CF Q2 Earnings Miss Estimates Despite Strong Nitrogen Pricing

Segmental Review

Ammonia segment net sales rose 19.3% year over year to $586 million. Adjusted gross margin increased to $288 million from $188 million. An increase in the average selling price more than offset a decline in sales volume. Higher prices supported profitability, while lower supply availability and maintenance costs remained headwinds.

Granular Urea segment net sales climbed 38.8% to $759 million. Adjusted gross margin advanced to $551 million from $351 million. Sales volume and the average selling price rose. Greater product availability and a production mix favoring granular urea supported volumes, while stronger pricing lifted margins despite higher natural gas costs.

UAN segment net sales edged up 0.5% to $613 million. Adjusted gross margin rose to $403 million from $342 million. A rise in the average selling price offset a reduction in sales volume. Lower global demand and a production mix favoring granular urea pressured volumes, while higher freight, distribution and natural gas costs partly offset the pricing benefit.

AN segment’s net sales decreased 39.3% to $71 million. The segment recorded an adjusted gross loss of $1 million compared with an adjusted gross margin of $35 million a year earlier. Sales volume plunged because of lost production at the Yazoo City Complex, outweighing an increase in the average selling price. Higher purchased ammonia costs and outage-related expenses also pressured results.

Financials

As of June 30, 2026, CF Industries had cash and cash equivalents of $2.48 billion. Long-term debt was $3.22 billion. Net cash provided by operating activities totaled $878 million in the second quarter. CF repurchased 2 million shares for $230 million during the quarter. The company bought back 2.2 million shares for $245 million in the first half, leaving roughly $1.48 billion under its current authorization.

Outlook

CF expects full-year 2026 gross ammonia production of approximately 9.5 million tons, including the effect of the ongoing Yazoo City outage. Management expects ammonia, AN solution, nitric acid, UAN solution and urea liquor production at the complex to resume during the first half of 2027. The company projects 2026 capital expenditures of about $1.3 billion on a consolidated basis.

Management expects nitrogen supply to remain constrained and demand to remain constructive through the end of 2026 and into 2027. Lower nitrogen prices entering the second half of 2026 are expected to support demand in India, Southeast Asia, Brazil and other import markets. North American nitrogen demand for the 2027 growing season is also expected to remain firm.

CF’s Price Performance

CF shares have surged 40.8% in the past year against the 44.8% decline in the industry.

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CF’s Zacks Rank & Key Picks

CF currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Neo Performance Materials Inc. NOPMF, Almonty Industries Inc. ALM and Skeena Resources Limited SKE.

Neo Performance is slated to report second-quarter 2026 results on Aug. 11. The Zacks Consensus Estimate for earnings is pegged at 50 cents per share. NOPMF sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Almonty is expected to report second-quarter 2026 results on Aug. 13. The Zacks Consensus Estimate for ALM’s second-quarter earnings per share is pegged at 10 cents, indicating a 300% year-over-year growth. ALM holds a Zacks Rank #2 (Buy) at present.

Skeena is expected to report second-quarter 2026 results on Aug. 13. The consensus estimate for SKE’s loss per share is pegged at 11 cents. SKE presently carries a Zacks Rank #2.

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This article originally published on Zacks Investment Research (zacks.com).

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