CFCF Industries

Our reportable segment structure reflects how our chief operating decision maker, as defined in accounting principles generally accepted in the United States (U.S. GAAP), assesses the performance segments consist of our reportable segments Ammonia, Granular Urea, UAN, AN and makes decisions about resource allocation. Other. These segments are differentiated by products. Our management uses gross margin to evaluate segment performance and allocate resources. Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes), are centrally managed and are not included in the measurement of segment profitability reviewed by management. The following table presents summary operating results by business segment: Ammonia(1) Granular Urea(2) UAN(2) AN(2) Other(2) Consolidated (in millions) Year ended December 31, 2024 Net sales $ 1,736 $ 1,600 $ 1,678 $ 419 $ 503 $ 5,936 Cost of sales 1,243 926 1,069 340 302 3,880 Gross margin $ 493 $ 674 $ 609 $ 79 $ 201 $ 2,056 Gross margin percentage 28.4 % 42.1 % 36.3 % 18.9 % 40.0 % 34.6 % Year ended December 31, 2023 Net sales $ 1,679 $ 1,823 $ 2,068 $ 497 $ 564 $ 6,631 Cost of sales 1,138 1,010 1,251 359 328 4,086 Gross margin $ 541 $ 813 $ 817 $ 138 $ 236 $ 2,545 Gross margin percentage 32.2 % 44.6 % 39.5 % 27.8 % 41.8 % 38.4 % Year ended December 31, 2022 Net sales $ 3,090 $ 2,892 $ 3,572 $ 845 $ 787 $ 11,186 Cost of sales 1,491 1,328 1,489 597 420 5,325 Gross margin $ 1,599 $ 1,564 $ 2,083 $ 248 $ 367 $ 5,861 Gross margin percentage 51.7 % 54.1 % 58.3 % 29.3 % 46.6 % 52.4 % See Note 21—Segment Disclosures for additional information.

arrangements we may enter into may involve significant risks and uncertainties, including the ability of us and our strategic partners to cooperate, us and our strategic partners having inconsistent interests or goals, ours and our partners ability to realize tax, financial and other programs incentivizing low-carbon production, and the potential that our strategic partners may be unable or unwilling to meet their financial or other obligations to the joint venture, which may negatively impact the expected benefits of the joint venture and cause us to incur additional expense or suffer reputational damage. In addition, due to the nature of these arrangements, we may have limited ability to direct or influence the management of the joint venture, which may limit our ability to assist and oversee the design and implementation of the joint venture’s business as well as its accounting, legal, governance, human resources, information technology, and other administrative systems. This may expose us to additional risks and uncertainties because we may be dependent upon and subject to liability, losses, or reputational damage relating to systems, controls, and personnel that are not under our control. These risks may be exacerbated when the joint venture is operating outside the United States due to geopolitical and political uncertainty and differences in language, culture, and regulation, as well as the factors listed above that are relevant to our international operations.

Natural gas is the principal raw material used to produce nitrogen-based products. We manage the risk of changes in natural gas prices primarily through the use of derivative financial instruments. The derivative instruments that we use are primarily natural gas fixed price swaps, basis swaps and options traded in the over-the-counter (OTC) markets. The derivatives reference primarily a NYMEX futures price index, which represent the basis for fair value at any given time. These derivatives are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. From time to time, we may also use derivative financial instruments to reduce our exposure to changes in foreign currency exchange rates. We do not use derivatives for trading purposes and are not a party to any leveraged derivatives.