CF Industries (CF) 6 May 212021 Q1 Earnings call transcript

Company Profile

Participants

Martin Jarosick	IR
Tony Will	CEO
Chris Bohn	CFO
Bert Frost	SVP-Sales, Market Development and Supply Chain
Joel Jackson	BMO
John Roberts	USB
Adam Samuelson	Goldman Sachs
Ben Isaacson	Scotia Bank
Luke Washer	Bank of America
Michael Piken	Cleveland Research
Andrew Wong	RBC Capital Markets
John Rider	Stephen Inc
Rikin Patel	Exane
Roger Spitz	Bank of America

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2021 CF Industries Holdings Earnings Conference Call. My name is Beth. I will be your coordinator for today. At this time, all participants are in a listen-only mode.

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

Martin Jarosick

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

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

Tony Will

that morning, U.S. demand generated up winter are such throughout and first each they of financial the these corresponding production together, happening somewhat things take of million. and adjusted good due XXXX storm story and prices one during everyone. in sales offset quarter, other. increase But results quarter, the afternoon driving Yesterday a were There prices, Thanks, weather our the the corresponding we very lower all winter LNG if we quarter offset the nitrogen volumes. as These results gas in to you roughly large EBITDA lot $XXX of which of impacts really event for Martin, post and

we color me a I'd to to our meeting response provide Let in six bit our like of Gas events. of Weekend, Day gas in the posted U.S. deliveries on suppliers winter majeure locations likely Back shutdowns. hard and would refer But several materials. that force our hit an extreme the and curtail these seven slide you Presidents' storm the face informed to February, were in we

quickly, on team mobilize discussed options, of the action. following various and decided Our course

the our Given to to the to back contracts gas we sell we're at delivery prevailing loss would suppliers our we and of gas in plants gas effectively for prices. anyway, opted down shut facing net contracted had by be delivery our market settling

on gas how back the operating We still sale risk levels levels gas The also of of gain was result gas, we're affected to reduced how six rates those prices. provide and at of price that minimum Slide gas suppliers. some excess some sold the to plants we million. February a gas $XXX mitigate and details minimum storm above receiving

for shown operations maintenance as that result we for result some prolonged of result expense, of so the and a write-offs market came impacts cost so also basically price a including and rose shutdowns We net amount. our seven that not gas this out cost of was commitments, that go freeze of gas small significant of costs, pretty us extreme purchase that And urea our and increased materials. meet of sale to mitigated experience is the chose we us. lost could we course, which Net-net, were increased abrupt hedged. there fair existing a it portion production, slide our our of we of the disruption However, as barges outages a gas fixed Because cold. even. on all The of bit of to customer the

Now, production and positive would margins we did lose have the received. we corresponding

we context So for we pieces. was picture of unusual costs. why we main year. is two the are the of Bert a challenges had with where that We full so But factors at feel we results. going provides moving faced through out-of-pocket the loss Hopefully very quarter, we at now to bullish. point And the recovered Even net solid least the positive us. all are our you about big, this take some in for

low, stocks to grain are extremely prices demand yield, and through coarse farmers expect incented increased remain meaning, to several for to use growing maximize grain ratios are we nitrogen. driving cycles strong First,

have strong. Meaning that for to energy higher plants but spreads widen, such for China than steeper, quartile quite now. is With Therefore, continued only Bert. not curve cost to substantially nitrogen that, turn Second, let nitrogen me to costs expected global is over are actually producers. Eastern that wider remain fourth production European pricing it

Bert Frost

Thanks, Tony.

to products strong at and quarter prices and time. Since into global urea in prove XXXX, resilient commodity Global have been the demand. first the conditions alongside nitrogen prices positive look prices foreseeable followed. global driving nitrogen market the steadily believe nitrogen this that we late rose for rising are other for future, As we crop likely some demand

I environment at however, as do reflect not capturing did the the especially of will on with fully hand. positive in these weather opportunities team quarter, job our a good first the note results production severe that segment winter Our the impact they UAN dealt of our volume.

America in Nitrogen demand expected. subsidize is UAN North have the supply quarter, We imports Russian there face North America. progressed continue season in spring has remained that very to is prices have first than strong depressed challenges out well. Coming prices the of high, application from tighter market and the

prices. value demand for agricultural an commodity positive commodity crops strong across major stocks ratios out, crop setting resulted has further use to chain. fundamentals are the global of period look extended we in low and Strong As all up entire higher margins

continued ratios will well those robust for replenished as do the crops, we as where believe commodity season. be growing are, Given one in stocks just not demand

if to ratios, you to nine. slide last back fact, seasons stocks this it as look had use see several took growing low, can on In we the time recover, you to

to global to nitrogen energy protein. As all higher conditions CF opportunity global retailers beyond. and green from stocks year remain pricing increasingly crop to to the farmers, strong to supporting wholesalers channel, and We green into recover aspects believe is originators, prices should will an some financial processors slowly, favorable next environment. commodity for producers for to underpin time, for likely this for due heightened demand this well-positioned of

Asia Hub Europe has in lows in As you slide the on to prices. from significantly. of see steep global and returned year compared the have energy increased dramatically XX, cost This differentials both curve can Henry to last costs and sizeable

European The low Eastern $X the a producers conditions curve Additionally, producer the near gas positive very CF. opportunities from increases expect European per for global These will steeper environment forward term. the we a act cost the around with natural such have and for as that as at curves, MMBtu cost producers company. created today, outlook marginal margin in

the reset few quarter nitrogen traditional will levels their above the at be third well in price expect also years. We last

believe environment seen will this tail. favorable most in the we in years. relatively And operating we've many long have a are We

benefit global to need will same economics the curve stocks chain next CF that across global forward suggests robust expect energy for at foreseeable persist resulting the the nitrogen year, value We will demand. differentials in time, from the through rebuild future. least agricultural strong and At favorable

will have call this our over deliver turn us customers. tremendous result, to as As and a ahead that, our let With of capabilities to Chris. believe the a manufacturing we distribution we leverage me opportunity logistics for

Chris Bohn

Bert. Thanks

generally billion. the adjusted For net common XXXX, we They was the natural attributable by and year-over-year how the stockholders or partially also XX approximately the year-over-year volumes share. of were $X.X months EBITDA offset first and cash by prices. management prices, The EBITDA million. These trailing earnings gas per faced approximately company flow offset in million we billion through actions. results realize first reflect reflect $XXX quarter to higher cash quarter challenges higher net and free operating activities of lower provided $X.XX diluted was $X.X $XXX reported

the will be benefit through very the is outlook in year of offsetting pricing factors. number Partially Bert favorable nitrogen the of this rest year. a As comparison described, to last

year. turnaround between We compared product XX activities with we the expect company This to and production weather. to million plan inventories compared production level tons over lower million XX last impact ammonia tons the result production, tons million This gross year, be likely to the million tons to XX year in million to around product the last will of of the to selling XX.X the due lost million and along this start reflects X.X year. XX.X

year. to curves, gas XXXX. to expect our of also We last at year our be expect Based compared cost on be natural XXXX forward end similar we or MMBtu will the price average the would to higher

activities. for of compared and return million. our reflecting expenditures closer in conditions this That XXXX, cash described support to be XXXX be driving year year. margins significant positive should to we will level this that for a nitrogen free have Finally, maintenance turnaround anticipate of our said, range XXXX, company will capital plan to This normal the the industry expanded flow we the in $XXX and capital much expenditures

The to in in growth expenditure Ammonia typical strategy. clean forward our The fits of thyssenkrupp Green with within important an Donaldsonville continue invest step our energy our efforts. on our line this will recent was with partnership We project our annual announcement budget. in capital of cost project

and We notes be March, other on green available also will potential million the remaining the repaid with we that $XXX the advance were In senior in validating to future. for broad ammonia, believe continue due December. our we secured in opportunities partners discussions blue

time. to and As strategy, company reduce gross evaluate opportunities we over on further we'll continue growth clean investment grade, positioning the debt to focused to our remain energies execute

share attractive We before to our opportunistic cash to will some levels. the at shareholders repurchases remarks Tony dividend provide continue closing through quarterly that call Q&A. open With and to return we our

Tony Will

Chris. Thanks,

our your on thank making, agility market. I Before of efforts working CF time were I move and the quarter, of want our employees decision recognizing critical fantastic still particularly capitalizing data our at the proud at and especially remotely. to the and on disruptions and am everyone when collaboration, to teamwork for thinking their during in we driven questions, many

are operator, optimistic that for Nitrogen our years. outlook company strategy to year We North will positions the progress strong. where We results year positive. are will first positioned. value And growth half open into this our energy the dynamics in to and very about most industry questions. the next be producers for seen believe longer along the the is term. America This we with With of in remainder our very is your us favorable clean in shareholder we've we on making well were create now call the and near

Operator

call, you [Operator ask courtesy and queue limit one ask you Instructions] re others we you, question. we to As sir. Thank on as additional the yourself have a that to time will additional we allow. questions, the Should enter you that questions answer

from BMO. next Joel -- question from our from is Your question Joe Jackson first is

Your is line open.

Joel Jackson

morning, everyone. Good

Tony Will

Good morning, Joel.

Joel Jackson

seem guidance. color nitrogen QX in Tony, could really a trended versus on in we QX the into lags -- price color you higher to QX? would prices how can versus little QX? bit Can look add your I It you QX. QX Like where us book well, XX% give prices know would could and how be understand helpful P&L? QX when well extremely stronger we going setting about quarter are of you earnings any good is So see think out don't into really order give have across like

Tony Will

Joel. Yes,

I'm color in to you just As bit guidance, mentioned, America. here. not Gas is firm little North behaving real of but price give going a itself

to where it of cost have prices internationally And gas be. our blown kind is really So structure out. we expect

TTF very price in in the it's So the JKM Asia, price Europe, high.

and the Bert into than for anticipate not this, sets into going the our higher I to QX, production strong terms that's in reset of well only in would those And in that pricing. years. is bid but to sure going get our it's to marketplace really to that's nitrogen mean that program that up is is So bit what recent be, regions requires I'm been be expectation that'll fill quite later, -- going a

QX. So, at I ends think don't this

if excited on, got as we've rest the And about not one of I the it think XXXX, We taking to based in us. least year in really more growing of front about talked we're so than really season and ratio, think fact, a this strong at it. into beyond, Bernard is recover. stocks-to-use

Operator

Your next from question is from USB. John Roberts

Your line is open.

John Roberts

some the discuss you unusual Could like Thanks. looked happened was that It UAN there? something there results.

Tony Will

prepared a articulated it's think in several remarks. I things like I the reflection of No,

an is all consistently market And and was We UAN off remember, Gulf importing we're Coast. of have that's the East XXXX, Russian were out to risk globally. subsidized influx obviously, coming pandemic. of think Coast, Coast I low And then, had and a pressure, cost we West in you when regions, which it of a have for

low desire and to or you different saw first. a regions so in prices purchase And maybe inability to not at

that And QX. I as to move logistical think, have had production, disruptions And plant QX, you moving. so you keep as price as in well a QX, others, as low into we well then even situation, environment assets our the have and with that

moving prices The And so have up mid always for we on. UAN, book QX. forward a started

going immediate an to not have you're so price anyway. realization And

to then has will to be different level the expect of positive. be a more so And very QX. that Tony and we that reset than it And we in mentioned, at see expect as been,

So better we or more we're all watching on things and thing keeping focus the our to think. that. variables And come,

Chris Bohn

This is Chris, John.

is. UAN product that those costs we were items there, margin all to natural the little Tony spoke segment about, maintenance because In it's and lines. thing misleading where the fixed ammonia, I would the other settlement, write-offs booked the gross costs The a gas was against all put higher there, add

during sort adjust more similar what to out, you it last something was if that year So to that's closer you're of QX.

John Roberts

markets the and same And the recovering agricultural markets then time? industrial competition the at discuss you helpful. got ammonia, could industrial for the between you've because here That's

Bert Frost

Yes.

So I up up. our moved lost program think spring had industrial caught then December. in And We prices in QX. also

And the a think QX volumetrically, availability, And place have project right, season, for going very fairly application takes not And on in fall. reflect today will price I application that well to that's Fall would only attractive. corn that attractive we you're November. prices we Ag so and be based but prices improve.

ammonia been the industrial that's buy it a all by really attractive very market. the decrease reflection and we differentials, And side, producers for Tony articulated ammonia, has nitrate cost energy and UAN, to as and high driven urea, On cost globally of and have or a as even at tight products; above $XXX. many, global you've that well healthy ammonia, stop up quickly the since in market that Tampa, and tightened Baltics, that years the as prices production of seen margins level. ammonia been up many the been move Yet to phosphate in Blacks we've It's on side. import

their producers Ag, uplift necessary with going we'll as the a but for through had I phosphate opportunity. year better are And to competition get industrial you've capture operations. the then tight consistent a fibers appropriately, our the areas next. as So which you're enough globally, trying time, portion a that into along synthetic economically, demand. to you're Gulf probably demand market well different for that And and from a or in this that acquire then book margin recovery the Coast, industrial moving that's normally watching driven we ammonia to and ammonia see is think right, there's for And of as be

Operator

next question Adam Sachs. Your Goldman from from Samuelson is

Your line is open.

Adam Samuelson

everyone. Thanks. Good morning,

values? think helping Gas. here kind set where how it that, at the in urea So to $X, kind more think ammonia pretty depressed But European it's to I'm spreads cost on and point versus where going last for months, last Seems maybe, price above with imagine. think couple it's about returned to NOLA? that a the Eastern trying And I'd the years, think pretty -- forward? of Bert, been do I'm of It's those value last they've been you levels the to I your you about of the deepened do couple end like normal trying now. well have curve couple about UAN and the How below against where think floor about that has materially. just is of years. one, how

Bert Frost

Yes.

to in to and probably setting going NOLA, you're tender floor your on an it question we've you of without a covered ton India morning seen floor. that would to And in see that heavy kind have sets yesterday, at already global So a take the this I of be open -- a the global, XXX the to number of amount FOB. And XXX, was or metric that needs AG reflect a demand prices inventories globally. significant that it

the this from now on coupled the be in or expensive, year. levels low then, having India export to from a an the inventory now to participate So high purchase And market, into pick -- or will globally, Brazil in point our up you'll get cost season need in producers market a consistently and with for export and forward. inability later

You end or than be anticipating. probably higher have very to if kind have And healthy a user, going this platform sufficient market, you're in very industrial sure of a this for you supply Ag what making floor people level, then, that are it's good economic hand. whether an on you're in

be So $X I corn, supply. on the go there demand. product-by-product, At soak that cotton, up this will healthy that demand will wheat, $X incremental pool XX will be mean on that

is and talked extend tail. and about I've actually then with much that's down especially then ammonia which the will why urea. interesting for farm we are positive. closer right, be the pulling UAN dynamic And values So that the And today prepared run, ammonia sector And my the play to think rice extended on say, see this to I pivot products. move runs the an floors how and the out put looking of you're year remarks would they upgraded we'll tail, in this

now. We cool a have weather right

got at incremental to there, see us you're year, then going opportunity And that's that and planting XXXX, in very So into well. pull again to that price haven't and looking very is in is that UAN. and that'll demand probably seen demand the $X lead years corn But next the you're products. environment, going to emergence nitrogen $X a fertilizing corn okay, yield be when for going even urea for is we've positive we out

Operator

is Scotia Your next Bank. from question from Ben Isaacson

is line open. Your

Ben Isaacson

very and you UAN good question again. morning, Quick on everyone. Thank much

imports. about talking Russian UAN subsidized keep You

something what countervailing phosphate Can the on will exploring or that's about explore of side. saw whether You Mosaic terms potential in talk you you guys are did duties?

Tony Will

fact. the a to Ben. Yes, it's just Good reference in morning, comments,

so And out situation the has subsidized that And situation taken from I you're Mosaic place. wanted was that just right to lay that there gas.

just the more I reflecting a more so, we've peel so to it's incoming down onion And nature you. And several product, think when drove you questions the as look direct just the correlation had UAN poor at that, back resulting performance. and the to inform and prices, that there's

Chris Bohn

say, of XX$ that, I into goes that the production. here, is total which ammonia DAP the I'd of tack and other percentage And the relatively Ben, thing UAN gas into producing cost or goes the of The of production. cost XX% a on small aggregate MAP is that is

there on therefore true found subsidized needed when and MAP that if that UAN. that's FTC to pay, should and So Russians duties was true be doubly the gas DAP, it in

to at. say continuing we're So look take something I'd it's hard a

Operator

Vincent Morgan next Andrews is question Stanley. Your from from

Your is line open.

Unidentified Analyst

question. Vincent. taking for Steven Thanks is This my Hey. for

regard substance anything appreciated? those initiative. to provide carbon not on and wanted capture a be that And there discussions, was Just much and kind whether around color to of would of in or to more any ask nature timing the question

Tony Will

Yes.

There today we today different are to say, because of, on something that capture. what ability do it capturing we And continue have have would looking lot industrial that partner I it's few to doing our really quite by of organizations as the a that. are we're who with not about are actually think talked conversations people is COX. I

where already So removing our we ammonia COX net position have and from a we're stream the that. capturing

diligent for that have us There ahead of tax now right there being a opportunity at puts join. at permits no also look from other as to we is parties EOR. lot that of time is So credit But a known But that. we sequestration want this classics particular what points. obviously we're

those I that. parties several on opportunities and say we're would to now to right we talking So explore continue

Chris Bohn

And I'd across the a the say opportunities our UK. of our but there's not both places of plants Donaldsonville in in network, just number including

Operator

from is question Bank next from Byrne Steve Your America. of

line Your open. is

Luke Washer

is Hi, good for on Washer morning. This Luke Steve.

shipments XQ, that the tons. million about outages the ammonia XX.X year? now this running are you right had up XX enter does the as to set year your in thinking guess that you ammonia into So shipments And guided of of And course to the over million I XQ? cadence how plants your you just how

Tony Will

of wasn't not XX X.X we about its total is XX ammonia and product tend we network to that one status That's break the out kind that our million million those one shipments between things talking of million just sort it We of competitively ammonia were XX.X production to the tons. of current of is operating of million, sensitive. believe So, is plants. kind across entirety shipments,

not provide think that. reflects tend real we increased of I time all So update turnaround. the But of to our both on level a guidance

year versus with did have this event year. And we have outages kind winter we on fact storm didn't big some that a of associated on knock the that it. had So last

those an the for Chris aggregate product the sales terms pretty So of two production ammonia year. in year terms the for at about of guidance when we that and tons volume provided things together, both comfortable we look in feel

Operator

Michael question next Your Research. Cleveland Piken from from is

line Your open. is

Michael Piken

Yes.

When you supply guess, fill. with imports price? the fill seasonal And Just in of And Thanks. come are demand terms sales lows. your little more to wants of summer more favorable keep the to of of a sort get expecting mentioned to fill know How for in a backdrop? just terms higher little you bit in UAN. been desire about you I already out phosphate, out there's that balancing thoughts. bit expect A you thinking done. some I in versus

Tony Will

we've And the programs our the to look year, for opportunity is that's this The you have When we June. for inventory. believe summer years, situation fill, materializes, going normal. had as what the the for and gone you're Yes. that different when depending needed latest later season August, tail we've a we've of applications, demand kind earliest at of is different than what on gone because

you I look at So then, and XX to it to I program. for the probably was for feathering at least imports a be just field robust in or to today, And in looking announcing again, tend latter winter of acres. the low very in the to-date and production that applications And starting, and be would XX are talking Inventories with what probably all yield, already moving And -- February lost the it's date, the personally side has demand different the going some as more pulling early. to of be at on spread markets, talked grain contracts additional the coming earlier, leaning or me going producers. to the leaning different acres, projecting for storm started million participants million the about you're you're we're have XX, in going when products. towards amongst

if need see I good, So to this yield, that because to those have back even this year repeat back the on average you're fill inventories don't and of big in going And or XXXX. of we're to going it's to inventories. the

because customers asking levels level value. every value at Nitrogen said yield. the earlier, a out programs, you're ammonia, several to I when we to it at as is and healthy fall going had price of one level. the as But One, that. And It's come today. as going I'm what's We've expect so, balance give well not chain, the you even profitability looking give be to position. application at a a us at is for we fill with sheet a higher And of it. worth at it's good whatever

our this customers So them as launch very do as well question? full for to going with it success to our you next work to to we're want industry. for good And go excited us. the time is to make be a Beth, a and program our

Operator

sir. Yes,

Your RBC Markets. is Andrew from next Wong Capital question from

open. Your line is

Andrew Wong

question. taking Thanks Hey, good morning. my for

versus understand quarters. volume just and the to QX an coming maybe guidance. sold on prices just the hard forward it's earlier quickly was about should seeing QX? pretty moved of Just us have about we're I up following think much the help today, into high qualitatively Can realized question sharply. us give you And the nitrogen given how know pretty pretty kind prices we how in prices some of and market

So off sometimes? unrealized that kind expectations of prices Thank the can throw you. or

Tony Will

Yes.

the So I last we're in environment. a very, think good mentioned I qualitatively, review, on very

of statement kind anything move be looking for have you And that QX. the as it we'll Quantitatively, that's giving So forward. guideline. that's we the assessing sold and don't we at

For going QX, book have do and have we active QX. for sell your a checks, have into selling, if products said quarter, you earlier, always channel I we we when as day still the to been market, the every in we're

move there ammonia are So different products at different And times. is generally first.

was UAN. bulk north be our for December period. as further move the the UAN rice And and well applications in Canada. you as And run irrigated this June. of will for starting The urea in of program those for ammonia move and wheat run. urea also north part well as as well left part think open And we and so to we're latter we're move the then market your just which was it the the of positioned for as tons May that UAN of runs is pivot and will early available into programs That's are that part then for you and sold and have and those and then in

we like we come. to are. But more So where

Operator

Your Connelly is Inc. from Mark next from question Stephen

is line open. Your

John Rider

morning. Good is from on Rider John This Mark.

you and as what XXXX? So, rates we can your right you normal winter are assuming are forecast we in see of global saw a fairly for back rates shift operating as Chinese where rest China normal to seasonal far the a coal this Chinese And operating in swing pretty now? in seeing

Tony Will

we've lot metric , Chinese discussion $XXX on with seen the anthracite past about consistent per John of Chinese you've relatively MMBtu it's equivalent, is ton. and an specifically about Therefore, start, seen coal, a had on coal. gas equivalent I'll really been softening per the energy coal that. to XXX of at what And been seven There over year.

to perspective, with that marginal is European widening producers Chinese producer, continued marginal here of curve them in a is deepening from see a be Bert the slope. his mentioned, equivalent actually expansion see to that So and the and you're of we fourth the in started remarks, to cost as the we've but seeing Asian be energy the quartile differentials along Eastern with of those

year of I'll maybe Bert this from he's So type exports talk expecting for let what about China.

Bert Frost

roughly following of and represent as [ph] expanded India Specific the contract, that they Yes. have and tenders. producer in to participants Yara export do allows, China, because the obviously, the and active market, XX% have been pricing it, been we're marginal

So they've of some million publications, to in be XX like for capacity, would laying percent the the XX on a the production. And about that year, XX, estimate, out been XX just XX. tons of we of

million around XX to years Consumption tons, we're the XX estimating risen million exports, to consumption pay has million in and tons. we four As is But last from tons. the estimate we thing attention X to remember have China China. over in

of their that, least season. to water, take to that. the me of shortage imports need of million So a year, soybeans a for trying for What inability to this that produce soil. happening? the also next But tons. it And reflection corn to at it's now tremendous guess One, of place of fertilize care an some Well is have growing taken X in that China additional is what? they're seems yield. and and They

year think as the XX China, that a out a million ton to We're importer. to exporter, So India of I dynamics will expecting million majority go India. X positive of ton that this be and

not of swings to than six ago. let's China say, is eight out or move same seven, the the years ability it was, the So the market and

Chris Bohn

are within I increased seeing we Bert, think And point activity economic China.

is going And side, more based India our they're the production is expectation to importers, watching other that is be this India, likely consumption, is big be therefore, that. China domestic larger to to that piece on of in which going going a take And -- thing down. means, usage, so, to about Bert on industrial closely, there's point consumption. And Bert's it the mentioned that we're on goes and your very

the and deck in [ph] is but differentials, very where So, with a energy pricing not again, North the constructive the that balance, very where favorable suggests, costs we're are American it they end terms of for overall only SME nitrogen high producers. of

Tony Will

there a about last In of tons, to tons you're And three go exportable offline China. estimate million XX last X.X thing you years, and closed. been When That's have year this we got tons. million one adding the move. remember significant

make ton with And a closures producer continue, domestic coming basically out. so marginal which okay. the That's a that's China will

Operator

Exane. question Your from is Patel next Rikin from

Your line is open.

Rikin Patel

just firstly And the and Hi. taking for up follow my a comments on market Thanks on India. your questions.

there plants expected on think on new customer million then up are you I was is that of of the to mean help And you that into understand just secondly, phasing down How Thanks. HX? Can ramping then slightly Does can outflow the in be a $XXX flows we this QX production expectations a free QX? just of higher with advances, saw year. the step some this secondly, I your us And that in or cash that on views there said this assume guide now? year. quarter. does into play higher and right keeping out CapEx for that

Tony Will

Yes.

of those with Chris. deal over then couple them a I'll to turn I'll and Bert and So

over On couple and, seen plants have in the and past of and there's front, have of we an aggregate number and Matix [Indiscernible] years, amount been the what increase as India of production. the not others, new that a started domestic up

some plants some is or like import in been traded inefficiencies the on cheaper issues. try to and impact now, the those because older labor the over efficiencies LNG what's those. domestically as is globally comes trade supply as of based challenges new or urea and expectation to There's be curtail, offline, going COVID our productions some understand production it's opposed also they're on, that of as taken there now, older and we trading on on of looks where with real chain most it's cases, going right right to So, run of it to particularly either

is, in understanding the questions. for so, other a net expectation full trying basis we anticipate coming be And remember there our to India. online our year, production the I'm excess is on again, to don't

Rikin Patel

capital was on other The question expenditures?

Tony Will

the like to is turnarounds general, do the year lowest. in mean, pricing I where Yes. portion during the we of

plants the hit kind quarter. that like can So suggests so end the QX. application And pre the into up that we'd of of then, running, fully fall kind of be of and second third to and we online, of quarter again, kind and ammonia for stock QX

of turnaround you at happen, majority the that's the where end of least back at into and QX, our the the vast of most of expenditures plant level. So, as get most time, QX,

Chris Bohn

Yes.

our work, fifth where when you pretty would if mentioned, turnaround historical at down use CapEx a that allocate good doing on and spend year. that see set would you plants look and this the think we're taking quarterly we're fourth, to be proxy Tony I that

Bert Frost

these And year-out the said million of produced they seven the up, six of if our even XXX% immediately India up And new or XX last they as don't at they addition come when between to Tony tons capacity. they're check, XXXX years, do with and don't look channel year-in, late. they plants, from you and a they capacity, basically XX.X -- run don't come over since

is And level still but not maintain a a continue multiyear import that the the this So healthy may we're to going current growth issue. foreseeable at pace, it's future. multiyear in in seeing

Tony Will

Bert now. bunch a then And the have taken indicated, right as customer we on orders QX advance of front, not

are So QX the customer advances the deliveries. that are really on for books

of we'll that of rest get thoughts is get down. on go earlier of in. the also So advances the whittled advance new our that looking to corresponds But and toward expectation talked not correspondingly window. will ahead cash it your those about as fill, of orders, customer a end the the bank we point, than the fulfill kind end kind Bert opposed more earlier And later launching of in of he's also to window the customer to for likely which timing, as number orders

kind that of advance customer of a quarter. way is our lower all we're number working the So through suggests

Operator

of question from Bank from Roger is Your America. next Spitz

open. is line Your

Roger Spitz

Thanks. Good morning.

do focus have get pushing saying prepared what for might And your the remarks, on what take IQ you that in to they to an do? need comments you about your from it rating Regarding been to What on rating? specifically it ratings, agencies? are you

Tony Will

so question. right the grade, looking the as to we Related in for investment now place is Good are are believe metrics to Yes, Roger. investment grade. at we getting morning, Thanks one our for back thing

of at the $X.XX down debt EBITDA. done, X.X look happening us what projects, here see Bert in We in you outlook our And return But invest to on not gross also bit sort shareholders take just market, well. as times also through a really $X That little we've an and net to not our cash but net at the only If XXXX. and recently we under XXXX. Tony and see more to billion as down in opportunity our debt strong here, growth mentioned, an with you're the puts debt, LTM billion. only debt taking to

I only So think take not but to we're the to is us following a strong, more is debt, how really down year, hearing grade. we're investment rating we'll market And able very from agencies to I we now, that a think this just year. What what develops. in believe little bit seeing be probably and the want see get right to should

Bert Frost

Yes.

as the to of into industrials. kind summer got of the agencies on thing the think questions we I in what in just view going risk it is, or Roger materials anything for of a on real year this equity a although seeing add demand off the last was and is results in and and were a some there along a And we're would were with into the taking XXXX, terms negative continued a I over our kind that environment now, other position pricing XXXX big spring there that of market in remained bit our very demand. lot rating was was more period, Broadly, of the Chris pricing down little environment. And reduction And debt. downgrades watches said, in positive. strong. and sequentially XXXX, And prolonged than as really was really a based with products conservative

we conversations, averse. they're respond. wouldn't I word grade think fairly argument have point, but strong at down company to very say even the investment without continuing a quick debt, incremental tend taking those to we're have I to They this risk be

to its here soon. the a want But that'll move see us like and run happen for they long bump that So the optimistic they we're before that give sometime up. there make

Operator

remarks. today. to questions call and for gentlemen, would now that I that is Ladies turn all for the closing we have for back Martin

Martin Jarosick

we great Have conferences. joining and us on look to day. with forward a today upcoming everyone, speaking Thanks, for you

Operator

have this Ladies for gentlemen, wonderful call. Thank today's and and your concludes day. participation you conference a

disconnect. all may You

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