CF Industries Holdings, Inc. (NYSE:CF) Q3 2017 Earnings Conference Call - Final Transcript
Nov 02, 2017 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 CF Industries Holdings Earnings Conference Call. My name is Vince. I will be your coordinator for today. At this time all participants are in a listen-only mode. We will facilitate the question-and-answer session towards the end of the presentation. (Operator Instructions)
I'd now like to turn the presentation over to the host for today, Mr. Martin Jarosick, with CF Investor Relations. Sir, please proceed.
Martin A. Jarosick
Good morning, and thanks for joining the CF Industries third quarter earnings conference call. I'm Martin Jarosick, Vice President, Investor Relations for CF. With me today are Tony Will, our CEO; Dennis Kelleher, our CFO; Bert Frost, Senior Vice President of Sales, Market Development and Supply Chain; and Chris Bohn, Senior Vice President of Manufacturing and Distribution.
CF Industries reported its third quarter 2017 results yesterday afternoon as did Terra Nitrogen Company L.P. On this call, we'll review the CF Industries' results in detail, discuss our outlook and then host a question-and-answer session.
(Forward-Looking Cautionary Statements)
Now let me introduce our President and CEO, Tony Will.
W. Anthony Will
Thanks, Martin, and good morning, everyone. Last night, we posted our financial results for the third quarter of 2017 in which we generated adjusted EBITDA of $134 million after taking into account the items detailed in our earnings release. I am particularly pleased with our performance and results for the quarter, especially considering how the quarter began with prices meaningfully below 2016 levels.
As nitrogen prices rose from the unsustainable lows of the summer, our team responded extremely well, dramatically ramping up shipments and capturing the improving prices. Our team demonstrated impressive execution across all parts of the business. Operationally, our plants ran really well once again. We produced 2.5 million tons of gross ammonia, but most importantly, we did it safely. Our 12-month recordable incident rate was down to 0.85 incidents per 200,000 work hours. Our team has also achieved more than 3 million hours without a lost time injury. This is a tremendous achievement considering the level of activity across our system.
Our sales volume was the second highest quarterly volume ever. This is particularly impressive because the third quarter is historically a lower-volume quarter for us due to the seasonality of applications in North America. During the quarter, we participated in the North American in-region demand, sparingly at first, but with increased enthusiasm as prices rose. This included our successful UAN summer fill program.
We also leveraged Donaldsonville's ability to export to a greater extent than ever before as North American nitrogen prices remained below global parity. During the third quarter, we exported 1 million product tons, which is a new CF record for any quarter. These export sales allowed us to balance our system and manage inventory positions to maximize overall margins. When North American customers were unwilling to purchase products at netbacks comparable to international prices, we increased exports and built inventory by pulling back from selling in North America.
As prices began to