Download PDF

Financials

Reconciliation Of Non-Gaap Financial Measures

EBITDA is defined as net earnings (loss) attributable to common stockholders plus interest expense — net, income taxes and depreciation and amortization. Other adjustments include the elimination of loan fee amortization that is included in both interest and amortization, and the portion of depreciation that is included in noncontrolling interests.

The company has presented EBITDA because management uses the measure to track performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry.

Adjusted EBITDA is defined as EBITDA adjusted with the selected items included in EBITDA as summarized in the table below. The company has presented adjusted EBITDA because management uses adjusted EBITDA, and believes it is useful to investors, as a supplemental financial measure in the comparison of year-over-year performance.

Year Ended December 31 2017 2016
(in millions)
Net earnings (loss) attributable to common stockholders $358 $(277)
Interest expense—net 303 195
Income tax benefit (575) (68)
Depreciation and amortization 883 678
Less other adjustments:
Depreciation and amortization in noncontrolling interests (101) (78)
Loan fee amortization(1) (12) (55)
EBITDA 856 395
Unrealized net mark-to-market loss (gain) on natural gas derivatives 61 (260)
Loss on foreign currency transactions including intercompany loans(2) 2 93
Equity method investment tax contingency accrual(3) 7 —
Loss on embedded derivative(4) 4 23
Loss on debt extinguishment 53 167
Private Senior Notes amendment arrangement fees —
Capacity expansion project expenses — 73
Expansion project start-up costs — 52
Transaction costs(5) — 179
Impairment of equity method investment in PLNL — 134
Gain on sale of equity method investment (14) —
Total adjustments 113 463
Adjusted EBITDA $969 $858
  • (1)Loan fee amortization is included in both interest expense-net and depreciation and amortization.
  • (2)Loss on foreign currency transactions including intercompany loans primarily relates to the unrealized foreign currency exchange rate impact on intercompany debt that has not been permanently invested.
  • (3)Represents an accrual on the books of Point Lisas Nitrogen Ltd. (PLNL), the company’s Trinidad joint venture, for a disputed tax assessment. Amount reflects the company’s 50 percent equity interest in PLNL. This is included in equity in losses of operating affiliates in our consolidated statements of operations.
  • (4)Represents the loss on the embedded derivative included within the terms of the company’s strategic venture with CHS Inc.
  • (5)Transaction costs relate to costs of various consulting and legal services associated with the company’s proposed combination with certain businesses of OCI and the company’s strategic venture with CHS Inc.

Controllable cost of sales

Controllable cost of sales is defined as cost of sales adjusted for natural gas costs, realized and unrealized losses (gains) on natural gas derivatives, and depreciation and amortization. The company has presented controllable cost of sales and controllable cost of sales per ton because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance.

Year Ended December 31 2017 2016 2015
(in millions)
Cost of sales $3,700 $2,845 $2,761
Natural gas costs(1) 1,194 761 746
Realized net losses on natural gas derivatives2 26 133 70
Unrealized net mark-to-market loss (gain)
on natural gas derivatives		 61 (260) 176
Depreciation and amortization 836 597 433
Expansion project start-up costs — 52 —
Total adjustments 2,117 1,283 1,425
Controllable cost of sales $1,583 $1,562 $1,336
Tons of product sold (000s) 19,952 16,957 13,718
Cost of sales per ton $185.45 $167.78 $201.27
Decrease in cost of sales per ton (8)%    
Controllable cost of sales per ton $79.34 $92.12 $97.39
Decrease in controllable cost of sales per ton (19)%    
  • (1)Includes the cost of natural gas that is included in cost of sales during the period under the first-in, first-out inventory cost method.
  • (2)Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives.