, especially in consideration of the decreases in international ammonia prices seen entering 2015.

The company has experienced strong customer interest in purchasing urea for delivery into April as well, and has opted to book orders to take advantage of attractive pricing opportunities. Urea prices through and subsequent to the fourth quarter were largely unaffected by the decline in global oil prices, as the urea price floor continues to be dependent on the cost structure of Chinese based producers utilizing coal as their primary feedstock. The company expects China will export a minimum of about 11 million tons during 2015, but the volume could be greater due to the potential for strong global demand and reduced output for those producers facing continued gas shortages in some parts of the world.

UAN prices have increased from their 2014 lows due to increased buyer interest, particularly in the U.S. Cornbelt where some demand is expected to switch to UAN to make up the nitrogen levels needed in the soil given the reduced fall ammonia application.

“We have an attractive order book and are well positioned to capitalize on the fertilizer market conditions we see developing for the first half of 2015,” stated Mr. Will. “With a broad base of ammonia and UAN storage assets, and one of the largest urea production systems in North America, we will be able to have the nitrogen products farmers need in place for what is anticipated to be a robust spring application season.”

Attractive North American natural gas costs, in comparison to feedstock costs in other regions of the world, continue to support CF Industries’ long-term cash generation prospects. Natural gas production in the U.S. lower-48 states was, on average, almost 5 billion cubic feet per day higher in the fourth quarter 2014 than 2013. Higher production, combined with lower than expected natural gas consumption in late December and January, has led to industry projections that the natural gas storage balance is expected to be at or above the five year average at the end of winter, and potentially significantly above by November 2015. As a result, gas prices have decreased to less than $3.00 per MMBtu compared to the collars the company has for 90 percent of its gas needs through the first quarter of 2015 with an average floor price of $3.41 per MMBtu and an average ceiling of $4.25 per MMBtu. Henry Hub natural gas futures are below $3.00 per MMBtu through most of 2015, and do not exceed $4.00 on a calendar year basis until 2021. As of the beginning of February, the company had no material hedges in place beyond the first quarter of 2015.

For earnings history and earnings-related data on CF Industries (CF) click here.