CF Industries (CF) 16 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Martin Jarosick	Investor Relations
Tony Will	Chief Executive Officer
Bert Frost	Senior Vice President, Sales, Market Development & Supply Chain
Chris Bohn	Chief Financial Officer
Stephen Byrne	Bank of America Securities
P.J. Juvekar	Citigroup
Christopher Parkinson	Mizuho
Joel Jackson	BMO Capital Markets
Adam Samuelson	Goldman Sachs
Edlain Rodriguez	Credit Suisse
Jeff Zekauskas	JPMorgan
Will Tang	Morgan Stanley
Andrew Wong	RBC Capital Markets
Josh Spector	UBS
Richard Garchitorena	Wells Fargo

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to CF Industries' 2022 Full Year and Fourth Quarter Financial results. All participants will be in listen-only mode. [Operator Instructions]

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

Martin Jarosick

Sales, thanks call. and Chris the Industries' President CF CFO; Supply Good me for today conference of Vice Senior With Bert CEO; Development are earnings and and Chain. morning, Frost, joining Market Tony Bohn, Will,

reported results, the fourth its question-and-answer and host discuss of our full quarter we call, session. for On a afternoon. outlook yesterday this results will Industries and year CF XXXX review the then

that the Statements guarantees historical may are predict. or made results involve differ and website in this assumptions on on to statements. These of not are actual and that expressed and not implied any in are are presentation materially statements. and performance forward-looking risks, from facts uncertainties outcomes is Therefore, difficult our call statements future what

factors be find release More SEC, the website. Also, measures our the GAAP are our may that our in in detailed filings you affect information between website. found on our with presentation performance posted about non-GAAP will available on which and reconciliations and may press

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

Tony Will

morning by Yesterday our Thanks a good XXXX year reflected for Industries, full year everyone. quarter from and afternoon, of that results we phenomenal CF at the outstanding Martin execution fourth highlighted posted and team.

extremely XXX,XXX incidents most averages. the ran year, X.XX XX-month well producing importantly, plants our safely. was well, tons the hours, And million per of end Our incident below we nearly operate of ammonia. XX At continue to labor recordable industry rate

earnings, quarter full and year supply/demand results. flow. produced led free extraordinary EBITDA, of backdrop We fourth record balance, global a and year these full cash the persistently achievements adjusted full nitrogen Against tight year record to record

our in our significant network ammonia We and decarbonizing production. also leadership progress position furthered low-carbon made

gas. signed of last XX We ammonia new complex and ammonia, for blue low with with a purchase low-carbon supply agreement facility, development Mitsui with an the BP the in our an signed to the an of with COX Louisiana. we months, ExxonMobil. a We transportation emissions recently BluePoint production MOU agreement Over certified natural for and MOU signed JERA signed we've sequestration methane

put forefront of the at which decarbonization nitrogen of and within industry. CF All sustainability the Industries

Turning the economic volatile for been industrial leading High demand to energy period events, industry. our months XX geopolitical particularly last have prices, market, nitrogen weakness production and nitrogen affected to prices. the and reduced rates both

expect volatility market. nitrogen the In continued we the global near-term, in

the taken to we the As look half the Northern is their typical approach of at to weighted second going a procurement. we in wait-and-see spring nitrogen have XXXX, buyers as first believe to be demand Hemisphere quarter

driven of this export demand stocks, CF with source storage and emergence to by of company. fundamentals between Industries our cost a for combination energy spreads suited positive network our network. energy to and all for need clean of North significant grain replenish America, and advantaged compared low-carbon logistics Asia type the global in-market to strong, resilient as the well favorable a remain is for we continue ammonia very navigate to are and demand Industry Europe see Longer-term, production, operating environment environment. extensive the optionality capabilities

generate will This and -- years the invest capital in enable continue us result, both flow cash we growth we shareholders. to free As in to to a substantial generate ahead. continue to to expect return

company low-carbon clean demonstrates a as We for low-carbon and tangible provides and JERA growth our demand blue green that source. emerging opportunity are with ammonia about our MOU enthusiastic believe the energy for ammonia

ability and We developing low-carbon accelerate and to decarbonize green new to to to our our demand. continue network focus investments ammonia on this will help produce blue disciplined meet

years, And we returned shareholders. billion nearly flow, XXXX, our to through dividends. repurchases continue we reduced XX%. substantial to to outstanding the In returning Alongside share $X.XX have shareholders last free our and these growth investments, share of count we two by XX% expect capital cash in

billion on our record participation We Board the repurchase recently authorized expect shareholders by continue to with business. program track the ever-increasing $X and this in share providing further to building leverage our long-term

let who With will to me over global nitrogen more in market the conditions the Bert, turn discuss call detail. that,

Bert Frost

was global The prices expected drove demand recession Asia nitrogen we The Tony. in to agricultural for production levels demand decade. believe regions supported and nitrogen focused America, higher demand was time, lower softer pushed Europe to India. fears. Thanks, grains in smaller feed North market global replenish in extremes in America. grain At a and historically agricultural to like areas to major Asia and This than to for nitrogen due subsistence Industrial and led need the Brazil and also highest stocks Latin XXXX. same prices high resilient and the prices

large we nitrogen gas restraining actions XXXX. Additionally, invasion production prices of in a These and of nitrogen curtailed availability Russia's significantly This, to trade The reduced natural the Europe events trade, prices along high Asia -- of Ukraine, triggered these nitrogen which by realignment global regions. global disruptions exacerbated those highs further in push supporting in spring high were prices. with government dynamics very product of combination and all-time flows.

nitrogen second of factors absorbed previously capacity trade adjusted urea additions. and natural flows half of the of the as gas last Through these year, delayed the moderated shock global and world

lower the global in lower Hemisphere In therefore, gas natural resulted prices prices. higher stocks, nitrogen addition, and gas a natural Northern mild in winter

longer nitrogen reinforced high, has wait-and-see approach nitrogen many were Global approach. is as spring also agricultural global unusual, buyer application This a prices than season not pushed demand to prices for historically distant. risk normal the just-in-time are purchasing. buyers the as seems prices and behavior declining off took persisted lower This

step farmer have The weeks, spur the levels. and pricing was back into attractive at seen at higher globally we has prices. price Over two market wholesalers in demand the nitrogen economics begin retailers should global and last decrease dramatically to discouraged that improved

believe that demand at lower weeks and into QX the will in mode We the chain of emerge given catch-up significant inventories the extent and value to last retail expect are likely the into farm America QX, the coming through purchasing North the We level in second quarter. slowdown. as moves

were July lower while year-over-year, significantly since imports exports nitrogen are nitrogen into the Additionally, higher. US

As a a to needs. and we fundamentals is spring movement of industry a to balance. to yet to required a demand term product believe occur From we that point meet there global perspective, supply continue result, good and longer believe purchases nitrogen tight amount

along As weather limited did season you production to growing can stocks slide lower global many Ukraine year's due last with key see conditions the global grain improve growing on X, war not areas per in yields. from in

been exporting world, regions use and profitable Brazil. prices the such highly US, cost of grain high As supporting Canada ratios low, a for low as course result, the grain global remain stocks This global has longer. and farming

maximizing along demand this support be planted in wheat, plantings food and XXXX the expect agricultural We in resilient America. project to production will cotton nitrogen and We XX sector incomes. farm States XX million corn million focuses United as on with that canola the acres will for North of strong across

at growing We believe fully view, more to In least take yields replenish industry. our in marginal stocks. at trend we'll Europe the global seasons nitrogen the two producer remains

as this in have the production is on profitability continue nitrogen be currently suggest Industries product current We capacity marginal will the is While believe reflected remain of for the substantial, that to can in marginal decline European slide the values XX% the you moderated, to in estimated CF European region curtailed. the forward ammonia producer challenged. opportunity ton energy curves XX. With XX% see that industry, supplying in global

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

Chris Bohn

Bert. Thanks,

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

full was of reported and $X.X share. For billion. diluted year, $X.XX or net earnings the EBITDA the EBITDA attributable to $XX.XX common company billion adjusted per $X.X billion was stockholders

free net making matter approximately was to operations million tax in cash for a early -- both fourth year. related free cash US back We $X.X interest third XXXXs. calendar fourth from tax in CF year generated Industries cash was flow even after Full quarters payments the one-time and and a dating to Canada the $X.X $XXX and billion, records billion, flow this

a cash yield billion, flow was$X.X rate flow cash cash adjusted free free almost a and to payments, flow these XX% conversion EBITDA representing Excluding of XX%. of free

production we of in include projected XXXX. $XXX schedule. to ammonia carbon They These range in ahead to million $XXX normal will reflect projects. amounts also Capital to expenditures to low the million million expenditures our X.X be approximately are XXXX, tons. turnaround be Looking related expect a ammonia

project ongoing for expect at the site ammonia to installation We Fabrication green year. our later and electrolyzer is year-end. work around this complete integration finished is of its Donaldsonville and be

project progress. compression early start-up for track of activities facility for the Donaldsonville Engineering The ammonia in equipment blue and remains XXXX. on procurement COX dehydration and at major are in

shareholder return growing within increasing Longer cost capital our to growth clean term, four well flow free initiatives this do shareholders. and cash participation flow. our growth our of disciplined offer capital; generation projects current and on We cash inorganic focused in investing energy, free in returning we pursuing above opportunities in that returns high network, ways: in capacity our remain

this best in the can number a XX. world's some clean we approach, see with motion, line slide with have high-quality In investments of on energy companies, of you as

to capital substantial return shareholders. to expect also We

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

Tony Will

Thanks, Chris.

recognize, technology safety we completed resource successful questions, I an in which to their these largest we expertise This projects. have do. business time of is more of was since of for foundation we Industries than the rare and everyone to had on implementation is types was the employees, want XXXX. particularly to work CF your at Their on the and everything I planning extremely operating CF who for our to outstanding commitment to of Before and on Industries that contributed ever, want it year. budget, move upgrade beginning thank unwavering outcome XXX system, enterprise our the the

the fundamental headlines, while not it work future generate is for And growth. may our

ahead. We we're we are at excited outstanding the had Industries, CF proud more about that opportunities even XXXX the of but

profile Given flows. free disciplined positive market return we capital our outlook superior focus, stewardship, generate to and from expect strong clean our energy continue cash initiatives, to operational

believe create continue substantial to on well As record a we shareholder result, track positioned are proven build we and value. our to

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

Operator

you. Thank

We first go will the Stephen, comes from question ahead. now Our America from [Operator Securities. begin please Instructions] session. Byrne question-and-answer Bank of Stephen

Stephen Byrne

Saudi-based willing just level Russian aren't. very deferred on a as this $XXX don't Is things some there Thank are cargo or has view else on manipulated coming Is months. there countries price? NOLA other something lot that, your hear there Is five in curious driving to going like it. the the of what US urea get is on some take cargos getting that $XXX are to here? I from and that demand you. to retail driven is at in – I'm

lower a are costs got even gas, still marginal marginal producer $XXX their You still ton. a with it's

you do it goes where So from what think And has led here? to this?

Bert Frost

Steve, Good is your morning, answer this yes Bert. and yes, yes. short is And

So, September prices. yes, has from, cure factors, are some remarks FOB pricing there down NOLA. in in the of high prepared high that ton mentioned theory to $XXX fallen there is as I my short $XXX would say, the I prices And today,

some cut look you world a that reflected especially countries across in or Tier Tier transaction. When whether and of but of X makes to of it Tier or country, for demand. where currency, it's subsystems kind did back, lot X in the a dollars, X, Tier And consuming is local the globally, you're X a Tier importing economically trading farming, difficult which on that in X

coupled That or South tons. is the X.X tons Russia, Nigeria, million Iran, supply then you Central Peru and of that next So throughout between on at America, is equation Asia, probably those that from additional combination let's XXXX with step lower in two X Brunei, look Thailand. regions probably feathered like say, just of America million is India, demand or when countries came

did lot then recession consumption that in high starting or it about our at that of -- take prices energy Europe. industrial So And EU the we in a least to therefore, see we're doesn't and in talked over. operations lower with tip products and

off tonnage pulled that to was equation, add on exporting a the market amount in European took Now -- there shutdowns in there an regions. do added the to significant various that imports from and of was

and pushed with countries sell positive NOLA. overwhelmed combinations, along And a those has Tier index QX that demand see goes have the freight say, demand of in a market in lower. position still from Oklahoma of we satisfied, being us. and amount X holiday, and differential right, a prices be into like slowdown going or All a that's car $X.XX gas So various a significant though, positive right equal to to we're with you're deferral on in the countries that then purchasing or we to

eager. so And We've for on we're QX a arrive. book and got waiting to good order

Stephen Byrne

have on. or pricing? And than Bert, a Would maybe said in say good you you've expecting the book more that a second you're just you if sold just you maybe recovery into for you order quarter less normal and you, one than more normal

Bert Frost

Well, we're book pleased and And wide order we're always expectations and QX. for requirements. open look internal market with to our manage sensitive. those We're

Tony Will

demand Yes, in the have think to keeping to say, terms manages that fair of sort we're that to comfortable very emerging us get where to here. in respect being the significant place our I start first quarter. We're with it's able half the us orders participate Bert really we're we powder well. in Steve, to to a of the dry high-demand expecting way in But portion of

Stephen Byrne

Understood. Thank you.

Operator

from Juvekar please P.J. Our ahead. Citigroup. P.J., next comes go question from

P.J. Juvekar

on X.X where your from, projects tones From of agreement, to more? going a ammonia. you Where or come Yes. have JERA do million this come from? question Good would that ammonia which clean on, I where need does supplying morning. you're it you have all build

contract uptake Is would in your what And bid this? it how current market JERA a thoughts Louisiana do price, price, you from pricing? on are there? initial take do or And it and you how long-term that

Tony Will

Yes. P.J. Good morning,

compression agreement sizable first of about be quantity as with a COX result going and permanent transportation the COX. ammonia So available project ExxonMobil the Donaldsonville, earlier of sequestration dehydration that is low-carbon the of in talked Chris for that to at

about XXXX, be is a of GERA some metric about taking X is going time So able which tonnes COX the in we're going of beginning that sequester year, begin to frame these to to volumes. million

emerge. syncs with well ability it so to produce very when up to And with our is it demand beginning

or around framework of or an equity MOU agreement, the whether have the strictly is investment off-take not from of some JERA, project an it We the agreement. a in whether specifics an there's

details got being we currently and further as but we're firm are dialogue of kind things discussed -- to those good very going of relationship more All a good we've a and up. things come

to showing credit well. really tax side on the suffice But of this real up. of recognition product XXQ relative development to and the the scarcity with value ammonia, be involved low-carbon production tangible it say of of interest as of the part And we're the of this the excited equity demand of the it and about of availability consumers globally in the

really you've people and different got So into the base than to the to production us, that's very want building kind integrate vertically that's of spec that consumers plants side, an development. exciting

P.J. Juvekar

what to for us here. season. is need how does between an sort Bert follow-up is planting lower My is Bert. much Yes. just of much these now on urea give to contracted Can season? and at how prices and US that water between get update already And now import happens and on planting of you

Bert Frost

in. million each to X.X to tracking XXX tonnes of the bring probably X and February it's Yes, probably cargoes month. let's tonnes has X previous on say X.X we're a are average, million on have between review million in, for come historical experiences, million just tonnes, it's March,

dicey because here it's if And then water gets importer in move a in has interior, May a import and April, for a April, easy. into you're early little vessel putting on it to late that from that not getting coastal port the the

on that I So come to issue. more think

tons corn be additional acres in the acres demand. X and XXX,XXX demand probably the remarks I acres got, that say, of XXX what XX When on wheat you've our additional top to of XX at XXX, million we is look think of fertilized. the pasture acres, I'd issue the of you other will targeted to additional

profile forward. demand good So going

three that with then to coast positioned the imports generally And and urea balanced. interior I the be our to tend serve the need. plants on we're think well

P.J. Juvekar

Great. you. Thank

Operator

from We have a now from question go Please Christopher ahead. Parkinson Mizuho. Christopher.

Christopher Parkinson

you Thank so much. Great.

whether idea share for Your decarbonization flow it's your has Chris, the projects some and good cash of terms years, distribution obviously, green support and just free the and on the Japanese cash payment. outer Tony and for of adjusting XXXX, conversion I'm XXXX. XXXX, I tax initiatives. at when blue was buybacks inquire flow the the curious in pretty between to in look the free

of Just has flow, already obviously, opportunities that continuously then distribution updated changed in participating you. the versus the of that free process Thank in? emerged? Just that have curious you've IRA around that is context the thought buybacks just cash your And been to your hear given thoughts.

Tony Will

on Chris. generating. the the above. modest decarbonization there compression Yes are cash news investments say we're relatively I for making all plenty that be flow to would in we're good the the amount compared that that particular, of here is and of should the free The dehydration

And continue the all above. expectation can we of do so our is that to

that say, of investing Now, going tax of that the That's light projects for capital those have would in good call above all seasons. projects, I don't first that as or. cost either XX-Q be some we given of of is to make kind to the these an a is But have return I choice our this returns on think way the of in capital. profile -- particularly credit

Chris Bohn

Yes, the capital at but to in how is, the just the those projects technology looking disciplined, clean we're energy Tony also we also, Chris, infrastructure, as really to side have looking I modest always, very that that goes don't and partner, think, where or the there. mentioned segment

cash at to look as at capital so those time, flow shareholders. of mentioned, us for distribute there's not lot particular you leaves a huge free that as think I this to on projects, you calls excess

sort year went that repurchases will method we think year. opportunistic share about ratable one thing this we look in last versus which I the at of differently is

long-term CF saw the our where that industry $XXX in And today, anything I getting of that timeframe price with or can we're QX that the repurchased share general, if trading during where in to we we mid-XXs. in fundamentals just no better change point our

So, some we we're the to repurchase. do to at the ratable going that if discount, offer it altering looking that large of maybe a is versus way is share type market may of opportunistic

as free returning cash with flow, have And of mentioned Tony shareholders we last we cash think his to year. a history of in I the XX% returned remarks,

Tony Will

I also bring a looking energy opportunities, Chris to people one and we things said host ammonia to are low-carbon we're think different of highlight is of at -- initiatives reality. and to I with clean things want just partnering those while the

in for ammonia complex dollar. facility, built is example the new the Mitsui, $X.XX on almost Louisiana, being in a so And who BluePoint with that if we're our doing we

So really as you out and spread and and half it really grand about of over that's -- relatively in it door, the that's a feel the does we think four do modest above going cash scheme here. four, things, the years, why we can maybe of is all

Christopher Parkinson

And as just follow-up. a quick

bit and hasn't side at Europe apologize market Just production just, be imported was reluctant still odd. even in fact pricing current I on I earlier environment, the the surprised, a also are been downstream facilities some which you've given less short-term that the all ammonia of restart you little year. for relatively because ultimately just Trinidad. is holistically still are the surprised of European that it's And to all even the in favoring the bit tighter production at seen you've and out question, But if thought you seen a

If very you. additional say helpful? you in it could just framework, Thank would that the be

Tony Will

Yeah.

market standards, demand applications. it's ammonia would a good We've this which Arguably, by pricing where economic of say a in goes the is there of reduced activity. bit back very the Bert that happy today. going say reduction seen historical out of industrial is. mentioned on with a I the into some to also ammonia point earlier, little So would I we're value

by standard ammonia looking of So on look, that any right impact had a the at an phenomenal. year, absolutely somewhat it. other time we're market that is But than last certainly period of now

Bert Frost

talked would earlier historical that market of say market delays as the open and tender purchasing about in the I with same dynamics has these some mono delay for tight with India, products. an And well. the the is pushed product we upgraded The standard

going were probably populations, to just in applications So as the higher as attractive incentivize and incentivize demand. but only not incentivizes application in well limiting all These well. other as demand, prices countries some prices this United seed rates, are States as

market about I we're prosaic So the today fairly say and forward. market going the

Christopher Parkinson

you so Thank much.

Operator

question please Joel, a from from now Markets. Capital Joel We have go Jackson BMO ahead.

Joel Jackson

Can bit here. not, trading the been a for cost Hi, seems I this really in upgrade curve, right, is that? Bert, you before on margins, and It's marginal urea I've this you a many ammonia have this has morning. there's It months seen don't before that Tony, think about cost risk good and is seen from a sustainable? Maybe ammonia. following for with talk marginal because months months? And long to time. lasted fact, And negative like in

Bert Frost

is on have differentially, the market of Europe you've we today of in because been the and has on the come have some and urea, have marginal purchase delays operates production. product just can Egyptians, in where moving ammonia and cost down stream, these you example, been into in urea that utilized and do that Nigerians the products, of can in production products with think import like Billingham where under initial some the Algerian, plants for at got ammonia, are the ammonia the additional run I some UK of and of is the the that upgraded ours

differently, for that and Europe. little ammonia, require you is production COX ammonia products some bit make the to to why that a DEF, the make of However, in need trading the

different of two bit little process. a it's So

Chris Bohn

that the the is mean, start think mentioned, one up purchasing just the upgrade past And season. plants than come that the I well. tighten But one as then expectation you I just reluctance see the on think that to this to right the the year. is additionally, application now, is prior urea have points I additional tighter for S&D ammonia urea, Bert plants,

Joel Jackson

bit with area, you to BP my week gas that comfort but And I'm a is going – with announcement Can you made question, different little or of try. on BP. a little last arrangement I – a week think Okay. arrangement. on I this out have the the this

question. gas? XX% how going Is intensity, you BP two-part you supply – a in the That's actual gas? then are it's on? carbon So intensity the physical is premium paying going financial gas a offsets? netting carbon – for investing And exactly lower Are BP this to against supply

Tony Will

Yeah.

So of then invite on – to go. sorry. background Chris, as I'm and bit this, to I'll happy in others But give a Joel jump little yeah, or you here we basically, there both Basically, methane typically and slipped some that doing around you of well involved in are you're when terms wellhead, fugitive as get the E&P pipeline transportation emissions system. as in the

BP gas. and emission invested you in a implemented methane some and And reduce dramatically those the potent technologies of Nathan, sources. to know, at and very developed has has greenhouse amount approaches is And slip as

And investing on impact X emissions. minimis. a is in but reducing small. the their of dramatic so that is the reduce our by has they're de Because it emissions amount Scope really a them profile, there fugitive It's emissions to on pretty investing premium gas,

in very another way after a can we way our emissions that's do it environment. a and a piece in go is good way for the it of this so cost-effective profile, that And do

this and forward continuing move excited it. to we're so And about partnership with

Bert Frost

think Yeah. are thing this verified a is and reducing add that the these our as something well, case, it's in credits I X. in Scope legitimate And I only particular would

Operator

Okay.

Goldman from question from ahead. continue Adam, We go with Adam a to please are Samuelson going Sachs.

Adam Samuelson

you, Thank good everyone. Yes. morning,

Tony Will

morning. Good

Adam Samuelson

Morning.

Hat to Port And And American just with different related kind North energy carbon rest you Verdigris hydrogen pursuing? So and these the it's US the plant Can Mitsui. some of Gulf, become XXQ confined the be or the you're the you've evaluating type of considering talk with Canada, on but – are question into in that to another available might I clean Donaldsonville of Neal of mean, maybe those of of viable date, things maybe kind ammonia opportunities opportunities? potential fit would to Medicine the and largely new at network been kind how clean energy or about portfolio your that the capture, plant of plant obviously, north at investments border?

Tony Will

Adam. bet, You

and because City So ammonium have a Yazoo is what being primarily one of amount the there is places we COX that's partly our vented, nitrate producing of significant currently we're that it's facility.

there's of Energy kind venting and end we and That from Clean transportation a up are we that de-carbonization. there. active the of when one we and options discussions about sequestration finding COX, highlighted our two lot a movement we announced of initial solutions ones was So into in

the pointed rights as Medicine Medicine to Hat, in the in been And granted of poor Hat City has you the area. out, space that

we're them so developing kind XXQ And the already of active us sequestration forward. lot going I'm high on in Canada, a benefit And higher option. The the carbon, US. about to in and you're a in with it's here of it's is cost discussions different a like -- for that's as sure get going aware

in other as emissions is are we continuing we evaluate there potential areas economics good So profile. really well. a around investment reduce our aggregate to there where can also And dramatically

amount at a place of we're producing, and the produce. The like most we're because process UAN of Neal challenge COX that one that we Port the urea using

the it's ultimately amount gets so that fairly low And there. vented

COX reasonable prospect looking does amount going is the side of are other of after we of network at nitric opportunities, carbon emissions from And small. for intensive some doing equivalent the And the really CCS is so Verdigris have hand some a across on acid also NXO other the plants, standpoint. our COX. NXO including it from a project our

Chris Bohn

the to said, the the then of on out more are there projects tax defined those credit and enhancement the XXQ. that really hydrogen build production And just what that are Tony

scope IRA like related but what and in And the of is hydrogen others there's the already everything are part are are evolve well. those the as that that. hubs, are carbon from those So continuing motion, to that the transport and to everything incentives

are evaluating strengths talked we is those and the well. about as as where we chains. But But our participating really to have lot it playing return active where earlier, again, have a partnering remain don't of this value where we in very we those highest on

Adam Samuelson

Okay. That's helpful. on the in follow-up a UK. guess separate plant the I Billingham just And

that Does be starts was you there tons plant? the for able issues And at guidance assume full UK? not, long the are running of the year that how production think would if before to of creating you X.X the not ammonia restart kind ammonia production. million ammonia I gross in actually comfortable

Chris Bohn

Adam, Yes, margin amount I'll on pretty CF overall an UK really basis. of is past, small is the the with we've start with said business as first in the associated gross

just gas it's right But that Our into get that. upgrade to import a is where it's it, intention profitable ammonia we'll it there prices range when produce than and now, to a margin more do play.

this, is how importing going flexible, the a turn that we Donaldsonville at So do ammonia on nimble as we're plant and will uplift Right be out to selling the the of I it providing better guess and from to margin an advantage very we're when back the looking from get see in Donaldsonville standpoint just ammonia market. to merchant at versus that. could is now price we

but evaluate to always continue we'll rather volume. production So will it margin be that, than dependent

Adam Samuelson

I’ll pass on. Okay. you. it Thank That's all.

Operator

We will from Edlain now go Credit take a Edlain, ahead. Suisse. question please from Rodriguez

Edlain Rodriguez

Good you. morning, Thank guys.

up are on those of they they to what prices? think can should you be wishing buyers and still prices clearly hear see buying buy you shouldn't expect ahead one do to quick be a pattern wait psychology. like going they soon, higher Just Like, when that buyers saying

Bert Frost

but good yes, successful. Well, interesting global and far Bert. And dynamic, is it's an this morning, been it's so

for was And TFI we have the as to just conference from the have there various our customers. we're returned we the down and late domestic many January, our We customers yesterday. in as had conversations -- We've to with customer interactions. global Brazil in So recognize that. going well team

There purchased is spread before. between was a what

waiting is is they want inventory the think on we floor, feedback review the for our need to priced so I they're the might level, and much get you we're think is, average. the And have feedback to retail there. what several cost you dollar higher And because floor

global And so dynamics this will forward. drive going

dynamics and have is again, probably than healthy North We lower portion year And America natural this just with offline and I last keep, a will inventory temperatures. good not soil a -- at very we Europe Europe in now point in and have tighter year. levels in and place those keep priced to gas we going supply recognized had to of think, moisture, dynamics, We're production right I spring. that the adequate drought look that that higher a

we'll So see happens. what

Edlain Rodriguez

you. I all Thank That’s have. Okay.

Operator

take from a Jeff from Zekauskas ahead. will please Jeff, go We JPMorgan. question

Jeff Zekauskas

Thanks very much.

do tax to Your government roughly much expect XXXX to when? to get about is back million. the And How $XXX the into same US taxes? tax XXXX bill Canada and and from continue you problems

Chris Bohn

would and Jeff, early a this talked where we've we matter payments. our this given made between whole really pricing dispute is get that this before as are take fully this, about is fully CF it's to US, tax for is, to Thanks tax this likely say question. XXXXs, Canada it's the relates is years back where the and many a to time issue, resolved. taken this now, resolved transfer and What we will I some it earlier, Chris.

everything. of that, full the to However, have returns for related seeking XXXX, Those resolution made sooner refunds come the than payments amended in saying we we through XXXX should filed US. from the that

some should what So there come this, there's will contesting would number between XX time, is just of costs depending probably full particular difference because some to we that much what to out Canada but this going interest know at we We months this from to know in don't but the this frictional is. at don't the jurisdictions of US, charges of to anywhere XX time on we're that this initial particular which months be XX in with, both XX when to really see get item. say, payments begin I resolution

Tony Will

thing other higher the much stop is period US. make rate as to Canada than ahead the interest a charges we the the interest through and go ticking XXXX payments in order Chris said, the Jeff, XXXX estimated of And did for

that where that's cost comes of some expectation frictional But our is from. the get so back. the of we'll And much money

to And recover about much XXXX XXXX. put of XXXX faster, as is again, this arbitration the going when to another the you're through forward talking have round likely as going rest all But go to back through obviously of it efforts possible. of to money to XXXX we're

Chris Bohn

point, to answer we your forward. this second build Yes. go the Jeff, continuing One part is other question, to as of

this XXXX recall, initiate this went goes we when though to it's early started even you on XXXXs. it, -- As back to to really

changed that profit of distribution some was during timeframe. So, that

time to a that's go-forward the part. for really this basis. build or nothing frame on less It's through more XXXX So, there's most continuing

Jeff Zekauskas

Great.

of How store the in does COX And process was maybe Okay. want COX tons Donaldson put Donaldson per complex, ammonia how transport way, or off, COX. much million of X to produce? the much complex ton in you another throw thrown off you

Tony Will

Yes.

COX. So, our ton per it's plants, tons ammonia in in generation COX terms about total of of of X.X

the The flue about XX% flue processed maybe it is third like is it gas is more COX. of rest XX% a and of it rest of it's or of Now, gas. is that,

of So, million in of have the now, we an is portion right excess about X the process COX tons aggregate.

that about up more taking Exxon We're to second and up process ideally, we're we'll half to to signing project to of with the of has amount. continue COX -- sequester going sequester do and and signed a evaluate So, it. excess

little at tends is ammonia urea energy in a and way current a that the higher the clean world. to bit change margin least on than challenge may The ammonia, is be UAN, just pricing opportunity for product

current a on that's But basis, case. the

So what ensure do of want trip we ammonia urea to continue at of capacity. have to when upgrade one full the plants, do operate our is able a to we we're units to

an an basis unlikely that to excess to or we a So, our allocate COX upgrade. the don't make running get keep want XXX% we turnaround we a we're if -- sure can on upgrades sequestration, fixed ammonia plant even we because on for of

that now point option one talking sequestering able a some recovery being gas we But lot capture anticipate is then and that COX. spent to haven't flue about to that ourselves at and avail time up of of we

we the now. involved -- recovery and of right we in are evaluation flue So, as gas

more like promising such the to effectively deal sign side. sequestration to So, another gives in a lot being on -- a that that flexibility and of be to COX realistic implement as able us technology looking able cost starts terms of up

Jeff Zekauskas

That’s Thanks a much. good answer. very pretty

Operator

Morgan go from from question We ahead. please have Vincent a Stanley. Andrews Vincent,

Will Tang

looser I then Will a on color level guys that, a give additional tons if you're some of be a what respect a year-over-year could million XXXX Chinese with little bit million and Tang is to XXXX why you year, on wondering export in for what I'm them basis And is follow-up than new as five Vincent. and on restriction exports This the guess, to three guys. million to be of to Hi between you would they flat happening XXXX? which exporting down been lower on, to gave, tons. per I expecting around what's five guess,

higher could that region, are demand there. the I'm difference the bridge from other there aspects So you Is if estimate? or just that wondering, influencing

Tony Will

it country. thing I policy Bert I'll specifics some would say the I'd of for shift affects say the turn to biggest biggest help environmental exports. around been significant strong There's in a nitrogen there's then more is of to around reason, it really one trying curve inflation the some so desire and the that availability reduce COVID, over here here. pollution But also order since recently on fertilizers and affordability -- restrictions in pretty to of

from you're natural employment from when comfort in them consumer perspective real and the a terms of going exporting around quality. importing particulate not looser environmental and thing with effectively jobs not gas, environmental you're amid good restriction and that of is Urea or of big cleanup in there's form gives turning trade a just a huge lot to policy But environment, the push urea freshwater, that an that energy matter a it's export a it along old back the go the of around around government. a many but just is in central days the not us

Bert Frost

think mechanism farmer mechanism The control and did. covered was well. cost for the a export have This controls, reflective a and inflation very you an available governmental good protect. nutrients for they worked, on to is key it action Chinese to And XXXX. I thing it me and control the

the so the when in global the price $XXX, $XXX. market price China And of was hit

think And so that program. a was successful I

And tons see But million last moderating, price probably the Chinese level million market. maybe to tons. than and just we they're the Chinese year, global right to exports three you're expect up five same below higher is that today,

going be I demand expect is we there season, are not an the And those incentive to their to export spring like robust. they're into in tons. and Hemisphere, So Northern just

soybeans very feed China has for a their their -- and stocks. refined the active stocks, for as expect well supporting well as global agricultural grain been products the we continue that to of purchaser stocks, decades. protein they their as And as corn rebuild structure now and as

for we urea don't out coming see on a in China So big XXXX. change of front export the

Will Tang

you. Thank it. Got

Operator

go from please from We Andrew, have a question Andrew Markets. Wong ahead. Capital RBC

Andrew Wong

taking for Thanks my Hi. question.

So market. term bit little thinking here on a longer the

urea and is? gray like been users? you see of new coming some up, of announcements to most clean or anything ammonia. of you you competing that? this entering We ammonia for for lot UAN think And or ammonia with traditional it just haven't of mostly is low-carbon that or do going reserved builds, tons, or seen these be kind do that Do the of why great market have with some traditional a they're think projects ammonia Like,

Tony Will

of does. exactly those rate new at situations, develops where one I the you think mean, that's production I same where balanced XXX% demand never fully in as

comes availability enough gray as implementation with project of chemically if blue probably not to two becomes shift certainly we'll as so into like for using towards up, is there's And available. uses. get as it think little what that the if ammonia I it's see this develops, that initial or a production, you desire of any demand have a conventional you excess product, identical, bit while, go a a or of can it

thing there it very thought, available. go And announcements compared they think do. participants this announced My start industry of of some broader to margin, not at a going in sense to the is different were on is use happened of hey, be people making by will about as basis spec because lot that want we a as being ammonia low-carbon desire was to what becomes that great I on there that's just the application today again, time, on the that a was XXXX plants the thing were industrial

involved to going product announcements ultimately And Most participants business, of number the it. you're to that end that today as from well-capitalized a in understand are people or of that the are be are the people you well. users other see want the also of seeing in that channel be already

just And demand lot And it's more to forward, the the first feel and it. come. JERA we a emerging, tangible to piece is got that very as different of MOU a look expect so we really again, is

source, billed sense And the our for one is versus that the a energy really for as off are get we're to number that a is these So that announcements. are that the represented ammonia clean to of less production ultimately it's in one. need number than capability, take some going – announced

see global early sit the of pleased where how produce we're leadership, the production, network on also only our and very taken kind – de-carbonize not terms all that actions low-carbon actions ammonia – in develops. we of we'll with but ammonia. we're So But the we've to

Andrew Wong

of in continue? That's in hesitancy invest just we Is traditional is? just And the announcements, seen maybe of something general, helpful. And grey else? a plants, that there lot do ammonia potentially haven't maybe businesses, think carbon like generating does like that there some on you to is sort why or

Chris Bohn

effectively actually ammonia that has it. I ammonia are of gray just production Jeff, around areas you're blue which the sequestration projects, lot that announcements, are think hearing a

think the to Gulf it's with the you're it. Coast in seeing why ability sequester activity I the So

allow So, structures incremental given obviously, that you the to transition make out there, that put capital. blue ammonia the incentive to been have

the because So be. become you're blue close would very conventional to ammonia is what projects I it enhanced a seeing think that's production why XXQ with

Tony Will

And conventional probably production. actually of with better economics

Andrew Wong

Thanks. Okay.

Operator

I'm Our UBS. next go UBC from -- question ahead. comes from Josh, Josh Spector please sorry,

Josh Spector

Yes. Hi. Thank you.

see out, of on mean, wrong next you take that. XX six do are, do Just much where It's very quickly. mean, over further to be given you'll you hedging guys hard months. know on view low natural the I that gas I to normally a end the different prices I don't but

just curious thoughts. So, on your

Bert Frost

We numbers, don't hit months look again the risk. the we've in hedge that low until $X there. Yes. with a at gas, hedge reflection the forward. you through at Bert. When the you This now do looking in X.XX and far is in that's freeze-offs some months, forward, the saw correct. as you're QX and winter We you But from $Xs as we're summer our of seen you're and and winter things just of natural when then then

of So a we'll few things, it's do committee and and team others to look at take We sit and that. have have on about. gas and that who Ashraf Chris these to the a a I talk ruminate at, something over to something and look

Josh Spector

years. share CapEx. of I the just mean over this forward FID I that's year guess, quick facility, assuming assuming And sense. your on with on makes years, billion that CapEx be the four million if you further is four Okay. I next I in do projects? barring plays go your thinking guys mean roughly $XXX spent you $X any should we about range, additional out, the don't mean, $XXX million,

Tony Will

there's Yes. way, other procurement Josh, for work the last about of happened upfront expenditure engineering it's which it of to not doing we little the all initial though talk equipment. and But months, of also two vessels activity. and XX years vast the money long the is you're the major time of in the allocating for vast, the last spent majority lead construction can really bit ratable a even that on down typically, way payments that when

So loaded. back-end it's really

Josh Spector

Okay. you. Thank

Operator

Our Richard go next from Please, Richard Garchitorena. question comes ahead.

Richard Garchitorena

Great. me having Thanks in.

Just one high-level question.

you you have terms of could constraint. on past many those? you When or Thanks. you You've announcements of same would can in the considering doesn't I made think feel in have so in energy plate be of full a like priorities where in free your comfortable projects time like a your now clean think be then guess, year. how also strong terms that? lot And on manage at seem And terms between the going what just and that's initiatives will it flow, cash you the you of managing XXXX do do

Tony Will

Yes.

forward go organization be. on that go existing and that bit lot decision would what of made a yet, one of staffing the complex different in the The the up project, but it it's of is think are of don't estimate we we given with kind So I have capacity do execution assumed greenfield about because Point the for a Louisiana a cost the forward, engineering to Blue obviously a that within facilities. that been has has not

would talking a phased So than this that the the And the these resources that like lot things of I we of in. our a large are other would overwhelm we're Point feel not and get about got execute can and of lot network. We've capacity a so Blue Complex involved around it lot engineering projects simultaneously. so stuff

think and/or we're facilities number we be of CCS the good phased progress gas abatement time turnaround overwhelm we horizon we those don't turnaround would initiatives on so flue NXX over little So planned, forth. making recovery, talk align in and a do the that that making about in longer kind I sure as a concurrently. with and but bit also resources, of activities stuff,

also So up. would get those phased

Chris Bohn

Yes. And whole the and only competencies. a exists the bunch It's of not projects that doing new add-ons And to that. that have I to if we thing much of we're this as infrastructure. for out that's is add really strategy play would the organization. core build why making go A into makes so sense we're and our lot

we competence were size and those allow -- also alleviates if additionally, ourselves. that these doing core all then think a have would few in we the them projects projects take we I areas than maybe partnering by don't to of on more that us So

Richard Garchitorena

Thank Great. you.

Operator

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

Martin Jarosick

we us, you to month. joining the forward next and for everyone, seeing over conferences look at Thanks,

Operator

now presentation. The concluded. attending today's has you for Thank conference

disconnect. may You now

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