CF Industries (CF) 10 Aug 212021 Q2 Earnings call transcript

Company Profile

Participants

Tony Will	President and Chief Executive Officer
Martin Jarosick	Vice President of Investor Relations
Chris Bohn	Senior Vice President and Chief Financial Officer
Bert Frost	Senior Vice President, Sales, Market Development and Supply Chain
Joel Jackson	BMO Capital Markets
Adam Samuelson	Goldman Sachs
P.J. Juvekar	Citi
John Roberts	UBS
Steve Byrne	Bank of America
Vincent Andrews	Morgan Stanley
Mark Connelly	Stephens
Michael Piken	Cleveland Research
Andrew Wong	RBC Capital Markets
Duffy Fischer	Barclays
Jeff Zekauskas	JPMorgan
Adrien Tamagno	Berenberg

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the First Half and Second Quarter 2021 CF Industries Holdings' Earnings Conference Call. My name is Kristel (ph). 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 Mr. presentation will host to I today, for Instructions] turn over the the [Operator with Investor Jarosick Martin CF Relations. Sir, you may proceed.

Martin Jarosick

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

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

Tony Will

we regions first of of adjusted increase and energy in last we cost lower good results which have and recent generated spreads years. XX% These an supply-demand XXXX, opportunities half to nearly for financial between the produced expanded considerably years. EBITDA overall of North network. same margin much high-cost billion. strongest And results in global our for our EBITDA prices America balance morning, demand six posted Thanks, And increasing adjusted tightened in our higher drive first-half nitrogen have production everyone. financial supporting advantage than billion. the time, in year. we Yesterday $X Strong compared approximately At afternoon, Martin. helped the factors

free Additionally, the generate metrics achieving business investment-grade focus energy giving tremendous executing clean continues we our to flexibility flow, strong as us cash and initiatives. on

challenges, production The first call. on the half without we gas-driven interruptions its including was described natural not first-quarter the

the the and the the it due substantial The a first to operational benefit offers agronomic required other and imports half of harm years, few subsidized demonstration upgraded the produce nitrogen investment in over U.S. premium UAN faces the industry and also it dumped to Trinidad. earned from saw UAN capital and continued a Russia Until last to higher products from meaningful farmers.

As trade our you trades nitrogen can results, products a to UAN practices. upgraded recent on at discount unfair due see all now from significant

countervailing have of Trade to duty to initiate result of week. investigations. by 's and the Commerce taken necessary vote address situation and the look the later this the the International Department anti-dumping petitioning We to Commission We preliminary forward steps ITC the

years. very are X we about the next bullish forward, Looking

grain support years. X economic activity stocks As all-time increased industrial global will a over need next describe the of along impact should demand replenish the with nitrogen in record Bert to agricultural global moment, coarse the driving driving demand, demand,

this energy very Forward over curves favorable also are timeframe.

value margins we've its much believe tighter increased further factor for will supply and balance, ammonia in for for advantage We nitrogen clean tighter supply demand attributes and and demand to cost expect the than pricing demand significant help extended driving our balance years, global energy and become our factors the we supporting an Longer-term, recent network. higher in keep period network. seen a nitrogen these of higher

We clean needs. world's help meet clean hydrogen the see ammonia to in broad interest energy and continue to

discussions As blue be significant world's have production our other provide market our from our we and being network at continue forefront opportunity for the the global to where participants, positioning green leader collaborating unique on capabilities with to focus ammonia leaders value. to of with this remains can

outlook are Bert, additional let detail. that, over in made the who talk Chris will and follow Then, global with pleased I to to it will for comments. Bert? about We months. in some our closing the discuss forward progress return to position turn With look we've me developments the coming nitrogen financial before more

Bert Frost

Asia. Tony. today, we and demand this in nitrogen years. global recent in remain since being by are agricultural season, ratio place, stocks. into than believe maximize yield we world's and least prices plus and to energy Based grain grain remain and global to favorable will Europe applications. XXXX, higher coarse demand this the global fertilizer XXXX. have Thanks, the persisted incentivized for environment balance the pricing nitrogen at coarse was commodity year's in prices demand, farmers second Underpinned by positive is highly planting environment strong replenish into stocks-to-use response, of have need in tighter The spring far entering led a lowest risen has The with significantly supply fertilizer a seen see Strong energy pricing that half on and has This the created outlook agricultural year. we industrial

Given Brazil. this, in to we the led demand expect by and second see India half sustained

launched Fill similar leading North into had America our weeks the meeting and We demand to We Europe positive start application XXXX UAN when few Program. a from season. a this expect strength ago we

at a especially low though quarter mentioned. discount stocks from the Tony ton, into at for remain built to persistent next urea for no-load we per out, coarse demand that order contribute reasons prices $XXX the expect of a China, grains, third equivalent for price global significant We to Further year. high a have will solid book

higher economic for nitrogen. XXXX, into nitrogen continued sales global replenished levels. pre-pandemic Increased least we As believe America, at we've strong driving still demand won't North to fluid exhaust supporting a demand. need result, industrial also In above seen diesel is that stocks rise be activity

continue and seen and increased. phosphate record higher demand Globally, acid sales producers has expect customers. to industrial-related from Our also were in nitric ammonia will also industrial demand we overall Company and China from for demand our We've first-half a grow. DES

While will we strong demand to rebuilt. expect remain channel for fertilizer we to time, global is the some and in be inventory that low believe today need

in reduced urea, and global far high availability, pricing. and have in lowered rates and XXXX, operating costs further So Europe for supply particularly ammonia energy Asia supporting

increased curve these producers you The the As can on the marginal have regions to $XX for MMBtu. producer for being. become see energy costs global Eastern in European higher time over X, will Slide energy And CF substantially. differentials global as will energy opportunities for the from favorable increasing have future. low-cost benefit nitrogen the costs steepened such The foreseeable cost forward producers, CF. for curve suggests margin

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

Chris Bohn

Bert. Thanks,

activities first was XXXX, million, I shared, million Based the The generate the was to EBITDA net outlook months cash half Bert continue we flow net cash by billion operating of want diluted and $XXX the to EBITDA press provided attributable adjusted and to and on Company to $XXX earnings common $XXX reported approximately $X.X For free Tony our $XXX million. covered and share. X was trailing million. additional free had per was XX the to flow. or significant stockholders context $X.XX in well-positioned release. these build we're cash provide items results on of

XXXX driven expenditures primarily for to for $XXX the estimate reduces the capital outage next we asset maintenance year. during million risk scheduled XXXX our a our First, by for year believe application XXXX raised decision approximately that is to for around best of increase $XXX The pull We an is and this significant this the from activity event million. spring into season. performing in unplanned

XX return capital maintenance, the severe the expect forward, of the previously maintenance year. With additional and planned million range Going $XXX we per maintenance project, this to weather level of to additional X.X from high expenditures million this production product at tons and end will respectively, February, tons that in sales volume and the ammonia earlier we forecasts our be gross estimate million of year. around low both

would we and to XX XX sales million typical million production of and million XX.X have tons. product return of into ammonia to volume to a tons more approximately Looking maintenance schedule XXXX, expect

on Second, we are investment-grade ratings line execute focus positioning taking and achieving our the additional to Company our with steps initiatives. in energy clean

will $X.X billion. have redeem XXXX. gross we million We due that announced Which to Notes debt Senior reduce our will June $XXX our of

remarks through debt share XXXX to levels. We'll notes. We continue some before to our of repurchases Q&A. maturity Tony expect to to and With cash or attractive lower quarterly the that, return our gross the will provide the closing we dividends $X before open by to also opportunistic call at shareholders billion

Tony Will

Thanks, Chris.

the half. labor at the XXX,XXX end incident than the incidents hours, of first well to June your many to on everyone the X.XX this They for at strong recognize up at during better first want rate second move with CF we the the us successfully their our importantly, we year, challenges Most half. of in for did X months safely industry per Before recordable just setting managed I significantly questions, work averages.

We support the to which favorable Asia As progress good see Europe we and energy forward and look on robust nitrogen clean energy strong ahead, cash create to demand. expect record spreads all-time over industrial demand very initiatives. generation. curve we agricultural margins timeframe show global The our should and same

in longer-term. now call Taken Operator, together, create significant we shareholder to we near are With and open the the that, well-positioned to will questions. value

Operator

Markets. the first Capital Your comes line with Jackson Instructions] from question of [Operator BMO Joel

Joel Jackson

Hi. Good morning, everyone.

Tony Will

Joel. morning, Good

Joel Jackson

your higher rare is where half your It's half very first second EBITDA EBITDA. than

situation to talk been type this Thanks. that then you what answer a in you maybe maybe expecting And it's happens fourth-quarter? that, decade. think you pricing you -- a visibility as think have you could the were quarter Is which I third of year? about you

Tony Will

at the And of really the had -- sheet year. that Obviously, as with that's and quarter, advances moved appreciation where UAN, further a it in you the We're of you of of as XXX UAN a basically the Russian of we the number. first shaping balance when the pleased disappointed environment been how looking order see the little able the all [Indiscernable] were And values off of we're we've result that third look at up. going Trinidadian were the half for year second end imports system. quarter uptick have XXX then, a our we And -- get dumped that's bit customer at substantial launched to but at forward. really is and with book subsequently, through price in of the Phil our

continues Urea book with like. the in of trade strong really a half how we're and, for back I the the what UAN fall up is pleased already, interest looks as year and said, the order seen now very to set So looks right We've in spot, reasonable ammonia good.

both So, but we're the and excited just half, it's up half, for XXXX. and think about it sets second we well the XXXX really that not second

Joel Jackson

Okay. free up with working capital quarter. that on you up outflow last that. Do on this Obviously, in you've some you'll you year Thank end [Indiscernible] flow are flow. cash for higher -- maybe second got prices just following And free year? think more cash than and the

Chris Bohn

Good to flow, From prepared see cash is, standpoint expect continue significant free to talked morning, strength. in remarks, we we about Joel. a the

had half was advances, receivable between as year differential be billion about seeing the seeing As strength got But will pretty particular product that second globally we're as our spreads we We both mentioning, mentioned, talked for about probably Tony few you X. with the But a cash still to from free accounts year. the mentioned, done through around which our of on million we're that, have, the this the do due we -- strong product those we capitals, customer pricing a we second really was just working the tons. bleed outside quarter, end, of $X.X the then lower standpoint. and tons see as energy flow half that XX in of

Tony Will

the last all this mentioned of year, sit we we're the picture for Capex done. year. due that's overall seeing again, to But what a remarks, year, were little that of That as events principally we've the about his and really, are looks like. we major where to where turnaround really Chris a hit, And in relative excited forward -- higher we bit

Operator

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

Adam Samuelson

thanks. morning, Yes, everyone. Good

Tony Will

Good Adam. morning,

Adam Samuelson

Good morning.

when investment sub where and X.X% rating, idea trades allocation of around what think clarify, on The the sure over just term see status be the my the early free stock rating and just the the you investment-grade to the first question balance green to the head were make long value capital your medium still you of repaying sheet cash see I having I'm trying in at, was the yield. hoping you figure guess, I get of to north credit value XX% to flow you would think about as contemplating. And investment-grade

Tony Will

Company first turn I'll are think an CHS in and the we of frictional real equity having for I go comments. from cut grade. that to with about take also it at face believe that stability the regain investment I'll both Adam, costs the rating. over business we are is with probably away more embedded the insightful things some holders derivatives that and we not strength Chris there lines important. costs But go those then to has our of those And to do this ahead signal with investment-grade venture, and investment grade the a and of there other credit and if some frictional and

our why investment really get back that's focus to grade. on to So,

Chris Bohn

Yeah. And I that. would add to

to does from structuring drops As a we some going flow investment-grade, capital of getting can several But of next and cash moves at an already. of activity. little or in shareholders. the it additionally, do see some with in our to to different of Senior bit cash get things By our energy really that years most return is, a the the billion, going question's target our are our Notes, us to then the XXXX, $X really Secured free more your we're forward announced limit be And be we with think reduce within plans to is able what we've to that, where efficient, whether off tax Senior asset we like having debt clean going specifically a growth invest a basis and asset. bit little with allows Secured which of others think I those that over gross I here initiatives, that look return generation that

I think of all to do will couple those. next what allow we're seeing the X years of us over

Tony Will

we're a dollars the green the blue kind been managed from cash huge from balance both which looking are And now, at our a building yield the flow. are right is on we've issue, And and perspective, easily investments and you cash that with not as really got the any terrific, on which not of mentioned flow -- while yield, for we've we're return. the some sheet but earning

all perspective, fairly though business effective than even a something nominally rate, from the we flow be out rid taken cash. that better talked to do, on correct to And that equity are for so generating it's able some to of do yield that tax pretty that important certainly having that of costs structuring trades those terms looks of the a while overall consideration, internal drag things the you're we're assets that to Chris still like the at of think optimize us the those and higher want of a And flexibility to and what it's first. low-interest I about residual the by business things cash getting in on cost

Adam Samuelson

fixed in for be year. the that the half. And the think trying impact seems of cost costs Okay about to sense helpful. for just balance higher then incremental the maintenance heavy absorption how maintenance to a is thinking And I'm in turnaround a second quick should $XXX quarter, of about the that's like and related of P&L turnarounds. year-on-year that half second second we really business million to And about the a activity the had in you the with just follow-up, in the get again going light,

Tony Will

that up ago. $XX big cost so the associated in and amount I Yeah., with ended want other compare with side year write-off versus it cost up year. for we made Based and the to we put year. of was X the purchased products to goods plans $XXX of maintenance pieces ended would on And commitments incremental with first half hits on part salting it million That's of was work of on to cost and top resale, fixed I the turnaround last almost about activity based of we on of the that on, had in the then QX based that, maintenance the and customers. million going a that, through

commitments. we With to the make reliable and plant sure our and those supply could positions on the outages needed turnarounds, We cover provide

And purchase those so, to and we some cover both requirements. out ammonia urea went to of

the normalized that or hit And so, in way. an you line see wouldn't that average, year, kind million COGS an otherwise in $XXX in of

X are half ongoing have magnitude may won't some that we to write-off. But likely half. second the those and so, in turnaround fixed ongoing that is But year activity there pretty -- the And that right thinking lead the I'm second of certainly pieces significant big same costs you're very to

Chris Bohn

of year second a half. half we I the Yeah. second you just tons million that probably mentioned, first million and the look good here the additional at additional way total is that in produce as that gross that to tons we're to the the drag indication tons, at we I some did we think talked say gives the But XX work. half look expect about ammonia going Tony have would production best you of at at don't of in X.X if as that product the what in year, then the pretty the

Operator

line of next question P.J. comes from Your Citi. the with Juvekar

P.J. Juvekar

morning. good Hi,

And how energy energy, your UK, energy contracts? be electricity the of does a prior renewable is to cost step. that What in compare UK? could which XXX% in purchasing the which great You're is renewable the fuel

Tony Will

actually. is de The incremental morning. us minimis to pretty at Good P.J. Hey, cost

in just renewable pounds the XXX,XXX paying like it's of XX,XXX move to today. As we pounds to we're somewhere looking are versus what neighborhood at it, to

in to move the ahead it's get renewable to similar of go per opportunities which in cost a emissions. the easy noticeable energy XX,XXX year, on overall So and system at to to trying is negotiate of was the why We We're incremental we're at to to the very XXX% baseload will -- makes and have system network to into where that. renewable per be of drawing is U.S. easy good the scope not is can for the year, so able looking significant all provide we reduce the so why which we the to it where XXX,XXX cost on this some operations we're people good some consistency good so that and this the because rates without really do sense. and it incremental our pretty

P.J. Juvekar

your Great. know Thank natural also now, higher for you natural anytime, which all And just forecast? and you. change the what's that, hedges forward curve, higher based activity, it gas that you higher And I your second outlined gas you. your you How in miss, half? call can gas do compared were then to to want maintenance if costs and today's came but from costs. cost you expect and Thank on -- what much

Tony Will

Yes. what energy the than more absolute the P.J., face what cost the is is. gas, spread differential of we that I'd important say is on cost

and partly the per And operating COVID low saw Asia. low, dramatically like reduced, was you cost rates. high or so although also the Right you between you very saw MMBtu. gas what It's and while global the as now, U.K., And U.S. - is also really energy our $XX energy because and a result, were see last driven. you also costs Europe, that costs $XX compressed were differentials both costs our in U.S. year, saw in margin opportunity

margin huge so and producers running high-cost And are at what runs what the a differential our between network you at. see

this we fact our environment more rapidly great despite up, as costs our costs so, think the is going And for about are up, that what are our us. going a margins it, than much expanding are

a be is you market, energy the in regions. higher Hub, analysis, the of LNG the the in into a forward typically differentials a the future. good tend little contributor particularly of And that important instead -- feeling energy where In cost NYMEX just of some believe U.S. there's that of is an the we thing we insight as headwind. margin a more higher producing we'll cost that lot forward. and forward, indices, chart likely to -- spot curve forward because are such over as tend this have in as at don't a to the we our We've But fact, basis, on see I bit result for other additional looked the expansion import in LNG think and a look gas this Henry where higher. which the puts on is when is that, market structures pricing This the us a of trades major

Chris Bohn

P.J., just really see from Yeah. that as of instead was it's the overall agree hit the And in I Tony looking total, more sometimes when expanded the side COGS even pricing. gas, said. because, at maybe Tony controllable with mentioned, that everything COGS helps us we by maintenance

per cost significantly higher mid-XXs first controllable generally is the over which the runs this of that year. half than the and So, in ton,

to million We be around closer we'll mid-XXs expect next of back the year, get tons. operating we product that mentioned, rates normalized as XX when to back to

Tony Will

instead that mentioned asset. just we've we about protect an all-time year. backward turnarounds scheduled major already on we're on-site, a from and to in and plus the year bringing next operation production of that this X to make of -- X would for just trying supposed reduced year, what sure had which activities. year, of said, year, which employees we're we've associated so we year last X to upgrades. some that we them ammonia do reliable And that Because year moved set got last our earlier, X, the be that us that do to X is last year We minimize we we the X were a we normal one record And Chris had reasons forward, X as it fewer ammonia the an turnaround contractors This Chris COVID because into to add this last plant turnarounds, of number got major of were to year

In being seven addition of expansion major our turnarounds four, to of were two the instead plans.

of two Donaldsonville the be more result Port a little ammonia the plants both plants tend in those Neal and Six than longer biggest our the little the expensive rest Two a be So and and network, to or This major network, time that size this the average first at to a plants. But turnaround. expectation undergone a they've we're is our as looking well-positioned of the year potentially year an that got record of all-time able and our we the that's why pricing set view right make to opportunity to is want looks production reasons out. as we this very because we next next the run Port for done one to we can as X ammonia, well flat make now, and wanted year we sure Neal is, as strong sure think good is

where I what very good really about So, we're future we're and setting for positioned. doing up the here feel is

Operator

line of question the comes next Roberts with from John Your UBS.

Lucas Beaumont

now I differentials at for Good the where North is But more discussion bit that's morning. normal John. Chinese are to follow costs, I the your there gas just a just I point wanted coal historical can. Beaumont on if your This quite spread. on and that on take Lucas up is, Asia probably between super of a Europe looking America. and high right

spreads Asian coal to marginal we as Chinese come to as a shifts level was back normal I look and more opposed just wondering and then, are you persist what reducer? European going the into back cost Just confidence to the being forward gives that

Tony Will

is side. I Chinese $X think about an currently MMBtu on anthracite the coal

is don't indications to coal If of you're looking or see a So anything, further trying push to urea place to wouldn't to prices. that us it great down Hub. to really up. China trying instead differential at on we that is And relative still $X see a shock reduce $X be. Henry exports restrictions

global and at And be differentials, curves, availability, and setter that also look not going And those forward on so if look we pretty just at we as think of TTF suggests margin at just that may our forward. to important, -- always you that Again, and on a a the as price China, I the are well lack what stable provides tend outlook to price NYMEX the the that as while opportunity substantial Lucas, network. for Hub. Henry look really terrific JKM us

Chris Bohn

Yeah.

so I Strip average are compared to right year, And to right now, think, the has mentioned in Bert so producer on and and prices. to earlier, Tony $XX you that higher now $X the and of Henry supply them is the next other the higher his that particular so over bid as side year, cost. spreads TTF the marginal remarks, is in seeing than that Hub, for and have point, at Asian you're tight And that the anthracite. European NBP significantly producers.

right So the now. well cost curve are economics in a demand-driven market was above what curve cost

Tony Will

global record in next And remarks, nitrogen demand expecting we're all-time year. as I my also an mentioned

economics the said, as the so in. to trading needs highest And where we're are Chris we're bid that about above in cost very, talking what a demand-driven And production market, now. really curve right is very be cost

really all that again, us. great for provides environment So operating of a

Operator

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

Steve Byrne

and the you higher much to margin roughly already per third you do gross your shift Yes, in in, got a book higher the a you. XXX just, quarter. given you third forward just how have UAN volumes on Tony, price? thank mentioned urea of it's or ammonia, forward and comment maybe Can Can urea the book and ton? on in locked think you quarter volumes your you

Bert Frost

good book QX. -- Bert. our going pleased morning, Steve. with I'd is We're into -- This And say our order Yeah. we're very with pleased

see now and in a public from pricing and very can our level, the healthy at book built we had order through book looked you have books, through -- and exited that $XXX NOLA Midwest, book up the we orders we there worked Fill entered and go it few QX, our ammonia Program for is nice then terminal on through to and with launched first into built the fall UAN at from the information order up As $XXX we XXX QX QX, that pricing. for the we half QX as the and then a at stair-stepped and

market range the stayed to FOB into urea, to $XXX For obviously And the up then NOLA. stair-stepped has Canada. $XXX of in Midwest the and

the to these just And forward markets difficulties inventories. both have products. QX so structural environment All Chris healthy positive articulated just and pricing probably And in questions, have just see we things have Tony the and into as and U.S., on we for the and place, and the fertilizer low and all of both taken to, global nature some year. Brazil, look a Upper oilseeds, and to see their for a inventories of due coupled that comments book grains low for we and next X climatic of together the Midwest, the

So year. a nice anticipating we're

Steve Byrne

Thank ammonia well drill like blue less you, the consider your at Class and step you so, in wanted is rate-limiting property little capture just a and for move and in bit pursuing on ever sequestration? just on have to treat understood And about opportunity control VI would like about own injection to that more pretty engineering you. sounds carbon demand if And But a forward Donaldsonville? to that well to Bert. the is It the underway.

Tony Will

limiting Currently, factor. Yeah. availability Steve. geological VI of sequestration permanent the potentially is Class Hi, the

subsurface ourselves benefit when are those be market EOR, to up but to really ready immediately and quite where level Although, from up reasons the things And there go into available and opportunity that's in COX That's ready. had to we're are full and of really there's of are able wells for and to pushing want we expertise. that available that. we're one And of just rely running, have we so the get compression availing participants place opportunities quickly tax if benefit, geology to look that their now a dehydration one the of XXQ are get the on compression because not not dehydration our are the and and ejection tomorrow the to Relative of EOR of place applications. want expertise. areas do. set And not to that on we sequester other lot It's and area now you some that's go. permits we to us in even that, issued provided to if into for and it's wanting

that trying that, of work other And with and so people that's we bread instead butter. replicate to and want to their partner

Steve Byrne

Tony. you, Thank

Tony Will

would the a to say are and a just Class after Donaldsonville of well permits come miles VI of situated people for I things. number said us of of have that there they're those is kinds going and within geology couple

that's very structure just about order them. in pretty terms what to is, and what so look timeframe -- run in talking do And like speaking, generally overall get encouraging, so short-haul we're cost the the of to And a to injection.

Steve Byrne

you. Thank

Operator

Your next Stanley. comes of the Morgan Andrews from Vincent question with line

Vincent Andrews

to Tony, Good community. you. the free the I investment morning, it budget. and be everyone. outlook strategy initially, be brought it at lot October lot Obviously, you the was you levels your green time, last within And when would cash to going the least flow Capex blue Sorry. lower is with, a Thank different the characterized at and obviously today. was than annual a think what spending

ago a anticipating around weren't could a that as for think about the release you money overnight. spending is max there few about range spend for And years, want of this is we you us? us level few within? these you over or think stuff parameters would next that for efforts, sums there the talking you've I maybe dollar that You to you any put big that mentioned But press the just types in size had a questions of you're

Tony Will

Yes.

which couple should is in So, next taking cash compression the that. The be systems easily opportunities we've tons ITOCHU position a ammonia announced, exciting Donaldsonville with to margin operations think million increased as in that around real account from by this XXX the the fuel, is turnaround that there us Singapore provide and the about or sub thing blue that to be year -- more slug accelerate X to years. is, Mississippi, we us based we'll quickly. tons dehydration in to $XX $XX mentioned, project that blue chance happening years probably able XXXX. the it I and able And Since a And a and think with dehydration Donaldsonville, X on spending probably Mitsui seeing we're marine spread Yazoo I provide so that million we're similar to looking beginning in X COX than compression we the of with and of far ammonia rearview million. of we're on likely $XXX hydrogen/ammonia about of then, over you of along normal which announcement in be can for blue flow we're at are us sooner manage our the normalized range of for get we port market the XXX legs big have are consortium that's potentially initially The back of next at unit help to evaluating to there there ones more and good we've and that projects the a that probably to in just ammonia. be tons at green activity range that, all as of ammonia, opportunities. would the think million based to is X that The the XXX to mirror And care in those of, announced our million Plus looking rates, million a announcements, should though very XXX,XXX range. able going levels. also thought, some develop looking -- XXX,XXX with here both potentially, of XXX City, call at, another, in

our really existing more about investments replicate think to generation we're above and other both asset on -- feel thinking our and green that worried our people not to based in interested cheaply than free great given able much leverage a more We can again ability and get we're much that. quickly in spot blue I to that. and ammonia right base being fund certainly cash beyond. additional we're so But flow now, enhanced about And

Vincent Andrews

fair is that to low? a it next, price big is on So say with -- a of over very pretty say announcement then tag the that X large-scale probability it years, the

Tony Will

of that's and short and green other blue coming. is going be Look, lot ammonia to hydrogen, participants, just and relative to green Mitsui that believe, we're supply excited and be a blue to demand in the like

not there's at I'm of need where largest who see some be us. there develop particular. opportunity And than I'm if to think I anything to the low today. it's that think to the off a the of blue there's also not world best in with suggests dollar That world ought it's the operators us saying We're happened. about advantages, to the table. we're is network scale got an investment. what taking already ammonia significant volumes significant are it and how more going exists something to built, be in you excited to things that going But for very generate going here. get

Vincent Andrews

the clear. Very Okay. for Thanks update.

Operator

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

Mark Connelly

corn Thanks. year. Tony, are next expectations acres obviously solid pretty for

changed I'm something "Bert, of of system, Assuming we we had Given beginning the flexibility anything we continue you just if is challenges past materially if would at the there year, the do? and would to we've have the said, your had you logistic this kinds that have this?" known for different learned, there's curious

Tony Will

product would but them in-market supply means to we some chain to sure to or we and that take I'm can and UAN points a other say Bert of or buy incremental make just we've distribution I in-market that them, advantage turn lease Yeah. disruptions. opportunistically assets either distribution expanding going full here to whether continue tanks staged got minute. just in where at over of that look

over I other and things things. ask do, are think Bert I'll of to those for turn easy it kinds to but

Bert Frost

agree. I

You're on. spot

We've years with this for product subsidized coming of or as in think the number the suffering a some Commission. the biggest gas in with of we've years whether end the step at I International of it -- U.S.. be for been as the and on Trade to taken innovation is receivers levels with freight, well case monitoring this consignment

market East railroads, we've very and position those now to will major agricultural the and we another create the reach the feel products UAN and in our and as for supplying needs is as to is discount over with talked the for built have the our of greater on last or substantial about ammonia outcome. a of have our case, said, market, several already we has the And amount structurally growing. supplying where on believe -- of because that logistics chain, community, value able And and value so this we a years were U.S.' on blue able and over we that, we growing we to blue all about bring that the urea California front future. of believe to a with Tony on products, green a rivers, to the a It years bring issues into With good a being portion positive moving UAN Coast, those green ammonia to thing, blue in in anticipation as Ag we'll think as a the traded market. but CF. system ammonia -- for planned as at higher we've and advocated X well been, articulated I the reasons valued to low the the and carbon the brought and that low

Tony Will

Mark, his didn't And the I here about and are forward He and one looking attractive there ideas. to satisfy we to really some of better And have to at space team rates although end U.S. be worked us, with out side. add, region the touched again verdict go and That some now other develop -- can really have week. for would we and competitive been. times relationships specific ahead to we're but ever invested California. out is weren't the we hard best now ability domestic into tank partners our ITC try than thing we it logistics certain around rail so really the carriers very Bert our can on challenging at with on We've the it's demand to that

Mark Connelly

Sure.

How price corn there. look a Just that down curious quite Gulf? parity issues the switching in while, global year, is trend you didn't Brazil to situation, want that in the second. of farmers see plant the I'm whack corn. they corn higher, for at to to to start more for it? tick to every will being about Brazil curve your improve clearly get -- this in But import and Last there. that if a finally cost gears out situation that's partial going does if and talked Brazil is once if of terms resolution You've competition more a

Tony Will

levels think pressure really, of find you seeing relief strong. up take liquidity demand terms international That U.S. valve in imports the of for trying really Gulf tick I demand bit Mark, anytime off and little it's product, to the record of a we're this see helps India, to there. of continue Brazil, year, in out

corn. the movement in that's I you'll that whether acre, what increasing biodiesel, So see are, going think think lot of to view good prices it's we thing. always a that and soy a and coming given toward between be or soy fact, given ongoing But competition from I where oilseeds, is

then good depressed. one acres, being And what end so high I don't a up stocks-to-use ratio, oversupply because corn the of is is on you see think hand, this all driving of want to and huge a we

COVID, nice think nitrogen good, a up acres competed particularly is after the really into in products. being I that sector So given are the -- demand for We're now seeing industrial is for back activity as balance the fact where all-time healthy economic picking

to And so corn in huge we increases acres. don't see need

that bad thing would us. be a for fact, In

the with ordered here. I steady-as-she-goes what in think nice, just increase is industrial demand the doctor

Bert Frost

out -- this in the whole year, seeing in especially million drought -- the by that X also tons exciting acres In ammonium for shipping say in negatively going has, to what And for coming Parana, of sulfate it was the impact X just nitrogen demand And demand. to region. has corn the We're and Argentina. impacted terms because over of million of or river close overall is growth we're I a there little increased Brazil imports. demand, on urea that's

also And at ethanol with that so in the which place taking then we're some especially is and changes feeding combined feed Brazil grains. is in are what production, consuming more looking interior, structural

they're are and by picture whole the at yields. look nitrogen. you necessarily what it more Higher yields when more driven doesn't require of looking just So at acres, higher but terms in

looking So Brazil. doing at for what higher-end all for combined for positive exports, the of the protein production, they're for interior, in environment structurally and nitrogen combination a

Operator

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

Michael Piken

good Yeah, morning.

Just trend. get but I XXX I wanted ammonia products of Mosaic your up, price a to the and Tampa's also that understand you guys gone may know sense realizations some around how booked you have ammonia for little contracts. that volume talk have you look meta the the price the of a in how about realizations forward Could you third committed, kind of and in might quarter, cost-plus? moving terms

Tony Will

Yeah, right. you're

with the well is high a Tampa, and cost-plus to due Mosaic anticipate a are like them customer that good have are as They're as contract month-by-month Q&A that our with price And at contract. consistent contracts preparation we that consumption. We remarks. -- and and is just articulated industrial issues continuing the have good Tampa a of that we many today we And in very global a partner. off you based

tight. fall that low-cost at then all acreage ammonia increasing, they're articulate of had probably booked the demand this we an Asia have to season. that fall then short a look we to And market Just Europe, you exceptionally the good structure U.S.. ammonia we've ammonia And high-cost We're corn over to acres. shipping time, And those last in million the XX consuming keeping regions, prices at year, in remember. a within lot is and for got those which you the anticipating produced really

some in very forward ammonia the have opportunities we good so book. going margin And

Michael Piken

then the being just lower the you towards volume guidance, talked And on product tons. the of about, end great. XX call million Okay,

much the Thanks. breakdown of ammonia rough terms be of those UAN? give split us of tons urea to you versus out could last of versus year, come going some have how a where In might of versus it's

Tony Will

projections we upgrades some it you're ammonia an that the are production I for The more would ton. fight And at for margin. across When easier this will opportunities to say around, we've today, And I basis, the urea continue. on with margin then good based very because UAN, it's at that to board. say moved the got would we shift come. but our communicate on It's right. ammonia and point fight look on a

Michael Piken

Okay, thank you.

Operator

next Wong of RBC Capital Your Markets. the from comes Andrew with question line

Andrew Wong

Hey. Good morning.

cash that flow special or seems given more you'll just enough probably it's very So bigger debt reduction, for and some dividend? generating share be your sort like the repurchase it consider and would a than program of strong you priorities Capex

Tony Will

program. of certainly considering not what the special repurchase dividend, share Probably in a but way do we are would a

holders are has it but, likely We to the opportunistic going chunks that's bigger as ratable one of we're about in that the leverage Although even certainly, as to be past, additional opposed a and I for way talked about think much our about. equity program. things more that provides talking opportunity we larger, that return think Chris

Operator

Your next comes Duffy the with of from Barclays. Fischer line question

Duffy Fischer

Good morning.

so the see Just the you'll do and a similar favorable against UAN a in unfavorable then And anti-dumping, decision as delivering that? expect parties before and question it's impact favorable a process we is kind final until conclusion we on here the think on after phenomenon around the saw should with its timing its of What some near-term, the What extensively versus the here. this phosphate coming this market? just with fought if up you are [Indiscernable] from where this stopped steps

Tony Will

I think The Friday. decision on Duffy. out coming Morning, is

an to and UAN incremental And agronomic get at capital it should return that we on historical has back to as you my to if to appropriate intensive, more make for where remarks, mentioned favorable efficiencies would in I upgraded also rate outcome, of operational incent to of that both nitrogen significant product. go people need a trade therefore, farmers. is it's that products. other and expectation expect to investment earn really trading capital a I Our we premium That's the practice

it that's should because it to a premium, really in and absence to for the and and where dumped its so produce, cost ought And it's be both higher was, tons. carry of grower where good that's it the

serve the U.S. term. The it So think that's to we sufficient goes manufacturing is to longer U.S. demand. capacity domestic where the

need to up here. the those there's over subsidized no And imported, really show for so particularly tons

not U.S. we we're And to just it well-positioned and satisfy so think then -- those demand export tons does is used to to. what we have means it like don't

a I bit in think think terms In we're on we're just up, when In on event TBD but that. favorable timing currently. overall business that the short-term that I a that's the of usual because living not as talking world stop showing would that's about little outcome, relatively it's it's imports

way there's to like today navigate challenging. all you have timing? finding is a to fact not despite it's coming So it operating that downside that other do what the and today on Bert, those it's -- we're of dumped we're with in thoughts the tons a

Bert Frost

position. of been the QX to given -- And customer year. more that Friday. next early some and and timing expected ideas a something have official result. decisions into on could But expectations go the we've then QX, is long as first Well, address we're final want then response by of to as I And

have with are obviously some and closely We decades-long we relationships very out also long-term soft that on customers but work laid that our contractual commitments supply. contractually

will who been in just again, in in did continue with market helps farmer product. we've a today communicate and the which to of against this case, long-term levels was price with grow subsidized appropriate are why priced to the an And work we with. customers going we And which, the continue support that's so in and faith of and appropriately high American them Fill what But or American have our talking anticipation, is will on been forward, constraints based those a and aligned business economy. and us help still that be imported and to the work their with as us good Program the

Operator

Zekauskas next the question of with line from JPMorgan. Jeff Your comes

Jeff Zekauskas

to seasonally at very of much. the are in you Should they on weak is, Thanks terms, for third My legacy are understanding environment? you contractual customers this in the you sell That be quarter industrial move giving a buy you revisited? volume? away or in cost-plus you times, just basis. quarter those Can and too in that a some ammonia is because contracts other terms stuck much

Tony Will

seasonal. the tends ratable. of part reason Jeff, doesn't lower be it's It of that tend most business, priced be industrial our because to it is to

plus the balance up market want And is either And to every and of that is a dynamics of basis. business certainly from years how A lot is couple on about big -- that of at what of the are of every much what contracts so of business level we in the year, how come S&P there some reevaluation. the cost-plus for an in our adder. think terms we terms look those

a coming pressure Some was to years, the those number of various contracts that. but it time attractive rest the Obviously, have at that in is points Mosaic business margin in way agreement favor very to with was pretty of of when our contract helpful for supply of was the under out now, and their ammonia enhanced in were right a us. favor far

anything which team So his it's that being things But us than clean expand. isn't at of pressure to one we see some applications and else hedge as a high. are in bit certainly how and for will those thing a little the under of And those evaluate end things natural ammonia Bert probably more much beginning how of all. come that those bad energy a up

able it. lower that able it the appropriate today. blue come we premiums service is to ammonia of are place going the that value about make earlier relatively when to industrial demand And so that for The talking we're the we'll business pay we're out to serve that's and

Bert Frost

higher obviously QX our is Ag they're QX QX movement because the ammonia and are at reason generally, and prices. lowest ammonia is The periods,

the price actual average months on Tampa-based. book fairly do Tampa just today. the the or for consistent, industrial is see that, you'll where So throughout is XX gas-based think, well, based I our But

Jeff Zekauskas

dividend. this period of if for struggled. at my realize you stock them that for buy to you then CF want like time, attractive more And sounds a you has look multiple want back for seem at that been high price CF want has really pretty a good share over interested pay And it year reason. the buy really in a doesn't shares a don't has it follow-up, longer to historically, the cash but to And I whatever the been in market your flow, to price. not And raising

out do? make So, are above-average or over You time? what your money of time, longer those want to lead to do hands? lever are an the in don't a do you over going CF levers of to How What people period return up. are that

Tony Will

at And have that I'd look than appreciate the say question. nitrogen in I Jeff, think other our been have been. during I space the think some the No, in heap at, top if return context of certainly, at numbers, to But in that you XX-year Yeah. much ever ratio highest-priced the cash days return And look within better how time. Company's I has you the I we of within today look we're our in And companies challenges the in peer that group done terms than some EBITDA back think space. if of outstanding, and also that, generating the I where and/or interim it's at been we're or in think were of are the the the today that there period it And the there shares things history. stronger we've highest many the is how you generating make was flow of the past. even stock Company today

the favor so I And in than of the not sector business fundamentals may they've any million not probably past. much more better even ever actually shares. right that XX that over taken I million XX count in improvement. repurchases. been marketplace, shares dramatic through led it's think the we've think I are be our this out in I out, now say, share to also than And the would And think has And but of

sure share not to the is answer. I'm repurchase so And

I costs, sources economies in And than fact think in as we're on does the values in last term, better is exceeding And the ramping as we're that. asset demand and are it is decarbonize. really above future I anything toward energy where near see way position the or to which years. that and think replacement clean will tend think, we've which it's capitalize value you'll are longer drive what the that the fundamentals hydrogen, best today. supply, the clear, And X for looking investors in ammonia term, at, what the X the of starts really up are is I seen they

that's are value. to people it believe And in that so a that need be tight you how clearly screen, clock market ammonia radar to or gives terms several us whether is fact uptick the puts to move of going in organic. the that and you on to the participate want dramatic think And the back and it about opportunity it. we matter is, place in racing the be growth and firmly But see I years to going happens, of asset when supply, to forward build inorganic

very optimistic that return offer profile we're about the So we to our investors.

Operator

Adrien comes next Berenberg. the of Your question Tamagno line with from

Adrien Tamagno

if a UAN you urea to ammonia much QX. be about case that the will in it Can less it these question Good went maintenance explain was and volumes. than products morning. to subject seems It I in relative and down why others? the HX more have

Bert Frost

product just good in and pricing QX very a of did was job carry and the questions, we and QX. we of Tony had as in to the volume, moving in from QX one that lower UAN finished mentioned it a first out but, book The then

our we make s. produce that ability commitments our a we historical actions Company. in to have freeze-offs cover we market which urea we've And in to And customer a the sure after the amount stepped about, value for as purchased and to more talked of UAN February, so, our urea cover, we compared of -- substantial competition in because do that and in value

meet ammonia available easily market purchase not into go and UANs, to it's and to level high on urea if the to So and purchase chose commitments. we some a customer run UAN very

So and February on took substantial deliver disruption across-the-board, on every in time, that product we with were to and the March. even place able

going uptick. volume see and a with saw you why goes forward. volume how that's so And will the that urea, you we And deficit covered

Operator

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

Martin Jarosick

morning. speaking forward we to upcoming Thanks us at look joining and in everyone conferences. you And follow-up for with also this to calls

Operator

today's concludes call. This conference

now disconnect. may You

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