CF Industries (CF) 14 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Martin Jarosick	Vice President, Investor Relations.
Anthony Will	CEO.
Bert Frost	Senior Vice President of Sales, Market Development and Supply Chain.
Dennis Kelleher	CFO
Chris Bohn	Senior Vice President of Manufacturing and Distribution.
Joel Jackson	BMO Capital Markets
Mark Connelly	Stephens, Inc
Steve Byrne	Bank of America
Don Carson	Susquehanna Financial
Duffy Fischer	Barclays
Jeff Zekauskas	JPMorgan
P.J. Juvekar	Citi
John Roberts	UBS
Andrew Wong	RBC Capital

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 CF Industries Holdings Earnings Conference Call. My name is Tiffany, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session towards the end of the presentation. [Operator Instructions] I would now like to turn the presentation over to the host for today, Mr. Investor CF with Jarosick Relations. Martin Sir, please proceed.

Martin Jarosick

in on facts historical may predict. guarantees risks, from filings More website. are available the is GAAP difficult that or statements. the about are are expressed differ that our factors affect yesterday Vice With and full SEC, what our website Industries fourth performance discuss Supply Senior host measures Bohn, year in morning results Martin find future are President non-GAAP Kelleher, On Vice results information for and CFO; thanks CEO; reported and quarter forward-looking may Senior made Statements Tony conference Sales, uncertainties Also, in full posted found Chris performance on for XXXX Industries and Jarosick, Market presentation Industries not that which CF any and results CF. statements release Relations the Investor question-and-answer President this of CF Bert involve actual the a we'll President; outcomes today in and assumptions of our These not and and Dennis Chain; I'm are Will, joining Distribution. are you our call. call, materially Good website. our presentation on call and its be year between XXXX and CF then review me Vice Therefore, and afternoon. our implied may will this fourth Manufacturing detailed of with session. on outlook, reconciliations the Frost, press earnings and detail, quarter and statements. Development the in to

Tony Will, President Now, let CEO. me and introduce our

Anthony Will

XXXX tighter nitrogen XXXX, and good gas over and generated which supply backdrop billion, of generally we lower reflect million. in EBITDA execution prices. for our natural I night, by Martin, results North global a of highlight the posted EBITDA XX% But it and These morning, results adjusted it of results, a American $X.X adjusted outstanding Thanks, allowed financial $XXX we that Last team everyone. team market and great to to entire was Bert’s on even organization the the CF us the these delivered And want that though conditions. Chris’ in particular. was the hard efforts of CF work demand capitalize

our our incremental produce your to greater utilization materials. plant basically attention Let North than to being XXX,XXX talked a do into of This analysis X said impact Or we capabilities. production on an American about We've achieve this may our competitors. what performance. we operational ammonia the call year We've our asset the but operators on we've size translates from great able have tons me first base. that indicates time you. world per worth quantified of our that data additional with roughly a past, of comparably would plant a another competitors versus superior year network, Based our slide of way, conducted our the be full scale by to the XX% ammonia every ammonia taken be operating CRU based able in been sized production in for

plant is a ammonia a that over competitive expertise Given $X significant cost scale America billion, operational world our in North would advantage.

we and all and across selling marketing on side, higher products -- supply side realized On the year-over-year. prices the supply chain

I We am very did incident business rate we a accomplished for heavy XXX,XXX maintenance of all most per hours year. CF an proud that importantly, in of worked, lower the incidents zero year to the really We operated goods adjusted of of a schedule. EBITDA execution This increase six generate and XXXX. the our fantastic us also despite safely. so ended enabled We of with and XX% a parts recordable achieved turnaround year. team point sold we truly for costs versus in across well

ahead, about Looking XXXX. we're excited

Bert conditions January a and of see forward from than moment, the continuation Based As XX gas with favorable almost on strip market gas year. explain could we last February, along by a costs XXXX XXXX be will lower in the actual million.

demand the pricing also is in year, both anticipate substantial for America corn and as U.S. in we in last compared for index wheat Golf last year-to-date products Additionally, our year. the given expectations ahead to increase publications of at major running reported nitrogen a increases and acres North in

half materializes in first be quarter. a a should or to first strong first the quarter have big will All the But say strong. that way as of total either the of XXXX. half Weather that suggests in if second

beyond. The as of always sit to we the second be the a half reset, and bullish somewhat we therefore year February. term is to and in about here continue uncertain that out trends extend XXXX But, long

tightening nitrogen more really the of and demand. the further than North world. looks to slowly from gas the growing supply curve natural New is compared American global demand, capacity forward rest attractive And

more just first XXXX. great So is a of story about than half our the opportunity in

and cash well next very capital allocation four invested $X.X consistent We our million outstanding with in existing improving units grew announcing LP. previously share of our to Nitrogen five a are program. cash generated by excess $XXX business we the for shareholders and paid We Terra years. in assets. We billion and dividend XXXX, regular cash. our then our positioned philosophy. our completing acquiring repurchase deployed to by We the We In sustaining that returned longstanding

million positive closed the outlook the balance runs materials, with Slide accretion board new themselves through repurchase for $XXX XXXX. our almost share given cash a XXXX program X% to We X on should in four authorized the the dollar As our sheet years, by shown over in our billion year drive on roughly $X XXXX. and five share next repurchases a has that of

$XXX that, me XXXX. it closing turn I in for the to Bert, our to cover return outlook and In over debt Bert? market will discuss our retire before our honored who Dennis in of maturity some financials commitment its million addition, let we With will then before thoughts. again May reiterate

Bert Frost

CF and Thanks nitrogen performed plant weather. negatively with record in demand XXXX of Asia in Ammonia record in a throughout in well the a a due ammonia and of UAN. low while compared was included sales affected higher from product higher in XXXX due and million to volume Tony. volume seasonally This begins season moderating for benefiting to by tons. they pressure; fundamentals due XXXX as were Europe, hemisphere. to lower Since sales near fall prices believe will XXXX northern that XX.X team in urea materialize, first total then, prices both highs turnarounds support Global under prices October. to This of have XXXX. energy notably number prices been reached We global to poor XXXX. demand then and industry The

to additions As XXXX are year to we substantial million see performance. projected at our a for result, approximately urea be build X.X the production opportunities on modest metric capacity Net global tons.

X corn the half during strong ratio in in XX XXXX. new demand corn demand projected soybean Additionally, America The we nitrogen States, in believe North which expect to futures in acres be acres million Most nitrogen million United first to crop are in XXXX. substantial the to plantings year. of notably, we favors a rise increase global by the will solid

These wheat increase nitrogen X We in also should drive expect acre a shifts in million plantings. North demand incremental America. acreage

nitrogen of the poor demand, need resulting will fall upgraded season to the products first incremental of not fall up likely did or Additionally, further ammonia ammonia make ammonia applications supports in half the the deficit spring. with apply that the areas in year the in

the at be a quarter. high barge, and truck premium demand and price North we America, With rail through in the outlook assets demand logistics will in anticipate second

look CSL product XXXX. any we increase expect or year volumes mix. sales tons, which As inventory and and higher during to be million compared lower we maintenance is based can turnarounds year, around ahead, product the given on In levels to XX.X

American well, We forward the favorable. and cost from gas. continue benefit looks We the to to weathered curve our to also low access in it quarter fourth expect spikes North natural

We continue price these differentials to make risk. purchasing spike term about differentials lock factors We're our in the gas optimistic Oklahoma from are forward actively particularly Alberta managing of basis us to remove well this positioned near in XXXX. basis and benefit environment. Each substantially natural and requirements for

With leverage ability to demonstrated that, flexibility margin the and the the year the [ph] to effectively system our into navigate maximize to market the future. our ability turn have to call Dennis. I'll of overall confident We CS and we're through our over conditions

Dennis Kelleher

adjusted EBITDA of the After in per or The million $XXX $XXX and taking the detailed million. fourth reported share $XX Bert. account for Thanks release, EBITDA net diluted press our our company items of quarter of XXXX. earnings million into was $X.XX

turn. our longstanding taken This with global has allocation the our to cash has line generation in has As us allowed excess play hold, nitrogen recovery cash increased in philosophy. capital

As you on net improvement and cash XXXX. Slide activities provided in is $XXX $X.X dollars can million on approximately billion sustaining use operating capital see projects. We by expenditures for X,

included publicly repurchases. invested shareholders XX shares. in XXXX, us purchasing our share April. million million and by common Nitrogen also reduced million in all repurchase to We units in to growth $XXX $XXX which by count traded $XXX share Terra in the It in return of enabled payments program dividend The million of also approximately

of have the increased taken shareholder to As by end approximately business X you of X% can assets participation see in the tons XXXX X, nitrogen on underlying these XXXX. or the of shares compared Slide for together,

ended As build we to track look record. We Apple with we able be believe, on liquidity. will ahead, we this XXXX

and revolving facility were cash million about was Our undrawn. our cash dollar equivalents and $XXX $XXX million credit

million the capital dollars. be Tony ahead. expect $XXX explained, cash million as expenditures substantial XXXX generation also in we expect in $XXX to We And years to

the new of $X billion to result, end XXXX. a share repurchase As authorization the approved board a

some its remarks. remain repaying Tony debt that, XXXX. May committed in maturity also With in million or will date provide before We to closing on of $XXX

Anthony Will

Thanks Dennis.

looking again and accomplished we we opportunities We're we beyond. in future. Before of and take thank for achieve well-positioned considerable as questions, call to the and see the in we all the commitment I to XXXX proud everything a industry Their fundamentals XXXX. drives favorable XXXX to strengths the their CF’s outstanding forward want we company. for ahead advantage employees to see foreseeable our in dedication and of leverage we're of work open what We're

cash now enable term drive questions. can long to and open With to that to our operator, we we substantial the us shareholder We us create value. generation continue expect to call capability will

Operator

from proceed. [Operator Michael comes our Cleveland question Instructions] Please Research. And Piken first with

Michael Piken

thoughts Yes, well hi shut the both Magellan about to future bit out your good as morning. your I term the on for longer pipeline, and find ammonia? just a what potentially as for means that down wanted being little business

Anthony Will

Yes, thanks.

happen. team operational to to to as had Midwest. Magellan, for our kind their tons decision and them of that issues projecting with our ship our and create options in move providers. They've we has Regarding out shut the terminals not into our avenues we've or as the we vertebrates which what tons working is are to able several the up by surprised support truck with loading down storage would challenged our with We've We capabilities barge X% we're up in working certain well thought wheat about market. increasing on to but do to X% the different now, ammonia shift disappointed, wanted system, Magellan One of been the which and our past upper of the to of pipeline. move years

so Michael, transported out moving tonne, be [Indiscernible] will down the by forward tonnes to the we in we there. was the the we've Realistically an the the that of believe gallon to it expect good we with pipeline position tons year. that that continue got options and those coming into predominant the to okay a as that Bert down shut to end barge said, we market move of just So

So I preparing really done nice has team job a for Bert's of eventuality. this think

Operator

Isaacson And Thank question from next comes you. Scotia bank. Ben with our Please proceed.

Ben Isaacson

impacting U.S. you. and years update specifically you of to can on the curve the give LNG us Good out, morning. do an of nitrogen you cost strategies you how the economics When see you and kind plus Thanks. five position that? on manage market CS U.S. think have Thank growth

Anthony Will

take are North costs Yes. high. this. a is and Ben, But, construction America I at I the good our that will think both from look extremely in perspective news Dennis

position expecting production of a advantaged North if look I abroad. And at base a so into ground bit substantially it in fair our all North to given price world just is high of the liquefaction an we've now. supply America gone America of profit couple what's or in over capacity that’s is into LNG where the the XXs And gas response And North result in in for of is are And on continuing anybody those from are relative here. XXs return. is an rest in the low dollars of very putting and We and from building think entities XXs the costs that in expected gas be given happened is return a competitors resource to see that XXs quick Bcf below the the America bucks. years three America a North mid you last rate

resource LNG elsewhere So, the is and capacity lowering dramatically in the American drying there we the we think up North quickly new issue gas cost don't world. the and production of spiking see an of don't marginal

business for as So next to producers. for five the it's we think U.S. usual four years,

Dennis Kelleher

for resource high, Tony at about you that is a has I've land what look you to talked money, be the key response it. rig sort outlined of when ratio, got Yes. you've XX projects, to side or to and ratio as thing Ben low can when anywhere production seen is production tap XXX. think time, resource that short into can And the the I on cost, you've from the cycle typically with got the resources

And is in that small timeframe. LNG that see capable resource to are will the small or of base come that fairly capacity we have so, in come pretty a what compared increments short the producing

Operator

Christopher Suisse. proceed. you. question Thank Parkinson our Credit And comes next with from Please

Christopher Parkinson

Thank you.

are last challenge expansions of believe do build decreasing flows over be touch the you. context the European Chinese how flows to or you evolve Given if importance trade was cycle Thank you exports? decade half And could would on the appreciated? capacity duties, trade How the evolve so. going those UAN approaching in also will of believe both of given you anti-dumping the of urea we're

Bert Frost

So you're right.

declining said, we're will new we and coming growth on expansions, this in tonnage and expected tonnage, Regarding a as positive tons forward. market the notes urea are on that that going about coming year, good the my I X.X million of amount expect with be

we not China that production X capacity of are lower there'll East. having pay expansions of the from exports. to believe high are million come have that announced I'm sure Africa, down to Nigeria, just LNG. Middle additions time do the of be Northern is areas, However, because there about about that over tonnes cost level Indian And cost moderating this

So trade flows.

imports think you've that move the down. expect and plants we as shut growth on tonnes, say additions in in United I million a and seen come let's operate level range into are down well the stay in to the of States. Brazil Petrobras of We're lower and X going

million years. net to So million to the X moving from seven expect over X tonnes, a for be tonnes still couple India six to of next tonne million range

higher marginal will that producer higher that's to these cost, And direct and will with of so moderate reflection tonnes cost EU a cost it's cooperating We're analysis. down these in and this high demand the those economics actively participating and discussions. and a curve cost lower classic and markets and the absorb have back and work supply and to LNG

in tonnes We the come millions same we announcement expect month half continuation at and month duties duties, and in paid while lead of duty can come or of an and the which the no X.X% States. to next to way out today or pay they duties, no a this United

have imports to margins producers exports we position but the U.S. our have completely that So to shipped is or is over pretty European one there, the clear, that on unrelated low shipped lower we the then costs, European of we higher driven gas costs urea and high what or a that LNG global by caused by a and would combination price be imports. production prices UAN Russian it's whether experience of

tons reviewing dumping. expect, would States something that was if we should provided to we was were anything and that were to similar and we shipping prices close at and so, United that I and economic out that others did you And what economically not thinking the analysis have come analysis the that

Anthony Will

with Yes, investigation. we're as I Commission that said, Bert actively point mean, cooperating the I think on

dumping, using United and our price the hit a price above We not our Belgium is net the UAN price is would are East Jones Act a Coast what point and delivered France be that States. Vessel into for it back global of

as of high to Romania, those -- bringing of this. transportation because East, Cam Euro Poland, logistically said, So it's of those higher. if even inefficient, U.N. the land it's very us not have producers; Eastern center are where where filing OCI, European make. end and in producers very [Indiscernible] of or France Lithuania, Belgium day, they're do, as is rational, lawsuit for is costs that it's and And the [ph] the the that plants, of located and This are you not It is Europe, moves product this and Bert kind running the at consumption are the as complaint. are Western in Yara, is challenged we it plants European look not it's not it very at cost, to mass they high that

sitting situation and fact And the Belgium, attractive the terribly duties, have is, to a some French to basically given the of the subsidize farmers us producers. if goes with that's to in probably be yellow the what not So message the so the sort European matter forward if farmers sending you eastern cost you're particularly Commission high forth. out vest they're telling French European

talk with if made the are it it way, Bert, subsidizing farmers if deal develops. want producers. high we've But you So goes cost situation see the that about how to to we'll plans that

Bert Frost

flows. and XX tonnes We of go. to urea above we've we're moving our extra constantly where so it UAN, there far highest market running is back. growth because liquor, trade being constantly we’re on that up brought of in also. system whether it's this options million plant way, X.X XX looking have and that review, tons the we and move your to the the the we we've UAN like Neal to be capacity said, ambivalent capacity to Port either making additional capacity the or them to plant, market optionality But, on net question We're had and Yes, that regarding at extra

choose buckets We probably that because in and working very the a Brazil, ship, remain each. for this and development So and week, our to the margins. And to about coasts, markets higher right of at domestic that the looking the Colombia Chile, at the attractive forefront production a with last you've customers move on to each We're heard us, the talk look with tonnage you the five we're we're grown and we effort of market. attractive. substantially mix all really at more day work and we're America, United of then to those are that when additional opportunities South on years now it's in let’s available mix States urea little can that terminating Mexico is extra have Argentina, running in us for

good So that participating at to be at continue we or today, book least opportunities see we're above market UAN in the CF’s level same we able think, we'll going forward. and look the

Operator

you. Thank

from next Capital proceed. question with Please BMO Joel comes Our Markets. Jackson

Joel Jackson

urea Iran, volumes maybe can comment terms which volatility also participate China India, good counting among of but double of discussion has that flows between around in. you of China Indian lot lot But volatility of were of in kind perspective, the bid trade tenders in guys. which into morning on we you different a what last ways. -- the going senior a tenders, don't there's and some tenders, and your [ph] maybe months, of participants saw Hi created different market from The few

has about tender So play how maybe the on talk market affected you different your that the in? Indian Thanks participate

Anthony Will

this have from and year. amount of at a depending look only tonnes six, half big do, country timing, depending the five purchases the and impact. they minutes China. on million and volume, the They're the When this on past, Yes. a world can Iran you India tenders, say the the that And in let's seven that the came in principally tonnes, to size

then, the As been changing. the and that couple these years, we've has impossible that talked see flows are China, the tenders. next amount out recent we Iranian has decreasing about And over with trade a sanction over if of to Iran, coming of difficult of happened. tonnage on years couple the not participate of last in And

East So Qatar, principally some well that tonnage those of as northern as Saudi and Arabia, supplied has moved Nigeria Africa. to of and some countries Middle out the

I and covered direct, and participated, have some some some shorts producers took traders, so And producers are some then traders and as you're think, later. right, going people

on and And million it in does in period. plus disrupting a six a have you tonnes buy ships market so impact that eight then the to a when a that week overall and get over week,

are how than providing think that's how So, manage flows freight producers we evolve. expect shipping into $X that a attractive the back like we is I North to Eastern goes India that a good to come trade buyers cost to this we Middle Low our for look and a to into them, position at come Indian America. what it's go And North are and East spending to works. comment will But and manage economics providers for are for market us us, to how we $XX America. buying, continue that, this earlier so just to outcome $XX and my to rather that's

moderate, that to that's overwhelms spot forward. as is going market we Brazil and think of this some what a tonnage That's the and months. have We into market too market. happened positive when that that us the happened as what well will see And last comes in that couple Brazil. We much, to

Operator

our comes Connelly with from Stephens, And Please proceed. Mark question next you. Thank Inc.

Mark Connelly

Thanks.

going the to issue. barge affecting on higher? your talk barge high of costs weather quick Is that With there's season, follow already freight a pipeline drive the cold Just demand quarter. through up second

Anthony Will

our have our and group own XXXX well logistics. trucking our managing an have contracted truck barge For our increasing amount CF, we railcars and we logistics of that’s were own as we’ve

correct. You're

I a little slow. think later, be of and cold water rivers probably the with will that's make probably going bit the traffic barge ice, be will volume the lot going ice up weather, going down but the to

impact and already us well as can will for that. see as and are probably we and the Donaldsonville, think ammonia will barge I go the ammonia, I are customers doing, we happen of think Magellan we’ll into So, and putting do do and Verdigris we we up What fine. is barge believe be But that freights for motion what’s locking other the suffer up are or but might that, vessels versus these and get for lows its Midwest time. of coming Louis CF short to Saint points large think for what vessels I an sale securing coming inability a period like connecting to will without service get barge that for be service the spot inability are impacted, logistics that’s in to competitors

Anthony Will

have is tightness generally The ones. much own barge dry we around other of other our the have has ammonia the [ph] in Bert and to is, toes we market thing and long-term what on leases the add, said I would speaking – focused product Mark own

or go power the pretty about do we bases lease got to that up same price Oklahoma long-term the tons days that some in actually what down well. we’ve Newstar. an for ready lot favorability times Verdigris So into Orleans already ammonia in And we because than it New end even produce move the differential export as because and Donaldsonville, the ammonia out. Verdigris access making vessels of have is What Donaldsonville tend can can of and when on we cheaper we on the

and in-market that on glass full So, in equation costs barge general get. the half the we increase of the side premium freight costs just high

network have to freight and costs, we all actually really a that’s scarcity as high of And for of good given detriment high to -- another opposed that us our us. the thing, becoming play thing high oil, a instead vessel to options a bad advantage in-market so capacity a

Operator

proceed. you. our Please Bank from Thank Steve Byrne of comes America. question And with next

Steve Byrne

for your for maybe Was contribute was or net say particular more spot then that that Good in that UAN Yes. selling in into it with What full that the light, channels already pricing the for in a -- the haven’t your and has on it full fall not to respect conviction been to seems the price already sold last competitors what more morning. were markets your that two you months, And end realized quarter? terms forward? do was your how supportive, in bit below expectations more corn of quarter would key very who application outlook our little here the that sales? already seems forward channels weight UAN that outlook and the season weak gives not or but

Anthony Will

Steve, to the me it look. I’ll answer forward that the first turn piece and Bert of let over to handle

to a the look we when to back November to order from we So, contain our heavy in we book, price I’m of you take saying, about sure to fourth the fill run-up fall summer. the most the it, took and I’m liked going transcript. our dose not huge how didn’t clear coming much been the see forward quarter could expect of have

done of on UAN me you price” quarter what work people your are half the said, what But of I’ll listen we fourth price, And to results. the for because view instead for XXXX. script happen but that to what So understand first should’ve a out like I our posting spot turn that sort “miss in and only my terms to lot could've there of this provided the clear over what we what respect was say not let got its about to people differently in into visibility to having you for that sense with Bert it we been gave of the expecting. say publications most the I talk is, of and him have

Bert Frost

Yes.

several don’t tanks area. will for America didn’t UAN UAN tier I that Southern lot did and It be fall the but a at, And the in million time. believe season believe be and the tons. be kind the Canada as general above the a distribution last XXXX XX% of identifying and the did the to Canada the for of fall did get upgraded difference tons look We’ve a North go to out was tanks tier given season to the and of years considerable ability produced get and in Today the ammonia. go bigger XXXX tier. comparison, which be consumption so is Northern of to of market fall. impossible and in Northern all And to they robust down, to looking considerably system That million a XX ammonia we that XXXX comparable so the that time And So, we year will will size XX% a did lot product. was will ammonia It that’s this you supplied when tier, imported. Southern have that’s movement at spent the absorb that poor I being the taking That about means product XXX,XXX industry in opposite could to in that not ammonia. on demand specifically tonnage was for not went light. very [ph], think we

and in that logistics reserve we that can customers logistics preparing they get and those realizing to that with believe for others. place, us is so, need And and our those are

in current have NOLA trading spring with sold network, four probably, is And very and end pricing and historic base, and six positioned our will may its The we right away fare say, from well of competitors price end it urea the actually our so in production very premium. fairly we’re that’s an QX UAN strengths we at being And the well fine. storage market above to think terms plays where on which that with and I’d that’s into QX. weak trading market is strong just forward, starting think in UAN weeks

Operator

Thank you. next comes Carson question And our Susquehanna Don Please Financial. with proceed. from

Don Carson

what a Yes. got I and pricing on what prices the had moderation EU curve. cost U.S. implications thoughts for global are would curve you’ve on you Normally your of presentation cost think on your the in and energy be. the question Asian –

price urea to over you give XXX you some range cost that For in then NOLA your [Indiscernible] are example, went the you XXXX, site. QX TTF in through of curve implying advantages cost – a would XXX

now update you lower prices? given you’re about where talking we to the what can quarter us So are on Thanks. energy compared third

Dennis Kelleher

gas range Dennis. the out talk What is as said Don, bit of fits to sort prices. sort prices today you has what’s we XXX that laid for this the little the talked to because XXX, say, that– than was to last ceiling you oil account Yes. shelf it come we they’ve saying roughly $XXX. down of happened we’ve – but about say the is is to XXX we’re that related basically on effects time When as to been floor same the

it oil is at up still to today, left like not is if think still you look So perking happens Brent we see Tony that curve what can you, curve, price as with a $XX Bert pretty left-hand I still I’m those a face bit. compliance at cost in sure exactly have see gave little two tremendous cost even curve out, And forward is what’s reasonably of and margin been to upper have from but plus prices. OPEC in you just way OPEC its has the the I energy we’ll it a prices. at that happened And now we’ll business. opportunity looks good. steep numbers what just see and there What discussing, side the been the going

Anthony Will

And one. that I Don, would just add on

low that their You’re at relatively coal flat but it's bit little XXs. [ph], -- a The prices China, I increased absolutely internal moderated right. think China they're not that what was not we remained one mid-XXs have to bit. little the importing at Woodmac if curve, according Brent When a to now internal thing least published XX that and is against

has as so shelf terms that of you collapsed and but little compression said, couple bit any by like the here stretch on to And Dennis have what may positions changed of width up a have -- not was that and a of you of there, flat low imagination. to high fairly that got otherwise a but its bars those in the the end low,

when look that down looked published The for up a was you about spiked with It like we’re gas first and honestly the that curve the forward while. quite quarter and after December it’s in price, you in dramatically. November thing got much U.S. today into it’s four of excited on a other come the is October into pretty we handle

We’re now. mid Xs in the

earlier we back there now to when what year. open capacity spoke favorable have think is and around gas largely and cost there. -- produce much there there about some gas -- so I chart October see And to very to our right of goes to rest what the out if the it to for because anything we’re structure is just us But I upside response in in be is we’ll we the happens to think the this here. supply terms is pleased of U.S. And how and

Bert Frost

Yes. they always the at I’ll are a who Don, are curve point what that they people thing other important remind but facing out, good its think to indication. the cost what I look

prevalent? of prices would year prices in sort be the price price detail a we average not really what lay ceiling. we’re floor is the that So energy for And if a it out the

moving rate look us. you And going so the prior and on the outstripped in immediate can periods thing during as XXXX makes which in in is you they’re supply can cost in the XXXX, lot average into And and confident of of perspective, the for so and through despite this direction than seen the get get right you we is demand going that forward stronger the as balancings demand, demand you years that by growth that year the above in one and capacity I can that And the prices think from get have two XXXX a rate growth rise curve years. us the

Operator

next our Barclays. with comes Duffy And Fischer you. question from Thank Please proceed.

Duffy Fischer

Yes. Good Two fall the America. the floor season in impact North morning. questions of of application

First And that do normal. you does UAN products how ammonia then season? be is mix nitrogen carried replaced what the the big two, to to your the kind year? expected much mix the you And and demand inventories spring you both of that of like have amount meet is, product will then big that between or dollar urea, think a through we get if change

Bert Frost

cannot the to and season So you as you we floor shows what fall a of is. enter – plan normal floor decades to for we normal impact got

that of And of and sold presold some fast. is that some

roll we XXth it through the As about by was have fall fall November a we not evident season. would ammonia early, I’m the talking

so quickly plants the different And redirect to and and markets position differently. in tons the we pivoted

for run then markets position products the and and as Our come Texas full plants and the north into play. our spring the demand for starting and intension market to to market is now those prepare of always kind in Oklahoma those moves

sector, playing in are $X we positive into season corn for constructively on with XX but there, in probably very Spring, some the first, big out the plus believe soybeans, in acres now. the million happen shipment you today ratio special stock We because use you’re if what low has Chinese to out carry corn going almost limitation XXX% downsize, store don’t the of position revolution move spring to imports has increase beans carry a and difficult and the were as that can [ph] Brazilian So on upside, one some corn.

ton And from forward. soybeans. a out planning going that soybeans we’re of I lower put on the XX billion level So range pressure type exports think

XX difficult in ammonia and from will those I and to fall a So paramount. tons moving The to on days trucks period that’s the weeks this season timely logistics corn other And basis. of moves make the goes it and where of million a it mentioned become spring acres. earlier attractiveness I the think to out then all demand get additional

do not going XXX,XXX in million the down say change, fall. a tons the XXX,XXX is to million did about to so, go believe I let’s And a mix – of ammonia

third, just different UAN is it spring, will because by XX%, then N ready bucket that dividing to the you ammonia Urea it of a ammonia XXX,XXX XX% for and get And by that. move If positions is XX%. is the tons three multiplied factor we’re

substantial upper and being and the and UAN, prepared going see amount then You’re to a needed will we and inventory be wise plan urea Midwest full go resupply. to in in of challenge the

barging our well up we’re as we’re tons the having So those railcar our as and to assets move challenge. position to

Operator

Zekauskas Thank you. proceed. And from question with our JPMorgan. Please next Jeff comes

Jeff Zekauskas

Thanks expecting your United very fourth how imports season? limited by about was turnarounds? can your first the how And can was by much own nitrogen something say half of States XXXX? to about much. you limited short level the it your much also you’re volume And quarter In of in talk of fertilizer results you the

Anthony Will

of I’ll to handle least then piece throw me the of kind let first that the Jeff, piece Bert. over or that and the of of it first pieces at

Jeff Zekauskas

Sure.

Anthony Will

The exports go -- would’ve the extra as quarter fourth turnaround certainly sales the market we really that are. to as us not activity had they're ag out But while it’s make fine. exports high either valuable had in as for They ammonia some end are ammonia had money. which the

And about. at couple issue was we opposed talking upgraded the to a dollars the of had shortfall products. turnaround movement hundred a a good on a And that tons really issue. end volume so as was we’re the ammonia pretty And seasonal day the of

I the volume what point ag versus number But let didn't normal go small context that out And the else. tons. is I’ll season as it’s relatively million of So you rest. in XX.X largely then of comment the ammonia Bert, would that of anything to kind opposed on a

Bert Frost

Yes.

imports million to-date, the above where to and probably at we’re say, looking we’re are that we trending I million tons would of urea UAN expecting million X.X tons X.X X So, currently needed one and level. of ahead towards

have markets times. Brazil the world remember and you’ve vessel few And all Jeff, the is that to bring the one of So In I seen Orleans it in in think that liquidity nominated you New has in weakness and NOLA. sold. at

have You that NOLA and tenders. you in do to there don’t off walk then

product market and happened million decline traders. think. in, This over taking lesson in take of time four, for has so gets people from or they losses over takes time the and the going these I that’s seen lower as is believe what first but to X we’ve bring we we’re tons these learn some And who traders years, some

in demand of would total in market expect position. we probably that we inputs will QX lower like. think And be so because that balance just the And coming

Jeff Zekauskas

[Indiscernible] I being move on the to but to NOLA imports But that so region? bit you on able in just market of what’s of want happen that kind the swapping in comment given actually around constraints a to premium little – out have product do

Anthony Will

Yes.

XXX contracts below $XXX of market of direct interior ammonia in UAN premium and XXX in NOLA, say, Tampa in and trading matter. $XXX $XXX and I positioning on market XXX production location. end the it at in timing in is UAN trading trading at depending and logistics where reflection the XXX/XXX at for interior, the the terminals. trading both in the to think NOLA Urea Ammonia urea the on the and are is is to we the importance in a $XXX for trading

plan So think continuing, risk vessels taking just at you by a to customers it the tons pick XX,XXX want that where that’s and to opportunity positioning exactly and of for appropriate right. I has on being not because them. dollars provide been prices our truck you taking million for a called to loads we several This who up is talked about there is a able and such value substantial we’ve something position

Operator

our from Please Juvekar comes P.J. Thank next proceed. question And with you. Citi.

P.J. Juvekar

Hi. morning. Good Yes.

Anthony Will

morning. Good

P.J. Juvekar

how So, on with UAN. that do in goes And into of volumes but lower because each of fall different that likely bit product. to think farmers can will margins more decide little application are out terms play spring, and apply of the each, your ammonia, maybe you urea

the you profit how quickly urea growers back and you maximize do Thank season was and your how you. export? So the net what did during your while the much on helping related export here just off

Anthony Will

Okay.

the time. And to farmer, partners optimal the at decision-making right the the is the that to to product at right that our for planting we at at place, directly question do right farmer. don’t sell right work connected directly and the for the looking channel and XRs rate, So, retail with we

these be we for make the whether and rail, in product through having our place the idea a on or we domestic, with of products having the in products with the so that idea would can of move trucks, And to different river, the customers export pull. places pipeline, our up that to

an who is this XXX you’re though their corn so, at yield trend yields for year looking farmer when acre. is of And and bushels planting

what the your that’s Nebraska Illinois, If bushels off is was irrigation you’re Iowa, last in year. Indiana target acre space, pulled an XXX probably it pivots and XXX areas, probably and [Indiscernible] to

growth you’re will and of be role stage growth. combination we’re as or pulling of optimal planting pivotal play urea So, combination you’re a off those ammonia of What is application UAN and in or needed initial there especially then needed and a nutrients both the seeing soil the the seed, the seed nutrients for that either corn but crop application.

but different And upgraded we’re as margins go, are we so, product yes, for driven.

that’s think serve farm center and for of that center driven products go what we I to the needs also. where the we’ll to market and and that [Indiscernible] retail continue our On what do. exports, urea

last America, We Last of to we the market XXX,XXX opportunity So we that when on cost attractive us. there and week. going loading where did was to back compared South also. that tons giving in a will X.X and vessel towards and week next domestic focused we net positive export but took be to we and we’re urea, Australia over tons is export [ph] and Chile little to year was a Europe shipped million XXX,XXX Ukraine UAN an

in participant execute as great were as as this opportunities us. customer opportunities will those against global base to and them. for And are so build come We our happy we to those a market

Dennis Kelleher

of much Urea the last little the port of year And say on in would year a number international for I bit a the last producers. of particular resort U.S. or of was

you at discount bit And parity. of international what saw trading so a NOLA a was

virtually on, substantially year every one exports net so was NOLA was we offering. And that last of back conducted what that above those

us. a I is think standpoint in particular urea for the export so And from great option

Operator

you. And Roberts with comes UBS. Thank our Please from proceed. John next question

John Roberts

more bought the in the is fourth in pace stock? think And could lot just that about you max can open of buyback about might rate or you. the Thank expect? activity you do an a Was program buyback it market I quarter back the that we

Anthony Will

October share mid mid-XXs, in the toward then trading wound low had that you the had was price the capped in was an and the dropped XXX we we end and So, we XXs. of million – at year the John, authorization were as to

a taken was in price low given about yield X% share that the think share. of saw is what fact that the was I So XXs on the us was in providing activity after-tax out increased the shares the you a where reflective dividend for also

and take is pace I share to be great with of that in. buy to think going opportunity generation more share And to where lower So, a going us see we is think as what reflective the conditions cash well price down. that's is price and as expect you'll market a that forward

how kind the about we that’s of So think the world.

John Roberts

in closures closures And rather the the actually the then in assumptions expected XX announced. Could are on back assumed half talk than about behind that China, the slide you about of expected estimate? on

Bert Frost

tons because to going it on the today. producing but doesn't production they we of surprise permanent opposed closures turn to about not that first, see they of that there into but cash perspective? from yet, number plans the may loss a and closure into where to curtail. coming. change what that We wouldn't sense Yes. perspective able that cash you which off think the electricity standpoint. have of likely of plants aggregate way from to parity. is And certainly the are as if The import curtailment haven’t lights assumptions list yet those that breakeven being versus do the goes It's on there's me as been kind X as They at shut that and can’t year. the of the or be a down, you looking number coal demand just in haven’t as from get balance as so, moved announced these What the a prices Chinese be make closures net internal that's And temporarily those tell it we below through flow are standpoint well ones pricing plants but could this way be Lot are that we million assessment. price our of of we be going

Operator

proceed. And our with Morgan Andrews next Please Vincent from you. Stanley. comes Thank question

Unidentified Analyst

anything for slide Thanks on This [Indiscernible]. and is would a takes my Hi. any think there whether Thank just from rate be helpful? perspective about to would – you. the or be modeling just perspective modeling from XXXX, Question that taking tax question. for really puts

Bert Frost

to what year mid perspective we the substantial I foreign plus largest for of XX%, purposes Yes. for have looking to state there. federal be net and from rate carry in so sort at year a XXs, a higher with that tax in today. addition mean, around of from next perspective four some there which probably we’re XX% statutory rate have see ability of has the a cash is there will and to provision Canada bonus foreign in capital that the budget is that rate XX% however in tax That forwards tax we’ve out taxes. XX-K, operating have a of is jurisdiction Remember here are we a amount to the take deduct But depreciation loss you'll capital cost a we laid XXX. in got of are

provision. be way perspectives, I wouldn't how our those, significant from a have in federal taxes cash earnings tax what of all I'm that paying that perspective, but shelter So different sure so you despite a XXXX expect we’ve the amount to good got in we have we’ll

Operator

And proceed. our comes question from Oxgaard next Bernstein. you. Please with Jonas Thank

Jonas Oxgaard

Good Hi. guys. morning, Thank you.

active U.S. press release wondering there was out? government? a monitoring? see interference the as active pretty intelligence you’ve no market your know. I I exporting you in its taken we been the Chinese mentioned re-exporting. as How just Chinese have role sanctions playing Can the Iranian stands and do is from with than this to You far more traders keep monitoring You

Anthony Will

think with international that business there’s option do been movements of I continue the think more certainly there's about don’t India Well, discussions I trying the recently to currency wire direct some for system. is to and payments that some and then and some touch doing

allow activity happen. some of to that that would So,

built. the is government gas that overhang the some sanctions long well appropriate supply and bit coming way created to counting plants as that free, I that are tons Our government and against. of are happening. that the aware to are But the expertise, just some areas a out to international pressure that a in picture our part the those the it's U.S. those plants and all virtually provide we can are those some place has of the does and think affected. more on materials disruption, need new some term the that do global longer other view are technical but market that going Europe just the They’re it as in can was them be or find through stuffs been vehicle tons outside fabbed we I would an view into the to parts going access of more that directly run and provide is places not is were access of along say the to that whether stay particularly exotic or

thing. plant slowness of rate either operating up reduction like a may the in for You Lordegan kind or see coming

could So little this continue I depending upon how think, what's is but a off to bit. on, long goes run, running going drop that to

Operator

with And next question proceed. our from you. comes Andrew Please Wong Thank Markets. RBC Capital

AndrewWong

good Hey morning.

a that's debt aside regarding that? on else of to more year. is into is maybe million things? allocation, plan and repurchases, roll there And you to investing due the this at general of you question do plan maybe debt So capital repayments it look anything over? repay expansions that $XXX or from M&A Or Do next you share just

Dennis Kelleher

things share not at. would can basis you capital. for I it we and business cash if picky our capital on We and those and to the look our our allocation we There our above Well like million M&A the where philosophy. us about accretive be cost invest per for and to to go back do that a we're however that growth have prospects projects mean, are flow do, of pretty in of

want but commitment investment of the to So, grade absent that to -- return we framework we a to that in shareholders, metrics. frame do want that term significance to in it cash our anything area, a reflects long within

$XXX we've repay maturity market which what the the to or is so rate coupon XXXX XXXX its before of is, the the of X the XXXX, million are bonds. May Those going carrier of we're date, or I And to of XX think and about on it’s X. in last committed

per of so So, just $XXX that year, when cash we million interest a significant reduction fixed in per below finally at an we'll cost cost be year sitting get and charges. done,

important [Indiscernible] charges repurchases do also think, out, on also ish of in a Tony yield X% cash shareholders to I well. lot eliminate it's as a after does pointed a as and that that, like it as we of share means fixed returning tax

believe that taking credit are debt associated we both So fixed with charge positive. out dividends and reducing also the the

Operator

for Thank today. that is you. closing like time to the gentlemen, Martin Jarosick all I'd to have turn and Ladies the remarks. questions call for we for back

Martin Jarosick

these conversations everyone over Thanks few we’ll for joining us. at look months. next various be And following we the to conferences forward

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