CF Industries (CF) 5 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Martin Jarosick	Investor Relations
Tony Will	Chief Executive Officer
Bert Frost	Senior Vice President-Sales, Market Development and Supply Chain
Chris Bohn	Chief Financial Officer
Chris Parkinson	Crédit Suisse
Luke Washer	Bank of America
Kendall Marthaler	Citi
Lucas Beaumont	UBS
Joel Jackson	BMO
Ben Isaacson	Scotiabank
Andrew Wall	RBC Capital
Adam Samuelson	Goldman Sachs
Jonas Oxgaard	Berstein
Michael Piken	Cleveland Research
Vincent Andrews	Morgan Stanley
Mark Connelly	Stephens

Call transcript

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Operator

Good day, ladies and gentlemen and welcome to the CF Industries Holdings Nine-Months and Third Quarter 2020 Results and Conference Call. My name is Joanna and I will be your coordinator for today. [Operator Instructions] Thank you. I would now like to turn the presentation over to your host for today, Mr. Martin Jarosick with CF Investor Relations. proceed. please Sir,

Martin Jarosick

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

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

Tony Will

the near of first our feel in $X of everyone. position Yesterday EBITDA billion. about we We Thanks, the our which as just Martin results adjusted XXXX posted morning months end we and for over financial year. the nine good we generated good

to that quarters shifts there This full weather years remind due a As or our evaluate other like be rather performance based call, significant half events. across years, can quarter. is results on we because and on our you we than I’d review this single to

However, over tends out to that spikiness smooth time.

than of picture So quarter. longer a performance time on period individual an better actual focusing provides

go fall As season to still months of today, is with most of two ahead ammonia us. of and the

expect to up our XXXX a EBITDA. XXXX points minus plus percentage few performance end results within our or will of for continue We year that adjusted full

hasn’t outlook February, Our execute when first CF team year. back to the for changed our the we since exceptionally expectations in well. Overall, gave continues full

Asset utilization company volumes our and remains high new nine sales months a through are record.

We are into convert importantly, to also Most cash. EBITDA free efficiently continued safely. we operating

the a teams incidents at of pandemic. hours, the is per record Our benchmarks. accomplishment which This proud unwavering safety, extraordinarily tremendous of in X.XX better on focus of and the than our labor XX-month face rate particularly recordable September was industry rolling a XXX,XXX we’re end is incident new and company substantially

Speaking have of the measures pandemic any of and well, transmission working known had we of been which, COVID-XX related locations. within our not our single have precautionary a virus

With locations these to turnaround quarter. were complete several critical we activity at able in during safely, precautions place, the

is toward the opportunities for next we look company the As ahead. year, well-positioned

will a year. in price spreads, global to XXXX, solid we few describe will and moments, energy this widening create compared Bert As which expect opportunities during demand realization greater

support of dynamics we low free these position end the continued generation. believe the our cost flow Given global at will cash curve, strong

energy platform last and for real economy, week to are company. which announcement our very the our commitment growth provides about excited clean We a the

developing world’s of uniquely ammonia base we largest ammonia, technical hydrogen asset is the source demand. carbon one has and of leading emerged is discussed, the emissions and achieve ways producer with help clean world to Because serve we knowledge to transport As CF our efficient store are most this net a and positioned zero energy hydrogen. as to the unparalleled

doing follow ability to for our As we our aggressively to before I who we position global rather the our will ammonia and and fuel growth financial Then we and realize ammonia be ahead. than In is value. the produce capital in a for to to announced green decarbonize with Bert, ceasing low to over so, as a premium clean Donaldsonville carbon this will believe the Last our return our some Thursday, centerpiece first feedstock. project realize value of ammonia able progress months investments. about forward me ammonia, sharing to let turn expect steps it green market. fertilizer nitrogen nutrient We scale that, its discuss will comments. With our we the Bert? substantial a network we opportunity or at Chris initial the look steps and allocation value compared of follow-on in talk closing to

Bert Frost

April Year-to-date in has Demand the resilient Tony. and nitrogen been the pandemic. agricultural Thanks, has grown XXXX, light in and global demand applications May. in the incredibly market for continues to from of disruptions recover industrial

led we demand North Brazil. Looking global by and XXXX, to India solid ahead expect America,

also compared America. energy steepens North project and dynamics global curve spreads to energy wider price We as the prices rising improving cost with

the a noted planting North well corn supporting we plantings increases press as level region. the release, As as in America, in canola wheat in healthy we are projecting good demand and of in

farm XX approximately conditions in other in allow, strong by line lower have the years to expect to today forecasting input million would This of just last due fall a States ammonia acres compared products. supported due economics I the described government weather higher the we and nitrogen the levels attractiveness to farm If in prices. United over season with the XXXX. are XX corn payments economics futures, improved and to We is corn planted prices ammonia and

recover tied industrial urea of has that We with resilient. fluid the demand continue to economic expect for mostly has state demand due contrast, in feed industrial We ammonia and economy for been relatively diesel the activity. pandemic. the believe demand line In grade to will been exhaust to

to XXXX, and driven economic so declined continue would to X exceed to regions, X% expect of are demand particularly Outside of Our dramatically. most metric have compared imports been North is in we when foresee up tons Brazil. to which tenders India million growing year-to-date, XXXX. positive and miles DEF through activity likely We America, India in difficult sales April, volumes in urea believe

also We tons, approximately X.X for million of urea be Brazil into continue expect and by of lack metric imports incomes the to will urea demand farmer production. supported improved domestic

cost during the half at see led year. to our we we projection of year look In compared to price next in gas this global XXXX, a largely XXXX on global XX, the As first cost for for the curve opportunities realizations prices greater convergence Slide curve. natural flat

for pursued rate opportunity available increasing have like and In North risen the in own our prices. them, costs some CF Europe temporary Asia than months, were at price margin higher to greater pressuring to and operating across recent cost when than rates energy profitable producers opportunities wider. a natural were but cost America. Formerly, These and most of higher producers higher gas the in increases achieve realizations. this high-cost much years product prices steeper results low curve our costs spreads that energy globe, global Indeed, been has gas

let turn response nitrogen are year the market the adjust that, to call me of and as the to clear. We With coming over the well-prepared the over global the Chris. becomes pandemic dynamics direction

Chris Bohn

Bert. Thanks

$XXX adjusted $X.XX earnings nine to was attributable For and per $XXX million the EBITDA or $X was share. first reported common of stockholders company million billion. diluted months net XXXX, of EBITDA the

$XXX For was the was loss of million. and to stockholders EBITDA million quarter million adjusted per XXXX, diluted attributable reported EBITDA of net or third we $XXX common a $X.XX $XX share.

of you maintenance As has quarter lowest know, lowest the turnaround highest and activity. prices, third realized and typically level our volumes

no This was quarter different.

reflect cash SG&A trailing both $XXX year-to-date and end cash cash month However, activities we to our million approximately costs. partially On the repay $X.X a over natural sheet factors. same At million. the notes. XX basis, fulfill and our well global net commitment and billion and the prices was on Lower by quarterly October, $XXX XXXX flow $XXX free million nitrogen well-positioned balance overall to on are lower gas the remaining was our by provided offset operating results was year-over-year of

expect be million high for we our reliability and XXXX as safety. approximately to We standards of expenditures capital $XXX maintain

than to activity a pandemic. largely as the we is noted lower estimate, As initial in the press deferral non-essential due of our of result the this release,

our of three nitric typical allows our Donaldsonville but maintain capital investments also CapEx year, capital pursue We will category, steps million return The green to million the $XXX levels. facility. normal only the completed both will ammonia our this fit Recent investment fluid That improvement includes announced in us sustaining we beyond this project improvement strategic – million diesel XXXX production to Each of $XXX our at expansion expect our $XXX activities, turnarounds examples take require over to in ammonia acid the $XXX carbon our CapEx not additional green to exhaust range. and other projects million we opportunities. year expenditure budget into will years, at annual portion will the this low to project beyond. from the budget at next and range budget and include unit which to said, expect that us in XXXX, overall and that Donaldsonville lighter allow capital enable

that. of – We do a the are opportunities company, we of lot profile. profile return excited given to growth to And expected the expected invest just in the see ahead

would we our the $XXX on supportive open the in our that projects. Q&A. after the So focus of strategic million primary expect some hydrogen provide will before of of in will that, and XXXX ammonia coming With we call cash notes, to Tony the remarks closing repayment be in years use clean

Tony Will

Thanks, Chris.

move continued CF your at want their outstanding to I Before on everyone we execution. to thank questions, for

technology during award of our found winner strength to to continues encourage this deployment on safety. the prevent also facility their from This our our the predict for of nitrogen and safety annual want and excellence wireless team in Ontario I demonstrate This unusual is excellence our And work. can the to focus, failures. our at to impressive better great and for their year’s most recognize winner of a operational business which website. of I Wilson years. finalists, the Courtright Award culture ideas is everyone view reflection year’s equipment of be Our

significant of base, low value. and the world’s looking be of forefront the of of scale, source ammonia and our hydrogen CF dollars for at opportunity. years less Industries asset and others us is deliver With As in will and and decarbonisation, intensive to strength supply advantages clean largest this operator, now us capital will hydrogen. providing world on carbon energy of leverage ammonia technical is excellence, key and a producer transport our growth critical ammonia, a hydrogen at competitive questions. to and the producing storage include than enable the a your to that propel we a operational shareholder world advantages, team, enabler will will which our sustainable we unparalleled knowledge that the to This green faster for call being leader many billions will clean create the a platform open fuels focuses

Operator

Suisse. the Crédit first Your line Instructions] Chris question [Operator from Parkinson of comes from

is Your open. line

Chris Parkinson

Great. Thank you very much.

on infrastructure, given market? of focus you. out blue the or we of Saudi’s guys but North ammonia what just are the long-term, you in ultimately these the the in of NH for efforts? Japanese percent will regarding cetera. ultimately so Can the speak you So required could growth which to – to be thinking what there be this utilized intermediate a of Just appears others? should be just the Thank fuel term merchant of like technology actually just reflection ammonia just how appears potential XX the tons, just current million intermediate about It to context be the America seems positioned, to retrofit three that? well So, as the source, and fuels, what et generally a

Tony Will

chime really ask the handle demand to of utility Bert you as But coming here. go that as we in providers. some we’re Chris, the sources said, right also initially, Yes, first now from I’ll and this think Chris are of Japanese I seeing and

fleet nuclear coal-based in electricity know, terrible that’s the and back direction the to a going at you production. emissions gas wake Japan As decommissioned greenhouse from movement tragedy that in was Obviously necessitated the a wrong perspective. of the Fukushima,

focused of a developing used as see ammonia being going one along they’re well, and of a of very alternative applications other as as toward used perspective. traffic. disassociated are are that that off-road with of ammonia sources ways fuel. that a transport, can to injecting from number production be to rapidly those marine vehicle And aggressively including help their footprint offset rapidly other a as improve coal-based fuel, into they and hydrogen well clean moving we are energy there’s the country But is directly to electricity where so number And as pretty explored of applications be and industrial a

going And the then rapid that our evolution. tipping the soon. so, supply is you a occur more view that developed, the And And pretty gets this that’ll happen. base. that point infrastructure to is developing you’ll obviously actually But see start really can’t faster hit until

And be able edge this and of to faster. to infrastructure facilitate the to the so the we’re on – front really base the tipping supply getting develop help and point

So really we’re about excited this opportunity.

we’re only Bert, the make profile. emissions greenhouse gas to dent think a leading way the efforts. Chris… to in I the going the is world it’s And dramatic overall excited be

Chris Parkinson

close simple, given parity discount us XXXX? trade expect been of can No, ultimately? a you quick that still you And Or Do you. pricing? the on U.S. year give in your just was UAN projections quick just for update the Europe, very that Thank a you just UAN set since it’s normalize a to do very in follow-up, helpful.

Tony Will

Yes, impact North North price – we’ve more America, of American what relative went – a XXXX. seen XXXX – for production in year increase was a into ago been about that to has discount play or is that price the through was It of pressure of EU played excess again up, that we’ve out especially effect is kind other opportunities, a and seen ramped is import is when was as lower. in continued needed. nitrogen reflection is full what we’ve in substantial probably that That out price the sanctioned just seen

So of pricing how which acres the I improve goes, growth on and with think consumption, the application seeing for increases what UAN expect greater with depending we’re XXXX, ammonia in to fall we and profile. should see

Operator

you so much. Thank

from from question next America. line of comes Bank Byrne Steve the Your of

Your line is open.

Luke Washer

morning. This Hi. Washer on Luke Good actually is Steve. for

being the product to production in nitrogen selling You increased prices pressured over prices, of lower talked the skewed meaningfully course spurred that one Was about average energy year particular due rates. towards seeing urea or to are gas back you like now global And see ammonia? regions started costs you with that what normalize? supply up, coming to normalize? that And nature starts have

Tony Will

manifest prices, there’s commodities and a little highly to an terms in The give in of see of of answer the Bert I’ll then lot Yes, bit places well. supply. in and lower chime as ask where particularly you which a traded additional it for

is matters into third push and tier up, pretty the spread significant particular, parts year excess the that cost because that’ll high of as that even in particularly the urea. time. that’s for curtailed the in year, that think dramatically higher improvement that in year. see about, on a ammonia America the people still that lot least why the globally benefit I pricing. next have response, in pressure is spreads complex significant with North facilities going at you we think it’s So there’s expand question to for and quartile it previous shutdown. And production overall curtailed margins second And the been some have if between extended sloppy there’ll terms during energy and Trinidad actually three going There’s point you where or actually is, plants fourth period cost was supply second downward or of Europe that in we talked a of Obviously, But won’t of quartile, excess what Asia Bert UAN seen forward see or the energy and some the UAN be supply, that’s this rebalancing, see well. pretty producers opportunities from pressure you’ve the

excited back we’re spread getting differential normal to it And of so where the be. energy should about

Bert Frost

Yes.

two impact. pandemic by $XXX went – short North the continued May, ton think, is equally canola. And on $XXX May to we’re which a in a high was also But energy capacity the I $XXX. $XXX, things, we operate. to big April cheap but the where and June, to the the and as Europe in to in fell issue low probably from and brought cost down cost $X.XX side UK, their America, as And we

wholesaler or So an on And then Brazil. by of the positives India retailer had operating be into lied inventory pushed either two and have a you carry really in decrease pricing the the been group. so imbalance of where type substantial value taken positive and just some one perception and and then fall and or risk a over that what market have back normal rate would

XXXX a Hopefully through good that And acre position. and with pandemic, improve international good factors so economic positive get cost should the the we plantings we into curve going this prices. see are higher support

Operator

Thank you.

We P.J. Juvekar from comes from next Citi. our the question have line of

open. Your line is

Kendall Marthaler

Hey, good Kendall morning. is on for P.J. This Marthaler

big U.S. sticking So prices obviously, with are prices at urea discount a international now. just your prices, to pretty right

do quarter international meet back it high to to to see is in the to go you prices growth up international decline how in parity, get order or you any So next that meet And do I think just those guess year? in parity parity? could in mostly U.S. prices first

Bert Frost

So urea look when you at you’re today, discount correct. the

are delivered market. for is in will what that We be as with market. And the to to China a well X production China that caller. exported. rates with the be where international and in the last $X.X the mentioned not $XXX and a up coupled the markets costs demand currently as being healthy are where in of see again, at recent to in million Europe I XX driving to post-November operating goes NPKs. operating the the the and are demand spring demand coal with participating big and today those most the are yet tons that today negatively force key with market. story. tons supply tighten don’t at we see coupled million million crop of level and And does tenders the RMB buy, around metric probably increasing should they production, what China’s ton of X Chinese to differential probably price globally, is tender issues as We But Again, urea the where world see – international for $XX we going going $XX India that good into just to to And pressured we marginal producer

through I the We’re September tons be. below at think – probably it should where States, imports that’s of United into XXX,XXX

some up And need in either at Middle to or so North we tons point, East from digging start the catching and Africa those Russia. or

so than should higher again, drive corn that position plantings a closer And we pricing, And what with to there corn as get we’re today. projecting be could spring. $X out

Operator

Thank you.

We line the have Roberts UBS. from question from next our John of

is line open. Your

Lucas Beaumont

Hi Beaumont is for guys. on John. This Lucas

follow-up energy on to wanted costs. Just the

some from So in lack in terms normalization the any availability you North which normalizing of side to risks of differentials, conditions COVID either lost demand supplies shut America related the in? they’ve increasing kind picks Europe Or with million because on X X shutdowns? of back the up of or sort do they’re as see around and from supply the million demand deteriorating

Tony Will

Yes.

that was big gas I extraordinarily think, the normal. natural good low year spread. more America, chunk massive And of driven perspective Bert from that as happened UK by replacement a excess from about America the lot than economic we Europe. the in floating the cost actually for There is economic North costs was us, What expensive. COVID, really home. into our completely natural that’s the paying gas aftermath facilities had that had slowdown gas led or were that’s to for of a the price to of was differentials cheap is, becoming because in year LNG there the to around up upside the was you that very which last North supply. and no incrementally talked And in were really a over what end and this of – energy down a of driving costs in in going for starts result less it, U.S. means And cargoes you cargoes LNG what’s in rising energy we thing a

of led nitrogen. abnormally that is where provides I excess exports, – a to the demand to back So pricing the think be kind in in for price given a to natural even structure supply, gas operating We’d and price higher. the kept the LNG trying to there of spur that rates again. normal reduction And is rising high our if environment, really which differentials, on environment, return world and much for rest expect the better in cost

but the to cost from prepared mentioned think relatively of were America higher our a of remarks, Bert some best real standpoint gas North low compared I natural his profitability in in actually years with cost. a

looking for we actually think so, And well that us this portends forward.

Operator

you. Thank

of next question Jackson BMO. from Joel Your comes the line from

open. is line Your

Joel Jackson

really good down smaller you over those be you Hi, you wouldn’t gas kind have station do this think unless your now how are kind secret but which newest in affect smaller how to Like, next and your M&A green taking could about the With If obviously ammonia. as your – maybe focused would road start, focus some very imply the nitrogen here do decade? any that acquisitions, assets. deals, thought might strategy cautious you about you of destock you we on morning. opportunities on think M&A you’d of some

Tony Will

Yes.

and close ours. there’s we And And have extraordinarily money assets set from to those now comes at compared put tear of out the that utilization that I the are the – bunch price we when assets to be I another assets will investments sequestration think energy, and would our investment and know, own to all those to there this up end to acquisition. into know Joel, rates value finished of as access at and to that running access in don’t think, a also a question base. it our really are a logistics renewable and making asset to what And the existing down standpoint. really of you end modifications markets all high access the assets particular of factor. on-stream day, to that is I

of one green M&A that off of ammonia. to with embedded well into you them get is, low you as assets first costs So, make additional probably our on investments start up standard convert are maintained not and and the to top have before carbon to

possibility, certainly it opportunity comes about again it’s to while like So, value, excited and down price it. base we’re continue our in to really a to the asset I and reinvest

Joel Jackson

Thank you.

Operator

Thank you.

Your comes of from Ben Isaacson next question the from Scotiabank. line

open. Your line is

Ben Isaacson

past, you has very the in spring. in much. about the Thank talked Tony, when the fall ammonia demand window CF was narrow, made up being

Thank guess second, the up of the question or true down And solved? you fall cannibalized? right dispute some sales my the Are of you Australian mix? by start wide imports? now? we ban nitrogen on And can on a and is touch that coal going going when I gets so So propping the kind to that matter have then is, does spring see much. And get quickly strong product that cost reverse you curve that window? if at just Is is risk to

Tony Will

Yes.

bet You Ben.

spring. I’ll off plants us application, and and that less nitrogen in But that the in up our down, we allows make you’re bit poor that And end able up for realization ammonia base with the values over And end that ammonia a realize whether start a or asset So apply tends the load. we nitrogen price certain if the some then we it’s in run terrific to differential to for you’re general, a like it But in a we here you have fall be pass in we amount really requires of having we And to export going that full ammonia. you then Bert. to ammonia and lower. little because if to fall, grower, spring, need everything general, of on. sell the if

we a course that we’re this have capacity. North so, from And our year. that everything given really not sell import an – move region to plants able is next “cannibalizing” year we America out run we over to is, about make of worried the that sales at the year, be that We benefit of the

have we that differential hand, And But on number ammonia get less but this anhydrous either fall terrific of same on to tons, the other so, and in exploit again, it they’d basically get go realize of got urea of And margins X putting And side, more relationship or one it X every every of it that on didn’t us goes of the that better ultimately about based there ammonia tons the in that per down, the on to ammonia ammonia down of UAN we’ve tons is it’s upgraded ton a spring, down. with product means asset didn’t that tend for the upgraded of or the we you’re And go basis ton love/hate allows the the down. goes down. be go on values. sort we unit nitrogen products. for basically

well market, going do products we value. ammonia ammonia we’re upgraded we a make. lot, volume to In really strong an to that market a the because of move really that doesn’t because of in going great well So, we’re get do

of good mix. kind that hedge really a have a on based do Bert, we want it’s our product to… position So, natural you

Bert Frost

where the excess some we’ve to and pass-through put Also years actually And in precision difficult one adaptability or of some on that difficult ago then ammonia market right right impact you’re ammonia in to seasons some – on product to less remember doing spring and it wet, that multiple time. and the and be too it Yes. ag, probably too at was with both into spring, had moisture or the where river that well those transition floods whether you had or because cold, the XX I’d markets to applications, springs did top. fall applying fall less ability urea inability we’ve where was than ammonia say, our and moved of UAN had either and to apply. is and

the ability so what again, manage fall less. through is is to Tony said, impact of negative it And solid. a our And pretty

Operator

much. you Thank so

Wall Andrew of from line the from comes RBC question next Your Capital.

line Your open. is

Andrew Wall

Good morning.

a to there the in the back space? blue drive for be low nitrogen? product ag farming ammonia, to for that there green in carbon demand Could is and some fertilizer that results future and Going market decarbonize

Tony Will

regime, We actually to possibility, growers carbon do fairly so a soil be there’s within of of thanks. I a it’s up the see strong Andrew Hi, income now, right are cap and look for at the other that that’s end ability that sequestration beginning although a can a not in farmers. or and a trade source would got to system valuable forth, and that’s say, number entities real

if potentially And sequestration. you with benefits using in additional even in-soil get that you’re associated so inputs, carbon environment, can lower

pretty customers at with provide. I sequestration think I’d doesn’t so that that something projecting and attractive. Bert and others exist. a right carbon And that’s may value can here, a we of developing that conversations But might be I of regs really up a around the at of if modeling imagine legislation that particularly could carbon ours be level forward that set now, that of possibility. end are had looking number And and say, the farm

Bert Frost

Yes, right. that’s exactly

with we’re meeting the So leaders.

and the do live crop we’ll for the captured. production you that’s technology, that and chain married part As that’s insurance, other at derivatives for carbon then with practices it’s put together strength the think achieve seed with we tracking nutrients, correlated what or that And what whether of recognition an farmer how there But there is of to farm weather and the bring gate, then crop network with and of out that or so for are opportunities, team. table percentage input of help the that potential level farming of network provider and through protection, value critical I being hedging our value is this role solution. obviously with that a key we our that, that’s play a what we with able we’re of to And measurable. industry. to for next achieve the help believe can If do because a step

Andrew Wall

like more how cash network. like you green build You just up your is of generally, And flow. you just CapEx little rollout million typical the Dville, a for more bit guess, a capacity flow, just just initial than interesting. significantly, need want that the need regards but CapEx, to Okay. That’s the little cash would cost the the future ammonia it would cash maybe that? that $XXX of might in if finance you to general that have then capacity? you I versus And bit for across seems

what we your financing be for preferred approach So that. would

Tony Will

in Yes. investment for terms Andrew, tons so – of $XXX it the million. year, per initial so circa call XX,XXX

we becomes as a think, that week, of talked scalable. I then investment about lot last

a as same So subsequent long plants. in adding the come discount capacity improvement at to you’re as

you time same some to in And to from. there’s chunks, move either new subsequent but every within a can complex so, the a be that plant efficiency, over starting we new complex, baseline get you’re or capital some going

third second expect ones these efficiencies and of we we’ll a and that up some and learnings However, lot improvements. our on of would end with

from out operations. investments And would at of cash are we you two, want just plenty so subsequent or flow Chris, it? the of to talk we to down. expect But one generating think, able to And those come about I be self-fund cash do to initial least

Chris Bohn

Yes.

I from electrolyzers to think here as and the what are the to costs side, we’re renewable comes efficiencies see innovation and is, that well. energy going down where even also going come those

of here, our that a looking Tony the just we’re project we’re we based as having many as return that from place, feel scalable to of with better profile. So said, get of ahead at that’s And And to I seeing on based already in peer we put going expand. initial what units groups. [indiscernible] other profile confident on think us continues

Tony Will

to a I I our tons, to you’d think, we see of about, can that debt. focus know these has certainly or Andrew, forward significant level to a And look four back been down of once there as delever. associated here five the support the additional And the really last with finish years sort comfortable talked growth on be expect Chris $XXX very EBITDA million premium that back front. debt. to we expect we’re down also and

this adjusted the that that CapEx looking at. support some So EBITDA certainly be used you’d that on of we’re if can some see some line incremental can borrowings basically self-fund correspondingly growth

Operator

so much. you Thank

Your the from from next Goldman Sachs. of question comes line Samuelson Adam

is line Your open.

Adam Samuelson

Good Yes. Thank everyone. morning, you.

Tony Will

Good morning, Adam.

Adam Samuelson

in late and make projects supply expansions. starting that I’m Iran and capacity India are projects Nigeria expectations on on to clear urea in next year, want up. next year, start on big couple just a question they’re So this just of the a year and supposed the There’s sure early market that up to

months? global when so, closures true So about if Thanks. capacity make And see in actually the XX the in where growth exceeding talk that next you sure, just want nitrogen demand to market you for global XXXX? that additions. capacity do Is

Bert Frost

And Good your you agree morning, with Adam. on list. I

on you and probably You come coming the to Dangote Nigeria, project it’s on, then projects in in the plant [indiscernible] the or have got that’s India. ready

and being And All projects of connections, imports feedstock, and to been continued these the ancillary export delayed have of Dangote that loadings. and startups then the issues case peer of with expect we it’s the ability delays.

and articulated. is on we’ve And side where with on, a so see if coming not that’s being capacity economic list, the what list industrial there of we recovery the great growth already coupled and

JKM see tons with million off we’ve now coming in we’re of where and we pricing in does and that’s producers looking at close a energy So a and at what a over – $X, the spread. ammonia market, gas tightening current ammonia $X.XX market, Trinidad NBP cost higher seen at a market and And the rising $X on good that X make economic. to for UK Europe

in expect they cost in all adjust we’ve demand to you and expect that cost to XXXX. areas, But the to very so areas, had where market. flows back would higher lower And continue XXXX, start up we moving being to would tighten see, considered. that good things And to were, trade

Tony Will

that in to India comments a not I come have tack that couple to other plants production but online onto of aggregate of the there’ve in has is Indian just Bert’s want last the years, number been in Adam, increased. that, actually

what record number So is down. was in of India think fact, import. efficient year the for have plants you’ve I this Bert urea shut a And seen a less older

Bert Frost

XX X be we’re closer seeing to to million. going million, above but it’s Yes,

healthy very a demand. So good

Tony Will

Yes.

the despite So been fact it. that coincident you’ve with there’s rationalization, seen been additions, as that’s capacity

looking standpoint plants trade from flows. So, as at those we’re being of the problematic not

Adam Samuelson

I appreciate color. Thanks. that

Operator

you. Thank

Your the Jonas comes Oxgaard next of from Berstein. from question line

open. line Your is

Jonas Oxgaard

one gas hydrogen instead companies well, the this as of electricity. but bio gas of announced industrial sourcing Wondering morning. green Good week

a that and little So bit and wondering about considered if you minuses. talk that’s have the you approach plus an if can

Tony Will

trying regularity operation had can know the know, all whether I enough methane commercial steam instance, get plant the don’t bio and Yes. it because regular of of plant, that what it. the of stream quite up gas associated and I of with kinds you be of you [indiscernible] and supplies good lack off of looks run disruptive see never for like, of it. these kind consistent kinds and coal is the – know the a of actually about in to consistency gas which and India chemical to [indiscernible] sort production problems for as stream all a Jonas, that compressability created into plants of down

coming I know gas idea. enough about of an bio So really what source the off But interesting it’s don’t these looks like sources. of

Jonas Oxgaard

Okay. Thank you.

Operator

Thank you.

Cleveland Michael Piken Your of next question line from Research. comes from the

open. is line Your

Michael Piken

Hi. Yes.

wondering expecting progresses. of the move months. mean, and exports thinking little just prices for to that I next of bit in sort guess, UAN more year wanted and of start terms higher to of we see strategy. you over a Just in to are waiting kind you’re the managing imports Thanks. pricing are UAN several you of And urea or more your in guys more come kind flow as just if imports delve how or I the on about any thoughts the

Bert Frost

receiving When principally Russia. million in America you and X.X Trinidad at to X of market break out million the tons around been we’ve million domestic about of tons tons UAN XX North of look you demand, production, from imports,

think at to acres the XXXX. stable is new side will a lot market there’s of where coming overall, capacity the in one, possibly so hasn’t We but looking there in. increasing, increased demand And that of demand be with been

a plant drop market. their in in that to You’ve had decrease Russia production Acron producer a urea in

You’ve take helped we with moves existing Brazil, you’ve market. further seen DEF demand and products. some which to had the in have stream that higher nitric then support made has that growing valued acid Argentina and of And the into

product fully not we key the a And But the Europe, this into has And so, UAN from to as market good at have of if tons as have company. balanced. those our very point market our value opportunities end is and key, the for we plants the pushed see some that repatriated market. we continue been how not

Operator

you. Thank

Morgan Andrews our from from We have of coming Vincent Stanley. next question the line

open. is line Your

Vincent Andrews

morning, Thank you and good everyone.

market I movement it year moving on sure just to on was the slide, Just seen next with you the make want and within what look to up understood your Tony, curve, of you characterization sort cost of sort to the kind $XX. going of I’ve ask of $X have like because

up we’ll or your longer as our as range middle I’m come been the case end the Is trying it’s how what the the So be the higher might’ve year going models? when low think to going during just wondering, see to period at across year, about and this we is because we that well the realization that quarterly look get should sort the to of higher about be average the we But for think some is when during highs. more in about year, going to year we then of stay to year. lows that you’re us, as thinking

Tony Will

Yes. to Vincent, here let that’s him over a going it throw about Chris and it. to great explanation. I’m talk

Chris Bohn

the is there. would in put the you lower should agree it’s for going and it, of as That each is we mid really and you expectation some predominantly about this quartile to Europe of see from much by already range of saw, differential. $X sort rates the for expecting I operating on is JKM. cost players. third talked And margin as Tony to these your Essentially of we’re because other Yes. tier $X that to have energy top with end pressure right call low with fourth widen a were we’re characterization year, Bert and And those the spreads curve. on and what see – at beginning

than we Tony in paying we less the the here mentioned, are As U.S. were in UK

of end during a the going higher year. is this the curve, we’ve provide times us pricing only XXXX to specifically but year cost So than not of particular I what think more what opportunity also seen is

Vincent Andrews

Okay. that back get it less not green or desire make terms investment make sheet how into And you’re does of shift that overall? the the to been balance talking about Does sort Does we’ve a a does just anything change grade. even desire of desire of follow-up. more of your it to as or in of the about arena, a sort it thinking

Tony Will

Yes.

investment to I a still have think back to desire get grade. strong we

another the a and having that time. with cash, base. little of at get investments of margin is from a this ahead end round operating that delever higher think source fundamentally associated I with fund same because we And go can in market can helps more diversification first terms customer of the we continue to base different, out

So I think of all positives. those are

Chris Bohn

Yes.

that right in specifically that like we’re to sort as process we use puts reviewing $XXX – and of share of project is, because and mentioned within us be as incentives is to XX subsequent million we those sequestration, to the carbon think here, CapEx, of the this first our that of wave going the are we our $XXX projects tax I there – million with to now, from to advantage. credit. fund And removal plants in capture all remember have already thing some

we about the at this the early you incentives So pretty just flow. the when I initial of funding look feel straight coming cash out here, laid both, projects in, periods think out, good

Vincent Andrews

Okay. much. Thanks very

Operator

line the from comes Mark question next of Your Stephens. from Connelly

open. Your line is

Mark Connelly

your that? Thank on wrong with blue? like you. urea. UK And give could us green Tony, in ban I to It the seems was and What’s the going you it’s would respond sort hoping of happening sold direction. you proposed perspective how on

Tony Will

granule. rationale back sequestered the part though COX think volatilization around the it’s been the releases even the urea temporarily atmosphere, urea, which is decomposition of of in Mark of then and I in Well, the kind the

think the we and a the UK little the of soil the really the grown conditions the make reduce about bit UK, our given and and ammonium issue production agriculture choice is the crops of fundamentally UK – Relative American gets are I the challenging, which there. in to fertilizer And emissions base, North that nitrate, but aggregate very that’s in serious over so, well. the trying to from to being that as climate

carbon to so, away I prepared going. farmers a And just produce exist we’re to speaks UK direction how have to it our UK some low gotten UAN helpful green reduction. very the us support – But think, over to carbon regardless ammonia serious business from think opportunities that And But actually from able up we’re certain about is of there excited I they around there. countries reducing the be in and as end again, for over substitute which well.

like well So when that. start we’re movements really seeing I you think positioned

Mark Connelly

But as hurt I and your there, starts doesn’t UK a to to everybody. wise. it wealth spread, mean, policy position, you concern direction if starts it’s this the position but this

Tony Will

going incremental globally the other nitrogen of forms that and with putting the you’ve starts substitute demand, that reducing then is readily. most food, the at nitrogen a think fertilizer for of it’s I doesn’t relatively Mark start expand questions ubiquitous got captive is what’s Because what supply traded you it. form extent, ultimately, demand to of And price right? of mean, I raise currently Well, of take the that sort to one to the

sort going shelf. you going wrestle. food And the if so are supply on the store And of driving up ultimately, question to governments to its the have of a you’re farmer, that to way chain, that’s nutrients into through to price work then of grocery the price that’s

But easier because it’s managed world to some on I it in than decarbonizing. early it news moving others. more areas I how develops. good we’ll guess at see is affluent be we’re The of probably in is the think

think will position ammonia, for whatever carbon, and supply a is that’s energy is actually a I needed, very different be a we’ll low network in to our whether it’s an be it’s a able source for content. that a helpful very, a Our nutrient at movement that’s be business. And carbon, it’s both that it’s whether position form, low in AN, whether to

Mark Connelly

for late There that’s planting. maybe in of been Big Great. And lot season earlier a crop, a the tempered a the little just one excitement follow-up. by bit was and Brazil corn

in As assuming increase a there? are demand in you Brazil acres and think steady increase you about steady Brazil, nitrogen

Bert Frost

When what tons Brazil been over this tons not XX towards tons happening demand of has distant been It’s say, in XX probably from, million demand. to for gone XX too last the XXXX, It’s you’ve year a exciting and fertilizer increasing million steadily decades. in heading million probably let’s future.

Brazil Bolsonaro how directly that reaches the comments of climatically opening those what a the those issues and and Tony’s opening I of think has new outer one up where pretty to they’re they’re of dealing and aggressive opening Savannah. what And acres we’re opening been acres with acres. – – relate the

with not is controversial much And Sul in of even available, grass that’s so feeding outer Grosso too land a cattle Bahia. today, up there the that’s Mato could or been some substantial globally, two do fed that be reaches of but Goiás difficulty and opened area

done fertilization. are American farmer They’ve opportunity of the yields done. farmer let’s in Brazil to, an they economically through experienced with on areas, of for on the as dollar. the have things increase we sophistication the the been equal super taking advantage that technology, is the Brazilian year And which happening. increase basis what Brazilian down so exactly They’re X.XX the on on And currency is there. that equipment, should, they attractive is say the That’s of with and it this devaluation producer the to

what can bullish, fairly happen. we’re So

XX You You’ve late the it was planting than further was to consummate this imports to And seen increase They in guess especially have anything corn, more of urea tons years yield. dryness year. yield X million ago seen million grow what? go a X.X related in else. from tons to

So going safrinha weather soybeans crop that of That late has what is crop corn to the again, the gets We’ll which you see then dry yield the a planted form impact think planted planted – and you’re be with plantings. means second to late. because will have due happens see see I pattern late. there that hovered second that may

we’re So to come constructive, what’s happening market more we’re the to in Brazilian see like down participating there. and

Operator

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

Martin Jarosick

joining us for you we to look forward morning. everyone Thanks this speaking And upcoming on with conferences.

Operator

Thank for conference you call. joining. and you. gentlemen, Thank concludes this today’s all Ladies

You disconnect. may now

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