CF Industries (CF) 1 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Martin Jarosick	Vice President of Investor Relations
Anthony Will	President and Chief Executive Officer
Dennis Kelleher	Senior Vice President and Chief Financial Officer
Bert Frost	Senior Vice President of Sales, Market development and Supply Chain
Christopher Bohn	Senior Vice President of Manufacturing and Distribution
Adam Samuelson	Goldman Sachs Group Inc.
Joel Jackson	BMO Capital Markets
Harris Fein	Credit Suisse
Vincent Andrews	Morgan Stanley
Donald Carson	Susquehanna Financial Group, LLLP
Mark Connelly	Stephens Inc.
Luke Washer	Bank of America Merrill Lynch
Ben Isaacson	Scotiabank
PJ Juvekar	Citigroup
Sean Gilmartin	Barclays Bank PLC
Andrew Wong	RBC Capital Markets
John Roberts	UBS Securities LLC
Jonas Oxgaard	Sanford C. Bernstein & Co.
Michael Piken	Cleveland Research Company

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the First Half and Second Quarter 2019 CF Industries Holdings Earning Conference Call. My name is Amanda, and I'll 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]

to Mr. presentation like host to now today, for would turn over the your I with Investor Jarosick Martin CF Relations. Sir, please proceed.

Martin Jarosick

and President Martin earnings Good the morning, With Vice of Kelleher, Bohn, call. me quarter CEO; Tony for Vice President CFO; CF joining Chris and President Development I'm conference Manufacturing Senior Dennis Industries first today Sales, Investor and half Supply and CF. thanks Relations and Jarosick, of Distribution. Vice for Bert Chain; Will, Senior of are second Market Frost,

this CF outlook second Industries results reported quarter a XXXX its our we'll first then and half results and yesterday review session. afternoon. call, discuss question-and-answer Industries CF the host in detail, On

differ any are the not not performance expressed found statements may are that facts statements. affect is this our our These of materially may and what detailed risks, predict. results our on available factors forward-looking guarantees Therefore, historical which may the made with actual presentation filings in More Statements and on that call about in statements. outcomes that from are are performance in SEC, and difficult to be assumptions uncertainties implied website and future website. or information are involve the on our

GAAP press non-GAAP on the you'll posted find Also, reconciliations between and release and presentation measures in our website.

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

Anthony Will

Last posted taking in financial items our after everyone. we in the results first night, $XXX morning, generated we earnings which XXXX detailed good adjusted half account release. the and of Martin, EBITDA Thanks, into our million for of

the another, significantly XXXX. of sales often of the but quarter million tons XXXX XXXX. Meanwhile, the volumes into years the and of forcing half the in constant over each shipments and to sales at XX% first increased applications of remained remained halves EBITDA Adjusted have over out and first XX% years. volumes product have over of one constant impacts fertilizer $X.X Weather XXXX, XXXX timing

and and expansion uniqueness model. most first the three of capacity through at Industries since started uncertainty This power by the really of of has sales half weather crop steady the our That been shifting acres business demonstrates our ever despite years and CF project the past extreme up planted record end volume the on type, XXXX.

some even best, planted productive world in one. has the America all most be at in and possible, like the year North year of farmland the will if each it this

This are As volume by results half comparisons as planted, than nutrient. first half requires weather, impacted year volume nitrogen of the quarterly only compensability is it is quarterly demonstrates less fertilizer. but year-over-year constant. it why The nondiscretionary meaningful also the remains first

prices Our two factors; outstanding terrific year-over-year nitrogen Nitrogen supply results the increases demand were global driven balance. by CF underpinned by by and higher team. tightening a were execution price

premiums production. that normal CF the network team from during for higher record an We weather-related product ammonia time half. locations. We to some inland logistical limited in-region and first than set performed well all issues also benefited supplied to due Meanwhile, the exceptionally

records flexibility and urea distribution We higher and and over the our time production to capabilities leading production of urea logistical took terminals reliably favor UAN, advantage shipments, all system's leveraged customers. for to we deliver margin our our

to continued we importantly, safely. Most work

second the incident high hours, product per remained work X.X quarter. rolling ton record that XXX,XXX rate million included recordable at shipped X.X Our XX-month of incidents despite a level the activity during

generate our cycle the flow that of free superior As most compared through stated, cash we we we competitors. to will have global believe

plants running. created cash our lights into consumed all last our to As EBITDA It the flow XX the our business back deck, is Many industries is Slides from at free the months, over of not clear X the X equal. keep shown best competitors and billion. of their nearly is cash was on on $X operations in that

higher While available cash of convert flow. into a we percentage significantly free ours

efficiency of significantly other best similar yield rewarded multiples is competitors. business is a of most although we Because any as that valued This flow cash of participants’ trading the shares. to than Why nitrogen tons equity that our use shareholder higher cash of that conversion free free free within are industry means measured CF per band with in Industries by important? industry capacity of cash for EBITDA, accretion into increase XXX,XXX industry EBITDA investors in

driven have the for growth, returning same Slides by accretion significantly able seen reduce investing outstanding also time. shareholders over in and to on XX dividends months, the X and cash shareholders debt As last and approximately were XX, we share to our repurchases we attractive X% at through levels

believe are next this several we years. over track positioned that the build on record well We to

As detail, positive are there number our Bert more of in factors will a outlook. describe supporting

First, plantings. strong corn instant over nitrogen North America we as in farmer next two expect years, demand economics strongly the

the Industries, curve CF provide keeping Second, cost will forward the cost end world. the global of gas a to for very natural a the to continue North rest remains attractive us curve. advantage, on This compared the lower American of significant

global next continue support tightening our to supply generation global demand the for And years, additions free outpace balance. Because four see tremendous of opportunities substantial to demand ahead growth us critical flow. that capacity for we these cash further third, nitrogen expect drivers, of net we will over three the

how over our Dennis items Then it financial who talk offer to cover will deliver we the Bert? let some few results for will turn outlook about years. before I more me the strong remarks. that, these closing next With in Bert,

Bert Frost

Tony. Thanks,

We where Company record, receive our the of and they first second achieved quarter, first The of distribution of compared the half, and CF's million year-ago, X.X including to our prices the XXXX product tremendous in higher flexibility skill million a needed ensured half when the demonstrated system tons people. X.X tons in and showed and it. manufacturing customers

the many States. proud season, applications historic transportation challenging of United in application disruptive barge of given parts flooding, performance an We're very and extremely this spring planting, rail in

did ways. a three Our to customers. conditions focus under to We in was be these our this reliable supplier

strong shifting had facilities, our including UAN higher to mix production favor we over at urea our production margin to capture First, opportunities.

given sites having transportation from benefited the challenges. production also inland We

they Port ran Iowa in which achieved the enabled prices higher Orleans. to shipments that – record Our urea are still well, New normal Neal, premiums very

Second, spring product ammonia, critical record quarterly of the despite season. This at in our window company, to we've limited positioned a of distribution our the X.X was terminals tons advance application. ability to for well ship million for a

to the transportation full flooding. Third, to a enabled to us higher margins. Donaldsonville Louisiana flexibility we to put of our put order volume from extra rail overcome We railcars facility closures urea your Minnesota, river our during to that use significant capture in

us secured allowed river terminals barges along spring. additional to remained focus that through which on Ohio the also River, We open

nutrient latest Additionally, record activity UAN fill program ever applications so. the until we truck continues week, July across This went through done, this much normal United All than later this is why launch States. of earlier levels as we the had we our shipments. didn't have

As we the believe are over next you years. look ahead, that very several industry fundamentals favorable

have XXXX. corn much farmers strong in planting lower We will million price the heading than expect have into U.S. the years. acres that corn increase United incentive a significantly to believe this We XX the to over year, planted next around anticipated States several

late will yields. Additionally, planting to lead lower

acres to It their since corn As levels to ending to be stocks corn lowest a stock. several ending XXXX. take result, return we should higher years at expect normal corn of

favorable to the American and rest the North be world. for cures natural gas continue to compared XXXX to extremely Forward of

supporting in Natural low curves quarter price over gas region. the Hub natural second XX during quarter, almost record the $X per to Henry a forward continued U.S. well production increase the XXXX, of which MMBtu the Bcf day prices average is the gas below per in through averaging second XXXX. XX% With

foreseeable production to expect advantage robust We for cost our the remain future.

Brazil India. demand anticipate urea for continued Globally, and in we strong

under continue North also above be construction four number over global will of given limited that additions projects to expect We including years in none capacity the net America. the growth next demand currently

we into continuing we the our during customers of year work served to built the well our and a flexibility preparing rest in season. expect looking the ahead. CF and for to years system spring demand the customers strong The forward the We're challenging with us

With that, over the to call let Dennis. me turn

Dennis Kelleher

In diluted items Bert. or net million adjusted want There stockholders $XXX to $XXX and million. million Thanks, the first earnings attributable that first half the highlight. per was affecting $XXX reported XXXX, our are two of EBITDA Company was of half share. I EBITDA $X.XX common to results

include of earnings an the during of after net tax Company's the bulk $XX storage Our sale dry million recognized Minnesota. the gain quarter Bend on facility in Pine second

million net tax also incentive previously $XX of quarter. in credit Our net the recognized first announced include earnings a

by under for $X million was first activities $XXX cash approximately repurchased current about net free operating the million We During repurchase flow cash and share billion program. half our was X.X million shares provided million. $XXX $XXX

payments. dividend in million $XXX distributed also We

of sheet Since on described sheet end $XXX earlier. equivalents returned and shareholders we the $XXX we've to quarter even or $XXX balance cash have and Cash the demonstrates of the power XXXX, as balance end repurchases cash Tony This CF of free million million at added as million. flow the dividends. share cash to the

philosophy to those and and deploy generation in fairway repurchases. us allocation the maturity that shareholders excess pursue to cash It line in debt before allowed dividends capital longstanding in provided our to million Our its on to also return cash through to of with strong has $XXX XXXX. cash strategic flexibility excess within is our absence opportunities share the us or in repay of May growth

of half XXXX we're million. first the $XXX for expenditures Capital

the spend For year, continue expect to million. approximately $XXX $XXX to to we million

ammonia we second for the be the the we noted third press release, heaviest planned we the expect as of in than maintenance quarters somewhat period As first the production in lower enter and to quarter year.

remarks, will Tony provide Q&A. that, With to the we before call some open closing

Anthony Will

Thanks Dennis.

facility onto of for great to your customers the years work action to their capabilities want talked about their the Award people while want for everyone recognize generate operated our are thank Safety Wilson and in they safely. for to and enable first put deliver UK switch us Excellence innovation They'd to equipment we've who at move protects the that we servicing won half Before I into the of CF that XXXX. all questions, Most importantly, strong team financial in gear. Ince I R. for also voltage to Stephen high results.

As I special offer his a earnings thank us. call want on with Dennis to for to close, final I you Kelleher

in from a Company partner is an X you eight September leader Dennis our to our whole Financial has and CF Chief invaluable Dennis team. Officer. our to been senior me tremendous years on As is know, after retiring and successful

significant has He's in played As our our and all of role a the of pivotal scale grown. complexity initiatives. business

of Our our decade. our challenging program, a some major sheet balance capacity nitrogen over capital and navigating most in the industry expansions, conditions our management return M&A transactions,

Dennis? him miss Thank and you. will wish We continued him success.

Dennis Kelleher

Appreciated. Tony. Thanks

Anthony Will

group Distribution as is of three marketplace as Financial and a Chief you CF to As Chris Dennis and provide addition senior and for transition. knowledge will we President and holding role closely led years, last Vice Chris we other in announced, Chris in strategic the many past had Officer. brings Bohn to on Chris capitalize in expect since XXXX. joining the familiar the we our will Senior our months having in be appointed roles very Manufacturing deep future to and together working CF the opportunities. been continued the several leadership of seamless Company

CF’s future is bright.

model enabled shareholder powerful nearly and see advantages business billion are last operational industry XX long-term to we ahead, our drive return years substantial over to and we the unique has in fundamentals $X positioned Our flow ahead. generation favorable with to the creation cash shareholders months. along in generate and With cash value the well us structural free and

we the call that, questions. will open operator, your to With now

Operator

Our comes Goldman question line Sachs. Samuelson of Adam from of the first [Operator Instructions]

Your line is open.

Adam Samuelson

Yes. Thanks. morning, Good everyone.

Anthony Will

Adam. morning, Good

Adam Samuelson

but the this Thinking I kind marketplace? did urea, urea to us spring for guess sharply the the more some Tony, just limited dynamics about kind Dennis with of shown and quarter market interested we of captured the obviously the Bert, of U.S. specifically, out has pretty what come UAN in as of you still opportunities. and about production spring shifted premium export that has UAN towards So

a flex can the sharp that XX for of to see just marketplace prolonged seems that trade Do urea unusual you period evolving nitrate such next months? rebalancing you the is things people do see on to time? XX just ton nutrient who discount a for and at returning premium over to basis How a

Bert Frost

heavy are out Yes. several system. back and the the to you've over we play. years It's seen of again springs in dynamics interesting the flexibility dynamics the and pointed last creativity market seen it we've those And where a what CF We've of to to those falls, the past limited – end to have and the the ammonia and going make tons fall year how what and were where fertilizer we lot happen, to being ground. was find going ammonia, spring the

the look we've you driven. necessarily what these has when future shifted so what when has weather tons what And look more done, has making agronomic driven, and been not dynamics, to we market decision at done

to shifts we're urea. small so to And seeing over UAN, time, urea UAN

they But or the apply can is producer. economically choose when they the that that products, system for product advantageous

where we see that's balance pipelines products we have rail access the us. the in our for so you all good markets that the system with we lines, all that is the all And have that make, very to,

Specifically focusing it at on and UAN is and discount today is. why a trading it

to on think States. tons I a North Russian And and additional probably the CF come out we duties as And time, tons the that for antidumping to the EU happened. come is reflection additional access the indecision As United of as well have has market the greater to focused during Trinidadian States. to CF, forced building United American that to the

tons coastal our be as tank regions holes. we we the thought additional where well for have as good spacing So more we had that repatriated system to would

think developing. I see see you're other in tons EU then, is we'll with to then these market the happens as we're active still we'll and of what And a the what lower that rate, more overall. Trinidadians We'll the penalty going focus some their over probably have areas time and of America South be to

think I urea. would it's UAN at So now natural that a trade to discount right

this spreads or as premium. something think you we interior expansions we mentioned, it to that structural that we to maintainable. United went a way come out year-after-year I as States these a the at trade anticipate have believed just we that as we'll well this over year we something that and that UAN is articulated time prove that was the was and back states, from achievable balances, And and that. And in parody profited where even

Anthony Will

Bert of Adam saying. I'd And what that, kind was add to

behavior. things I led to think some one of inefficient the that, EU it antidumping duties globally the that did is

So you've least been a largely at got on that a are thought I've purely that set of running where full EU economic basis. basically curtailed. producers shutdown,

that the Trinidadian our of So and marketplace. in lower back tons Russian tons, even filled about cost and could

real is UAN farmers all the of – UAN and the the But of is this pricing guess irony, you've sort the the In has been rough of the to I has French, of what and the European rest on prices through particular, kind maintained. farmers. seen gone world relatively

European put entities. Brussels of inefficient what farmers huge turn so which around, given did And a on around and and Russian by the really to it is tax it the some European ironically producers,

farmers funneled So that pocket. taxed French into kind of the the back oligarchs’ Russian money and the

kind said, as it's that of different best and we're lot got of the as worked. way possible. twist weird of pull Bert it navigating to a a we've But So as levers

Operator

line And of from the you. BMO Joel question Thank next Markets. comes of Capital Jackson

Your line open. is

Joel Jackson

country. was A the I team. morning, higher feeling there the good are in – that I a Hi, question think think milling inventories ammonia, about

was How think then back? export lower play and QX in with your of and that were of maybe the lagging at and having July of ammonia incredible export premiums. netback, the MN August, dealing about Midwest premiums, because exports How the June you're net but we lower sort to should also some Thanks. into it million be I the in exploring I dynamic? think netbacks so guess of to quarter lot a And a convergence

Anthony Will

always. look we at we balanced ammonia, look a at portfolio So

constantly ag extremely so you we that focused executed well which very we're is the And team netback, did our and that highest And see business. on the well.

well. the Chris, that Part plant's of and preparation – was utilizing the terminals and in of and we the is that logistical running placed our tons where of extremely capabilities. our Part

prepared, as as sure were And participants not prepared were were. if other we market our we so I'm

number we we than And good consumption was around so execute achieve year when total per from also and X.X spring we did a knew on to ammonia was fall, very lower is fall But now expect you fertilizer million a system that number that normal. It's did spring. look netbacks. year, look X tons And the there of ammonia. the low. to And of at million

less ammonia was there is So there less or consumed.

normal, of get And so that's manageable. our spot the well fall ammonia sales the capitalize systems, based all and we on that's believe positioned and And then inventory but than then we extremely to industrial export quarter and that us during higher – executed ag, of that participate in it. to on season,

will be We exporting.

fall. We like but be don't And have than that's is premiums things said, to export. this more for expected, and it expect basis good, good year. We on last good a I and that see so are significantly market higher we year-to-date export you

Dennis Kelleher

the add I production half. Bert pleased time the well in I'd really volumes said, mean, perspective and a think and great farmers I represented the the with that so system Urea. all ag to on as or to because got UAN nutrient that down an ran the still the team Joel, ammonia set a in value thing that, ammonia, basis burden compared ground first We're from other compared on to the to we because record ammonia

of volume is into QX ammonia. typically come you price when historically back that always then But again. more the season and you lowest QX, see through lowest quarter get ag in our application business And for

wouldn't expect anything is it different every than this be that I year other in to so, year. And

we've business exports, We as situation. we've comfortable as combination maintenance. so with very and some industrial inventory managing the right incremental inventory, taken we're downtime, on it the And manage. as the well got of the also most feel plan some some the in and maintenance of the be able of to Bert period the where said, that place helps plans entering planned we've got to The year that the

Operator

you. Thank

Credit line comes of Suisse. next Christopher the from Parkins of Our question

is line open. Your

Harris Fein

Harris morning. This good is on Fein Hi, Chris.

us on economics stack views your Can you and versus energy players? costs? update global current the U.S. and Brownfield you. price construction on both for given Just Greenfield Thank

Anthony Will

what mean, labor is your and see labor is so, is actually I to Yes, and – then you'd some be being cases think gas absolute is that ability lock it's costs I as capacities locations, limited costs added more new if where isn't not it fixed in costs important added. you'd in expect in to

where Russia risk and actually the economics, labor and can political like place get level kind costs a those situation. Nigeria, I'd like some current that gas in there and looking you incremental if here you people reasonable places places are cost fixed that get Iran So manage and you've of I of in others seen your announcements at and locations to including think be and expect there those building units. like can came

for think I that challenge have a reimbursable LSTK where someone take at the basis, on a on that it's urea labor a it. the over risk. because basis is prices where rise, quite would really to America one's that and to not a run serious willing Is are in North to today costs take an - they no bit

don't it talking actually And an because we cost see we'll if or the that current price major the essentially build, means By wants in just in the that's with if find of anyone's terms America. the to plan new they're deck being construction here construction. it dealing projects about for someone astute supportive of just not completely sell of them or thinking newbuild you North inexperienced here way, to over just about

Operator

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

open. line is Your

Vincent Andrews

Chinese thing production environmental good is one hand to to pick obviously that for seen the higher declining But the question Chinese prices and exports experts on forth. because is be a needed year-to-date reasons so of country. hand you in supposed my order that's up other So get the out we've and on

capacity sort be have So in much things be would and you shadow you general you're how what it thinking to about those reconcile visibility there how might get and any needed Or of prices other how market? out? do the two incremental on just do

Anthony Will

the the of you general I’ll let into of more Bert give kind dive specifics. and then

based capacity, that production believe is we where gas marginal coal on seeing given today. is are, absolutely prices in the you're what where prices Chinese think particularly capacity Europe coal-based I

runs fair of year for a the slightly we rates do or campaigned a below of that of a below bit or XXX% runs that there's gets year. capacity portion think so and And for the somewhat it portions it's

that's what to is - look rates range. XX% their And what publication operating and so upon somewhere denominators at depending what use XX% in the why they the you

a of economically turn So when and when think it's - that turn on on fair capacity profitable bit we to do is that there will what export. can

out somewhat there so I capacity. sort shelf is that in of of this that this overhang do thesis And says upside because there's a know of the limited pricing or bear

truth back many the that going is yes, I'd just I anytime reasonable as and way make – - a price on don't I needed really the $XXX from some Brazil, from those the say, can that find see in to price think to in the total too And world terms I in probably or there that tons. the But bids side, $XXX India urea soon. China in interim people the in plants and comes from demand way world money indication of up. production

first I our double, balance we're doesn't even forward, they're see indicate, we don't today. And as going of four do sort they years operating a generate think, price cash. go a comfortable not our not results dramatically, can means in to tightening where S&D I lot view are this They We somewhat environment. very prices And of that retreat. think the may which is over going next up versus but if retreating half

acting or is global up Bert? tons, down economically the demand world a And think that because now. gears upon will what driven rational I or export sort it'll the much it's curve think cost way more is. China they're going more so And be in much to really depending economically to be those the be of overarching when view I there demands flywheel

Bert Frost

Yes.

is million XX million approximately million, is key domestic Just say tons, years issue, X They the XX largest the I million of which where XX have consumption tons. ago points was to a XX today would producing million at what XX XX million metric to do base, metric world some in that China that about tons tons.

about will disposable year that last the ton looks million that consistent be we've to been that has in tons. been be so talking X million tons, to the years of million exported And of X this incremental X.X and couple to the numbers X million

exportable XX of tons, about around an you're X tons. talking ton million global a metric additional million in So

And early don't used a a bear so it's that fun I no XXXX. being producer the marginal think the be States case, bull position and United in to or in

think can it's And gear those a are tons. major the exported And so I when don't they a up year. being portion a system exporter portion not are to that tons a let's of forget today of Iranian be idled that

have that's I many Iran it, been in China loaded other so And loose locations. word reflaged or and and to reexported into discharged moved then a or Panamax’ mean

billion I'm that so sure not really And Chinese. tons is X.X all of

back And and original case to tons, so we're has product million and that still is been X million the that of a to in, the if let's by moved market. that's thesis X of say then digestible X.X international Iranian tons

Operator

you. Thank

Our question line the comes of next Carson Susquehanna. of Don from

open. line Your is

Donald Carson

year? costs somewhat saw offshore? Does benefit XXX. go premium just along want below pricing next to out could gas the that headwind to quantify in-market what call was Port Thank product become in-market on EBITDA some that NOLA Neal you lower this with So was high The you to you. you a in year I for back saying year. the gate XXX sold very premiums when to this we

Bert Frost

in-market position premium. like our And while experience we're said time So is, seeing expands earlier, nice very we a premium the in and contracts. over I did

over rates market have have costs. in the bidding that this so capacity years with has And and because you're it an and maintained import tons new we're

tons have early moving And advancement into or the have play so say season, have Those as delays an value. difficulties come we of year. and come let's issues you next as into you or season

and You're the tailwind in XXX cheap very has a in Oklahoma. weight a actually on of terms gas, Hub that's that's some gas Canada on places low been right that like Henry in basis we as exactly of and below, then on produce as

terms So tailwinds. a see are something this I premium as of those in in-market issue don't necessarily get to the execute. to headwind

Anthony Will

marketplace Bert’s we even regard, is here, I particularly in exporting import-driven direction. coming of out tonnage think need remains still team Don to that requires fairly sizeable coming of a more mean, and tonnage an I amount when the U.S. diesel, attract, this it

And go with exporting best it's in terms where regions netback. of for and their looking they're the a always tons question those

U.S. bid those away And here and other from order get someone's Brazil, Europe, them to so tons from the the has to them to places marketplace. from India, got from into in get then

doing a we've product what the fairly operating people has is question. during get even during upon do when of I'd there's high field periods normal time, what And particular conditions, of year factor with seen spikiness it availability work. the call in when you and urgency depending market they're to some because applying in And where are and planting

just the we've of had that's pops more in but little so is we've that a that and prolonged, issues we It past. it of happened one benefits which network the have when typically the in-market was we the can bit capture And distribution some year. that It this with river plans developed, up.

on opportunities of We've our power is that little things that when other have line kind major present some like it the that but the we on of had these carriers, which opportunities is capture say was embargoes spot rail system, kinds that more created year, rail basis. a I'd themselves. can This widespread, of a more of

Dennis Kelleher

Don. Yes,

gas of to that's the by we're seeing let's that And on about you currently by curve. about Western the Think proven marginal cost is, price I'd not based we thing that that LNG other people it's high think add coal and internationally The fact – – produced just in the prices producer. Europe. that focus asked I China tons lower Western manufacturing. are is Europe coal taking bid out

So that really hasn't changed much.

at think on for average maintained. that slide today a the you're I you very gas that coal our advantage a basically it's is producer the cost – whether – in deck, you'll whether to per look We expect anthracite see we which if cost using China, on the be year. have And the using or and in of still ammonia, TTF basis, forward substantial a marginal a ton

Western The earlier in saw the gas ourselves prices $X, Europe in our like plant year we gate. at

I and into gate, the LNG. At seaborne MMBtu have think There chain. if being plants, you Great value it's didn't Britain, our the about think plant very clear $X that marginal getting above it fact not forward look so at significantly in prices those are rises that. we view sustainable, don't and people as who quite the if are paid and you curve,

Operator

Mark from of next of Thank the comes you. And our Stephens. Connelly line question

line Your is open.

Mark Connelly

haven't quarters we're the U.S. think Tony, Thank shipping to over things that in producers since they they about you a decisions suboptimal And clearly been U.S. were markets normalize, some might you economics? couple into as continue opportunities back, favor better the international the have parity. to where do you. where non-U.S. about going of time, see But making producers that good. commented

Anthony Will

Yes. Mark, actually inventory the need where U.S. a and enough timing to lot a there's little consume where I to out for there's access demand tons some between of it. for the exporters' the when of a cases think differences send in of bit house clearing regions it

because premium. regions. discount NOLA just earlier of this periods, high demand that think where we shoulder those of there's like bit demand of during year at trade the in of I to parity saw probably other much if not trade going year. So parity a there's to there's I periods is a If times then a bit NOLA not at think a some will those And international

better the ago. than we I are flows trade also were a where of a think couple bit years realigning

of that and couple of over were think lost awful U.S. importers lot traders I there lot the the last a an really years. of money in

number of a to back And fall that. trading the people there's already after they've seen not activity the of channel in you've discipline I the to prices because scale operations that big see their positions, to that think and it's more response inventory dramatically just committed. some I taking think names in are And benefit

the and of me the the price the a inland to of a gapping are volume I to So of in, bit being liquidity price end NOLA world the between and wouldn't again inland NOLA kind about surprise if they're back comment being of bit during little people price, little for clearinghouse a earlier Don. from you bringing tons up think just more time. It see out responsible periods with

you I necessarily existed bad have that don't don't back you'll think inland the see behavior reflected price that before. because

thing. So more lot taking and a that's think there's rationality good I place a

Operator

Thank you. Stephen And line our next question comes of of America. Bank from of the Byrne

Your line is open.

Luke Washer

Luke in growers side-dress see growers, half in this on a general appreciated Steve. due applied you Thanks. for some be wet Washer perhaps be would the Did weather would behavior you did on if as last to more is think changes normal, to a to saw wanted shift North ammonia lost? anticipation And commentary this farmer actually touch Hi, do farmer America. applications on well. and for compared than I year just any in that to you

Anthony Will

North see and July going regarding America, So into we ammonia did had shift we side-dress. yes, a out side-dress to for

weather, you no and by ground as point So crop where economics matter the a what the plant and well in seed was get planting. change to There behavior you're as that your comes – decision making. in a have in time driven was behavior

And state June. states, ground put the are I in seed Northern as to even when mid-to-late as, guess in well I corn trying

the and do you application happened have nitrogen to the was they point better You and plan came ready seed. then the get go. they What had to to there pre-plant couldn't where wait

a movement on So you late we of in as once I of June saw and July had address early emergence. lot ammonia,

see we so. much you're And watch. that they And seeing that think work on – of more? historical did N the we crop people some was on some the just information so from places applied and apply how holds other and in average inspections averages. And our I this don't with of No, can

going to thing used I ratio much for high think to this into that it's is think interesting a The the as a well harvest to at is is possible. going yield and USDA be coming there at we me I And season. be think the be number number stocks XXX as lucky acre higher still significantly XXX yield. projecting The still you'll impact and

And so…

Anthony Will

harvested that's were, where you XX.X good? also they're I mean acres at When do think

Dennis Kelleher

the so but the applied And nitrogen, year. was will any back crop Well, still think were don't other But what's million, XX see. this more getting year be numbers applied play. again, I in that's XX internal by represented and to was so up to we'll what our And taken and was really million probably yield? than

Anthony Will

is is is I on ice and to extending June application moved nitrogen” reflective the the ammonia ammonia way. through of you springs June, highlight said, went that in look not of states and at the mean you then side-dress as the other And amount particular tons of late application about kind the thinking before we've of that had from through point not out that any unprecedented out nutrient in see that it is kind wet side-dress of down in more the we're July. of if Bert numbers acreage, “over total

Operator

Thank comes Scotiabank. of you. our of from question Isaacson And Ben next the line

Your line is open.

Ben Isaacson

Hi, volumes quick was just you I maybe now? how that deliberate? about just market's year-over-year and bit right you so down ammonium me And can question Good Was now? were you. nitrate, can that strong. little morning. your hear talk on a doing I else Thank a noticed everything

Anthony Will

you CF, City. nitrate produce Yazoo as When as UK ammonium look it for well at in we the

Yazoo And grade The ammonium City, North UAN we ammonium DDS. this is American that and flexibility, Mississippi. nitrate, so grade at make as site as we talk agricultural the on have now industrial we flexibility ammonia about nitric acid, specific nitrate, side,

versatile very plant us. So that's for a

saw the that to as we we able to some and that during move of period opportunities this so direction. segment tons other And products were some

is side the other assets. The UK

the on in mix. We have two to different less business, that produce exports and focused and of side make nitrate plants NPKs. decided at that a we ammonium And there

or location my locations. ammonia We – ammonia that make at and also those sell make at

And but think a it balance don't bit – of so that I the not big was change, little shift. a was

Dennis Kelleher

we half QX. that Yes. I not was about quarters, there because up not up first down, – actually overall in pretty of business it think And this but first half think volume and was really in think I again, in was half was good shipment

Anthony Will

ag early. There okay. Well, started really season

Dennis Kelleher

So quarters. about not think half,

Operator

you. Thank

Citi. from question Juvekar the line Our next of PJ of comes

Your line is open.

PJ Juvekar

Dennis, you. retirement. on first your of Thank congratulations all,

Dennis Kelleher

Thanks.

PJ Juvekar

urea you on farmers of was all, so get plant a do some bins out. wet sold, the up for that environment. some sitting kudos a tractors you’ve acres guys volumes couldn't it how your applied it the think mean, all of I in urea ground to in question. is, of of is I was you did executing you the comment the and All have comment and do if that distributors? and difficult volumes you first this have think million go or XX supposedly My

secondly thoughts strong possibilities? the then And Tony on free for your M&A any with cash flow,

Anthony Will

So first of all, thanks for the comment.

do this I is outstanding the job the well the challenges it's are are challenged, good, of flexibility question? of there inventory And down and think handle when to it spring. really people team out network whole Did we really the things Bert, an the but go you there when urea. shine. or the want capability really when and did

Bert Frost

in the well to discussion logistical that gone lot obviously us So that side looking already some challenged. the when that of We'd just back issue to to asset, a good of at became preparation. how was feel And you season do up we about very that it this plant maximum ammonia we from with to interesting as in would whole be the called and apparent months the goes urea six We realize prepared didn't the note had six the railcars. an whole extra railcars. it of months barges, Again, urea all and move we're as system, quarter-on-quarter, Q&A on remarks that.

And extra as barge I with working capacity. power up enough fleet ways and team barges lot with of the a as creative give with our to well ARTCO, credit coming barging get

river high that could in they up barges focused on where least to barge St. we they movements, on started be where at and getting at working those ended so. April or unload this thought a river up into slowing them send embargoed flooded we point, being not places So and up we and with they them Louis a would

had But we is shipments. another note record side truck

driving to to went load So and demand and tons know the X,XXX trucks We truck. providers. are with happened. designed some a to had We that urea facility our distance. during We demand. Neal XX,XXX by up of customers another the And long our of spot miles day peak urea meet truck to a issue work Port

we that from on some and set back and executed were So up building record of movements when achieved place as premiums deliver to in to a on we inventory because us take that individual products QX totality prices QX you supplier well of how be a all high as time. these had that purpose, could in and these to

Anthony Will

your UAN someplace? which with the when the about to spring go level, price at weren't bins because people you which launch didn't season. UAN, program product this typically seeing July in there's a demand shareholder versus stuffing product prompt PJ, question is we Our infill the this until vast moving we indicates at and delivery pricing week because reach and it that to think ground reset was and a application into for were out just shed sitting I of But in did tanks earlier application, season still the that we experience why it is majority shipped is

July that us stuff it hold put June at to because that stuff pricing. were a was pricing firm all we of that There to one So relatively going was for into was even to selling that the that’s long ground. no indicating period and into warehouse through was the spring all going

Bert Frost

for high that the barge of and is barge market, urea based or issue Our river. immediate especially level UAM UAN customers just for well you urea. about talked urea And channel demand, checks P&K not that's in but there the do we same of low. but for and a of as ours the We this just on believe is loadings as like with UAN on Tony said, knowledge think and you our represented all on and

Anthony Will

your second cash free that. about we question PJ, And think around how flow and

free high very, very this We rate have base. a and EBITDA of cash asset conversion on

we drive there puts for so our the high us focus bar a in share. it of per to is, flow really out want accretion acquisitions on. because That's And cash way what

have it cash Sure. basis Absolutely. Does we to accretive It interested per growth? all M&A? we Are does. on after be And and in share flow interested done? in we're so said a absolutely are

looking other that a great not flow we've which still by Xx And else it. then to test, options, is things, better that but we're space. we're share it at So yield pass in than free anybody is doesn't yields got if the to going cash Xx the that way, price execute the

have So go don't we've we a to in our in feel terms to a head share go is way and and that like that I got we dilutive. of own think price there's long our something gun do

Operator

our from Duffy Fischer And question Barclays. comes of the you. line next of Thank

open. line is Your

Sean Gilmartin

for This the morning. Gilmartin Duffy. for taking good on is Thanks Hi, question. Sean

how XX view million. you real start give a Curious harvest? pegged year should acres had mentioned volumes potential year's you start know on thinking overall your half in maybe view on next of your we us and maybe planting in acres could I a of the XXXX given late Thanks. and take XXXX, if back about I Just of quickly, for corn in And the the kind kind your know around late corn nutrition there. you kind

Anthony Will

as couple of you were of years over on the million the of million estimate for what product given XX look make. shipped think not maintenance back if in I just the because we a running we schedule Duffy, product sort particular the tonnage, XX/X. are, the long as mix. And That's aren't they're looks what course maintenance, of sort tons between mean XX like a the bad I down year, basically and plants last we

has So just well. we'd half last consistent been like relatively the each the years half of in X.X back first million, as three the of been

for pretty guide second going half. I a look to are like volumes that's good think the So what

Bert Frost

book. I'm order pleased with our

in products. inventories I in at agree We're options our good about to disposal that have what their position the in so I for we're Tony, high, many but manage managing rates. ammonia demands. with a being you market good talked little production that position We a with we'll that think we the

shocked week your that late I in Canada, heat as and runs I cornfields what interesting. I just nitrogen at a days Michigan was four and waist is through high walks then some and to and Ohio not to degree and many was and think high knee I was last need go left. However, harvest did fields in of I point saw driving on and

date, frost, were the by going of have to likelihood to maturities. frost driven we if early you're So and an having a that not see

that for silage product will cut be so could And a or be just yielding. low

down harvest, and on spend So want to how then much dry it the depends propane. people late on

so And were the XXXX acres bullish.

But end. and as back levels XX XXXX to higher we're are, think $X. low you we want don't when to I end, use give a type look where corn ratios stocks a at was to where to up

today corn range. the is XXX trading in Now

corn could to? So go what

people weren't a XXXX positive that will But available would I the early. planted it's today going acres economic a up, and it's and going I preventive think be are for it's be but proposition results, the plant to to go on but planted waiting acres, especially acres see the silage acres think be, focus these those results farmer on corn to for to on or those harvest

then just have we down can December. normally. late applied you're generally to down, think So going going happen in see we'd as again. have harvest And dry do and or always That ammonia a we ammonia if I

Anthony Will

I on of are. mean I or people we're think it's more also than fair USCA lot to bearish acres in that fact then both say yield probably than a

it both going market's year, year next acres year So to our are today. pegging opinion us in after where where this be and off acres stronger harvest says the it to than board goes next that corn price, the

Operator

comes question of Wong of our Andrew Markets. And RBC Capital line from you. next the Thank

open. is line Your

Andrew Wong

Hey, morning. good

out? that and a onto strong it's providing that, over your going expect like really next big your America next of far thoughts the next pricing I'm Thank on years, corn guidance you from I pretty several crop next So in to and on confidence years, acreage just nitrogen sheets how it's year the curious the pretty over clear several given North commentary, year not some guess you. balance sounds about so be your following demand changes year. the But just

Anthony Will

it's XX in you Yes. also I just plus the when to this you relative. to a where think mid began mean get is to which acres at back year is down where believe, we which use look to single-digits, year, need that going end stocks this I you

I least the million, million, is XX Well, because sort million and year and this there. so initial price would are XX million, being if had signals back year I and acres intentions in you're million XX year after at think, the probably the just expect XX we of next XX

fever in in we the or issues whether beans. of kind side. bumper hog ongoing other expect, I culling also trade or continued And think weakness bean just concerns the growing regions African yields on and swine related that's other population and also of because ongoing

a certainly for I grow very, mid-term think you basis up farmers with very to short corn. mid-term incentives end basis, and on, strong

we're in so – demand backdrop against view And our that that bullish Bert, North the is of you corn really also nitrogen America. and got?

Bert Frost

Nope, I agree.

positive I think you are your where numbers spot market. on a see

Operator

And you. next John the from Roberts our UBS. Thank of of comes line question

Your line is open.

John Roberts

earlier Incremental And I well expansions to low Thank also And not Greenfield would and comment expansions. to since your recently? you, costs. that small high have guess to towards some back wanted Was new for just as the Christopher. Dennis enough I your de-bottleneck and pretty nutrients that clients announced opportunities? are directed prices congrats go some

Anthony Will

whole in respect not it mean – talking bottlenecks. complex, was with to about are a I incremental I clearly, well urea John new putting expansions ammonia Yes.

going infrastructure think much favorable I economics have you've got generally place is once new to a whole in building at plant. speaking, to the de-bottleneck

facility. new really, certainly a a additional and we're and Brownfield, Greenfield plant then was evaluating de building similarly ammonia it flexibility. or But whether And a opportunities it's upgrade bottleneck

like the in year what returns product our more Bert looks levers the can product, off of order this in in slight think the mix the flexibility to manage are. pull I value particular better highlights

fairly ability high of flow into add our given of scale cost the strong still And a return network, that return. are cash to is great that new a flexibility that some the low projects and in to invest some but of terms plant

of stuff So we're looking kind at too. that

normal when capital tonnage. that's of XXX say absolute I we our gives think to that there. upside in be flexibility good some CapEx both and of product growth the in budget, XXX most But number include a within And that us pretty us framework mix for forward accomplished some can going terms of margin and

Operator

you. Thank

Oxgaard comes line question of next of the Bernstein. Our Jonas from

Your line is open.

Jonas Oxgaard

morning, plants make urea to Good LNG then talked about fallen price doesn't the But agree the plant seen you are gas. much of early and on as today. we that new so also economics guys. profitable now starting sense have economic really of use the natural We and completely most realize

any to from rid urea you works And think the the to do export the risk for indication natural going second, your over places just gas is the last Trinidad for bad are so question, get to like their of Iran several the places sanction what find - to to least and urea Trinidad version word method? outlook seeing towards so LNG, more reversing part two allocate And years. trend that they're you like

Bert Frost

in contracts Trinidad they long-term challenges respect mean particular some think I had had gas has I availability at costs promised that Yes, with on. the to low

when initially envisioned. so profit as reestablished come of that have kind sharing been floor contracts based most of price renegotiation And they'd those different Caribbean for as a well than fundamentally up

some Again so gas into in And forth. the that of to I more more are on available revenue, it's willing there enough the reallocation to to so tax today. you some very Relative supply to think hydrocarbon that those is that to would they're see instant generate places of figure urea not far have to methanol clear and think Trinidad. I if of me look likely that of Russia sort the like there's regions terms capacity far and price Nigeria going much to molecules in returns that that superior new in they out offer can that don't the

say sitting or of a in on. is going some was urea Everything of running in there embargo that today. there of operating plants those see aren't favor think are methanol if whatnot, sort idle to of But you'd in And rationalization some full be lot regions rates you I did urea.

really in future new year build fix because have more that's the at four of it's to complex long and you'd a a be So a that. time ammonia urea to looking

You cycle reverses time that certainly could course go that in horizon. through a methanol

not that's about. and look that of worried I at know things one So are those we terribly

Operator

Piken line Thank next And Company. the of you. Michael Research the question Cleveland of from comes

is open. line Your

Michael Piken

your Hi, little Brazil touch exports XXXX just and I heard. Yes. product for a of base into lot on a sending expectations bit uranium day, wanted to Iran every we'd

trending of just and years? you next over the potential So here, the thoughts exports there see couple mattresses your for but how

Anthony Will

Good morning, Michael.

much to and money exchange. for get sending some to think, way going in find not China do send out. way them at look too always them them, run. to of our I direct or to view those barter it's the those plants re stake times and That they're And going run whether to India has or or been there's Brazil run to they're export an something and

the to you continue not that and maintenance plans for sort time are support Our they upset been view catalyst back only in any online. running or have if to may think or is issues able the the go where process to critical run. turnaround get technical And or them down is of vessels those either the will I see and bring

might And length. this anticipate. pressure so I wave you quarter quarter. a really little but longer That's point, not where that's or next see I bit think that's a wouldn't

continue running have you. they to been those run. and think Bert I plants So to

Bert Frost

been Tony price Yes, will just various as you've have tons, for certain low. things has a do those behavior, and people these mentioned been there the seen prices

re-flagging, be attractive So creative their they're a not creative for sanctions think Iranians, these business will have been a far. they've result tonnage but re-exporting of so bartering do been China. as from they in continues, but the lower I very And

Operator

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

Martin Jarosick

over look the next joining for And few we months. forward us. to at you everyone seeing Thanks conferences

Operator

in program. you gentlemen, thank does the participation This today's and Ladies for conclude conference. your

You a day. great may now disconnect. have Everyone

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