CF Industries Q2 2026 Earnings: Pricing Offsets a 15% Volume Decline

CF Industries (NYSE: CF) reported Q2 2026 net sales of $2.22 billion, up about 18% from $1.89 billion a year earlier, while diluted EPS increased to $4.73 from $2.37. Higher nitrogen selling prices more than offset a 15% decline in sales volume, lifting gross margin to 51.5%. The company also generated $1.19 billion in adjusted EBITDA and ended June with $2.48 billion in cash and cash equivalents.

Core Earnings Data

The quarter’s central feature was the combination of higher revenue and lower product volume. Average selling prices increased across all segments because of a tight global nitrogen supply-demand balance, further constrained by disruptions related to the conflict with Iran.

Profitability rose faster than revenue. Cost of sales declined to $1.08 billion from $1.14 billion, primarily because of lower sales volume, although higher maintenance expenses related partly to the extended Yazoo City outage provided an offset.

Adjusted EBITDA is a non-GAAP measure. CF Industries reported Q2 EBITDA of $1.17 billion, compared with $757 million in the prior-year quarter.

Higher Prices Outweighed Lower Volumes

Total sales volume fell by 15%, primarily because of lower UAN, ammonium nitrate and ammonia sales. Higher granular urea and other product sales provided only a partial offset. Excluding lost availability from the Yazoo City Complex, volume was still approximately 9% below the prior-year period, showing that the outage accounted for part, but not all, of the decline.

The two disclosed segment tables illustrate how pricing supported the quarter. Granular urea combined higher prices with higher volume, while ammonia revenue and margin increased despite a substantial volume decline.

Granular urea was the stronger of the two disclosed segments, producing $477 million in gross margin. Ammonia generated $229 million in gross margin as higher selling prices compensated for weaker demand and reduced product availability.

Gross ammonia production was approximately 2.4 million tons during the quarter. CF Industries operated at 98% of available ammonia capacity during the first half, although the company’s definition of available capacity excludes the idled Yazoo City Complex.

Profitability, Cash Flow and Capital Allocation

The consolidated gross margin expansion was supported by pricing and the volume-related decline in cost of sales. Natural gas did not create a significant year-over-year cost change during the quarter: the average production gas cost included in cost of sales was $3.37 per MMBtu, compared with $3.36 per MMBtu a year earlier. Higher maintenance expenses, including costs associated with the extended Yazoo City outage, remained a pressure point.

CF Industries reported trailing-12-month operating cash flow of $2.98 billion and free cash flow of $1.82 billion. These are not quarterly figures and include cash inflows and outflows associated with the Blue Point One joint venture.

Cash and cash equivalents totaled $2.48 billion at June 30, including $341 million held by Blue Point One. Q2 capital expenditures were $271 million, of which $78 million was attributable to the joint venture.

During the quarter, CF Industries repurchased 2.0 million shares for $230 million. Approximately $1.48 billion remained under its current repurchase authorization at quarter-end. The company also declared a $0.60 quarterly dividend in July, a 20% increase from the previous quarterly dividend.

2026 Operational and Capital Spending Guidance

Management expects the Yazoo City outage and Blue Point One construction to remain important factors in production and capital spending. Full-year ammonia production guidance incorporates the continuing Yazoo City shutdown, while consolidated capital expenditures include spending funded by the joint venture partners.

Blue Point One is owned 40% by CF Industries, 35% by JERA and 25% by Mitsui, with funding provided according to ownership. Because CF Industries consolidates the venture, consolidated capital expenditures are higher than the amount ultimately funded by CF Industries itself. The required construction permits were received in July, and permitted construction was scheduled to begin in August.

Management’s Nitrogen Market Outlook

Management expects global nitrogen supply to remain constrained and demand to remain constructive through the end of 2026 and into 2027. CF Industries estimates that the conflict with Iran has removed approximately 4.0 million to 4.5 million metric tons of urea and about 1 million metric tons of ammonia from traded supply to date.

However, nitrogen prices had returned to pre-conflict levels by the end of Q2 as Northern Hemisphere demand declined seasonally and the market anticipated returning Middle East production. Management believes lower prices entering the second half could support purchases that were deferred earlier in the year.

The company projects Chinese urea exports of 4 million to 6 million metric tons in 2026, subject to government policy, domestic pricing and restocking demand. In North America, management cited strong uptake of its July ammonia and UAN fill programs and expects firm demand for the 2027 growing season.

Recent Insider Transactions

The supplied insider data shows 233,485 shares classified as purchases and 664,213 shares classified as sales over the past six months, producing net sales of 430,728 shares. The latest 10 reported transactions were zero-cost stock awards rather than open-market purchases or sales; the supplied records did not specify the number of shares awarded.

Because these awards lack disclosed share quantities in the supplied data, their economic size cannot be assessed from the records provided.

Risks Investors Should Monitor

• Nitrogen price normalization: Higher selling prices were the main offset to lower volume, but market prices had already returned to pre-conflict levels by quarter-end. Further normalization could reduce the pricing support seen in Q2.
• Continued volume weakness: Reported volume fell 15%, and volume excluding Yazoo City’s lost availability was still down approximately 9%. Persistently lower shipments could pressure revenue even if production remains efficient.
• Yazoo City outage: The facility is not expected to resume production until the first half of 2027. Restoration cost estimates are still being finalized, and although the company expects insurance to cover a substantial portion, the final cost and timing remain uncertain.
• Natural gas and maintenance costs: Q2 production gas costs were nearly unchanged, but first-half realized gas costs rose to $4.01 per MMBtu from $3.52. Higher gas or maintenance expenses could limit margin expansion.
• Blue Point One execution and spending: The project is entering construction while consolidated capital expenditures are set to rise. Timing, funding and construction execution will affect reported cash flow and capital requirements.

Summary

CF Industries’ Q2 2026 results were driven by higher nitrogen prices, which more than compensated for lower sales volume and the continuing Yazoo City disruption. Gross margin and adjusted EBITDA expanded, while granular urea delivered the clearest combination of pricing and volume growth. The main issues to watch are whether nitrogen pricing remains supportive, when shipment volumes stabilize, the progress of the Yazoo City restart and the cash requirements of Blue Point One as construction accelerates.