CF Industries (CF) 2 May 192019 Q1 Earnings call transcript

Company Profile

Participants

Martin Jarosick	Vice President-Investor Relation
Tony Will	Chief Executive Officer
Dennis Kelleher	Chief Financial Officer
Bert Frost	Senior Vice President-Sales and Market development and Supply Chain
Chris Bohn	Senior Vice President-Manufacturing and Distribution
Adam Samuelson	Goldman Sachs
Joel Jackson	BMO Capital Markets
Ben Isaacson	Scotiabank
Michael Piken	Cleveland
Mark Connelly	Stephens Inc
Graeme Welds	Credit Suisse
Luke Washer	Bank of America
Andrew Wong	RBC Capital Markets
Don Carson	Susquehanna Financial
Dan Jester	Citi
Charles Neivert	Cowen
John Roberts	UBS

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2019 CF Industries Holdings Earnings Conference Call. My name is Justin and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We'll facilitate a question and answer session towards the end of the presentation. [Operator Instructions] I would now like to turn the presentation over to your host for today, Martin Jarosick with CF Investor Relations. proceed. please Sir,

Martin Jarosick

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

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

Tony Will

significantly really XXXX of which the with we after this especially items posted into $XXX first account in release. we Last generated performance, Thanks, Martin. quarter financial our night, We're EBITDA earnings And results our good million we detailed the pleased wet season last taking exceeded even Despite against lower cold delayed more adjusted everyone. for first in of volumes morning of NAN. weather with year sales year. UAN, adjusted from as for quarter and backdrop EBITDA the than prices urea, so another last that higher were our quarter first the application selling

set we We record work highest importantly, to rate and a our safely quarterly also incident third ammonia well. incidents XX-month hours. ever. as extremely was at production urea continue Most our remained XXX,XXX per recordable operated for We X.X work production rolling

going and of we have on our our we another now on a run ago year we much make. past may times increment. and we the XXX into patterns many the and of Weather out in business ship As of no one said but volume. the six-month shipments we over different. move product believe plan we ahead we're quarter to XX/X, plants shipments We everything this were a where saw year, course will are be improved April year

high we we Bert move upgraded believe and rail needed. weather. amplified As States effects when applications plays to logistics in nitrogen they to right strengths. for products our United time, tested demand industries of continued the barge corn due is transportation same We due last the lingering outline shortly, capabilities farmers, challenges by ammonia At will the into where and This to the to in fall. to increased expect disruptions expect acres low these

same application cost to operating American our and with our of advantage low have generation term, position us We significant production, as these network, expansive well in Longer and to access an import operational these season region progresses. gas our cash along will North continue distribution advantages, natural logistics spring dependent drive capabilities capability. unparalleled an in the region structural

ignore use Commission's the of gas comment highly prevailing imports our on duties newer, purchase prices. I the We the prices. of European disagree that Bert, expected between fundamentals like it announcement CS is natural our the at to lower efficient, the The market input which over Commission's sell on strongly our climate-friendly more market We it See we UAN. prevailing did. than efficient key that and of is of with turn reliable, UAN they plants primary I globally European difference at traded Eastern to UAN. market believe in more and commodities and impacts Before want we GHG producers plants to then have provisional more conclusions, produce

expect That the gas. and We industry also flows these UAN cost to some American time impact will adjust. access North for fully to will that duties have low trade said, that natural we global take

we tons make is realigning to We'll the that granular unless production more between UAN those depending more have impact financial Europe urea has We appropriate steps will to tons options how going about UAN exported last which year, XXX,XXX of company. of we to make. Fortunately, upon mix this others. than decisions XXX,XXX been to our the taking and And think many forward. we CF XXX,XXX tons absorb mitigate roughly specific

We America to continued demand build leverage that expect our into and we there to so South our region. and relationships exports in increase

six also year. America. based In additional significantly in actions poor these benefit fallout, that on those this with corn America financial in without on Europe short here space access Burt applications and Based impact. we UAN can easily an North months term acres increase a from realign we tons coupled teams that UAN which increase demand have taken, in to and sent those, the we ammonia leased previously the last have Chris significant to will Finally, we within their North

the that spring application before I who Bert European So net-net to turn cover few a more me items access closing financial deal some Bert? we're over it talk about with remarks. prepared the With will well season. to will Then Dennis of offer let the loss market. to

Bert Frost

Thanks, Tony.

in cold well-documented As North wet delayed applications America. has been fertilizer and weather

However, in field currently the fertilizer work weather the for well favorable in field April, Midwest and slowed. applications as work was and has

trucks a terminals Northern from Nebraska the Eastern sense in April the for Western day loaded To at several loaded Illinois Albany our X,XXX of trucks. tons XXX hours one begun of XX,XXX terminal. and XX activity movement on week you many the To expected. past weeks, be the significant Illinois of do straight term Over Applications nearly urea give we to saw North shift in record reached this recently have more this truck for facility. at just one shipments East for And one would tons as day, Port ammonia Neal to than a and more Missouri.

pace. CF ammonia of now last In fact are year's shipments ahead

spring in in we the to to first United States. continue demand acres corn strong nitrogen during year, increase three farmers had If catch of technology to applications farmers on too We in and for products, not the other plantings giving North a late to be up half we it an the position. expect driven all planted in ready switch is by though, end have have late And the they America use.

week pace As with XXXX. corn plantings run of this

in believe all and strong products this spring the for manner Most to to lighter the applications. industry's transportation barge for demand ability fall significantly also up We this XX of challenged. been will and upgraded volume the has and least supply anticipate normal are timing order than ammonia make We access XXXX spring of Minneapolis be winter a regular opening weeks. and couple is don't This by slowly years. latest we the has effects. the This two at to the effects expect moving rain. for Barges disrupted after

high Barge spring into retreating far to north moving Pricing urea barges week Orleans First, to the demand. so barges been in this quarter this second urea need have XXX. is last be has applications. pricing before approach prompt reflected $XXX no in for week

this trading is a region of at facility, from position. inventory Norway in and already at then that Port product strong CFS production Second, to premium significant this our and barge our from due prices. it sort Neal to

Midwest anticipation logistics into of the the Donaldsonville railing upper leveraged also in high by have We urea flexibility demand.

factors of compared to the across enable All higher capture should these most prices last of quarter year. to second us segments,

the of The With to to needs. strengths. our two call first quarter I'll play for flexibility months a well Dennis. challenges and the as into these We're our team company's was assets over weather, that, meet next but customers’ challenging turn the prepared and because

Dennis Kelleher

$XXX the reported XXXX earnings In per $XXX Thanks, million. quarter $XX EBITDA $X.XX attributable was was net or and EBITDA Bert. to company million, diluted million share. stockholders common first the of of adjusted

per earnings $X.XX was Our credit result net net first of quarter the income of the included XXXX income quarter. This the tax share benefit. per during tax $X.XX share diluted recognized of net million $XX

described, have Bert price overcame and quarter were a year supporting results Tony in generation. than higher higher as our line, strong cash As the lower product ago sales

peers business million. our repurchase basis. payments. on approximately of to $XXX first Due net the X.X $XX million in company's cash $XXX our million the we million to $XX quarter, to million against shareholders operating provided We was performance shares fertilizer by the and returned dividend seasonality XX evaluate During a including rolling activities the quarter, month during

free repay our and opportunities, than pursue cash XXXX deploy financials, philosophy growth period Capital flow cash $XXX Slide repurchase. the date expenditures share maturity to expenditures you the can see $XX capitalization. reported the XX, generated is operating to absence equity May our within demonstrates in deducting to significantly $XXX return through interest non-control XXXX these After longstanding market percentage at quarter our debt cash with with and we in in billion allocation flexibility first strategic the power, fairway. ample peers distribution capital provides Looking our flow, million, of absolute we in shareholders capital of in April to both XXXX. recent And an which and most believe million. dividends cash its higher in were generated of line or as excess million before XXXX a on This sense X and excess for CF’s $X.X that on our CF

quarter include year, to expect XXX the does provide We million balance Bend remarks $XXX and April the trend storage before in of $XX million. Pine end we open we sheet. on call that, dry Tony of the This not facility this cash our the bulk from With continue will million in received For to Minnesota. Q&A. closing proceeds before the in sale with logistics

Tony Will

Dennis. Thanks,

low challenges over the $XXX our were roughly for ago, than the to year hit point Orleans the the $XXX When ton. the work for spoke the XXXX. first to of premium, half you the opportunities prices most remainder everyone barge be of I in one helped Before safely, to per about their currently. sees ton our price at of I Midwest industry your well quarter. ton on we move of for Orleans logistical is want about per questions, first to CF and $XXX at to call reflecting more year thank the reprices Today the us made urea $XXX, on this are operated the New positioned and New great They per at in

basis the in prices. also quarter are cash first is through generation than We With the enjoy Hub benefiting Oklahoma. open and will highlight and natural that in natural the of futures below benefit remained operator, the we our and prices, Hub received to drive cost at gas gas that lower end $X long-term Added ago and well from differentials gas These the structural will your Alberta factors to year advantages the we we call XXXX, from now questions. was of XXXX that Henry operational lower natural Henry capability. that below and a

Operator

Thank Instructions] Samuelson first Adam our from Goldman come question Sachs. you. will from [Operator And

for is line Your now open questions.

Adam Samuelson

everyone. good morning Thanks,

Tony Will

morning. Good

Adam Samuelson

In of high I urea but, to European both Donaldsonville on UAN. room more utilization into and the know more you're heavily and forward to the the a level is quarter the this is a the market on company, the guess is skewed there product versus more tariffs bit production impact the on urea it at and representation mix versus what based I I wanted a adjusting you just looks in more flexibility or impact. like So more you've decent shifted UAN. just have go capacity even to UAN, the dig Union

Tony Will

that I mean, UAN, the – are both of a we're a we prices it more it's will of it it's would question ammonia various If really nitric acid the for if of uses make dial more question products urea, where urea really trading. back we getting ammonia it. piece excess make out go urea UAN AN and some otherwise to in into or

We've relative the got demand the looks and we've the we So looks like. granular Bert various to go historically between at and something that as to product what prices up are the in just of necessarily urea EU as the as the out the of of like also where door talked and in tank doing looking to with make then for the demand trying probably to mix it space room it into granular, disappear. DEF, to ample show the that what tons in about have can Chris which are or like move they're what also got either doesn't to exports XXX,XXX optimize we instead profile And sort – more XXX,XXX pretty production we is sit liquor inventory and comments shipped and grow. values script, continues

built – of team product when we underway side. done effort years. So continuing we up five have of his built mix a has projects, lot four, the and flexibility like last on been Bert the for into us. great additional markets for a its way That And to open job

in bit position flexibility, So and to I a disruptive a something of forward. think, removes it even though going little that it's manage our we're it's

Adam Samuelson

the from flexibility liquid the does as nutrient a UAN your a a at to it urea the impact transportation has historically mean a flexibility lines given but along readjust. market trade mean perspective kind costs, value And and logistics the I itself is part, those farmers to and I flows on that will commanded adds certainly, all, basis that change premium and product, of the added reorient

Tony Will

new I some bounce other out particularly other while, a kind have flexibility the sort to AN – for mean, back forth because trade product people I well. between as sort of of the the as figure and think, mix and have people going Russians market what flows NPKs, of flexibility, and options and they're adjust

relationships people incremental think, forward. see a needs bit. plants AN into a if UAN justify bounce to just going putting to the kind UAN and in us stop doesn't produce acid capital order a you'll what premium, there into around it little be maintenance acid plants I think, plants because granular otherwise, I you'll putting and term, in those Long people for command which premium see the So is of

months, But get you've it. with back near a deal a to we've eventually, a or we in means half, see this long-term and feel options year how think that comfortable got six don't terms in we'll I of pretty context whether So term, three of And term return. know lot that I the there. long we got in but months

Operator

Thank you.

Capital Our next question BMO Markets. from comes Joel Jackson from

Your line now for open is questions.

Joel Jackson

Hi, everyone. in year, should before as in this good morning QX of about, expect have that of release similar during volumes that you didn't questions. first Last you the release. the couple year year you A commentary half the did talk that the

can You up. volume little can sorry? to year, of did – not speak maybe it’s half Do the you year late color? as think too more catch a same the you Could you last you get first give

Tony Will

in shipments I'll to commentary Joe, over were April, it a specific through we're turn minute. ahead you year. Bert where volume of on give Yes to here last some we But

or more May And a we've April. little so first the was through bit behind, up cut quarter but that than

with we a comfortable very Bert? from we're So where demand sit profile,

Bert Frost

planting crop corn them acres you an still estimating XX looking be if million still the million long out you're are We in at that's or or a days get We've of month with proven to move a time. can in that available. or time work left the the in market weeks farm equipment of is matter which of move community new can to short-cycle as cycle. to crops, which agronomic we from XX have planted nitrogen to just swing field the it of Yes, consuming plenty

to terms nitrogen more if of P&K depending at will ammonia And lot have urea. CF think as We But going was what is was from take put have that plant all QX. so there ammonia that a from in lost on to lease risk well we of to fall. in made you the we little plan make to be will you're down up in sufficient apply do or fall to if up volume to would our that UAN transition train that and we as inventory pickup a

half. in And that an the so volume understood first just I think that move we would it's

probably stated. that's so And it why wasn't

Joel Jackson

And my second pricing. That's on great. question

the realized you years. for realize benchmarks see urea trading premiums So of Premium where for largest and NOLA prices Midwest your now. is We UAN, we that to see some for

So expect Thanks. in second elevated should in versus we realized pricing the NOLA. quarter benchmark

Tony Will

Well, of interior. part the product the went as positioned through we in we first year,

tanks the well storage the for move capacity urea own dry the to move UAN, the to the have for We have relationships receive rail barge capacity we not it's as ammonia, the and to as it, place it our control. it if in under even

been, is and there has expanding. yes, said, being today been that has NOLA it to with So premium and a

I think that's planning distribution. the proper it's reflection P&K. expanding of and also for And

nice the do QX think carry a spread. I so you'll for see that in through realizations And

Bert Frost

suppose It's few sustainable the the as notion a years an when to to that really people in market is have support of nice defend right in-market what fact premium trading matter benefit now being because network. conversation supply talking getting were disruptions out enjoy kind all the the ago, we wiped a the about, And of premium doesn't of in us said trying to that's evidence we've along. and issues of thesis. our that's of a another Like and we're $XXX in

As result a of that.

Operator

you. Thank

next Isaacson Our Scotiabank. comes from question from Ben

now Your open questions. for line is

Ben Isaacson

morning. Thank good you and

production premium benefit talk the On talk transportation that how and are about Can from distribution you the in cost? about and and their is and $XXX much logistic that much how you your advantages. how you network, of challenges region of that

Tony Will

really Well changed. the haven't costs

in to BN a But lot I been I some of for place, a out barge disruptions the northern relative took of there think well part been from as accumulation That Canada. poor from just CP is QX, flooding were think has dislocation. of limited The opening. just as of that it barges the and service think of market UP in that end some the I which has the been communicated there have logistics, coming to river service rail corrected.

the supplied tons think And of I just has and advantage and place where short it. assets short the the so and got that so, and assets sold that on. in were with moves heart squeeze our a also timing and advantage of taken of Belt a moves followed our our are put Some spread to additional from with acres in we've expanded our Corn that not bit the and that

Tony Will

stock, on barge got think over I of rolling big place people we've also got and in we've got that. multiple own we've , to a to our traders Ben are But contract access tons point, have issue network in our access bringing lot that rail that the lines and who don't is

so moving what ability of And is an into the the other is tons diesel premium into there really to in-market products kind Gulf interior. the that and is reflecting from we've the move challenges instantaneous got of ports interior

Verdigris Port end have and and also We plants market Neal already are there. other that

to so those to probably $XX from And it's tons the diesel, most coast from up kind $XX into the Corn move it's of or Belt. of

spread so Bert of squeezes traders to the what they And or the move just short is realizing and for today that about access between arbitrage was inability don't have sort logistic. is either of earlier we're that talking price it to tons because

Ben Isaacson

you year of is, you're on ago. just through question And Joe's second a question expand about maybe you how ahead quickly. talked are My were you Great. where to just April

I ammonium specifically, for nitrate? think but urea, you mentioned about UAN what ammonia and

Chris Bohn

off Yes, this in year-on-year. at I aggregate are shipments point mean

our with is, kind is for kind of are what gas shaping is what where what again our look are, looks last ahead very up of inventory where feel both year demand well like. book and like comfortable what and year we're position we prices of how So this

to us. really shaping that for half be first of all a So up solid

Ben Isaacson

Great, you. thank

Operator

comes Piken Michael Cleveland. Our next question from from

for open now questions. is line Your

Michael Piken

touch outlook more hi, Chinese good in bit terms exports. little base of a the to for morning. Yes, Wanted

flat the looking on You for year-on-year. right you and do of Where cost see do Europeans curve that you're where levels see Chinese the said exports, relatively now? them you

Tony Will

year in issues, January the lower that believe they're moved reflection a and operating position Yes, more shutdowns product in million QX a as come couple exported of China into tons of did per February and to rates. to to have They was some run some realized that higher We one of well export XX due Iranian the metric that estimate relative QX. were being the We XX and tons million have as prices of been in rate. then re-exported. in and and the possibly producing

their worldwide late for QX is confident reason Gulf, we're so by pricing NOLA driven where $X looking is especially QX and whether the it's that back and at Gas $X coal. the $X is fairly around strip, forward Asia Arab price with China, to range. generally in cost cost the the where with today you're QX And for in price, and curve

curtail And you current we at expect would this so if stay level. would that pricing

so ton estimating for comfortable range why we to export. And that's China million the feel fairly in two

Michael Piken

then little product Okay, if in at available a for expectation terms could Iranian your great. theoretically the is urea much talk about you of bit And how point. this

If who could China, theoretically India, is tenders, what's expectation? where it has you aggressive and or think in the go been your or product

Tony Will

all of all its people is planning world expectation out. I public coming our people There of that to marketplace. the enough and there's is chase that out product demands willing of way the dollars just in the that production that on production we're enough that kind mean, and finds

sudden, on there's huge if possible per we're to does certainly there makes a disruption the the of some upside all on not believe sanctions get don't year and planning there's U.S. said, bidders more us, going difficult be to side. we but it there. So actually That supply for

Chris Bohn

No, for that was has new development. I gone corn soybeans Brazil the the agree, or partnered was I that surprise to think tonnage was a

that with with mark inability We urea. at it restrictions is further those that their products of materials and difficult of the the work an services an to would and and a sustainability seeing make for there probably announced then and stays make providers production. I think the longer-term on sanctions full if issue production believe question on to you're were this markets extraneous that it will recently transition especially royal think tighter sanctions which does I to

Operator

you. Thank

Connelly question next Inc. comes from Mark from Stephens Our

Your questions. now open line is for

Mark Connelly

you. Thank

recently moving soy back saying moving us So seed surprised to big company a maybe sees that it corn back or by acres to soy.

the what curious says your market that I'm of So extent risk. about intelligence

Bert Frost

At to early I decision and/or at if out look there the an being and the expected production impact it's be economic this soybeans that's with of to and it attractive of it's can and already you difficulties be soybeans, the China spread being on to looking what out the, if corn fever were look could able America think what the with to and it to that's at on demand. trend possible point, South I tell, come consumption to at the too as corn you really and the that corn still African in has that swine with or as – well communicated could yield

that would safer I gone as believe we plenty we also there of gone I time articulated be will through have stay through of dry don't and that think to years, with economic did to is and wet and still an I So and people corn, we've Dennis choice. as choice think plant years Tony make

Dennis Kelleher

mean, other kind XXXX add or is down thing the and I levels. of corn at if use stocks soy Mark look Bert really can, is actually below I you if I'd to is high to

the been a look shipment at product But the our Intel own being guys and has we seed are just and we prices so demand we urgent that for what it order don't where despite we book as look And and tough as for pattern just our nitrogen, at products of pretty in-market as first our do. is look the the overall at quarter. premium kind with have

We first of see the and we for are very what year. acreage like with the what look comfortable half Canada, developing numbers the

Mark Connelly

sense know you versus to last don't obviously it to versus easy first how and transportation It sales, half separate a but got costs now how half, are I but a we lot transportation last got the year this year, with second hit noise. we this is about all logistics lot of makes me. thinking

and going benefit second out whether figure we're the curious can happening to So, if a you see just what's half. in

Tony Will

would the bit around gets if probably roughly it math that kind in to amount going is a up product, we're the impact I I'm terms But in little up there of small we're or cost it's, moved terms content MMBTU favorable think the I on distribution per just see buying say of flat, costs. getting down gas the table. gas it's the about what to price maybe think that you of whatever of a a the relative

net-net, in those So on the in terms ought a aggregate lower basis they tons moving market, cost. be a COGS at to of

also access I given availability in little a about the form forth. in seeing river Northern to transportation. we're of the We're seeing going as a Bert part, barge think movement still inability just less talked Minneapolis in what's and and on the terms of so Iselux

So we're probably seeing a parts. less bit more rail and a bit truck more

one the off sudden Cost, it's is things not think mode. jumps the what of going all those shocked that I'm higher this bit Wow be that but to is. is it little a that's I So numbers page

Bert Frost

years typical I've quarter, second changes on called year every more remarks, I eight our like I've is, and now guess quarter in seen saw I'd never thing a business company typical for so mix that we first least, as prepared saw and this and other transportation. I the what six business only a is a said and add Mark, the been it, where in we year and at think my we differs month of

Operator

Thank you.

from Our next comes question Chris from Suisse. Credit Parkinson

for Your is open now line questions.

Graeme Welds

couple through around earlier mentioned we of gas a that cost global quarters you for Chris. kind morning curious, good increases on you go prices on years flat is the everyone. you Welds curve, question expect an as a Graeme Piggybacking the fact Hi, the NOLA roughly had of This kind in I'm of average kind there shake back would that kind now. based on that global what you out kind on any those on curve. where of updates ranges the that curious, you're of the cost pricing spoke based if for range saw seeing China to

Tony Will

for that mean, the if once have But quick at because to it prices and moves published, LNG date mean jest year are that publish than one curve index you be just is the which of kind an bit oil dynamically. I'll quickly. of obviously TTF, about of lower already of October, for for very traditionally quarter. we things a over to year, Europe had and a pegged back you I to cost it's would the normal I the plus toss sort give fair would of curve by Yes, I Dennis. then and tends a instance it's estimated that, NBP day out of the of to the it’s going a change but forward it's $X in basis stuff fourth because lot the gas very got look only Obviously,

So honestly, the bit we traded like but range you that that of little and within last range near was within we in October dislocation, today. price we think look $XXX price projected curve it that at there's published, range if where a we're and still the $XXX of term to

urea So of today. inaccurate It's some where have that’s even kind those trading wildy moved. though and still bit it's is buyers a of little not older,

Dennis Kelleher

want on just to point. Tony's just I bit little expand a

Europe, look or linked you at If you gas Western contracts. Europe Eastern get and oil

gas relationship XX% you years the to energy sort equivalent forward into will, those to an what around you at of, see curves it's you the price that oil If basis. next restores or look if two so, on XX% to price is

the period relatively glut relationship warm gas the Western, in historical – sort although to in Europe, winter of near-term. expects certainly and see of with both market their Asia between now because right in and the So as restored be Eastern anomalous we affecting oil LNG it

Operator

Thank you.

from Byrne next comes Our question Bank Steve America. from of

now open. is line Your

Luke Washer

the lot Minnesota barges retail there channel, could was to about of little some product the challenged get that in challenges that and these you see your a too in is risk the know any bit I upper detail are and your you on I logistics challenges I appreciate do wanted you Hi Midwest. in to for urea guys, but this – on you getting talked Luke – can't closures Mississippi, touch talked Washer and in the region the there. late. to is any actually have But production, upper Steve. about be because flooding, of do in

Bert Frost

material that barge have supply which we've think which is product the we're go we who with been constrained. FOB by them and we send have then wholesalers, the basis Cincinnati, not selling place rail. retailers facility along and but do by supplying I the for river in received we our No, mentioned, been also We NOLA customers that barges way. are rented a And to actively has our we up only we Tony an how if Minneapolis, CF set to the Minneapolis, on the is up manage selling barges, that relationships barges

tons And by Neal. day our truck when of Medicine out look XX,XXX we rail we so as across in where that's Hat, at and mentioned, network one not by shipped you ship I Also, truck all. Port constrained

order of each to the efficiently, opportunity which So points available each and we safely economic modes us. the with those to of possible leverage them in operate receiver the

Operator

Thank you.

Our Andrew comes RBC Wong from next question from Markets. Capital

for Your now questions. line is open

Andrew Wong

beyond the either debottlenecks on adding expansions so plans, business. or about debt to that ask organically wanted good business payments you allocation just I morning. what capital repurchase you and planned, externally Hi, looking through Thanks. program maybe thoughts growing and your the just current do have to have your just

Tony Will

things of all see in obviously brownfield it's kinds or and I back below expansion, us of Yeah, we trade greenfield trading of do I XXXX kind inorganic look did a big organic assets because cost. like we at mean are replacement bold don't whether sort or

not nutrient the and there that is and the have reason and into improves able an been ag then urea industry logistics from space. and the it costs it move around in that on have seen those change balance fair a people converting to bit are want weather go others do a projects, the SMB expensive and to of that very have What but of standpoint, when those so ammonia spring, taken much you more as So the as and doesn't to other ammonia. gas vagaries transportation have, in And kind there's and because and things projects urea sometimes you're in ammonia the fall no you – largely do undertaking thing. nutrient it for economics coal of upgrade Coke kind out you

and got you've more just so products. upgraded And predictable reliable, if it's

about into exporting because and know of thinking to thinking things a of converting we would alternatives – of ammonia lot transportation, is lanes us accretive we on side, can That's certainly the upgrades efficient, to can that the So within that we're fits question network value it's that leverage of skills lot debottlenecks constantly kind got we're I and out some us so we there's continuing envision network. product set other some that's of we as doing about some more comfortable it upgraded the absence so something upgrades. that our or accretive, that just very and a are where existing different moving always and ammonia find what modes more more but can the it, product. of, And it and giving into D’Ville debottleneck cash flow create need of existing interior, other or do think drive or to capability we multiple we've different cash access about. think logistics don't And whether we our looking at our flow I forth. make we're improve inorganic our on on now, there if it's right our is, players but a could in ammonia about and

Andrew Wong

Okay. Thanks.

Operator

Thank you.

Susquehanna question Financial. Don next comes from for Our Carson

Your now line open. is

Don Carson

offshore price is seen for on which ammonia, XX $XXX Tony month Tampa Thank we've question a a low. just you. hit May the

or business on cost what levels? And export in ammonia? these price this curve? offshore Is kind imply going for at for just out cost global in of the ammonia lower say opportunities of, your what's So pressure Iran lower product

Bert Frost

bit – Florida phosphate on in look has the supply you come are at of seen been in that demand a there of terms Africa North taking but not But globally. we in has place the only excuse weakness not what the There asset. in additions. scale, Faustina also recently that industrial others – has a in less new with When – little ammonia been and so world Faustina, have on full additional – Russian with Mosaic me, came plant of shutdown

on – this reflective pricing come And obviously available less of it of increased modulator down improved. had move and as where what well do the of prices equivalent Dennis an some as improve We at globally. and about I phosphates to gas plants also as off demand the that think movements energy point to coming a the expect seen gas other its some so supply demand that additional and see high-cost back as the a comparison that's talked we've that demand oil, of We – to level with global to have industrial has, that to improving.

Tony Will

prices, space But ammonia our industrial the obviously current of exports kind resort. prevailing the are Don, last in

that goes options decisions we now think as got more don't exports and into regards about of anybody urea that we’re export the whether So we've to or forced UAN mixed ammonia urea. product for math good of domestically to and some on look versus it right take

Don Carson

floor could given industrial do that down and Canada the extending the to of Corn urea uses that’s ammonia the carbon a happens of gas. the the production and all as for of then tax of raise follow-up, to competitiveness the does border coming And the that there Midwest, some talk Belt. that natural price in If north what Western from Alberta is

Tony Will

to there. economic a another just mean don't is carbon is that's then apply that and domestic well some power carbon most put imports, problem of Alberta don't which tax then passed But to policy I given we're to local what talking the and as because the border to in operate is up or bit it that's going financial Canada anticipate offshore obviously the it in and production it's with have in for long and if to effect U.S. manufacturer results. as pricing to those production the up both domestic bar dynamic There's as you're and in Canada. for production it any time dramatic shifting it's regulators regime or you of It's a carbon end is place of closing plants working leakage. on raises of consumer. in efficient in the on doing we on jobs imports in applied changing things, fair is, Yes, on way one just And and I everybody ultimately about as dynamic. the the apply the provinces of terms or in new and spent this sides going and effectively shifting regime a you're our just parties regulators poor it's already the a that's one We

Don Carson

Thank you.

Operator

you. Thank

from next Our from P.J. question Citi. comes Juvekar

is line Your now open.

Dan Jester

Jester Yes, hi for Dan P.J. on guys. It's

chose few facility? talk challenges. if incremental opportunity the just in-market So about logistics all of the the Midwest Pine logistics bit storage on today Thanks. maybe to it's for a facility there Bend you to longer-term, whether is more of broadly. tonnes to premium sort capture sell with your why a could and call I'm in-market-logistics just wondering And the comment, an extra or investment in upper you

Tony Will

valuable there, region reach the that our truck when to to the lot at plant just it we were phosphate we we so there sold and is market and from I also we used same the phosphate worth it less and day Neal in divest Yes. became the about of of – the we as in that we sort employed we basis over around because legacy a the think same XXX,XXX because our return was can for capital What's of time when urea of us there the different it. business moving owners of it about using, holding were or built economic view that to move less else. phosphate of maximum that us for we XX matter it Pine back tons Are the and That our on a forth, and is co-op important gave value. and all period business became of what for were and incrementally incrementally utilized Port which solve there's space, a under getting access we do, space values where we the instance, were what on mean sourcing at products owner somebody and direction? member Bend asset fact and kinds we is we we

and put agreement it. they able reached that to strictly to it is it’s own asset, of who other is with any good to make economic them, to like make the on so much right this And owner. we us that for through didn't so gives for better and to that it The continue access us tons owner we be it's continue are facility, sense decision Mosaic us good for

Bert Frost

looking see providing we just provider service at Mosaic with that others and as a space. we a And working ourselves in few didn't were services already it, Yes. and

kind became they Tony service-taker as reverse best the flow As basis. said, an economic needed of a owner and were products that moving on and we our

Port more an the So our we tons agreement has utilizing Pine Medicine as space have X,XXX and then space that little we of XXX well for to have space And for we maybe to the of a Bend move Mosaic need in P&K. as up Hat. urea rest Neal,

been have accretive for also. at We that to our but UAN new so Midwest, and throughout the leasing not us been up space opening out acquiring, has

Dan Jester

And quick from EBITDA. Dennis about just free cash a then thank flow Great, conversion the one you. for

cash You've that. got over chart the the which factors two-thirds nice free flow has or Thanks. there boosted or I'm is wondering over past just year two reasonable in been deck. benchmark slide the in cycle of your this onetime a that is EBITDA

Dennis Kelleher

sit question The with flow of EBITDA. where sort you do cash operating is of your sort and

think CapEx, $XXX that's what million million sort of we is a intend be of year about If $X you said around our we kind [ph] flattish. to to

to move a is up change. down. piece CF changes that's So our going well interest and CF, cash doesn't a showing company's and non-controlling and and obviously of piece so subsidiary, flow as our own for it EBITDA to which we're distribution, of as they Obviously equation, changes, CHS biggest the that the of

lot somewhat muting portion up will So for effect equation move what so that down to are of say I'd is, that the on a that. fixed have in and pieces EBITDA CapEx, going with except

Dan Jester

Thank you. Okay.

Operator

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

is line now open. Your

Unidentified Analyst

Thanks on Jeremy Vincent. is Hi, this for for taking my questions.

may seen that on the the that of kind some I to I expectation dynamic? start near-term. that wanted depend flat Does to importing that. on back exports the just data on Chinese circle in even be export, suggest urea So wanted urea China considering We've for

Bert Frost

been in that reflection No, northern into you saw into think move was has kind I the where of QX, pricing a the ports. Qataris some of China market urea prilled

in well the as same preponderance the is and that south. Iranian think as moved area the where the tonnage I has been up of into production

And so I transport time imports inefficient don't think that's cost ramping imports unreasonable offline an that expectation or plants as they're peak see would up go to additional or more QX China into incremental become over these during market-based as that into that consumptions their you season.

I think a market. positive for the that's

Tony Will

environment, hole. it things sense. taken carries of they’re is when Central to scarce of other the doesn't they’re policy, make China, commitment no production, out emissions asking, of largely demonstrates their environmental be core they're tends which given way in plenty the traded recognition of think why go on there And I our lot is carries a production so something I it you're the very and it’s Government matter think that their answer this that and part to we toll footprint, on question importing soy, I the think a need around importing access particularly importing a to urea be whether be And is of the particular also usage freely a doing self forth. it's seeing rightfully with think really and big real water to sufficient the large urea environmental corn, the a which coal-based there, is I out urea

Operator

Thank you.

comes from Our next Cowen. Neivert question from Charles

Your questions. for line is open now

Charles Neivert

morning, Good guys.

side-dress is it typically maybe be going go of there pre-plant, there Does Just some this going XQ? that to Or to go the volume – year, that seem it’s going the normally look of given then extends therefore be that a amount sort on one to product and fact pricing of maybe XQ – out part down than to things in opposed even isn't longer-than-normal chance question, N get side-dress delayed normal season? during going early into and larger would ending the and like that down? as of maybe to late a getting is

Tony Will

Yes.

network. with I aligned technology not the this that retail mean, it's we're with spot I and in value the and just the retail get adds issues. is on, with are have mean sure people and end-to-end can like customers post-plant product the move market because want CHS from why our network we as grow sure. does not and and pre-plant Helena, For well market that's active think nutrient why relationships They are that, fed. top-dress, in make crops the these to you and like why that the dealing run you these available as, gets And the supplied will will to lose that that you're side-dress, that application XX/X

that this So acres sure. going irrigated does Nebraska go I can And us more move into, do well July into in season well the because see into into – application. tons of later pivot the with direction that July. bet more – we of not for but I in normally would

Operator

you. Thank

Our next John comes from Roberts from question UBS.

is for line open Your now questions.

John Roberts

you. thank Yes,

their ocean-going I reflects in IMO obviously XXXX fuels It's time. tangential they've that’s lot So got global does of fertilizers of product bit the sort this some switchover a a question, of trade and the of late guess in there. year?

companies year-end to with earlier when in So that so they're have year, at maybe shipments deal right the occur deadline the some issue? not shipping the

Tony Will

Go ahead, Bert.

Bert Frost

train bodies legislatively watching. will government industry the by Well big required and vessels that that either the there are we've sure if and these built or are issues. or But something to has and with are going is jumped been retrofitted from the how and positive change not issues just this we new that system or accommodate changes vessels similar a experienced allowed. control be is have today extensions delays it I'm bunkering

more come. us I there think that we – is to for

John Roberts

Okay.

possibly. hearing not kind end maybe earlier year doing to at in logistical of You're a anything challenge this about year shipments point just the avoid

Tony Will

and the not of shift kind on so it's a No, quote that you're I building runs is it's think hard unquote to though stuff a XX/X/XXX, basis the running pre-ship and of issue bunch disgorging mean because industry inventory I it.

to you it. got ship produce it You as

isn't there opportunity to of that so, really that And meaningful way. do any in kind

John Roberts

Okay. Thank you.

Operator

have for today. back to time is to Thank closing all the ladies I you. turn gentlemen, the like that for would and questions call Jarosick for remarks. now And we Martin

Martin Jarosick

forward conferences we at we'll the weeks the Thanks and next several you look few many of and next with in month. over to speaking then everyone, you see

Operator

Ladies program. concludes and gentlemen, in today's thank you for participating conference. This today's

You may all Everyone disconnect. great have a day.

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