CF Industries Aktie

All right. Good morning, everyone. Welcome to our -- I don't know what the year is. We're in the third decade, I think, of our Global Farm to Market Conference and a Chemicals Conference, too. Very excited for the 2 days we're going to have here together. over 1,000 attendees this year, over 100 companies. It's always bigger and better and very excited about it. Same goal every year.

We really want this to be a forum to explore the key themes across the food value chain. We're going to have lots of fireside chats, presentations. As you know, this conference really spans the entire farms to the market, fertilizer chemicals, agribusiness, protein, food, beverage, distribution, food retail sectors, coconut water. We have it all.

I just want to really thank everybody at our conference here. We have a really great events coordination team here, our sales force. all the corporates that show up, all the investors, really appreciate everyone that shows up for us.

Just talk about a couple of keynotes we're going to have this year. Today, we're going to do a panel, myself and Andrew Strelzik with our -- BMO is a very large commercial ag lender. So we're going to have 4 senior leaders in our commercial ag lending team, and we're going to talk about what's going on across agriculture and farmers in the U.S., really boots on the ground, and we'll see what's going on there.

Tomorrow, we're going to have a keynote presentation from our new Chief Investment Strategist, Francois Trahan. He's going to focus on how investors can think about positioning portfolios for a potentially prolonged period of inflation and what the impact will be on the consumer.

Okay. So we're about 30 seconds early, so let me just drag for 30 seconds to catch up to the webcast. But we really hope that you guys have a great conference, and this really helps you figure out where we want to be invested in food and ag.

Okay. Let's kick off. So we're going to start off today with a fireside presentation with CF Industries, of course, a leading global nitrogen producer with a very large North American nitrogen base. Very happy to have Bert Frost, who's the EVP and Chief Commercial Officer of CF; and Martin Jarosick, who runs Investor Relations and Treasury. So I'll slip over here at 8:00.

Perfect. There you go. Right on time.

All right. So why don't maybe we could start off with a bit of a state of the union. A lot going on in the nitrogen markets. Why don't you maybe talk about what's going on nitrogen this year and what's different this year versus other years?

Each year is different, and it's amazing when we sit down and talk about it here at your conference or on our conference calls and how we reflect on the oscillations of this industry. And you have so many things happening. But if you go back like to 2008 and talk about the peak and trough of that era or 2020 and COVID or Russian-Ukraine invasion, and now we have the Iranian situation or the Middle Eastern situation.

But feathered underneath that are other, I would say, smaller issues in terms of gas issues in certain countries or areas or lack thereof, operational issues. We had a lot of old assets in certain places and inefficiencies. And so -- but the demand continues to grow. And it's an amazing story of continued 1% to 2% demand growth, but not necessarily additional capacity growth.

And so where we are today is a very interesting place, I think, for CF and for North America because all of a sudden, the shift has shifted towards who is the safe place, where is the place to produce this stuff? Who has low-cost gas, who has the rule of law? Who has an area where I can build on top of some of the best farmland in the world. And that's the United States, and that's just a poster for CF Industries.

And so we're very excited about what's -- how this is transpiring, not because of wars or conflicts. That's not something we're pleased with. But it's the structural advantage that we have built of CF Industries and where this industry is headed and the needs of the world, and we're well positioned to satisfy many -- much of those needs.

I mean it's a weird year, right? Like you could say it's like 2022, but it's not exactly because a different conflict, a different situation, the timing of both conflicts start around February, end of February. But this market, we've seen a surge in nitrogen prices just after kind of, I guess, the key stock-up period in the distribution for nitrogen in North America. How is the market playing out right now?

Well, actually, I want to -- I think your first point is very interesting in terms of how this is -- is this similar to 2022 or not? And again, back to these other, I'd say, excursions out of the mean from '08 to '20 to 2022 to now, most of those were demand driven. And so in 2007, 2008, there was, "Oh my God, can I get supply? I need to pull forward. " Well, the world pulled forward a lot of demand and they had a collapse. Same with 2022.

The reality was the product came out of Russia that was being exported, maybe a little bit of a delay, but the world was afraid of not being able to have supply. So again, demand was pulled forward. Today, there are supply limitations. And it's not just what's happening in the Middle East with millions of tons that are not going to be produced and not going to make it out, but the nationalistic moves that have taken place from other places to say, well, wait a second, I'm going to secure my supply. I'm not going to allow exports, Russia, China, other places or needing gas. And so this is a supply, a unique supply limited market where will you get supply? And how long does it -- and what price will you pay for this product.

And so when we look at the forward and you're talking about spring and positioning, when we look at the North American market, our estimates are 80%, 85% of at least nitrogen fertilizer was in place for spring and priced at the Q3, Q4, Q1 average at very attractive levels for the American and Canadian farmer. And so we were pleased with how we have worked with our channel partners, the retailers, the wholesalers and we don't sell to farmers, but that group that serves the farmer to make sure that the product is where it's supposed to be, when it's needed for planting and that's for nitrogen-free folks out there. That's ammonia first, which goes down in the fall and then the spring, UAN, urea and those products.

So we feel very good about that supply, and we will then pivot to the global market once the U.S. and Canada are satisfied and begin exporting.

I forgot to mention that today, right now and for the rest of 2 days, you want to submit questions for these sessions on the app and down the conference app. People have to go in the lobby and then we have the iPad here to get your questions.

I think we're seeing bifurcated markets right now, right? We've seen U.S. I don't remember it yesterday, I don't think I was reading yesterday, but NOLA is around $600, going to be sub $600 a short ton. Offshore prices are closer to be high $700, $800 a metric ton. So there's some arbitrage or there's some opportunities here, bifurcated markets. Talk about that.

You're correct. And it's an interesting phenomenon in that we are the lowest valued market today in the world at that $600 a short ton where Egypt, Algeria, Nigeria, those that have available tons to export are closer to $800. Part of that's a reflection of, again, the North American market is satisfied. We've imported sufficient volumes. CF has produced and kept those tons in market. And we had a drop in corn acres from 98 million. We were estimating 95 million acres, so a little bit less applied.

We had a very good fall application in spring of ammonia. So when you add up the nitrogen needs, I think there has been sufficient where now the game is buying NOLA tons on a barge and reexporting them. So you're going to see vessels that have brought tons in, put on a barge, put on a vessel and sent out because of that price arbitrage. That will eventually correct. But kind of year in, year out, NOLA is one of the lowest-priced markets in the world, and there's a reason for that.

It's an easy place for, let's just say, Russia, Egypt, Algeria or Nigeria, you're long a vessel, you can send it to NOLA and discharge into the vessel and store it that way, where in Brazil, you can't birth until you have it all sold and paper is nationalized. Most markets operate that way.

So I don't get anybody in trouble. But thinking about the export opportunities and some arbitrage or some better netbacks. I mean the U.S. government, new administration has been very vocal the last bunch of weeks and months with Rollins, other players in the government about fertilizer shortage. I don't think actually Hormuz is closed, but just talking about pricing and things like that. Is there a concern that the government -- if this conflict continues, is there a concern that U.S. could put a new policy like, no, you can't export nitrogen. No, you can't do things like that. Like other countries we've seen. Is that a crazy thought?

Does crazy drive crazy? I don't know. I think you have to take a step back and say, is that something that's in the interest of the government? Is that something that's in the interest of the -- in terms of policy? And is that something that makes long-term and short-term sense? And I would say no, because it's a global market. Things -- products move all over the world. We, at CF, we do export at times, but it's, I would say, a de minimis part of our portfolio. We're heavily focused on North America.

We have an industrial base, and ag base and then that incremental volume that's exported generally during the off-season because you have a bell curve of demand. So you're building inventory until about March, April, and then you're dumping inventory where you're applying that product to the ground.

And so the goal of a retail, our customers is to be at empty by the end of June. That's a good goal because it's a reset. And then we supply those customers. We announced our -- it's called our fill programs where we're filling the inventory. And so during that natural time of declining demand, we're still producing 24/7, 365. We're always going. And so we would -- we have inventory space for probably 2 months, we at CF. And so there is a natural time because of our -- where our assets are located that we can load vessels very efficiently, and that's good for the market because it takes 2 to play in this game. We produce, we want to sell, but we need our customers who want to buy.

And generally, they don't want to commit their capital, their working capital nor their risk capital to fill their inventory maybe in June, July, they prefer to do that in August through December. So it's -- this is a natural oscillating market that there is a need to export at certain times.

So I think it's fair like we're going to -- we're getting into part of the where maybe some of the pressure comes off in the Northern Hemisphere, not so much the Southern Hemisphere, Northern Hemisphere. It's early, but do you have any views on how fill might go versus other prior years?

I always have views. You guys want to hear.

Yes.

No, we believe that this year, fill will do very well because of that earlier comment on there's going to be almost no inventory at the retail level. The focus from our communication and discussions with our customers is we're going to be empty. We want to be empty, and then we want to reassess where the market is, whether that's the corn market or wheat or whatever crops are being supplied, understand the credit needs and position of their customer, the farmer.

And then we like to work synergistically with our channel partners and price based on the world market, but also be attractive that they are willing to buy and commit their capital to this process. So I expect to have a very good fill program.

What we did last year was interesting. We communicated a month before and said to the customer base, we're going to start fill on this date in August, and we will call you on that day and offer you a price and then get your tons, your needs organized with your customers, and it went very efficiently. I anticipate doing the same thing.

What day -- do you know what day in your head right now -- do you think you're going to do that?

I would say sometime in early August.

Okay. So early July, starting talking people about, you have a month.

Yes, we got that, and we have the Southwest Fertilizer Conference where we meet and talk about all things fertilizer.

Okay. And do you think we'll see any change in sort of retail purchasing behavior where maybe they don't want to empty the bins at the end of the season. Maybe they're worried about supply? Or do you think it will be similar behavior?

No, I think they're going to empty the bins. It's -- and this is -- I'm speaking only of nitrogen. So you have nitrogen, phosphate, potash, some sulfur products that -- and then the crop protection and seeds. And so I would anticipate all that is focused on liquidation and repositioning.

So I mean we've known in quotes for 9 months, 10 months that we're going to see an acre reduction -- or acre shift from corn to soy in 2026. And we got our first USDA estimates end of March. And then a lot of people in the industry think well, there will be a more -- a wider shift like more acre reduction, more soybean acres. Do you have a view if the USDA has got it right?

Our view would be whether they're right or wrong, I don't want to comment, but our view is 95% or maybe even higher than that. And there's a reason. The one product you can make, if you're a farmer that you have a yield impact is corn. And so if you're a 200 bushel per acre producer and you are -- you've prepared your land, you've picked your seed optimization and you've got good soil moisture, which all is in place today.

If you fertilize and specific to nitrogen fertilizer, the yield uplift opportunity, and that's the revenue opportunity is there. And so in this kind of market where you're at $5 corn today, we're at $5.03 for December, the corn-to-bean ratio favors corn. But again, if you can get 10, 5 additional bushels per acre, which is highly possible, when you're looking out to the world today, what is going to happen to the supply, the stocks-to-use ratio of corn, you should ask the Bunge and ADM guys this.

But our perspective is that you've got an opportunity because of what's going on in the world and the lack of nitrogen and the lack of movement. And so second crop corn is something place where you might see an impact, but that will be in 2027. And so if you're a farmer here, you shoot for yield, you've got on-farm storage, you hold your crop in the fall of 2026, and we expect to see an increasing value for that output, and that's fantastic for the American farmer.

So I actually spent some time Monday and yesterday with AGCO, right, the big equipment manufacturer in Toronto and Montreal. And the view that they're trying to push is 2027 should be bullish and to get people buying tractors again because sort of some of the things you're touching on, which is that, okay, farmers might apply. Well, their view is farmers are going to apply less nitrogen per acre, yields will go down. This will -- crop prices to go up and so everyone is now going to buy another new tractor next year because they have more money.

Now I don't know if I necessarily subscribe to that because I think sophisticated farmers, if they're going to apply corn, they're going to do their 200 pounds, whatever of nitrogen. And if they don't want to do that, they'll just apply -- they'll plant some other crop that doesn't use nitrogen. Like do you have any views on yields, application rates, what it means for next year?

Well, again, my view on yield is you're going to apply nitrogen for yield. I do think that phosphate is expensive, and so that goes to soybeans. Potash at 350 is probably reasonable.

Cheap.

If I were Canadian, I'd say that. But I do think that around the world, these are the calculations that farmers around the world are making. But on nitrogen, and this goes, again, back to yields is we're short 5 million tons at a minimum coming out of the Gulf. That's not going to be replaced.

Every day that this goes on, the untanglement of the Strait, you got 1,000, 1,500 ships on the West side. You've got ships on the entrance side that need to come in. That's like -- it's a little highway. So you've got this movement of ships that has to -- and what ships go first? Do petroleum goes first? Does refined fuels go second?

No, [indiscernible] sulfur.

So we're short sulfur. I was just on the phone with -- last night, Darla and I were flying in. I was on the phone with a guy I deal with in China, talking about some of the needs and movements and the impacts sulfur on phosphate in China.

We are going to be short phosphate in the world. And -- but we're also short nitrogen. So yields are going to be hit in some places. And who's going to be impacted are those that either can't afford it or can't get it. And so again, back to this in a needs-based world where a majority of -- at least in the United States, corn goes to feed and then to ethanol or corn refining, we have consistent demand for that output for the farmer.

So again, back to where I think the impact is, is rising prices, which we hope leads to rising incomes for the farmer.

Okay. I got a question from someone on the app. Thank you. So you mentioned you were liquidating inventories to reassess. Would that keep prices high and availability tight? How are you managing credit terms to customers?

Credit terms?

So for credit terms, we keep them pretty tight. You can see from our financials, we don't have bad debt expense. We don't have write-offs. So we manage our credit very tightly. And as prices go up, it generally becomes tighter. I would say we manage it very tightly.

We have negative working capital, right? And so it's -- we -- a lot of our product is prepaid. So I think our position, but again, on the pricing issue, it's a global market. So it's -- as much as we would -- I think people like to say that, that's controlled by industry, it's not. And this is a dispersed industry. We're the world's largest producer of ammonia, and we're 5% of that 200 million tons of ammonia is consumed. 200 million tons of urea, we're 5 million of that tonnage.

And so as products move or demanded and during this crisis, I had phone calls from many different places around the world. And it wasn't a question of price. I need a vessel of this product or that product. Can you load it? No, we can't because we're committed to the North American market. When can you? I'll pay this price. And so it's -- that's the kind of drivers that are taking place right now.

So a silly question, but we all get asked every day, the war ends tomorrow, although didn't end in 2 weeks. War ends tomorrow, and things unwind take some time, whatever, some reasonable question, the war ends tomorrow, things start to unwind. How do you see the market sort of normalizing or developing in that ridiculous preposterous impossible to understand scenario?

Yes. I got an answer. Yes, yes.

No, you get my guess.

I do. And I remember on February 28 and March 1, when I got the call -- generally, I wake up and I look at the gas market, I look at the corn market, and it's kind of annoying to my wife. But -- and then I look at the news, what's happening today? And when the hostilities commenced, it was pull pricing.

We -- and let's sit down and assess that then the week after the -- Monday, Tuesday, Wednesday after that was calling customers, what do you need? Where are you at? This is -- what does this mean? -- thinking that was a 2-week issue. Okay, maybe it's a 3-week issue. Okay, maybe it's a month issue.

Well, now it's a 2.5-month issue. And we can end hostilities and open the Strait. Again, I would say it's 2 months just to -- and I don't know if we get back. We don't know -- we know that in terms of operations that are not operating today are nitrogen plants. And that's Bahrain, Qatar, Iran. We don't know what's been, bomb. We don't know what LNG is available. I mean you got to think about -- it's not just urea coming out of the Gulf, it's LNG that goes to India, Bangladesh, Pakistan.

Bangladesh has shut down their 4 plants because they don't have energy. India is operating their plants, they're 60% driven or their 60% of their gas needs are imported LNG. They're operating their nitrogen plants because of that lack of product at 70%. That's just adding more millions of tons of needs. We estimate that India last year imported 10 million tons of urea. We thought this year would be like maybe 7 million, 8 million, 9 million tons. We weren't sure. They're going to be 10 million to 13 million tons.

So you're short, it's not available, but these countries that produce aren't producing, they need more. So the import demand goes up. And these people need -- we need these -- the Middle Eastern producers to be producing again. And then there's China come in. So there's so many questions about supply, where it's going to come from back to nationalistic moves and attitudes and thinking that when you look at the forward market, I don't think we untangle this, and I'm just going to project we're almost in June now. till August.

And I think what's interesting is -- and Martin, you probably hear this, like if we were going back 6 months, 12 months, 24 months, I think a very simplistic investor -- a very simplistic view by a lot of the buy side has been CF is a proxy stock to TTF or Henry Hub gas price. Like if you just have to explain someone in 5 seconds, right? And that was what people were just fixated on. And the last few months have definitely changed the story a bit, right, because it's much more complicated. I don't know if you have any views on what I'm getting at, but now it's not just about gas price, it's about so many other things.

Well, I think that's right. I think the world has changed, and we'll probably have a new normal that's different from where we were in the past and in the not too distant past, the world is running pretty smoothly in our industry and with not a lot of friction and barriers to overcome.

And now you have a a very complicated global situation. It's affecting shipments. It's changing the risk profile of assets that we previously considered first quartile just based on the gas price alone. And now you have to factor in their ability to actually ship that product out.

Yes I think how the market valued nitrogen assets and again, where you're going to build new assets, that has a risk premium that wasn't, I don't think, incorporated. So if you're looking at a cost of capital of X or a return of Y, that needs to -- that calculus needs to change. And again, that's where CF is we're located in the best market with the best gas supply, the best ability to distribute the product, it all works very well.

Speaking of complicated, CBAM has been around now for fertilizer 4.5 months. There's a lot of political discussion about all the time. It seems like it's pretty much in place. Any views on CBAM has changed in the market?

CBAM, it's a difficult -- because you don't know until the end of the year what your actual cost is going to be, my European friends in our industry, it's a struggle to one, you've got older assets, you don't have gas or the price of gas is at $16. We're paying $2.60. It's a much different calculus.

Where I go with that, though, is what -- again, how CF Industries is prepared and how we've thoughtfully worked through this with decarbonizing our footprint. So we've invested hundreds of millions of dollars in decarbonizing first at Donaldsonville, where we now have up to close to 2 million tons of decarbonized product.

We're building the world-scale Blue Point project that will come on in 2029. We will be 95% decarbonized, and we have space for 4 more ammonia plants with our partners or independently. Our partners are JERA and Mitsui, which we're really pleased because they're taking some of that offtake to new applications in Japan for co-firing.

And so CBAM, there's 2 different schools of thought. What the United States did or our government did was give the cart. So the 45 system of decarbonizing, we leaned into that, and we're partnering with Exxon for our decarbonization projects and as well as -- who's the other one? I can't remember. But -- so we are on that path.

[ Venanda ].

I know she's passed. So we are on that path of decarbonizing, one, because we're getting paid for it, but two, we believe it's the right thing to do. And so we're looking to supply some of the nitrogen needs to Europe and meet those CBAM goals.

Okay. Let's talk about that. Since a question just came in as well. You've been running some low-carbon ammonia out of diesel now since third quarter last year, third quarter, fourth quarter, third quarter. How is demand -- how is that going? What are customers saying? And how do you think demand is evolving for sustainable and low-carbon nitrogen?

It's evolving in multi different -- many facets. And so what we've been doing over the years in terms of this journey has been going on for almost 5 years of decarbonization. And so what have we done? We've gone out and worked with and talked to the retail sector, specifically the co-ops, the Land O’Lakes, CHS, Growmark. That's the connection with the farmer and working with them and one, explaining this is what's coming. This is what the uplift is.

And then we've had project -- pilot projects with pilot or POET, the ethanol company, where we're supplying -- and this is where it's called the corn value chain, and we're really excited about this. And so it's -- because we play in -- you have the -- we're the fertilizer supplier that goes to the retailer, that goes to the farmer whose output goes to the processor. But that corn value chain, and that processor could be a feed for cattle and poultry and pork, but the processor we're looking at now is the industrial processor.

And so low carbon fertilizer in that corn value chain can lower the carb score for ethanol by about 10%. So as these ethanol plants decarbonize themselves, you've got a full decarbonized value chain that we think adds what we believe it adds we're getting paid for that decarbonization and then what the value of that -- in that corn value chain that the farmer will benefit. The retailer has consistent movement and the processor as well. But so you've seen our announcements with Pepsi on low-carbon initiative with UAN. And then we have contracts for low-carbon products into Europe to industrials as well as farm or fertilizer companies.

You like Intel inside, like CF in size on the Pepsi bottle?

Everybody is going to buy that. No.

That's good for you. And you guys have talked about the premium pricing, you'd hope to get the blue -- I guess, we call it the blue premium. I think you talked about $25 to $50 a ton on blue ammonia diesel. And then as you get to Blue Point in a few years, maybe more than that. Is that right?

So where we are today is we are getting a premium, and it's on the lower side of that, that $20 to $30. And we're being very prescriptive to our customers and to the market of this is a new product and demand is going to build.

Demand is going to build because of CBAM anyway. So as these penalties increase and we're able to produce under that, there's a value that's associated with that. There's also the CPG companies and their own scope emissions. And what we're finding is a lot of them want to partner with us to lower those emissions themselves or those that Scope 3.

And so all of the above, but what we're investing for now is we're being paid for by the 45 system, and we see that market pricing being associated and increasing over time.

And Blue Point, things are on pace now. You kept your CapEx trajectory on earnings and release last week. Anything going on there? Talk about any concerns about inflation risk?

For me, I don't -- in terms of the inflation risk, we're out -- we've already partnered with and we know where we're going to be producing these modules. We're going to be bringing them in. So we're in the -- in terms of what we're doing with groundwork and pilings and building our -- the bridge that's going to go over the highway. And so it's infrastructure work today. We have a great team that's focused on that. And so the inflation risk in terms of the modules, I don't think that's a great risk to us.

So again, back to the U.S. government, which has had a little bit of a chatty these days about fertilizer supply and building more capacity in the states. You're building a new plant. It wasn't designed really to be sold to farmers. It could be, right? I mean in the end if some of the low carbon opportunities weren't as attractive.

But I've already heard questions from people saying, with all the windfall fast, are you going to get what's going on in the war, could you guys build more nitro capacity? Could you build a Blue Point 2? We're only in the early days of Blue Point 1. What do you think about that?

Well, I think we have demonstrated in terms of we're the one company that has added capacity. Over the last 15 years, we spent -- well, we purchased Terra in 2010, so let's go back 16 years and then really revamped that system and invested hundreds of millions of dollars in bringing that capacity -- increasing that capacity through higher throughputs.

Then in 2012, we announced the building of Donaldsonville and Port Neal. So that was $5.2 billion for 2 world-scale plants, one in Louisiana, one in Iowa. Then we purchased Waggaman a few years -- 2 years ago maybe, which was an ammonia plant run by Dyno Nobel, which was running about 800,000 tons a year. We took that to over 900,000.

So when we have purchased, whether it's Terra or our own assets, we run them at 100 over nameplate. The new plants are running at 110% of capacity, of static capacity. So we're the company that is skilled. We have a great engineering team. We have, I think, a very focused staying within the things we're capable of doing and improving on. And we've demonstrated that. And that's our communication to our government, the U.S. government at least is we are committed to growing and investing in our United States.

I'd say North America, we have 2 plants in Canada. Our North American asset base, but that includes plants and distribution capabilities. We have 20-plus ammonia terminals in the United States as well as UAN terminals. We have our own barges that move products -- and we have 5,000 railcars. So when you integrate all that together, we are about serving the American or the North American market, and we could invest. We look at projects all the time.

And I think you're right, we're throwing off a lot of free cash. We're the free cash company. And that will be used for CapEx, for buybacks, for dividends and for new investments.

So I guess in the interim, I mean, as you're generating this extra free cash flow right now than you're expecting 3 months ago, I mean, I imagine you'd be going to the buyback. Is that fair? Or would you be trying to build a bit of cash balance for some dry powder?

If you look at our history, we've done both, right? We've built cash in times when we're generating very large amounts of free cash. And then -- but if you look over like last year, we bought back 10% of the outstanding shares. A year before that, we bought back 10% of the outstanding shares. And so we have a consistent track record of redeploying that capital either into our own network through accretive projects or through share repurchases.

I mean it's a bit -- now this year is a bit different. You got some more earnings, but you have a bigger CapEx profile because Blue Point starting with your partners are spending money on it. So does that change the calculus at all sort of both sides of the equation are moved up cost and inflow?

Well, we like to maintain a high degree of financial flexibility. So you've seen our balance sheet has a fair amount of cash on it. That enables us to do a lot of things that that are opportunistic, whether it's buying Waggaman where we had cash on the balance sheet, we just wrote a check for that entire plant or to have the dry powder to execute the share repurchase program.

I think something we've learned also is we've been through the tough times of 2016 when EBITDA was low and debt was high. We now have a wonderful balance sheet. We're well positioned and things happen in this industry and opportunities come, it's better to have cash on hand or opportunities with that and a good balance sheet to execute.

That's a good part -- like I mean, I lived through the times when you guys are like, "Oh CF going bankrupt. " Like I remember those months, right? That was just after the OCI deal kind of broke and you had a bit of interesting debt on the balance sheet. What was your sort of biggest takeaways from that? And what takeaways have been from like the peak times?

Cash matters.

Yes.

And having -- in terms of how Martin manages our treasury book and the people we work with, a good balance sheet is something always to work for. We're a commodity business. And so the oscillations of the products that we make against the products our products make against the products that our products make and that's just the price of corn. If corn is $4, a farmer cannot afford it. If corn is $7, he's happy. He's going to go to AGCO and buy that new tractor.

And so -- but it's the same thing as cattle. If your protein price is high, then that corn -- that feed value to your -- to the beef, pork or poultry is high. So that's another revenue source. And so in our industry, the oscillations of gas, the oscillations of price, the oscillations of the output can be punishing, and we learned that in 2016, and we don't want to live that.

So you're a nitrogen company, right? That's what you do. That's any ideas to want to get into other commodities, a little more downstream, I don't know, any ideas?

Nitrogen is pretty awesome right now. So I'm pretty happy to be in nitrogen. We've looked at a lot of different things over the years. We -- you talked about OCI. We almost partnered with them. We almost partnered with Yara. We did purchase Terra. We used to be in phosphate. We sold the phosphate business to Mosaic in 2014.

And I think that was a very elegant solution for CF. It was something that we had an asset that they had the land surrounding our land. So our phosphate resources were limited. This is a good transaction for Mosaic.

And then we had an ammonia supply contract. We make the ammonia. We did an ammonia supply contract with them. I think that demonstrates that they do what they do or different industries, but we're very satisfied being in the nitrogen space.

And then are you -- I mean, are you a North American nitrogen producer? I know you've got some assets in Trinidad or JV. But I mean, are you a North American nitrogen producer? Is that -- would you consider branching out? I mean you have in the past like you are and OCI some deals, but would you branch out?

So we have our U.K. asset that we produce ammonium nitrate there and we import ammonia. We have our Trinidadian asset that's a joint venture with Coke.

Like in U.K. it's small, smallish, right?

And we do some. We have the 2 plants in Canada.

[indiscernible].

That's right. So again, a lot of things come our way. So we look at things and we talk about things. I'm not going to say -- I would say, never say never. But we do enjoy the benefits of being a North American producer are substantial, and we do like our asset base.

What would it take for you to get conviction to look at another -- to look at another like greenfield or is there a greenfield opportunity? Is there a brownfield you have sitting in your portfolio that would make some sense? And what would you need to see to conviction to go down that road?

Yes. I think we're always -- I want to be thoughtful that we're always looking at things towards the future. And DEF is a very good example of that, diesel exhaust fluid. It's urea liquor. So urea liquor goes into make urea, which is a dry product. Urea liquor goes into make UAN, which is urea, ammonium nitrate. But it's substream now where we're the largest producer, I think, in the world, at least for sure in North America, and that diesel exhaust fluid as Class 8 trucks, power units have been dosing from, let's say, starting in 2010 as those new engines came in and dosing rates went from 2% to 4% and increasing up.

That has been a very good business for us, but it's a good example of identifying something early, building capacity to need it, and we would look at other opportunities in the same way.

And are there any other -- like are there any other Waggaman out there like plants that are available or could be available to name them that you think you could maybe run a bit better on your radar?

I don't have anything specific to announce or to talk about.

But just things -- I'm not asking to announce a transaction right now live in you.

I think -- but our skill set is running these plants very well. And our safety record, I do want to give a shout out to our team, our engineering and management and production teams. Our safety record is the best in the industry. And we focus on that. And so we believe safe operations lead to better operations. And our do-it-right culture is something that if we were to take on another asset, we would embed that with that performance and as well as the investments to take an asset to max capacity.

Start to wrap this up, what is kind of your base case how -- like going back to we were talking me half an hour ago, but what is sort of your base case and how -- and you just reviewed, how the next 6 months are going to play out and how CF positioned for that to maximize it for CF?

So we're in, let's say, June 1. So the first half is over. We've had a very good first half. We've supplied the North American market. We've kept our customers supplied. They're happy. They're ending up with a good performance. We got Darren from the ARA and can speak for the retailers, but we believe we've done a very good job of partnering with our retail partners. Now it shifts to the farmer and yields.

We're in an El Nino year. So the risk on climate and a severe El Nino with what that means for drought and for South America as well, we have to watch. But this goes to, I think, with the lack of nutrients that are available in the world, I think you're going to see underperformance in other areas of the world.

That's going to move to lack of yield, price increases for those carbohydrate products, corn, wheat, cotton, soybeans -- corn, wheat, cotton, rice, sugar. So I would think that there'll be higher values to the farmer at the tail end of the year. And I think North America is very, very well positioned for that eventuality with serving the world with the food that is needed.

Gentlemen, thank you very much.

Thank you.

Good day, ladies and gentlemen, and welcome to CF Industries' First Quarter of 2026. [Operator Instructions] I would now like to turn the presentation over to the host for today, Mr. Martin Jarosick, with CF Investor Relations, sir. Sir, please proceed.

Good morning, and thanks for joining the CF Industries Earnings Conference Call. With me today are Chris Bohn, President and CEO; Bert Frost, Executive Vice President and Chief Commercial Officer; and Rich Hoker, Vice President, Interim CFO and Chief Accounting Officer. CF Industries reported its results for the first quarter of 2026 yesterday afternoon. On this call, we'll review the results, discuss our outlook and then host a question-and-answer session.

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

Now let me introduce Chris Bohn.

Thanks, Martin, and good morning, everyone. Yesterday afternoon, we posted results for the first quarter of 2026, in which we generated adjusted EBITDA of $983 million. These results reflect a continued focus on safety, operational excellence and disciplined execution by our team.

Starting with safety. Our trailing 12-month recordable incident rate at the end of the quarter was 0.16 incidents per 200,000 hours worked. This is a direct result of how our team lives our do-it-right culture every day. Operationally, we had another strong quarter running available ammonia capacity at nearly 100%. And our commercial, logistics and distribution teams ensured we met customers' requirements leading into the North American spring application season. Our performance in the quarter also reflected the tight global nitrogen supply demand balance that carried into 2026.

Late in the quarter, the conflict with Iran severely tightened the global nitrogen market, a dynamic we expect to continue for some time. Lost production cannot be recovered. Damaged nitrogen and upstream feedstock capacity must be restored and global trade flows will require time to recalibrate.

In addition, the Russia-Ukraine war continues to disrupt nitrogen production at Russian facilities. From a macro perspective, we believe recent geopolitical disruptions are driving a fundamental shift in our global industry's risk-return framework. First quartile producers have historically been defined by low natural gas costs alone. Recent supply disruptions from the Middle East and Russia show that low-cost feedstock is no longer enough. As a result, we see a clear divide within the first quartile. North America, where we have intentionally invested billions of dollars over decades to build the leading nitrogen manufacturing and distribution network, is low-cost and low-risk, representing premium-grade assets.

This is in stark contrast to the approximately 50% of first quartile capacity that is fragile and exposed with low natural gas costs that are offset by extreme geopolitical exposure. We believe the geopolitical risk premium that fragile and exposed producers face will be an enduring structural headwind, increasing the cost of capital and adding cost and uncertainty for moving product to customers.

In our view, this has strengthened mid-cycle economics across the nitrogen industry with a higher urea price now required to incentivize investment in new capacity in the Middle East to offset geopolitical risk or to build in higher-capital-cost, low-risk regions. With that, I'll turn it over to Bert to discuss the global nitrogen market environment. Bert?

Thanks, Chris. As we have discussed in our last several earnings calls, the global nitrogen supply demand balance has been structurally tight for more than a year. Global nitrogen demand has been robust. At the same time, supply has been constrained by geopolitical conflicts, elevated natural gas prices in Europe, export restrictions and declining natural gas availability in several key producing regions.

The conflict with Iran and the closure of the Strait of Hormuz introduced a significant supply shock into this already tight market. Exports of urea and ammonia from the region have been severely limited, removing a meaningful portion of low-cost supply during peak nitrogen season.

Additionally, producers that use imported LNG for nitrogen production have curtailed or shut down facilities due to fuel availability issues. These dynamics have substantially raised the global clearing price to meet nitrogen demand. During this period, our focus has been on our long-standing North American customer base, which includes retailers, wholesalers and cooperatives. We've been moving product to our customers for the spring 2026 planting season since July of 2025. Based on what we see today, inventory for both pre-plant and post-plant applications appears well covered. We continue to work with our customers to meet the last layers of demand for this season.

This includes leveraging our manufacturing, logistics and distribution capabilities to increase nitrogen availability this spring. For example, we temporarily delayed a turnaround at Donaldsonville, allowing us to produce about 100,000 additional tons of urea for the season. We also repurposed Yazoo City Rail assets to move urea from Donaldsonville into the Corn Belt and to ship ammonia from Medicine Hat, Canada into our U.S. distribution network.

We continue to evaluate all our operations and distribution channels to ensure product availability through the end of the season. While CF Industries has flexibility to support our customers globally, there are not many options to overcome a supply disruption of this magnitude. Indeed, we are seeing several nations restrict exports further removing supply from global trade flows. China remains an ensuring -- remains focused on ensuring their domestic agricultural industry is well supplied with exports of nitrogen largely restricted. While we expect controlled and limited urea exports to begin later in the second quarter, volumes are unlikely to fully offset lost Middle Eastern supply.

Russia had also implemented export restrictions to prioritize their domestic agriculture. And this week, Egypt moved to apply a $90 per metric ton duty on nitrogen fertilizer exports. With global nitrogen supply constraints, there will be intense competition for available supply.

We expect India, which entered 2026 with low inventories, to lead the way. Given urea volumes not delivered under a previous tender, and lower-than-expected domestic urea production, we believe India's urea imports requirements will be substantial in 2026, potentially rising to 10 million to 12 million metric tons. This would be approximately 10% to 30% higher than 2025 and nearly double their 2024 imports.

With this environment, we expect to see unmet demand in certain parts of the world. We believe Latin America, Africa and Southeast Asia are areas where we'll see lower fertilizer consumption. As application volume per acre decreases globally, yields will decline, which we expect to result in higher prices for corn, wheat, rice, cotton and sugar. Looking ahead, even with some incremental supply later in the year, we expect global nitrogen markets to remain tight through 2026 and into 2027. We also expect further structural tightening through the end of the decade as new nitrogen capacity under construction today falls short of the traditional nitrogen demand growth rate. With that, let me turn it over to Rich.

Thanks, Bert, and good morning, everyone. For the first quarter of 2026, the company reported net earnings attributable to common stockholders of approximately $615 million or $3.98 per diluted share. EBITDA was approximately $1 billion, and adjusted EBITDA was $983 million. These results reflect a gain of approximately $170 million from a previously disclosed litigation settlement with Orica and Nelson Brothers. We recorded the gain in the first quarter and received the proceeds in April. As a result, it will be reflected in our cash flow statement next quarter. On a trailing 12-month, net cash from operations was approximately $2.7 billion. And free cash flow was approximately $1.65 billion. We continue to efficiently convert EBITDA to free cash flow at industry-leading margins, positioning the company well to continue to invest in accretive growth and return capital to shareholders.

Our capital expenditure projection for 2026 remains approximately $1.3 billion on a consolidated basis. CF Industries' portion of this is approximately $950 million, which includes $550 million for sustaining CapEx for our existing network plus approximately $400 million relating to both the Blue Point joint venture and the Blue Point common infrastructure we're building at the site. Construction on the Blue Point ammonia plant is expected to commence this year once applicable permits have been received.

We continue to be pleased by the progress that has been made on this high-return project that will add over 1.5 million tons of gross ammonia capacity in the United States when it begins operation late in 2029. Finally, we repurchased approximately 150,000 shares of our common stock for $15 million in the first quarter. We expect to continue to be opportunistic and disciplined as we execute the remainder of our current share repurchase program. With that, Chris will provide some closing remarks before we open the call to Q&A.

Thanks, Rich. I want to thank CF Industries' employees for their commitment and dedication during the first quarter of 2026. They worked safely, delivered outstanding operational performance and stayed closely engaged with our customers as industry dynamics evolve rapidly. CF Industries is well positioned for the near, medium and long term. Our North American footprint, operational excellence and consistent industry-leading free cash flow conversion set us apart. Alongside our structural and operational advantages, we are realizing decarbonization opportunities today that provide incremental free cash flow. And our Blue Point complex and additional opportunities within our existing network provide a robust growth platform for the future.

With our capital allocation strategy, to grow our production base, enhance network margins and return capital to shareholders, we expect to continue to create substantial value for long-term shareholders. As a result, the intrinsic value of CF's assets, durable advantages and growth initiatives has increased. That value proposition is becoming even more relevant against the current global backdrop. The conflict with Iran represents the third major supply and demand shock to the global nitrogen market in the last 6 years and has exposed the fragile nature of the global nitrogen supply chain. This fragility is not limited to production assets.

It includes feedstock assets such as LNG and logistical assets such as shipping that are essential to the way our global industry operates. In an environment of frequent geopolitical disruptions, we see distinct value in the true stability of our hard-to-replicate network and superior assets, strengthening mid-cycle expectations and the predictability of the substantial free cash flow we generate. As we continue to execute our strategy, we believe this CF premium will become increasingly evident. With that, operator, we'll open the call to questions.

[Operator Instructions] The first question comes from Kristen Owen with Oppenheimer.

I actually wanted to start out with this sort of CF premium idea and sort of phrase a longer-term position here where if we're in the scenario of higher-for-longer sustained energy arbitrage advantage in the U.S., like how are you thinking about the calculus now on your Blue Point economics as you think about the export opportunity and just given the excess cash generation, how that all factors together into those unit economics for that new capacity?

Yes. Thanks, Kristen. Related to really the structural changes that are happening with the longer, I would say, natural gas differential that you're talking about. I think all it does for our Blue Point project is really increase the return profile that we have put in place. We're always very disciplined in our investment decisions and almost to the point of being conservative. But I think what we're seeing here, as we talked about, is a structural shift in how the world views low cost. And low cost isn't just low-cost feedstock like what we have, but it's also breaking out what other costs are involved in that from transport costs to even operational efficiency. So what we see in place there is just an increased return profile and really, I think, if anything, the conflict is shedding a light on the strength of our strategy, being very intentional where we build and expand our assets here in North America that allow us not only low-cost inputs but allow us to be able to move product throughout the world, whether it be export or up into the Midwest where it's required.

And I think regarding the premium, we're seeing that today in the market as we have brought on our low-carbon product ammonia and upgraded products in Donaldsonville and then the future Blue Point, which will be 95% or more decarbonized, we're seeding the market today, building those relationships and putting in place those contracts, all with the premium on the current market. And so we're seeing very significant uptake and positive receptivity to our program.

The next question comes from Mike Sison with Wells Fargo.

In terms of the -- you mentioned that in '27, you felt supply-demand would remain pretty tight for nitrogen. And given -- when you think about the conflict here and the damage that is occurring in the Middle East, I mean how tight do you think it will be? Do you think nitrogen and the prevailing products will stay above the average? And just kind of a feel for kind of the longevity of this elevated pricing.

Yes. Thanks, Mike. I'll start and then Bert will probably add some additional color related to it. But I think what we will see here is a longer tail. Even if we are able to see the Strait open up and begin to see product flow move through there.

As you mentioned, there's a lot of damaged assets that will have to be assessed. The vessel movement itself is going to take a significant amount of time, normal transport would be 30 to 40 days. But then you can add something to that and to get those assets back. And even the quality of the product in those particular vessels, I think, is going to be a question.

And then these assets that have been shut down during this part that haven't been damaged to bring those back up is going to take some time as well. The thing we're seeing is probably some longer lasting where there will be some increased costs related to inflation, risk premiums, even vessel insurance as we go forward. And that's really the underlying thesis where what we've been saying over the years has only been strengthened more where we're seeing the mid-cycle of urea costs increase during that time frame. I'll let Bert talk about maybe the 2027 S&D balance side of it.

I think probably an informal comparison as the world has been operating like a Ferrari, where it's been operating on all cylinders, just-in-time inventory delivered, it's worked. Supply has moved efficiently and effectively to all parts of the world and bid a common number for a global market. All that is disrupted. You've got 1,000 to 1,500 vessels stuck behind the Strait. You've got to untangle all of that. You've got the repairs that Chris talked about. But when you look to the production or the products that our products produce, you've got a pretty tight supply and demand stocks-to-use ratio for corn and other nitrogen related products.

So I see that demand has elevated, one, due to lack of LNG. And so you're going to see Bangladesh, India, Pakistan, that rely on LNG that have had sub-operating levels for their nitrogen are going to have to import more. There's going to be a tightness on that import that's going to be bid in for a price. And so I see this 2027 number ahead of probably the average pricing that we've been expecting over the last several years. And then it's what does it do for food.

The next question comes from Joel Jackson with BMO Capital Markets.

Maybe, Bert, you could opine we're seeing as we get into the end of the spring season here, some interesting behavior in domestic nitrogen markets, urea markets to be specific. I mean we've seen NOLA come down a fair bit, the seasonality. There's also what's going on in the Middle East. Also some commentary that the imports into the U.S. in Q1 were stronger than many people thought. Maybe you can give your opinions on the bifurcation we're seeing in U.S. nitrogen prices versus offshore pricing, seasonality and the strength of imports into the U.S.

And it is an interesting dynamic in that the U.S. is the lowest priced market in the world today. And if you look at pricing that has been offered this week of plus or minus $600 per short ton or $650 to $660 a metric ton, compare that with North Africa, which is producing and shipping at over $800 per metric ton. So a gigantic differential. And I think North America is well supplied for spring with July -- or Q3 of 2025 through Q1 of 2026.

All that product has been produced and shipped and is in place for the retail sector to supply the farmer. And so I think what's happening on that retail and co-op side of the equation is it's inventory liquidation. Prices are high based on a historic level. A lot of those customers don't want to take additional open risk without having a buyer on the back side, that being a farmer. And so you have an inventory liquidation that's going to take place.

And then for second and third applications, you're going to see those retailers coming back to us to buy at those -- whatever the market price is. And so this spring has been, I think, well supplied. I think there's been a little bit of anxiety probably overexpressed in terms of supply availability and the price -- the average price that has been to the retail sector into the farmer this year has been on a historic level, pretty good.

And so then it's as we come out of this into Q3 and what does the rest of the year look like? We've talked about, still a very tight market and probably a higher price market. And I think you'll see the United States or the -- let's say, the NOLA market probably come into more equalization with the world price.

The next question comes from Vincent Andrews with Morgan Stanley.

I just wanted to ask on the buyback in the quarter, it was $15 million. Were you buying throughout the quarter? Were you locked up in some way? And if you weren't -- how should we think about buybacks for the rest of the year? Is there a share price level now that you're more comfortable in versus others? Or just any update would be great.

Yes. So maybe I'll start with the back end of that question that we continue to be a buyer of our shares. We -- as I mentioned in the prepared remarks, we think they're trading below the intrinsic value for not only what's happened just recently, but what has been occurring over the last couple of years where we've talked about our assets and accruing more value related to the consistent free cash flow.

So we have $1.7 billion remaining on our open authorization for the share repurchase. And our intention is to execute that just as we've done historically. In Q1 here, we generally go about and we set a grid in place. We had a grid in place that we ended up keeping in place and then the conflict broke out, and we weren't certain the duration of the conflict at that particular time. So as a result of that, we are probably a little lighter during that time frame. But it has no indication on what we see as the value of our shares. As I said, we still have $1.7 billion open. Our intention is that we're going to execute that before the expiration time of it.

The next question comes from Ben Theurer with Barclays.

Just two quick ones, kind of like related here. So one thing you've talked about the China restrictions on the export side, Egypt, et cetera. So I just want to understand with those markets putting in more of the export restrictions here or incremental duties, what does that do in terms of like just the pricing globally in your view and the benefits that you might have particularly in the North American market? And then just as a follow-up, you mentioned on the shutdown of some of the facilities that might not be damaged. How long -- remind us, how long does it take to run something up again, assuming conflict ends tomorrow and we can basically be back online. How long would it take for some of those nitrogen facilities to be properly operational back online?

Okay, Ben, this is Bert. And I'll take the China restrictions and just kind of the market and what's going on. It is an interesting nationalistic move a lot of these supply countries are making to restrict supply for their citizens. And that's one of the things that China has done with exports still restricted in 2026 and expected to come out sometime in Q2. And so last year in 2025, about 5 million tons came out of China. We need all of that and more to balance the world supply. I don't think that's going to be able to happen with what's going on in the Gulf and the current capacity that's off-line, either damaged, destroyed or just not operating.

So I would expect that China comes out like they did last year, maybe June through October, 1 million-plus tons a month. And we mentioned earlier, Egyptian restrictions or costs and Russian restrictions. And then it's back to the suboptimally operating plants specific to India, that's estimated today to be operating at 70% driving that additional import need to meet their demands. So a tight market pricing today, as we mentioned, in the North Africa that has available supplies in the $800 to $850 per metric ton. As we look to the back half of the year, I think the global market is expecting some price moderation, I just can't give you an estimate today of what that price would be.

Yes. And then related to the operational side and the shutdowns, I think there's 2 parts to that. The first being getting the equipment back up and there's a lot of rotating equipment if these were, as we understand, shut down and put down, you're looking at 1 to 3 months depending on what type of maintenance was being performed during that particular time frame and what type of procurement they may have to do on some of the parts that would be required to bring those back up.

So I would use conservatively like a 1- to 3-month time frame. But in addition, a lot of these particular plants had loaded inventory before they shut down, they had loaded up their inventory. And when you're looking at that vessel movement that we talked about earlier, you could be months away from getting vessels back where you can start to deplete that inventory and really bring up that production as well.

So I think there's a lot of different components here, and that's why there's going to be a much longer tail and knock-on effect, secondary effects that some of which we don't even know right now in order to get the entire system operating again.

Just to put some numbers behind what's shut down. It's estimated 31 ammonia plants in the Middle East have been directly impacted by the conflict or shut down production, 49 plants in India, Pakistan and Bangladesh are either curtailed or shut down due to constrained feedstock. And in Russia, at least 20 to 21 plants have been associated with being droned by Ukraine, so the impact is widespread.

The next question comes from Chris Parkinson with Wolfe Research.

Got it. I think we could all debate the degree of the windfall of free cash flow you're going to have presumably by year-end, and we could all debate even further into '27, '28 and then you have the Secretary of Treasury and the Secretary of Agriculture pleading for new capacity. And on top of that, you have, by my count, up to 7, probably at least 6 or 7 other either blue or gray nitrogen facilities either canceled or suspended indefinitely.

When you think about those factors in the intermediate to longer term, how are you thinking about Blue Point #2, is there anything else that you think the industry should be doing to work with in terms of U.S. policymakers? I'd love to get your perspective.

Yes. So Chris, I think you characterized it well. And this goes on top of what we've been talking about really for the last couple of years that the market was already tight, as Bert said, coming into 2026. And now having some of these fundamental additional costs, how things are being reviewed, we needed new capacity before. We're probably going to need even more right now.

I think there is going to be an increased cost into where that capacity goes around the world and it makes our decision to move forward with Blue Point look even better. So I said on the first question here, we're probably going to see a higher return profile than what we thought. And we continually, because this has been our view for a while, look at production expansion.

I think there's still some things we want to get a better understanding at Blue Point #1 before we would move into Blue Point #2. But whatever the decision that's going to be made, again, I think you've worked with us long enough that it's a very disciplined investment decision.

Now that being said, the amount of cash flow, just given our efficiency in converting that cash flow is going to be significant over the next several years. And I think we see opportunities, whether it be within our network or elsewhere to enhance our margins or increase our production on a very value high return profile type of return.

Got it. And just a quick follow-up for either you or Bert. Obviously, there's a lot of things moving in terms of when we would generally think about summer fill prices. Do you have -- in terms of international dynamics versus domestic surety of supply, the balance between urea availability versus perhaps UAN. Are you thinking about things presumably a little bit differently this year? Or how should we think about that?

Yes. That's a question we ask ourselves pretty much every day. And the team looks at that. And every year has been different in my 18 years at CF of how we looked at fill, when it's offered, the communication with our customers. And I've got to give Mike Hamm and his team a lot of credit from last year, communicating openly and ahead of time on the date we were going to launch, giving our customer friends time to prepare and put things in place on what their needs were in terms of volume and price expectations, and a very successful campaign. And we're probably looking to replicate that in terms of thematics for this year. Now it does get to the price and then the timing because we're in a highly volatile world and you're right.

We look at the balance internally what is the best use of the molecule. So the nitrogen molecules that work through the system from ammonia to urea to UAN to ammonium nitrate to DEF or any of the products we produce and we look at where is the highest value, where is the need? What is our inventory system, what does the export opportunities look like and then we make judgments and seek a consensus with the team and leadership on moving forward. So I expect that to happen, but I would expect this to be a Q3 event.

The next question comes from Edlain Rodriguez with Mizuho.

As nitrogen prices have moved up higher, like what do you think farmers can or will do to lower the fertilizer cost basket? And related to that, in a typical year, like how much of the nitrogen needs do farmers prepay for like earlier in the year?

Yes, Edlain, very good question, especially in the high-priced, high-cost environment, the best thing that could happen is we see a rally in corn. And that's why I mentioned in my prepared remarks, the impacts to some parts of the world that I expect to take place with under applications of fertilizer leading to underperforming yields. And that could happen in Brazil for the second crop that gets planted in January and February or if there's a weather event, an El Nino in Argentina or something like that. But N prices are high. We are in a high-priced environment. And a lot of times, supply and demand get -- or more demand gets impacted by high prices.

But nitrogen is the one nutrient that you really can't skip on. And this is a year, I think, for North America because the majority of our tons are consumed in North America. We're talking with our retail and cooperative friends as well as our agribusiness partners like ADM and those people who are dealing with the output of the farmer. And when you're looking at the opportunity of corn today in North America, there's 2 ways to -- you can cut costs or you can increase yield to improve your revenue per acre.

And in this type of environment, we don't expect a cut in nitrogen in North America with the yield opportunity that's available, whether that be dry or irrigated land. And so -- and we're seeing that in terms of behavior and purchasing and positioning of nitrogen. And so the typical applications from -- for nitrogen, you can apply ammonia in the fall, and we had an extremely good fall ammonia season in November of 2025 and we've had a very good one for spring this year for ammonia. And so that, to me, communicates, one, farmer planning; two, yield expectations; and three, they bought low-cost product as all of that was priced earlier, the spring as well as the fall, earlier in the year at attractive prices.

And so then, it gets to what kind of secondary and third applications are added to that for yield. And we had a phenomenal yield in 2025, I think, of 187 bushels per acre. And I would expect that to fall a little bit, but we're hoping for farmers to make money and to do that with nitrogen.

The next question comes from Lucas Beaumont with UBS.

I just wanted to follow up on how you're kind of seeing the outlook for nitrogen pricing as we kind of move through the next couple of quarters. So I mean, there's been no improvement yet in terms of trade flows and then we have a significant portion of global production offline. But as we sort of get past the peak Northern Hemisphere demand period, however, there's probably likely to be less incentive for people to, I guess, restock during the year than what you would kind of see normally.

I mean offsetting that Brazil demand will kind of pick up for the third quarter with imports. And we have shortages in sort of the other importing regions globally, coupled with just how the normal sort of seasonal factors would play out. So I guess could you just help us understand how do you sort of see the interplay of those factors there together and sort of what you think is going to happen kind of sequentially as we move forward over the next few months?

Yes, Lucas, we're still -- this is Bert. And we're at the peak of our movement for North America. So at CF, we're focused on supplying our North American customers to make sure we make it through spring applications with adequate supply and communicating daily with our customers. But the outlook for, I would say, Q3 and Q4 is higher than normal. And I can't give an exact price. I do think what Chris said in terms of what is going to come back and when it comes back from the Middle Eastern suppliers, that's 30% of global urea, but it's 20% of LNG. And so there are a lot of countries that produce nitrogen that are dependent upon that LNG to make those nitrogen plants operate. And I think you're going to lose some of that capacity. So in a 56 million-ton export traded market with, let's say, 18 million of that on an annualized basis taken out, so on a monthly basis, you have 1.5 million to 2 million tons not available from March, April and now May. So adding up just to be conservative, maybe 5 million tons.

So you need all of China to come out, and aggressively so, to balance that. I don't think that's possible. And then you go to the importing countries like we mentioned India, which has imported between, let's say, 6 million to 9 million tons over the last several years, we're expecting them to be 10 million to 13 million tons because of the low operating rate of their import -- their LNG import dependent plants.

So you've lessened supply, you've increased demand specific to that country as well as in South America. I don't see their import needs changing or going down, unless they're going to have an impact on grains and oilseed production. And so trade flows right now are -- you're having to ship longer distances to cover immediate needs.

Freight rates are high, much higher than normal, probably double. So the outlook for N pricing is higher than normal for longer. And the restock -- I don't know if the restock can be done in time without severe disruptions, as in demurrage at the Brazilian ports or late arrivals for some other locations. So you're going to have shortages.

Yes. I think that's why we're very confident in how this pushes into 2027. And I think the one part that Bert touched on earlier was really the nationalism and kind of the regionalism of energy in general and are these countries going to want to export what they have exported historically to even fill some of those gaps that are already tight.

So this is something where we see going through 2027 and allowing us to provide probably or generate significant free cash flow even during that particular time frame as well.

The next question comes from Andrew Wong with RBC Capital.

I just wanted to ask about your expansion plans, just given elevated nitrogen prices, both now and into the future, plus the tightness in feedstock like you mentioned and obviously, the competitive advantage in North America and the better return profile for North American nitrogen. Does that change how you think about expansion plans? Could you accelerate to add more capacity?

Well, it's -- thank you, Andrew, for the question. It's something that we review consistently around the organization, and we have quite a bit going on right now with projects that we're looking at that go over and above what is with Blue Point. But I think what we're looking at is, given the bandwidth and where we are right now is just seeing that those particular investments that are in motion or that we're considering are seeing higher return profiles than what we expected.

As I mentioned earlier on the call, we are continuing to evaluate what we would do at the site, the Blue Point site. It is a site that we can expand on over time. But I think there are certain answers that we want on the first unit before we had moved forward. One is to get the permitting through. The second plant there would see some efficiencies given the infrastructure would already be in place, that being the dock, tanks, off-sites, et cetera.

So it's something we're considering, but nothing that is imminent at this particular time frame. What I would say is with the cash that we've generated so far and what we expect over these next several years, our capital allocation philosophy hasn't changed. We're going to be extremely disciplined in how we look at investments and critical as to how we evaluate them. And then in addition to that, I think what we have on the table, we have excess free cash flow that we're expecting to generate that will return in the form of either share repurchases or dividends to our shareholders.

The next question comes from Jeff Zekauskas with JPMorgan.

If I can ask you a speculative question. Given the confusion over CBAM and of carbon dioxide emissions generally and given the shortages in the nitrogen markets, do you expect new plants in the United States to be steam methane reformers again rather than autothermal reactors? Or is it too difficult to tell?

Well, one, I think the confusion over CBAM may be a little overstated. CBAM is in place today. And I think if you've been following what the European Commission and European Parliament, there really hasn't been any change of course. If anything, I would say it's almost gotten stronger that CBAM is going to remain in place. We view the decarbonization, I can really only speak for ourselves, as providing incremental opportunity that doesn't exist to others.

I think if you look at what we've done, both with the 45Q, with the shipments we're making at a premium into Europe and then our recent announcement with Pepsi and other CPG companies that we're looking at working with, we can -- we look at decarbonization as creating value and see the value in doing an autothermal to recover as much of that CO2 as we possibly can. So I can't necessarily speculate for others, but I know what our path forward and the value that we're seeing not only in the future, but that we're accruing today.

Okay. Do you think -- thanks for that. Have the contractual terms for ammonia with industrial customers changed over time? And do you think that there's room to make those financial terms more attractive to producers as the nitrogen markets have tightened through the years?

Yes. Regarding the contractual terms, so how we look at our business and we segment the majority of our tons go to agriculture. And then we have an export portion, then we have an industrial portion that's fairly ratable. And we look at those dynamics each year to make sure we're placing the tons where they're most valued and those relationships are obviously contributing to both sides. So many conversations regarding contractual terms. But the actual terms haven't changed, but the implementation of low carbon and the low carbon premium that we're receiving and that we're communicating consistently to our industrial customers, our export customers who are under CBAM issues are attractive.

And as I think industrial companies look to their own scope emissions and want to improve those, and Pepsi is a very good example of that partnership as well as POET on ethanol and talking with other similar producers, we're seeing a positive receptivity and wanting to align with CF. So this is a growth platform for us. It's economically attractive. It's returning a good investment for us, and it's aligning us with what I think are good goals both thematically, culturally and environmentally with ourselves and with our customers.

The next question comes from Mazahir Mammadli with Rothschild.

Just a follow-up on the gas cost. So the Q1 came in at $4.50. What would you expect the trajectory to be during the rest of the year?

Yes. I'll start and then Bert or Rich can add any color to it. But I think the first quarter, we experienced a couple of different things in that, both January and February, we saw elevated Henry Hub gas costs here with, I think, February even settling at over $7 per MMBtu. Since that time frame, it was a pretty acute portion of the quarter or of the year in which that occurred. We've seen gas come down significantly, where today, I think it's trading in the $2.60 type of range. And we're seeing, as the curve goes out, it flattens even more.

So our expectation is that we're going to see the gas costs for the remaining part of the year, very close to what we're seeing in the NYMEX strip today.

Yes. And we're not hedged on a forward basis. So we're open and receiving those prices that are represented in the NYMEX.

And just a follow-up on the production volumes. I believe early in the year, you communicated the intent to switch to UAN from urea to take advantage of better production margins. Has that strategy effectively been reversed with urea price having surged much higher than UAN?

Well, the interesting thing about our capabilities is we can switch on a shift. So a shift, an 8- to 10-hour shift at a plant and that is well coordinated with our team on economic value. And so as the urea values increased and probably exceeded the opportunities with UAN, you would expect that we would -- in terms of the capabilities of the specific plants, we would be achieving that.

The next question comes from Kristen Owen with Oppenheimer.

I didn't think I was going to get one. Just wanted to ask on your maintenance. I think you've made some public comments out there about maybe delaying some maintenance in order to ensure domestic supply. Just if you can help us on how you're thinking about that maintenance schedule for the rest of the year.

Yes. The maintenance that we had shifted and we did it after evaluating to ensure that we could do it safely was at one of our particular sites. And we were -- it was already scheduled to be late in May, and we just shifted it to late in June. So it wasn't a significant amount of a shift that we were doing, but allowed us to get, as Bert mentioned, about another 100,000 tons of urea up into the market in order to go down for this application season. Other than that, I would say we have it pretty well where it's going to be the typical maintenance that we've done historically, and you can use that as a benchmark.

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

Thanks, everyone, for joining us, and we look forward to seeing you at upcoming conferences.

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

Welcome back, everybody. We'll get started. I'm sure people continue to file in. With me today, we have Bert Frost, the EVP and Chief Commercial Officer of CF; and Martin Jarosick, VP, Treasury and Investor Relations. Bert, stalwart here at the conference. I don't know that I have to like fully introduce you here, I feel like most people are fairly aware of who you are.

I didn't -- you don't have any presentations or anything like that, Martin, if you want to kind of lead off and maybe provide just a quick overview of 2025, the year as it was, and we can kind of pick it up from there, if that makes sense.

Sure. So 2025 was another strong year for CF. We had $2.9 billion of EBITDA, $1.8 billion of free cash flow. Ran the assets at 97% utilization and had a really strong safety numbers. So all told, a really solid year of execution for the team.

Yes. So maybe we start, obviously, just nitrogen markets, easy enough. It's pretty important for you. Ammonia, right? On the call, You'd pointed some potential weakness given capacity expected. Obviously, start-ups or start-ups. Spreadsheet math is very easy to conceptualize the plant starting up. But in reality, often and always does take longer. But as BofA, that's been one of our concerns, right, if we look at the globally traded ammonia market. So how do you see this playing out in the short and the medium term as it relates to global ammonia? And then I want to kind of hone in on the U.S. side, which you obviously have some very real structural advantages and we can touch on that. But first, it seems like most of these plants are going to go international. So what -- how do you see that kind of playing out here?

It is an interesting market, an interesting dynamic. I think what has happened over the years on the analyst side, there's been -- it's coming, it's coming, it's coming and negative, negative, negative, but we've had a positive, positive, positive market where we've exceeded expectations each year since 2021 in terms of an EBITDA performance or a free cash flow performance. And so the ammonia market today is structurally strong. And you have globally traded ammonia.

You have 200 million tons of ammonia demand per year. only 15 million to 17 million of that is globally traded on seaborne traded. A lot of that's going to Europe to backfill idled capacity or a product that's not coming from Russia as well as just for phosphate production in Morocco or imports into the United States. And so you have 2 dynamics taking place. You have idle capacity or capacity in Europe is not fully operating. You have gas supply issues in Trinidad has taken the nutrient plants, and I think other plants that are constrained today.

And so you have a supply limited market and the expectation that this new capacity in the United States, Gulf Coast and Woodside will be coming on. But we're 3 years now waiting for some of that capacity to come on and demand continues to grow. And we continue to supply some of that with our new low carbon product as well as just participating in the market today is $600 to $700 a ton for ammonia on the globally traded market. And our cost today at $3 gas is about $120, $130. And so it's very attractive for us today.

And then you talk about why CF is differentiated in the ammonia market. It's our capability to store, well, let's say, produce at a low cost, move that ton at a low cost through the pipeline in our barge system into our terminaling system that's in the heartland of the United States of the most -- and Canada as well as the most fertile ground in the world.

And with high-yield in corn, you have a ready demand base for the ammonia -- much of the ammonia that we produce as well as our industrial customers. So how we see, yes, this capacity will come on eventually, but we have a very strong and stable market today.

So Woodside in Gulf Coast ammonia, 2 projects starting up basically along the U.S. Gulf. If I had the ability to move it to the corn belt, I would, but not everybody does. And so when we think about your advantage with NuStar and that market. Like if ammonia globally comes under pressure, does that spread to -- like corn belt expand because you can't get the product there? Does it stay consistent? Or does it compress because they'll just -- I know maybe ammonia is not easy to put a rail, but like will they just -- will the incentive be too strong to move it to the corn belt that the product will find a way?

And so when you look at how it does ammonia move today, you're right, it's pipeline, but it's fully subscribed ourselves, coke and others because you have to have a destination to receive it. So it's one point to produce it, you have to have the ability to receive it. We have that. But again, the pipeline is at capacity. And so -- but would that ton from Gulf Coast or Woodside make it to Iowa, probably not in the context of just that structure that's in place and how we optimize it but it's also with the differential between the Midwest and the world market.

It's really a nitrogen calculation. So you have a farmer producer has options of urea, UAN or ammonia. And so he's going to -- he or she is going to choose those options based on economics. And so you have to stay. It's a global economy, it's a globally traded ton of nitrogen. So you have to stay within range, and we do that on an economic basis. But again, we're a low-cost producer, we have low-cost gas and low-cost capabilities to move our tons.

So as I think about this, right, because fundamentally, you can't just like move ammonia into a urea loop, right? You have to have the on-site production of ammonia. So you have the CEO to make the urea. If -- because on your earnings call, I should say, like there was some comments around potential softening in ammonia, but urea remains fundamentally very strong. And quite honestly, the supply-demand dynamics for urea are pretty favorable. There's really not much new supply. So how do we balance the view of maybe urea itself being fairly tight with a softer ammonia dynamics? Should it develop? Is there that fungibility that create softness? Or is it just not enough product on an end unit basis to do that?

Well, this is why generally, you upgrade your max potential because the value creation process of urea, UAN, DEF or other products, ammonium nitrate are generally consistently above the value for ammonia. However, we produced 10 million tons of ammonia, and then we upgrade about 5 million tons of urea, about 7 million tons of UAN.

And the remaining ammonia ton is -- a lot of that moves again into the Midwest. But we have the capabilities of Midwest export, and we have industrial contracts that are consistent, 360, 24/7 demand pulls. And so that's how we balance the system. So we're always looking at how do we optimize how do we profit and how do we leverage those capabilities and consistently, where you will find is we're upgrading to the maximum capability and then moving the ammonia.

DEF, talking about kind of upgrading a bit. It's been a growth market for you as it relates to incremental investment. When we talk to our trucking analyst, the conversation amongst most of the truckers is DEF consumption is expected to grow. I got a question from this from an investor yesterday and I didn't have an answer for them, so I figured I would just ask you. We've also seen some commentary from farmers that given new -- like the policy around some of the Obama administration guidelines that are lapping might mean farmers don't have to use DEF. Is that like -- I don't know, like what's your expectation around just DEF sales and as it relates to a growth engine for the CF?

So DEF is diesel exhaust fluid. And it's really a market that didn't exist 15 years ago. In 2010, when we acquired the Terra assets and DEF was one of the components that we purchased from the core [ lite ] plant where they were producing it, it was in its infancy. And so you have a couple of things in parallel happening. One of them is just the generation of power units of trucks.

So as new equipment comes online, initially, the dosing rate was a certain percentage. And as we've matured in this market from the equipment suppliers, that dosing rate has increased. And so the objections for dosing rates in the -- as the new units coming online and now and in the future for emissions control will be double or triple what they were 15 years ago. So you just have a natural growth rate with that. And then it's as new equipment has come into new applications like let's just use Deere or Caterpillar for different applications, that has also driven growth. And so what the Trump administration came out with recently on DEF for farming equipment is the frustration of a farmer, if you're out in your field and your DEF runs out in your equipment that, that can slow down or the efficiency of the operating rate of the equipment while it's on the farm.

And so they want to give more of a flex period to resupply that those -- that farming equipment in the future. And so it's not that you don't use it because it's a very good DEF in the operation of the diesel engine allows for higher burning and more efficient burning. And so it's actually a very good product. And if you drive down the highway and don't see emissions coming out of the truck, you could think DEF. So we're excited. It's a growth market we have invested and we will continue to invest.

As I think about maybe before I pivot, like nitrogen demand in '26. '25 was a strong year for sales, obviously, record corn crop in the U.S. But we saw strong planted acreage in Brazil. We saw a better landed acreage in Ukraine. Do you think the market can grow in '26 versus '25? I guess perhaps early winter will be helpful as it relates to installed applications of ammonia moving into this year. But what do you expect for growth for this year?

The beautiful thing about our business is people like to eat. And so that drives consumption. And so as diets improve and as diets have improved globally, what you've seen in China over the last 20 years, what we've seen in India over the last 10 years, and then what you've seen in the acreage growth in Brazil, but what you're seeing with governmental changes in Argentina growth.

And the 98 million acres of corn, that was planted in North America was a substantial change. We didn't expect that, we were projecting 93 million, 95 million acres. And so 98 million was, I think, the highest since 2012. We do see positive growth, one, because the stocks-to-use ratios are adequate, but not high. You're having good demand for ethanol production and the export of the incremental ton of ethanol. You have the cattle herd at its lowest level in 75 years. So cattle on feed are going to grow or cattle on feed for longer periods of time and the efficiency of cattle feeding does that. So you require more carbohydrates in that feed ration. And so we do see positive dynamics globally for -- especially where we produce, which is North America, but globally as well.

To maybe look at global trade flows a little bit, CBA coming into effect, then theoretically, maybe pause, maybe not, not, but what do you make of the flotations out of Europe around C-band? And what -- I mean, can they really pause C-band, but not also put a pause to their own domestic carbon tech because like that would implicitly kind of grew in their domestic industry wholesale. But how do you navigate that? I mean it's maybe not as important because you're U.S.-based, but like clearly, as a commercial person who's looking at trying to capture the best value you can for product, how do you navigate a market that seemingly wishy washy like a pretty -- what has been a pretty vocal policy?

So back to it is a global market. So as a global participant in that market, you have to pay attention to these various oscillations that happen, whether it's political or economic or structural. And this is an issue C-band implementing without knowing exactly what is going to be implemented and the cost has been very confusing for our European friends. And we do supply product whether both ammonia and UAN to Europe, and we have some very good customer positions that they. We have not been shipping UAN since the start of 2026 because it's an unsure situation. What is the actual cost?

How will that be paid and who will absorb that? And so we're quite comfortable to move our tons domestically or other places. But I think as this unfolds, will it change? Will it be canceled? Will it be -- according to our European customers and friends, it's -- yes, it will be implemented. Yes, it's going to be confusing, and we have to get through 2026 to figure out that cost. The good thing about CF is we have low carbon product available today, and we're producing -- we will be producing in a few years, even lower carbon, 95% decarbonized which we will supply to the world, and we think we'll be advantaged into Europe with that product.

Just pivoting on to that point with -- outside of Europe, you have seen regulatory clarity in other parts of the world. So in Japan did move forward with the contract for difference for our partners so that they have their regulatory certainty for that project. So it's going to evolve over time. But as Bert mentioned, we're in a great position. We're a low-cost producer. We have the product, and we've got all the options to send anywhere in the world that basically provides the best netback. .

Yes. And I want to touch a little bit on that next. But I guess I'd heard similarly like product moving to Europe now is frozen because of this general uncertainty. So what does that ultimately mean as it relates to how European supply/demand plays out for this year? Is this just we'll figure it out and they get the product that they need or there is...

I think the risk for this spring is that there could be a short for that incremental ton that was not brought in for a period of time. But then as we go into the back half of the year, and the question marks around what is brought in, the timing around that because generally, we exported in June, July, August, September, October, November tons to Europe. So I think we'll see. And then as inventory built by the European producers in anticipation of an unknown. So I think it would be a difficult position today to be a European operator.

Yes. Yes. Clearly, [indiscernible] dealing with some existential stuff in that regard. But to touch back on Japan, to your point, happy to see that JERA and Mitsui were able to get the contract for difference because I think in that regard, candidly, your partnered very strong positionally for that. But we've also seen some comments just given the CapEx inflation.

A lot of -- given -- through these blue and green ammonia project budgets, Japan might be spread across or I should say the amount of money they wanted to commit might be spread across fewer tons over time. Do you see this as a risk? Does that impact Blue Point 2 or 3 or -- because I know this is supposed to be an iterative project over time. And do you expect that the commitment from your partners might change?

I think when we look at the growth of ammonia demand of any color of any type, we do see that steady growth in ammonia. There's always going to be a place for low-carbon ammonia. It will be the first product that people buy because of the low carbon attributes. And I think you are going to see inflation in the -- and you have seen inflation in the cost to construct new capacity for someone with a large installed base of world-class and low-cost assets. That's not necessarily a bad thing.

And it's something that we'll continue to navigate as we look at potential further development on the Blue Point site, it will be based on the demand and the economics and as those 2 develop.

I think for us, we're really excited with the partners that we're with. Both JERA and Mitsui are solid and have the -- this is all going to new demand and that doesn't exist today. So it's -- when you take the structure of 1.4 million tons, the 60% is going to Japan that is not entering the globally traded market. We also have a backstop for our in the U.K. So we are -- the inbound calls and meetings regarding Blue Point future is positive.

And I agree with Martin, the 95% decarbonized product, you're not going to see many of these green plans move forward. And so green being 0 carbon. It's just too high cost, and it's a great idea until somebody has to pay for it. And so for us, at 95% decarbonized we have a lot of opportunity and options in front of us.

Yes. And the comments around the electrolyzer on the quarter, I think, speak to ultimately some of that. But I agree. Blue Point, JERA and Mitsui are highly advantaged as it relates to the access for the Japanese market. And kind of ultimately what is expected to be a pretty good sync for ammonia as we look at cogen and firing there. 2030 kind of more of the framework for when Blue Point commissions, which I agree, should be a better market. So as we look at this 15 million to 17 million-ton globally traded ammonia market, what do you think 2030 looks like? And is there a ramp there that's kind of consistent? Or is this going to be something that is maybe more of a back-end weighted demand profile as some of these other markets and ammonia ships or whatever come to market as demand?

So I think, Matt, we can all agree it's going to be awesome. But all kidding aside, but I do think what we've have been surprised with when we laid out some of the initial plans for how we viewed the market and shared them with the analyst side and the investor side, was in 2020, 2021, when we initially began our journey on the low-carbon future, was projecting what was going to happen in the market and the tightness at the end of the decade based on build-out based on demand, based on changes in the dynamics around low carbon. .

The surprising thing today is how tight the market is today. I think from the analyst side and from your side, it's been something that negative is going to happen. It's going to happen, it's going to happen, and it just doesn't happen. It's going to be China this year. That's going to be bad. China is not exporting to the capability that they were. I don't think they're going to be. But it's this tightness of geopolitical upsets, whether last year was the Iranian/Israeli conflict and -- or lack of gas for Egypt. The continued conflict in Russia and Ukraine, lack of gas in certain places like Trinidad. That is driving more structural places that used to have guests who used to operate aren't as much, and we're in this very high cost of new investment that is limiting of the 120 projects that were announced a handful are going to get built, but they needed to be built just for future growth and demand and again, limits of where our supply is today.

So we are in a positive market, and we see that tightening coming earlier than we had expected. And then at the end of the decade, probably tighter than even we had projected several years ago.

And as you kind of hit on this a few separate times, just CapEx inflation, right? Your -- I don't know, neighbor. But across the river, right, at Darrel, we're hearing about that. It's tangible. The CapEx budget gets revised up. Their plant is highly specific. But it's kind of the reality of doing business on the Gulf Coast and building plants in the U.S. So how do you manage CapEx inflation and the risks around it. And when you look at what should be ultimately is devised to be a pretty large complex, how do you go about limiting risks around that?

So for us, it started with doing extensive FEED studies to get more detailed engineering and more detailed estimates about what the cost would be. And then second, we went with a modular construction design for the ammonia plant, which is basically a turnkey. So the ammonia unit, which is probably half of the cost, is being constructed by Technip offshore and shipped over in modules. And that's a fixed price contract.

So that element of it has been capped. And that does a couple of things. It reduces the amount of exposure to cost plus labor in the United States. It also separates the development of the site from the construction of the ammonia plant. So we don't have -- instead of them being in sequence, they're in parallel. So we don't have to pay as much overtime and spend the money to accelerate the development of the infrastructure of the site to then stick build the plant piece by piece on site because the plant won't actually show up until 2028. So it gives us a lot more time to prepare the site to receive the plant. And we will continue to look at those other components and do fixed-price contracts for tanks and other components that are on the development of the Blue Point side itself.

And I think one of the differences is this is what we do. This will be the third plant we have built in the last 10 years. And we built -- and we're operating those plants the -- the other 2 at 110% of capacity. So we're good at the design. We're good at working with our partners. We're good at estimating like Martin said, planning. And this is the core of what CF is about. And so we are very confident in our ability to bring it in at budget. .

Okay. Switching to Trinidad. I got a little bit of a flavor for this because I was talking to Ken about this morning, new government in Venezuela. Maybe that matter, maybe it doesn't. But if you were to think about the potential for gas moving from Venezuela to Trinidad and Ken's comments. Like it's always just in 3 years, we've been waiting for a while. But as you assess that region, does that change your longer-term views around the profitability of that production base? Or is that too early to say? What do you -- how do you gauge?

So we've been active in Trinidad for 15 years, and I was on the board probably 10 years ago, a PLNL. And it was -- in 2 to 3 years, we're going to have gas. We're now 10 years later, and we don't have gas. I think all of us on the island that are operating us, Coke, Yara, Proman are facing difficulties. And questions about what is the future, what -- can we count on, what level of investment should we have or maintain for those assets. Our asset at PLNL has been a good asset over the years. We value it, but we obviously need gas and need commitments from the government and from the NGP that NGP, NGC.

And we'll see how that unfolds. I think Ken is -- was at the forefront of some of these decisions, and we're going to have to have those discussions as well.

Yes. I mean his comment was that in particular, they are pushing for higher gas prices. And sympathetic to the fact that Trinidad has its own needs as a country, but given the cost basis and the operation consistency of that region, it's hard to warrant gas price increases, right? And that's the standard that he's making. So do you face kind of similar pressures in that market?

So we are under discussion with that group of what the future supply and contract obligations are and -- but we're in the middle of it.

Okay. Gas cost, right? Martin, I'll put you on this one. It's like $3.20 in MMBtu in the fourth quarter. Very good. Lower than the Nutrient, even because then they have a AECO, right? And so how are you able to do this? And then look at -- as we look at 1Q, I think we were surprised a bit to hear about $5, $5.50 kind of range for the first quarter. There's always volatility in gas markets. That's just the nature of your business. But how is hedging playing here because it's not something that we typically think of for CF outside of basis, regional basis. But how is the ebb and flow? How did you get so good in the fourth quarter? And then what happened in 1Q? And is there any bleed out into 2Q in that regard?

I think when you think about how we hedge gas, we do like to take care of the basis so that we switch it from smaller hubs, down the -- Henry Hub was easier to manage the risk. And then we do tend to look at prices for gas that we're going to see across the winter, and we do that in various ways over the years. And sometimes, it's well in advance of the winter and sometimes it's much closer to the actual month of consumption.

And that process yielded a really nice result in the fourth quarter. We were able to take advantage of the opportunities to hedge effectively and then see the settlement settle higher than that. And we've seen so far in January and February. You're seeing higher NYMEX settlements. We had a winter storm that basically hit on top of a NYMEX settlement. And so those settlements are going to be higher, and we will do our -- do well. I'm sure we'll do well against those benchmarks. But over time, our objective with hedging is to minimize the negative shocks of these events. And so we tend to be somewhere around or in between the what you've gotten with cash daily pricing or what you've gotten if you'd locked it in with the NYMEX settlement.

And Bart and I sit on the Gas committee, but I have to give a shout out to the team, with Marty [ Melk ] he's the guy who runs our gas group. But we're students of the -- we view those -- the product markets and the gas and the operations, they're all separate decision-making that come together as a whole. But we look at gas independently. We don't necessarily for forward sold, have to lock in the gas.

And we do play a lot of the cash market during the year would -- has been at advantageous for us. But in terms of your reference to Q1 2026, this volatility is the word. We had $70 gas at the Port Neal site and $90 gas on the daily at [indiscernible] in Canada. So it has been incredibly volatile. I think the team has done a very good job of understanding that, covering what Martin talked about and being in the position that's good for CF.

Okay. I do want to open it up to anybody in the audience, if you have any questions, feel free to raise your hand and jump in. But I didn't want to ask a little bit on the policy side, and maybe this is -- I don't know, maybe it is, maybe it is an outside our real house bird. But if we were to think about the Trump administration, right, they've been keenly focused on farmer profitability, farmer sentiment, farmer affordability, nitrogen is maybe in the middle of potash and phosphate from an affordability perspective, right? It's not the primary pain point, but prices are high. So what do you get from the administration on that? Like are they actively in discussions with CF around capacity or tariffs or rebates? Is there any kind of discussion there? Is there any push. I mean I know you weren't necessarily listed between your 2 U.S. or North American peers as it relates to price solution, right? But it seems like the microscope is on nutrient companies and price. So does that resonates to CF at all?

A couple of things that you referenced -- resonates with me personally as well as professionally in the company. We're a global market. And we're the largest producer of nitrogen in the world, and we're less than 5% of capacity. It's produced in Russia. It's produced in the Middle East. It's produced in China. It's produced in India. It's produced in the United States or North America. And all of those places had the -- most of those have the capability to export. And so tons are moving all around, and they're priced at different -- for different products at different times, but the price in India today is basically the price in NOLA.

And if India goes up, NOLA goes up because we had to call that import ton. We're an import-independent market. And so we have to incentivize those tons to move. And so it's -- and -- but in terms of fertilizer, you need NP&K plus some S now in most growing cultures. And so the fertilizer market is integrated in many different ways. But I think the point of your question is and where the government is going is the farmer. And we do think about the farmer and how -- one, how can we help them to have the product in position to be a low-cost producer, which we are a low-cost mover in supplier partnering with our retail friends the co-ops and the public retail suppliers to the farmer because we don't sell to the farmer directly. And that whole chain has to work together to be efficient, to be low cost, and to make sure the product is in place at the time it's needed, but it is a globally priced product.

Yes. No, I know.

I know you do, but I -- sometimes...

Sometimes I wonder about the administration.

It gets separated or an isolated issue like in Iowa, it's this. Well, pretty much you can do the freight, the price in Iowa equates back to the Middle East. .

Is there any push for logistical improvements then domestically? Like do you see talk or within a policy perspective about pushing for new pipelines or relaxing some of the restrictions that impact our ability to source barges?

So the work that's being done, we're a multi-mode company, rail, truck, barge, pipe, vessel. So we're moving product in any 1 of those 5 modes at any different time. So what the core of engineers does in terms of the lock work on the Mississippi, on the Arkansas and the Illinois, very important. .

We need to keep that barge cost, and what the ADMs of the world do with moving grains and oil seeds down, we're moving fertilizer right back up. And so the pipeline, the Sunoco Pipeline is now 40 or 50 years old, if not more. And so proper maintenance of that -- the only existing ammonia pipeline is very important. And then it's very difficult to move ammonia by rail. So we almost don't do much of that, but the rail systems are very important. So this -- whether the UP hooks up with the NS or our work with the BN, that is a key component. So the low-cost delivery of the product is -- it's not just the production site, it's an integrated chain that we do focus on.

And if I think about rail, like boring, right? Nobody wants to move corn.

Any of the TIH, ethylene oxide, chlorine, ammonia.

So that was my point on ammonia. Is there some government restrictions around it? Or is it really just it's hazardous and corrosive and you just -- you don't want to move it by rail. And so there's like an implicit pushback from the rail companies themselves.

It's priced out more than just -- they still move it. It's just priced out. But we do have some very good relationships with our rail partners and need to continue to work on that as well as regulatory support to make the efficient moving of ammonia, possible. .

I'm happy to. Well, so -- I don't know if you have a question. We have one question up front. Sal, you want to raise your hand. But otherwise, get that hand up.

So since we're talking about logistics and might brought up the whole U.S. Gulf tons going to the corn belt. Can you give us a little bit more clarity? Essentially, if there is a plant on the U.S. Gulf Coast, what stops them from, let's say, chartering a barge that has the ability to be in the shallow orders of the U.S. Gulf and then going of the river. Is the cost prohibitive? Do they need to have access to tanks in the Midwest that they don't? What essentially stops them from doing that?

Yes and yes. One is when you're over in Houston to barge all the way to the mouth of the river where we already are as a cost. Two, is the destination point, where are you going to off load that barge where most of the producers have the tanks. So you need to build a tank or partner with those who do, and those tanks are limited.

So I do believe some tons could in the theoretical move up into the river system, it just has to be coordinated with the receiving points and the barge companies as well.

I have one more, and I'm sure Steve has asked you this question every time he sees you. But I got to carry the torture a little bit now. I mean as we think about microbes and nitrogen delivery to the corn plant. Everybody is -- not everybody, but there's a lot of companies working on it, right? We'll have a biologic panel right after you with Corteva, Mosaic and Pivot. All 3 of them are working on nutrient bioavailability. So how do you address this longer term domestically, internationally and opportunity as a company who has made a lot of money with synthetic nitrogen.

Anything that's good for the American farmer, the world farmer is good for the system. And so yes, we follow it. Yes, I've been following for decades. It's always -- this is another one of those promises that is going to come in the future is just the future is always in the future.

And so when that comes, and we have met with many of those companies and have exchange of ideas, but a plant is like a child and you feed your child daily. And then when they reach puberty consumption increases. And our corn crop is just like that. It has different growth spurts and it needs a concentrated form of specific nitrogen in order to reach maturity and to have a full head or ear of corn that's where the value sits is in that 1 year. Every plant produces 1 year of corn, maybe 2, but the second one is a dwarf.

And so you have to -- if you're a farmer you want to use what works and what has consistently worked. And for decades, nitrogen has worked very well in that growth cycle. That's why we've gotten better at our precision ag multiple applications of nitrogen. And so we've gone from yielding when I was a young person, 130 bushels an acre to today, 180 bushels. That's the average, but you have some farms that are at 300 bushels of acre.

That hasn't come with microbes, maybe that has supported it a little bit, but the fundamentals of our business, we produce a product that is demanded, consumed and applied in appropriate ways, and we're getting better at that. And so our future is bright for nitrogen.

Yes. Okay. All right. Well, I'll end it there. Bert, thank you so much, Martin, as well. I appreciate you coming out and participating.

Good day, and welcome to the CF Industries Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions].

This event is being recorded. I would now like to turn the conference over to Martin Jarosick. Please go ahead.

Good morning, and thanks for joining the CF Industries earnings conference call. With me today are Chris Bohn, President and CEO; Bert Frost, Executive Vice President and Chief Commercial Officer; and Rich Hoker, Vice President, Interim CFO and Chief Accounting Officer.

CF Industries reported its results for the full year and fourth quarter of 2025 yesterday afternoon. On this call, we'll review the results, discuss our outlook and then host a question-and-answer session. Statements made on this call and in the presentation on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements.

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

Now let me introduce Chris Bohn.

Thanks, Martin, and good morning, everyone. Yesterday afternoon, we posted results for the full year 2025, in which we generated adjusted EBITDA of approximately $2.9 billion. These strong results reflect outstanding operational performance by the CF Industries team, the enduring advantages of our manufacturing and distribution network and constructive global nitrogen industry dynamics that have persisted into 2026.

Starting with -- our full year recordable incident rate was 0.26 incidents or 200,000 hours worked, and we experienced our lowest ever number of process safety events. This enabled us to produce 10.1 million tons of gross ammonia in 2025, which represents a 97% utilization rate.

However, that performance is tempered by the incident, our as -- city complex in Mississippi experienced in November. While there are no significant enures,this event is a reminder of why we emphasize individual and process safety every day across our entire network. We do not expect the Yazoo City complex to resume production until the fourth quarter of 2026 at the earliest, given the long lead times required to fabricate and deliver certain equipment. As a result, we expect our network to produce approximately 9.5 million tons of gross ammonia in 2026.

Turning to Blue Point, our joint venture with JERA and Mitsui, the project has progressed well from positive FID in April through hitting all our pen milestones by the end of the year. This included our partner securing offtake from new low-carbon ammonia demand sources and receiving contract for difference awards from the Japanese government. We expect to begin civil work at the Blue Point site in the second quarter of 2026.

Finally, we continue to efficiently convert adjusted EBITDA to free cash flow. At a rate outpacing material and industrial sector averages, as you can see on Slide 10. Net cash from operations in 2025 was $2.75 billion, and free cash flow was approximately $1.8 billion. We returned $1.7 billion to shareholders in 2025. This included deploying over $1.3 billion to repurchase 16.6 million shares, approximately 10% of the outstanding shares at the beginning of the year.

Given our high-performing, high-margin business, progress on strategic initiatives and what we believe are constructive global nitrogen industry dynamics ahead, we expect to continue to generate substantial free cash flow. As a result, we remain firmly committed to our capital allocation framework, investing in the business for growth and returning capital to long-term shareholders.

With that, I'll turn it over to Bert to discuss the global nitrogen market environment. Bert?

Thanks, Chris. For the last 12 to 18 months, we had expected the global nitrogen market to be more balanced in this time frame as new capacity was slated to come online with significant tightening through the end of the decade to follow. However, the global nitrogen market remains tighter than expected. New capacity has been delayed, global production has not maintained historical levels and demand continues to grow. Nowhere is this more apparent than in our indicative global urea cost curve, which we share on Slide 13. Global urea prices are currently trading well above even the high end of the cost for range.

Strong demand led by India, Brazil and North America as well by European buyers securing volumes before the EU's carbon border adjustment mechanism was implemented has pushed demand to the right. At the same time, supply is constrained by natural gas availability in Trinidad and Iran, challenging production economics in Europe and the end of seasonal Chinese urea exports in 2025. Additionally, geopolitical concerns for the Middle East loom over the market.

Through the first half of this year, we do not see any catalysts that would move prices toward the cost curve floor levels. India's February urea tender is atypical for this time of year, suggesting demand continues to meaningfully outstrip lower-than-expected domestic production. CF Industries had a very strong fall 2025 ammonia application season in North America as we position supply well, enabling farmers to capture good value per nitrogen unit from ammonia. This, along with continued strong global corn demand suggests to us that 2026 will be another year of high planted corn acres domestically, helping support nitrogen demand. From a supply perspective, we believe global nitrogen channel inventories are lower than historical averages.

Chinese urea exports are also unlikely to return until the end of the Northern Hemisphere spring application season. However, we do expect that new North American ammonia capacity should come online at full rates will affect prices for globally traded ammonia but will not impact tightness for urea or UAN. As a result, we expect the global nitrogen market to remain constructive in the near term. At the same time, interest in low-carbon ammonia and low carbon nitrogen products continues to grow, both for tonnes from our Donaldsonville complex and for our portion of Blue Point volumes. In the near term, global customers have demonstrated a willingness to pay a premium for low carbon ammonia given the benefits for their sustainability goals. We also expect demand to continue to grow from customers in Europe and Africa, seeking to reduce additional costs from EU regulations on carbon.

We're also excited about the progress we're making domestically as we work with domestic retailers and end users of ag and industrial products to lower carbon footprint of their value chain. Most significantly, we have advanced our pilot project with POET, the world's largest producer of biofuels and with retailers in the U.S. to enable the production of low-carbon ethanol. We expect the project will be a model or building a low-carbon ammonia and nitrogen fertilizer supply chain in the U.S. and in North America.

With that, I'll turn it over to Rich.

Thanks, Bert, and good morning, everyone.

For the full year 2025, the company reported net earnings attributable to common stockholders of approximately $1.5 billion or $8.97 per diluted share was approximately $2.8 billion and adjusted EBITDA was approximately $2.9 billion. For the fourth quarter of 2025, we reported net earnings attributable to common stockholders of $404 million, or $2.59 per diluted share. EBITDA for the quarter was $731 million and adjusted EBITDA was $821 million.

For the fourth quarter, we recorded 2 impairment charges totaling $76 million, of which $51 million was related to the electrolyzer pilot project at the Donaldsonville complex in Louisiana. We made the decision not to continue to invest in this pilot project given its return profile. We also recorded a $25 million impairment charge related to the incident at Yazoo City that Chris mentioned earlier. We satisfied the business interruption insurance deductible in December and expect to begin receiving insurance proceeds based on lost profitability during 2026.

During the fourth quarter of 2025, we also completed a $1 billion senior notes offering. We did this both to refinance $750 million in debt that was coming due in December 2026, and to further strengthen our financial flexibility. Looking ahead, we expect capital expenditures in 2026 to total approximately $1.3 billion on a consolidated basis. CF Industries portion of this is approximately $950 million, which includes $550 million for sustaining CapEx for our existing network, plus approximately $400 million relating to both the Blue Point joint venture and the common infrastructure we are building.

Finally, we repurchased 4.1 million shares for $340 million in the fourth quarter. These repurchases completed our $3 billion share repurchase program, which was authorized in 2022. After this was completed, we commenced our $2 billion program, which was authorized by our Board in 2025. Approximately $1.7 billion remains on the 2025 program, which expires in December 2029.

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

Thanks, Rich. First and foremost, I want to thank CF Industries employees for their contributions to our success in 2025. They delivered fantastic results in the midst of the tumultuous global nitrogen market and did so with a focus on safety. We're extremely proud of what our 2,900 employees can accomplish when moving in the same direction towards shared goals.

2025 showed how much we can do. from operational excellence and positive FID for Blue Point to completing 2 major decarbonization projects and securing our first low-carbon ammonia sales for our premium. This level of execution is not a [ 1-year ] story, but rather has been consistently delivered over time. This, along with our operational advantages and structural advantages in where we operate underpins our ability to invest in growth and return in capital. This, in turn, increases long-term shareholder participation in our underlying assets and the free cash flow they generate.

As you can see on Slide 9, we have increased nitrogen participation per share by over 35% in just the last 5 years. Given our strong core business, strategic growth initiatives in our near medium and long-term outlook for tightening global nitrogen market, we believe we are well positioned to build on this track record and continue to create substantial value for long-term shareholders.

With that, operator, we'll now open the call to questions.

[Operator Instructions]. Our first question from Andrew Wong of RBC Capital Markets.

I just wanted to ask about the pace of spending at the Blue Point project, it looked like some of the project might have been pushed years -- just talk about that just the [indiscernible].

Andrew, I think you broke up a little bit, but I believe your question was related to the slide we had in the deck on Slide 12, just the capital cost related -- excuse me, Slide 15, the capital costs related to the Blue point. So the overall expenditure for Blue Point hasn't changed our -- it's still projected at $3.7 billion. But with any project of this size, as you get closer and get into it, both from ordering some of the long lead items like we've done and engaging the modular contractors, you get a better idea of not only what the costs are, which haven't changed here but also the timing of when that cost is going to occur.

So we thought it would be worthwhile just given that we've moved into that stage just to reupdate what the cash flow outflow will look like over the next 5 years. I think the important part of that slide on Slide 15 is the bottom line where it shows what's our annual cash outflow as a company. And given our free cash flow generation and the strength of it at $1.8 billion last year, $1.5 billion the year before.

You can see the level of CapEx going out each of those years. is not something that we're concerned about affecting other capital allocation decisions in which we're making. And that's really one of the reasons why with this growth platform that we structured the deal the way we did, taking a 40% interest in it so that we'd be able to manage and continue to be strategic in how we do other growth projects, but also return cash to our shareholders.

Okay. Great. And then maybe just a little bit more on Blue Point here. I recall there being quite a lot of room for expansion nearby on that site. CF is obviously building themselves some of the logistics and infrastructure there potentially to handle more volumes in the future. And so I know it's still early days here, but if we're thinking longer term, like 5, 10 years from now, does it make sense that we'll see a larger complex there? And is there a timing where it's more efficient to like so that you have workers that are already working at Blue Point to move to the second side? Like how should we think about that?

Yes. So initially here, I would say our focus is on the first site. But you're right, the common infrastructure we're building, there'll be synergies where if we were to build a second plant, we wouldn't have near the level of expense that we would have for this first site. And the site itself that we purchased could hold up to 5 ammonia plants world scale the size of this one, 1.5 million metric tons. So it is an organic growth platform that we're looking at here, what the timing is where we had moved into a second site, I'm not certain that we know that just yet. There are some questions that we want to answer as we get into these modular yards.

But I think as we look at the long-term dynamics of the nitrogen market, there's just not enough new supply coming on to meet demand. So as we see that going forward, we do think there will be a tightening in the S&D that will provide other organic opportunities for us, but nothing to mention right now.

Our next question comes from Joel Jackson of BMO Capital Markets.

I want to talk to you about CBAM, obviously, a lot in the news on CBAM. So what I want to ask you about is it different scenarios. If CBAM for fertilizers goes as is, if there's some suspension on fertilizer, if you get some offsets and other cost subsidies that sort of offset it. What does that mean for a, your business, sort of this year? And then what does it mean for returns on Blue Point as you have modeled it in the different CBAM areas?

Yes. So maybe I'll start with CBAM, and then I'll get to the implications on the business in Blue Point. So CBAM, today, while there's a lot of uncertainty around it, it's in place. And so it's happening. We are continuing to see our European customers show interest in low-carbon product and willingness to pay a premium for it. So I think that speaks to their thoughts that it's going to maintain. I think the weather CBAM stays or goes is probably more of an issue for European producers than it is for our North American centric production base.

We view CBAM as one of several opportunities and -- team and the Clean Energy team have been working on many different sales that go outside of Europe that we're receiving premiums on some here building in the U.S., others in Asia and Africa, that we don't necessarily have everything tag where it has to be from a CBAM standpoint.

Now what I'll say is if CBAM's altered or goes away. At some point, there's going to be some type of carbon program in Europe. And us having low carbon product, these benefits should accrue to us in that. regarding how this is going to affect our business, I would say, as we talked about before, we did not model in any type of premium from Blue Point or even in our Donaldsonville production with related to low-carbon products.

So all of that is upside to our internal rate of returns on that. So when you think about the CCS project, we started online last year at Donaldsonville. We weren't looking at anything besides the 45Q benefit that we would get from that. Now we're realizing that we're able to sell that at a premium. So that's building on that. And similar with Blue Point, our analysis was without looking at any type of product premium.

Okay. And then second question. On Yazoo City, when the plant starts, hopefully, end of the year, will it look the same as it did before. Will the mix be the same? And maybe you can just elaborate a little bit more on, is there specifically for equipment that you really need to get in that that's the manufacturing schedule that you have to hit to get in Q4?

Yes. Just to remind everybody on the Yazoo plant, so where the incident occurred within the ammonium nitrate plant, the site itself has an ammonia plant, a urea liquor plant and nitric acid plants. All that has been effect -- has been unaffected. However, given there's the site's not logistically equipped to move that much net ammonia if the upgrades are not operating, that's why the entire plant is down right now.

So the only point that we're looking to rebuild here is the ammonium nitrate plant. And I would say it's too early to judge on a lot of different aspects of that, but our intent is to get the pent up as soon as possible. The time frame that we've given with late Q4 here in 2026 is just as we've gone out to get switchgear and some of the electrical stuff, which is longer lead time items, we've been given those dates as delivery.

If it comes in sooner, that would be excellent. But we're right now just basing it on that. Maybe I'll -- just on this particular point with Yazoo City, I'll have Rich talk through some of the economics for 2026.

Yes. Thanks, Chris. Joel, in terms of the economics, the full year EBITDA impact of not running the Yazoo complex, is it going to be in the $200 million range. And again, that's an EBITDA number. But I also want to highlight, we mentioned in our prepared remarks that we have business interruption insurance for the site. And so we are working with our insurance carriers we're pulling together all of those claims, and we would expect to be receiving those business interruption proceeds during 2026.

And our goal is to see if we can offset most or all of that kind of loss with the insurance proceeds because that's the program that we have. I'll also mention that the timing of those insurance proceeds are going to be a little bumpy because we will record those as they come in to the company, but that's the impact.

Our next question comes from Ben Theurer of Barclays.

Just wanted to kind of like get a little more commentary around the current tightness in the market. And you've laid this out as '25 was expected to be not as tight and it was actually tightest at the end of it, and we saw this you guys doing almost $3 billion in EBITDA versus the $2.5 million that you talked about kind of on the current mid-cycle.

So as we look into 2026 and some of the drivers that you think can take you towards the mid-cycle of $3 billion, some of them might come already in 2026. So how should we think about, a, the market and be some of these drivers over more EBITDA generation, the tax credits, et cetera, as we move through 2026, considering the $200 million miss on -- asset related expansion?

Ben, this is Bert. And relative to 2025, a very interesting market as things unfolded globally. And because we're -- we participate in the global market, A lot of those issues drive what happens in different regions. And starting off with the conflict in the Middle East, which shut down production in Iran and in Egypt, and then you had high demand levels in India throughout the year, much higher than expected. I think the industry expected $6 million, we were close to $10 million and additional demand for Brazil and then European difficulty due to high gas cost took production down and it required higher levels of imports. And then the United States planting 98 million acres of corn, incremental tons were needed to satisfy that demand. even though we carried in lower inventory levels into fertilizer year '26. So a very interesting market and the combination of lack of supply and high demand drove the market to levels that were unexpected.

That dynamic is carrying forward into 2026. We expect -- the USDA came out with 93 million acres of corn. I think the industry would say it's that or higher. So consistently, I would say, over the last 10 years, higher corn acres, so higher demand. And you're seeing additional needs for India, the current tender that was announced or opened on Wednesday, when those numbers will be probably disclosed tomorrow or early next week.

And then you're seeing, again, around the world with $11 gas in Europe and CBAM issues, you're seeing higher levels of imports eventually will come there. and South America as well. So again, a positive demand and probably limited supply. So you're seeing today in NOLA, urea pricing at $450 a short ton which is $100 higher than it was in December of 2025. So exceptionally positive dynamics driving the industry in North America where the preponderance of our production is located and we're participating in that market.

Then you have the positive gas dynamics that are taking place. Today, we're at $3 for the forward market, positive economics for that structure as well. So we see 2026 as being at least through the first half having a challenging market on supply and high demand going forward.

Yes, Ben, and I think you framed it nicely when you talked about 2025 that we thought would be balanced, some people thought a little bit long, same thing with '26. And as Bert just mentioned, '25 came out with $2.9 billion in EBITDA and the first half of '26 certainly looks very strong here. And all of that is sort of bridging those years to where the market gets what I think is going to be even tighter given the lack of new supply coming on, saying that's up for when Blue Point does come on the market.

And that's why in our commentary, we said we see the near, medium and long-term nitrogen dynamics, very strong because we've bridged kind of a little bit of that time frame where we thought we'd be balanced during this, and it's actually tighter.

Related to the tax credit piece for next year, we will have a full year of the carbon capture and sequestration unit operating at Donaldsonville. Last year, we did about 700,000 tons we had sequestered. This year, it will be just under 1.5 million tons that will sequester. And that number is really based on just amount of process CO2 we have remaining after we do upgrades and with the plant turnaround schedules with ammonia plants being down. So we're going to max out the most we can sequester during that particular time frame. And right now, we're thinking that's around 1.5 million tons for 2026.

Our next question comes from Mike Sison of Wells Fargo.

Yes, I just had a quick question on CBAM, again. So if it goes away, does that make difficult or maybe impossible to get a premium price for Blue Point? And if it stays, then there's a good chance to get a premium for Blue Point? And then just curious what you're all hearing in terms of timing when we'll find out on a decision for that by the...

Yes. So with CBAM, I mean, I think it's more complicated than just whether CBAM stays or not because you have the whole scheme over there that gives free allowances that are beginning to stop. Does that continue where they don't receive those free allowances, which then would basically push European producer cost even higher without CBAM. And I think on the premium side, I'll let Bert comment on this a little bit more, but I think it goes beyond what we're hearing from European customers about buying low-carbon product when it comes to the premium.

The premiums in place, we have contracts in place for 2026 in demand for more. So we are constructive. We continue to have further dialogue. I agree with Chris, that this is set in motion, CBAM that is in carbon pricing. This is a train that has left the station, I believe. And so how that transpires to CBAM and our premiums were constructive. And we're even seeing that now across the globe with industrial customers and agricultural customers desiring low-carbon products. So I don't see that decreasing at all.

Got it. And then just 1 quick follow-up. Given the dynamics you shared for nitrogen this year. Is your bias that pricing kind of stays at this level and maybe the biases may be potentially to go up from here? Or how do you sort of see the kind of the scenarios for potential pricing there?

Yes. I'm never biased. I'm just correct. I think that because this is a global market, and you have so many different dynamics driving the world price structure with different producers and different localities producing this product that don't consume it. And you have some very gigantic producing places like China that are sometimes in and sometimes out of the market. And then you couple that with 3 to 4 months of demand in North America of actually using this product in 6 to 7 months of inventory build. And so you have to be a student of the market and follow these things. And we had an opinion coming out of Q4 or in Q4 that because of the supply demand dynamics I had explained earlier, we were on an uptick of pricing, a positive uptick in pricing, and that has transpired. How much further it goes. There's all kinds of expectations in the market today. I think there is still room to go, especially in North America. But I do think there will be a correction in the back half of the year like there always is, as we move from the Northern Hemisphere to the Southern Hemisphere of planting.

Our next question comes from Kristen Owen of Oppenheimer.

Carbon opportunities and maybe double-click on the agreement with POET for the low carbon fertilizers. Just given some of the proposed changes in the 45 guidelines, practice changes, I'm wondering how you're thinking about low CI fertilizer demand opportunity domestically. And if those 45 tax credits maybe help improve the unit economics or pricing premium that you're seeing here in the U.S.

Yes. So for the -- we missed a little bit of the first part of your question, but it's about low carbon and low carbon ag sector and the consumption of that product and the demand profile going forward. And our agreement with POET is exciting. POET is a super strong company and the leader in biofuels. We're also talking to other ethanol producers.

But the vision is about the core value chain. And how do you take a low-carbon corn? Well, how do you create that with low carbon fertilizer, who supplies that we do and who has plenty of supply for our customers, we're building it. And so as you take that low carbon product through the value chain and as the ethanol plants decarbonize themselves, there's a tremendous opportunity for domestic and export ethanol demand to be satisfied by the United States. And we're the one place that can supply that in terms of the gasoline blends globally.

And then for low carbon or low CI score fertilizer as well, we're seeing -- we're having conversations. We're seeing demand through the retail sector driven by the CPGs and other food producers as they look at their sustainability goals and Scope 3 and scope emissions.

Yes. And I think anything related to the 45V is just going to be an upside to us. As Bert mentioned, he's hearing enough activity even though at this particular point, low carbon fertilizer is not recognized in the 45V now that is up for comment right now as the USDA is defining what are those qualifying activities and you would think low-carbon fertilizer, which would be an attractive pathway as it's very easy to verify what is the carbon score of that. So we're hopeful that gets included. But as Bert mentioned, he's already getting interest in that, even with it not being included in the 45V just yet.

Super interesting. My follow-up question is a little more boring and on the modeling. So you -- can you just remind us your operating costs in 2026 you threw out the $200 million EBITDA headwind from Yazoo City, I imagine there are some stranded costs or overhead costs that won't be recoverable through the BI insurance just some thoughts around operating costs and any sort of turnaround that we should be thinking about in 2026?

Yes. In terms of the BI, our hope is that virtually all those costs are going to be recovered through we're not expecting anything major outside of that. And as we go through the rest of the year, our turnaround schedule, I think, is projected to be pretty normal in terms of what we would normally expect. So I don't really have anything I want to highlight.

Our next question comes from Christopher Parkinson of Wolfe Research.

Just a short-term question and a lot of questions for me. The short term, just Bert. Going back to some of the things you were discussing before, how are you thinking about order book flexibility into this year? I mean farmers are just now getting some deferred direct payments. you're waiting news RVO EO15 and then you mentioned India, Iran, Trinidad out, Texas capacity and it seems like there are more moving parts now than in previous years. at least going back to '22, let's say. How are you thinking about that with your team? Are you leaving some flexibility as you enter spring? Or are you happy with prices where they are now?

Yes. In general, we're pleased with our order book. And as I highlighted earlier, coming out of 2025 into 2026, we carried some inventory in to 2026 on purpose because of these dynamics that we're laying out that -- and this has been the discussion. We just finished the TFI, The Fertilizer Institute meetings in Orlando this week with all of our major customers. And the message is we're heading into a logistics game that as good as the weather has been that it's been warm. We're seeing applications already start Texas, Kansas, Oklahoma and Nebraska. And I think that's going to be even more pronounced and we could see in early spring, similar to what we did in 2012.

If that is the case or even if it's normal, we're approaching where the need to get products where you have difficulties on the river due to low water, you have, we believe, shortages or lower inventories in the upper Midwest. There's been a number of plant issues in our sector in Canada and through the winter storm that came through in January, we think there's been some downtime. All that equates to lower levels of available product and we're having 93 million, 94 million, 95 million acres of corn.

So in terms of the flexibility, we're all about execution right now, identifying where the product needs to be, where are the orders placed against our terminals and plants and communicating with our customers where they believe they're going to be requiring tons and then communicating about those -- getting those orders placed and in the process and working with our freight providers, the railroads, the barge companies to move it. So this is all about execution from now forward.

And perhaps a slightly longer-term question. There's obviously been a few questions here already on CBAM. But switching over to the other side of the Blue Point equation and heading to the east, Pan has actually been moving as far as I can tell, further forward, you've seen as of December medi certifications further go forward on a $20 billion hydrogen hub a lot of those consumers and potential have lost supply agreements with others based on 3 project cancellations, 1 long-term deferral and 1 final blue -- blue ammonia facility that's, let's say, currently a flux for the next 6 months. As much as everybody is focusing on Europe, do you think the buy side and the Street is missing something more pronounced in Japan that's still ongoing?

Yes. I think it's an excellent point, Chris. I mean, as we mentioned every 1 years ago thought that there was just going to be this big wave of low-carbon supply coming online. And we had said, it's easy to announce a project, it's difficult to execute on it. And so as you mentioned, a lot of those projects have fallen off. Now what we're continuing to see a lot of interest in, and it goes beyond Japan and Asia, but it is in low carbon. And I think the JERA and the Mitsui and others over there are the leaders in this.

I think more importantly, it's not only the low carbon aspect of it, it's for a new demand source. And that's something that when you look at the Medi agreement and what they were able to do with the contract for difference, their 60% of this new plant is going to a new demand source that didn't exist a year ago. And so we're optimistic that we continue to build out on that along with continuing to see additional demand growth in the legacy agricultural business of sort of that 1% to 2% a year. And all those factors are why we are suggesting that longer term, not enough supply coming on, new demand centers coming on and then just the regular legacy growth that we're going to have a very tight market when Blue Point does come up.

Our next question comes from Lucas Beaumont of UBS.

I just wanted to go back to the sort of difference between the pricing outlook and the cost curve. So I mean, we've had like strong pricing to start the year. Cost care has moved up a bit. but not as much. And I mean the sort of premium there is going to widen. And as we look further out, the energy futures curve continues to ship lower kind of now into like the [ $7 to $8.50 ] range kind of later in the decade. So I just wanted to sort of get your view on how is that sort of resolved with your view of sustained market shortages on the supply side? Does this kind of need to correct in some way? Or do you expect it to persist, I guess, through this year and then into the medium term?

Yes. Maybe I'll start. So on that, from a longer-term standpoint, there is the gas differential that you're talking about. And today, that sits at around $7 to $8 per MMBtu delta. We do expect that, that will converge a little bit with Henry Hub by no means do we think that goes away or flattens to a level that doesn't keep us economically competitive.

But I think there's another side of that, that we've just been talking about on many of these questions through here, which is the SMB side. So yes, you have the COGS side of what it would cost, but you have to bring on new capital in order to meet that demand growth without even clean energy growth coming into this, just the incremental growth of demand is going to push the cost curve demand side farther to the right, having to pull in either higher cost production than we have today or require new plants to be built. And like I said, our plants alone at $3.7 billion, capital costs are only going up. And with that, people are going to expect returns.

So I think as we look at -- we expect the natural gas differential to continue, but we also expect that we're going to see demand move to the right on the cost curve and also the cost curve to be supported by new plants that are going to be needed and required or high-cost production to remain in.

And that also doesn't consider just what's going on dynamically around the world with energy and shortages of energy in certain locales like Trinidad or high-cost energy in Europe and suboptimally operating at 80% or less as well as other specific locations of limited production. Brazil is going to be bringing back. They're supposedly, their plants that would have been -- not been operating over the last several years. And so supply is limited that we see in the forward demand continues to grow, but also supply continues to be cut in other locations, making for a very solid structural market, as Chris explained.

All right. And then I guess just maybe a bit of a short-term question on the Middle East tensions with Iran. So I mean, they're about 10% of the global urea export markets. I guess, how would you see the market dealing with any disruption to production there and the impact on pricing? And I guess how would that sort of need to flow through from a timing perspective in terms of, I guess, disruption to the shipments before it's really starting to have an impact and how long it would be down.

Yes. If you look at the Middle East and the suppliers that are located there, the producers, are in Iran, Oman, Qatar, Saudi Arabia and UAE for urea, that's about 20 million tons. So in a globally traded ocean going traded ton, that's about 35% of the world's supply that goes through the straight of homes or close to it.

However, you also have to look at ammonia where those same countries referenced are about 5 million tons or also 30% of the globally traded ammonia ton. And so if something were to happen, the constraining factor to supply would be pronounced. As well as LNG, about 25% of the world's LNG also transit through that the straight. So if conflict were to occur, it would be, I would think, even more difficult or more challenging than the current situation in Russia and Ukraine and moving out of the Black Sea.

Our next question comes from Vincent Andrews of Morgan Stanley.

This is Justin Pellegrino on for Vincent. Thank you for all the commentary on where prices and market commentary are headed over the last few weeks. But I kind of wanted to step back and go back to Blue Point for a second. You mentioned earlier in the call that as you kind of started going through the process, permitting or whatever, that the time line might have you shifted around a little bit. And I was just curious, where have the pressure points been as you started to go through the process, whether that be tariffs, labor, whatever it may be? And then can you kind of just flag anything that we should be watching as that project starts to progress through the stages and anything else that's worth talking about there?

Yes. Thanks, Justin. The timing really hasn't shifted at all. So our expectation is still in 2029, the plant will come on by timing, I mean timing of payments. In which case, as you get closer into these larger projects and you're actually talking to the -- whether it be the modular yards to civil contractors, you've engaged different things like that, you have a better idea of when those payments would be going out. Nothing's changed from our time line on the particular project.

I think as far as milestones go, as I mentioned, we've pretty much achieved the milestones that we have in place where the next big ones would be the air permit and Army Core permit as we look to build the heavy haul bridge that will bring the modules over Additionally, as we start to do some of the civil work, which our expectation is here in the next couple of months, we'll start moving ground, driving piles. We've already driven test piles.

So I think right now, there isn't much of these milestones other than the permitting process, which, like I said, our expectation is that we will have that going here in the next couple of months. The other part that I should mention is of our $3.7 billion in total capital spend, we still have about $500 million of that, that is built in as contingency.

So not knowing really where tariffs are going to fall out based on Supreme Court and also that a lot of this lead time -- longer lead time stuff doesn't come for 3 years, but we do have a sizable contingency built into this particular project.

Our next question comes from Edlain Rodriguez of Mizuho.

Just 1 quick 1 for me. We've had some affordability issues with phosphate. And of course, you don't produce that, but you know what's going on there. And with urea prices moving higher, like any concerns about affordability in nitrogen, like is it better to be as affordable as possible just to prevent a bunch of issues or the market will just determine where nitrogen lands on the affordability spectrum, and we just have to deal with it?

Yes. Edlain, I think you raised an important issue because we're a part of a value chain that the farmer plays the most important role because he or she is planting and harvesting and storing many times those crops and then there's a payout. And so we do study that. We do study where that lays out for the major crops, corn, soybeans, wheat, cotton, sugar, at least for North America and what those economics look like.

We are in a global market, however, and product moves pretty freely around the world from the Middle East to North America, from North America to Europe from Russia to North to the United States and like same thing with corn and soybeans. And so I think we're aware of that. We're looking at what that means for -- in terms of return on variable costs, return on full cost.

And I think the Trump money that flowed down from Washington is helpful for in terms of balance of payments. I do think there are some credit issues in certain parts of at least the United States, I'm aware of that retailers are holding and those are conversations with how they balance their year, and so yes, we're aware, yes, we're following it. And yes, we want to be a part of the solution for the American and Canadian farmer.

Our next question comes from Matthew DeYoe of Bank of America.

I don't know. You had mentioned Brazil, and so I wanted to tap in a little bit on that and the plants that were being restarted. I know it's not your plants, and so companies don't often like to highlight or talk about that a little bit. But at least from a headline basis, there's like 1 million tons of urea in that production. And effectively, it was supposed to be started up or starting to start up by the back half of last year. seems like you're calling for Brazilian urea to be flat on an import basis year-over-year. Is there some expectation that growth is in there? Or are you treating that plant -- those plants is 0? Or is it they'll take too long to ramp and demand will offset. I'm just kind of wondering your thoughts on that. And in general, I guess, like recommissioning in the commissioning cycle in plants and how that's creating or can create gaps in supply.

Yes. Brazil has been an amazing story over the last 25 years with their consumption of urea and especially on imports because they become one of the drivers of the glow of demand. But if you go back to those earlier years, it was about 2 million, 2.5 million tons of imports to today, almost 8 million tons of imports, but parallel to that ammonium sulfate coming in at also around 8 million tons.

So on the molecule or the end product, the nitrogen product coming into Brazil has grown substantially, onionitrate being fairly consistent. And so what has happened, though, during that time period, these plants are -- you have the plant in Parana -- close to Paranagua and in Camacari and some of the plants in [ Suci bay ] that are up north. Those plants are not well placed, at least the northern plants to where demand is, and they've struggled to operate over the years, one that they're inefficient to that their high logistics costs to move the product to the high-demand areas.

Brazil continues to grow in acres and acres planted and especially with the double cropping being economically viable. And so we do see these plants coming on, and they've also talked about reinitiating construction [ Planadas de sul ] that was stopped about 10 or 15 years ago. And so Brazil has the capability. What they don't have is the gas where these plants are producing or enough as that's been an issue as well. So they get to an initiative of the Lula government [ Ifetroban ] to continue to invest and serve their domestic farmers as they can. But Brazil will still be a major importer, a major driver of urea demand or nitrogen demand worldwide.

Yes. And just from the urea supply side in Brazil, I'm probably a little more skeptical than others on this just from my time in manufacturing and what the cost would be to bring plants that have been idle, but likely were not necessarily taken down just because of the number of years they've been down. I think the capital -- the upfront capital cost to do that and then the efficiency of those particular plants after they are up would cause a lot of issues. So I'm still in a wait and see what happens with those particular facilities.

Now loan on that, Bert, I just wanted to know what the -- your input.

Our next question comes from David Symonds of BNP.

I just wanted to ask on your assumption of a 4 million to 6 million tonne export quota from China in 2026. That's pretty much flat year-on-year versus what they did in 2025. And my understanding is they've got 4 million tonnes of additional capacity coming online at some point through the year and I think inventories are still quite high. So I've been penciling in a little bit more than 6 million, like 6 million, 7 million tonnes. Just curious to hear your thoughts on that.

I think that's possible. I think we've seen a different China in most years from the heydays of their export activity in 2015, '16, '17 to really pulling that back and recognizing the economic and political benefit of exporting that urea is fairly de minimis. But keeping that product in country for the Chinese farmers and the growth of Chinese production has been important to them. So I think there is a differential between the domestic price and the international opportunity.

Last year, you're correct, it was around 5 million tons of exports, and we're penciling in. We're being conservative to say that, that maybe something that the government is initiating. But if you take their capacity and run it at an 80% plus or minus run rate, they really don't have that much to export, and that's about the run rate they've been running over the last several years. So I would say your number might be a little high, but we'll have to have a coffee over that number next at the end of the year.

This concludes our question-and-answer session. I would like to turn the conference back over to Martin Jarosick for closing remarks.

Thank you, everyone, for joining us today. We look forward to seeing you at upcoming conferences.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Well, listen, thanks, everybody, for coming out this morning. Always good to get up like the ag space we got here, farmers wake early, so we're starting at 8. I just got to read a quick disclaimer. And then after that, we'll jump into some Q&A. We're very happy to welcome the CF team up here with us today. Again, it's a company I've known through, I guess, 25 years now. So a lot of change in that 25 years. So it's always a fun discussion. Ag is really close to my heart as I kind of grew around ag on a couple of farms. So it's an interesting space for me.

But we're required to make certain disclosures and public appearances about Goldman Sachs relationships with companies that we discuss. The disclosures relate to investment banking relationships, compensation received and 1% or more ownership. We're prepared to read aloud disclosures for any issuer upon request. However, these disclosures are available on our most recent reports available to you as clients on our firm's portal. So anyway, with that, again, Martin, Bert, thanks so much for spending some time with us today.

Maybe start off. Let's just kind of level set 2025. When you look back, if you were on Jan 1, kind of what you expected this year versus what's played out, what ended up being better, what ended up being worse? And then kind of a follow-on from that, we'll go to how does that set us up for 2026 then?

I think the amazing thing about our space in fertilizer is that it's the surprises that come throughout the year and how do you manage for them and against them in your system. It's a global market. And so we're competing globally. We at CF are moving products globally. But you have to remember, most countries and most places that consume our products have one application per year. So you have in the North American market, April, May, June and in the South American market with 2 crops, a little more.

And so you're always looking to where inventories are, production rates, how products are moving, how products are being priced. And I think the surprises of 2025 were -- the first one is the war. And so what that did to production. And so this was a supply -- a lack of supply-driven market and prices reflected that. So you took off uranium production due to weather, which is the cold weather and they generally use the gas for domestic consumption. And then the war probably took 2 million tons off the market. Same thing with Egypt, lack of gas from Israel from the lithium field.

And so those 2 combined and then increased demand in India, which has been tendering throughout the year, very positive demand in Brazil. And then obviously, high gas costs in Europe, limited production there, so more imports to Europe. I would say supply constrained, demand driven and that created a market where we hit almost $500 a ton in June for urea in the United States. And so that is, again -- we have to attract tons into the United States. I think the tariff disruptions of April 1 that were announced and basically the Trump administration tariff to everybody, except Russia, and those tons then it slowed down imports. Producers, let's take Algeria. Algeria, it's not my problem. It's the traders' problem. The traders is not my problem. It's the destination has to pay. The destination market being the United States, I don't want to pay for that.

So we had a lack of supply coming in right during our peak months. I think that also had an impact on pricing. Where we are today as we're exiting 2025 is a more moderated market. So pricing has come off those highs for today and for urea at $360 plus or minus. And that -- I think supply has come back into the market. China was a surprise in the back half with exporting. India continuing to buy. So we're -- as we exit the year, we're at a balance to a still tight supply market with good demand dynamics heading into 2026.

Fair enough. And then maybe discuss how you view farmer economics. Obviously, we read a lot of stuff in the Wall Street Journal, New York Times about the stress that farmers are seeing. I'm a little bit of a skeptic. I mean it's not as good as it was 3 years ago, 4 years ago, but we still don't need to rule out Willie Nelson for farm aid yet at least. But do you think that's having an impact or will have an impact on your business next year that farmers are making less money than they were a couple of years ago? Are you seeing that?

So we track that. And we -- just like you, I come from a family -- farm family or family with a farm and ours in Colorado, I think yours is in Nebraska. I grew up in an ag community in Kansas, went to Kansas State, have contacts to kind of pressure test. Where are you? What's going on? What are the drivers? We talked about the corn-soybean ratio, what crops should be planted and as well as my contacts in the ag space with ADMs, cargoes and those folks.

So I think it has been challenged. And you're right, we had some very good years earlier, 2022, 2023 and a more challenged year on the revenue side. What people don't remember or don't calculate is the revenue guarantee programs because of the crop insurance. And so with the price that was set at $470 with good yields, you're going to have -- you're going to cash flow okay, especially in the I states, Indiana, Illinois, Iowa and Nebraska, we'll call an I state. But we've had -- and if you look at the yields this year in the dry land areas of North Dakota, South Dakota, that trend yield is 188 million. That tells you that the more challenged areas had higher yields. So again, more revenue.

I think the issues with soybeans and the exports to China or lack thereof, where it's a challenge of movement, and that then hit pricing. We're starting to see some escalation in pricing that will positively impact the farm center. As we look to 2026, I still say corn is the favorite product to plant. We have a good -- with the feed ration what's going on in the protein sector with beef, pork and poultry, we have a very good demand base there that will consume a good portion.

Then the ethanol business, I think that's a little bit more challenged with petroleum at $60, but it's still -- we've got a good demand base just based on regulated demand. And then it's the exports of corn that don't go to China, they go to Mexico and other places. So we have -- I would say 98 million acres of corn that were planted in 2025, fantastic. People don't understand how much that -- how many acres that is. We'll probably be down to 92 million, 93 million, but still good for 2026.

Okay. And that drop of -- let's say, it's 5 million, 98 million to 93 million, just for round number 5 million. How big of an impact does that have on your business on AN consumption in the U.S., because there's a couple of ways to look at it. You had such a huge crop this year, you've mined a lot of AN from the soil this year. So maybe a 2-part question. So how are you seeing the fall application season progress in the U.S.? And then what do you think that does to AN demand next year, let's say, 5 million less acres of corn maybe going to soy?

So how we look at it because we're a supplier of the major AN products, ammonia, urea and UAN. Urea and UAN are applied in the spring, ammonia can be applied in the fall and the spring. And so we have a fall -- like you talk about a fall season that is only in November. Ambient temperature has to hit 50 degrees, soil temperature has to hit with good soil and moisture.

We had a very good -- and this is a nice indication for 2026. We had a very good fall application season, could have been even better, but it was limited by weather. This -- you're not seeing in New York like we're seeing in Chicago, but the 8 inches of snow we got right at Thanksgiving and the cold weather, that just absolutely stops it. And so -- but inventories are low. The trend in what this to me signifies is healthy corn acres again. We could have sold more. We'll have to push that to spring, and that will be a March, April application period for ammonia.

Okay. And then do you -- but if you've got fewer acres theoretically next year, does that hit demand next year enough that it's a speed bump for you or you don't think you'll feel it much at all?

I think it's a speed bump. When you -- let's call it, 5 million to 6 million acres. And in terms of pounds per acre and you calculate that out, you'll see additional wheat acres. That will take some AN demand and probably other products will take -- the land won't be fallow. And so if it does go to soybeans, you'll have more phosphate and potash, not as -- probably not any nitrogen on that, but for CF who has the ability to store, to export, to move it and we have these long-standing relationships with our customers, we feel very good about our position going into 2026.

Okay. And what about when you look at the different inventory levels throughout the channel, the different AN products? How do those sit today versus maybe a year ago or kind of the average in the last several 3 or 4 years?

The interesting thing about inventory is, again, the psychological position of a buyer of what is he or she comfortable handling, carrying because there's a cost. There's a cash cost, there's a market risk cost. And so we check that globally. We have channel checks in Brazil. We have channel checks in India. We have channel checks in China. Just to see where are we. Europe, we produce in the U.K. And coming out, the fertilizer year is July through June.

So coming 2025, July was really globally, again, exacerbated by the factors I articulated in the first question of low production and low inventories, high prices. People don't want to carry. So we had low carry-ins to this year and then lost some production on our own in some of our producer friends in the United States. So we believe inventory is low at the retail sector as well as the producer sector. And this is -- a lot of conversations are coming from our customers, and we've tracked them. Probably at this point, I would say they're 30% to 50% bought for spring, where normally they're 70% bought. So a lot of catch-up needs to take place. And I think this is a good market and good price structure for them to do that.

Fair. And then you've mentioned a few hiccups that the industry has had this year. Again, you could throw in Trinidad, some others. How do you track that? I guess some people would talk about kind of unplanned outages. When you look at that this year versus a normal year, how much bigger was the supply disruption, the unexpected supply disruption this year? And when you look at those different issues, is it likely that next year continues to be a bigger-than-average unplanned supply disruption? Or when you look at those, most of them kind of onetime things, you replace a valve, whatever it is, and now you're off to the races again. And so you actually might have more supply next year relative to that?

Yes. I think that's a hard one to project, but it's an easy one to look back on. And so when you look back on Saudi Arabia, for example, Maaden being down for, I think, 6 months. And the lack of supply from the new production that has not come from Gulf Coast and Woodside that has been projected, projected, projected and it hasn't come. We had some disruptions in production. And then you're right, Trinidad with gas is a reality. Europe with gas cost is a reality. Nothing is operating in Brazil. They have several plants that are down and have been down for at least a couple -- a year or 2. And so you can go around the world, Bangladesh, another area that are challenged and then the expectation of additional supply from certain areas, again, back to the earlier comments, didn't come, makes it tight.

Okay. And then if let's say, Ukraine-Russia thing is resolved in some way, so the business can resume, what do you think that does to the global supply-demand balance for AN? How quickly will they be able to -- I don't know the extent of damage to the pipelines and some of the plants and stuff like that, but what's your view? How much do you expect to come out of that area, the Black Sea area incrementally if there is a solution?

So separating the 2, Russia has done a very good job. And one of our frustrations is how much Russian tonnage is coming to the United States. And we've talked about that many different times that we're not -- the one country we're not sanctioning or tariffing is Russia, confusing, but it's still coming. So the product is coming out.

I think the Russian producers, EuroChem, Akron and EuroChem with the EU have done a very good job of creating options coming out of the Baltic with Ust-Luga, which is one of their ports and how they're bringing ammonia. They've also converted or upgraded more ammonia to urea. They've done a good job of investing. The Black Sea really hasn't opened up for exports. The Port of Taman that they've built to export is exposed today where product used to flow through Ukraine to us is shut down. And I don't know if that's going to come back. That was connected to Togliatti, one of the big operations in Russia. That will have to wait until peace is declared and some time is spent.

Sure. Okay. So I guess -- let's exclude that. But how do you see supply-demand next year versus this year, again, kind of across the different AN products? Do things get tighter? Do things get looser in your view? Kind of setting aside the unplanned stuff, but just the book numbers, how do you have that for next year?

So starting with the demand side of where we think demand will be, the stock-to-use ratios of feed grains and what's happening with consumption is positive. That's for protein, for just the movement of feed grains.

I think the question on supply is, generally, we go through some weather issues in the Middle East and Iran is shutting down again for gas use for domestic consumption. I think we're seeing in Europe at $9 to $10 gas, not $20 gas, but I don't think that incentivizes production levels any higher than they were in 2025.

I think Trinidad is still challenged. I would say more supply is available, but not -- we just looked at this internally, our agribusiness analytics group just looked at this week of those numbers and what is the -- when you look at the cost curve, what ton are you bidding in and at what cost level does that take? And that's what happened in 2025. And I think that probably moves a little bit to the left with more supply.

And then the question is China. And we've been pretty consistent with China, has the capability and the kind of consistency of around 4 million tons. That's what happened in 2025. There's discussions that those tons will come out in Q2 of 2026, again, with the licensing or the approvals to export. And if that happens again, then there'll be better supply in Asia.

Okay. So you think it will be roughly the same tons, but a little bit bigger window for next year is how you would handicap China at this point?

Today.

Yes. Okay. Fair enough. And then when you look at the internal Chinese market, because, again, it seems like that's kind of what's driven their decision on how much to export. How do you see the internal supply-demand balance? Is that 4 million the right number to balance that? Or does that leave them either short or long internally in your view?

So it's a good -- I mean that's the opaque question of the day. So when you look at static capacity, which is public and the run rates, which are public and then the amazing thing to me in China is how much of that domestic demand for ag industry and whatever has increased. And so when you look at North America or it kind of goes China, India, North America in terms of overall consumption, India is about 39 million, 40 million tons probably today. China is over 60 million. North America of urea is like 15 million, 16 million. And so it's just a gigantic demand. And China has done a very good job, a centrally controlled country with a lot of power centralized. And if the goal was inexpensive urea for Chinese domestic consumption for Chinese farmers to stay on the farm, goal achieved. Do they care about the export market? I think there are some companies that were -- that build plants to export, and it sounds like they're allowing that to happen on a measured basis.

Okay. And then the Indian impact on AN this year is more positive than it's been in a while. I guess, looking back what do you attribute that to? Do you think that is something that now is sustainable kind of at these higher levels, more active levels of tenders? Or does that turn out to be kind of a onetime blip where they bounced up a little bit maybe to take care of a little bit of a deficit and now they call it even for a while until the farmers scream again?

So the level of imports did surprise the level of demand for the imported ton that I would have said 6 million tons, it's going to be 7 million, 8 million, 9 million tons, which is very positive to the market. And the way they have tendered at 1 million tons at a time to 2 million tons has been consistent. And we expect one more tender probably for January and then they go quiet until their fertilizer year starts in April. But continued demand, a little bit challenged on domestic production. And just the way they subsidize, you have a very consistent good growth of demand of nitrogen, especially against high-cost phosphate. So when you have a choice as a farmer in India, when you're going to buy the stuff that you know works and is reasonably priced.

Okay. And then just because it consumes ammonia, what are you hearing on what the North Africans want to do with DAP-MAP production over the next 3, 4, 5 years? Does that -- are they growing that where that becomes -- would that be a market for you? Or would you look at that as just sopping up a competitor's ton somewhere that gives you more play kind of with direct sales of ammonia?

So the Bakkens are a customer of ours. We do talk with them regularly. They're very good buyers. They're very good operators, and they are growing and their projected growth of investment and their rock situation, the phosphate rock reserves that they have should drive them. And with the pricing of phosphate today being on a historic basis, high. They have every incentive, and we believe they will continue to grow. And yes, we have conversations with them. We ship them one of our first cargoes of low-carbon ammonia. So they're testing how can they be more active in the low-carbon space, which enters new markets for them. So we're excited about what's happening in North Africa.

Yes. You mentioned low carbon, so maybe we can take just a couple of minutes and talk about your effort. So maybe writ large, how does CF approach the low-carbon ammonia market? What are you seeing as far as demand trends go there? Obviously, we know the capital you've kind of already FID, but how are you thinking about future projects or future capacity in this space?

So we're the company to do it. And when we identified this opportunity 4, 5 years ago and communicated that to our investor and customer community that there is a potential, one, because of the geology that's understood in North America; two, the price of natural gas and the capability to access low cost; three, we're the company that does this and operates well and can achieve the higher level of capacity and invest in and get it done on time, on budget.

And so as we approach the market, communicated these -- our situation and the potential, the inbound requests from Asia, Korea, Japan, from Europe for CBAM and low carbon from Morocco for low-carbon products going to -- for phosphate and so -- and other markets. And so where we are, there are a lot of projects announced. I would say over 120 ammonia or low-carbon or hydrogen-focused projects, hardly any of them are going to be built, ours will. And we're already in process.

And -- so we have been very active over these ensuing years of how do we aggregate demand. And so it's with the chemical companies in Europe, the fertilizer companies in Europe for low carbon focused on CBAM. That's going to happen. We already have contracts in place. And then it's the domestic market that we're working on in the ag value chain as well as our industrial customers. We have a fairly large industrial book. And then it's the contract commitments that we already have with our partners, JERA and Mitsui that will focus on Asia. So it's a multipronged effort to make sure that as we come on and that production comes on stream in 2029, that it's allocated, it's understood and it's moving, and we're aggregating value.

Okay. And maybe has the decision been made on the percentage of your Japanese partner in the plant? I know it's like by the end of the year, we're okay. But the goal is still hopefully by the end of the year that there's an announcement on that. Okay. All right.

And I guess, obviously, you're still in communications. The great hope was that particularly in Asia, Korea, Japan, you would use a lot of ammonia kind of maybe coal -- burn it with coal and stuff like that. How are your customers seeing that market develop for them? Obviously, you've got your commitment on your tons, but if we're talking about something that can grow over 10 or 20 years, does it feel like that market is developing as you would have hoped? Or I think what a lot of investors worry about is with kind of Trump backpedaling on a lot of stuff here, that drags a lot of other countries backwards on kind of the carbon commitments. So just, I guess, as we're getting towards the end of the year, what are you seeing as far as the development of the low carbon market in Asia in particular for ammonia?

What I would say is 2 things. These plants are built and like Donaldsonville is almost 60 years old, the first plant, still operating and still doing great. These plants are long-lived and these oscillations that are political or geopolitical or economic or trade-related have a duration as well that are generally short term. And so we have a long-term trend of environmental and improved operations. We are believing in that as well as our partners are as well. And so we have conversations with other companies on future projects and future ideas.

Again, I think North America is the place to invest, and we are the company that can do it, and we have the capability for space and future investments if those partners and rate of return are acceptable to what other options give us. But I do believe that these trends, I think marine is longer dated, but there's still a lot of work being done with the engines and investments. Hydrogen, there's still a lot of conversations going on, but probably a little longer dated, but co-combustion is happening.

Yes. Okay. Fair enough. And just because you mentioned marine, to me, it's always kind of interest. Does ammonia win, does methanol win, does hydrogen win? When you look over this year, has there been any change between the competitiveness of those 3 that would move one or the other further? I mean there's been no technological breakthroughs. But I mean, as you look at that market, is one improved relative to the other 2?

I would say ammonia ships that are moving ammonia and have the capability generally to go LNG or ammonia, that's an easy growth platform. I think the questions around methanol, the questions around kind of the development of the bunkering system is still to come.

Okay. Fair enough. And then our internal view for natural gas is somewhat negative for you guys. I mean we have natural gas going up a decent amount next year relative to this year. And we actually then have globally traded natural gas prices coming down quite a lot that would make Europe fairly competitive where that ratio would come well under 2. When you think about the benefit that we've gotten in the U.S. from very high natural gas in Europe, what does that ratio have to get to that kind of unwinds in your mind? Where did -- I don't want to say where does Europe become competitive because we'll always be lower cost. But it's been pretty easy for us to ship stuff there relative to their cost and we can kind of land stuff cheaper than they can make it there. What's the ratio or what's the level that you would get worried about European gas prices?

So we'll just start with the premise that you're wrong. No, I think that these are -- it's -- there are so many factors in the energy construct of the world, whether the different forms of energy that are used, how those energies are processed and what is set up to process, load, ship, receive and consume. When you look at natural gas, the amazing thing to me, if you have tracked natural gas in North America from 1980 until 2010, it was about 40 to 45 Bcf a day. Fairly consistent. And then just the rocket ship up as the whole shale revolution and then the demand base for the same product.

So today, we're at 108, 109 Bcf a day, amazing, what is happening, okay? So parallel to that is LNG has gone from 0 to 4 to 6 to 8 and just a few months ago, it's 15. Now it's 18 Bcf. So almost, let's say, 18% of the product is being shipped out. Where else in the world is that happening? Australia, Qatar, so there are different places where is it not happening? Well, Trinidad is going down because they don't have the resources. And so this -- the reserves of natural gas in the world where they are and where they need to be and then the demand for those molecules being AI and new generation that's taking place, not only in North America, but Europe and natural gas is going to be the replacement product longer term, I think, over renewables.

And so the project -- this is my opinion, the projection of that compression of global gas to North American gas, I would say, you'll have still remaining -- if you have a compression and the marginal producer is unable to export, most of these people have contracts connected to their LNG operations that you're either going to see much cheaper gas in North America, okay, so maybe it compresses globally. But I don't think -- this is again, my belief, not to the level that Goldman Sachs has put out there. And again, it doesn't take, I don't think, in the full need of what that demand for the molecule is going to be.

Okay. And when you -- because one way I look at it, if you're a global potent, right, you could say, we're gas-rich, Europe's gas short. So we could send it over there as natural gas and produce ammonia there for their farmers or we can produce ammonia or urea or whatever derivative, ship it. And that's a cheaper way to contain basically the natural gas molecule to get it to Europe, right? It's just easier to ship urea than it is with all the compression. Have you done the work on like how much -- like do you look at it the same way and then say, okay, if it is cheaper to do it that way, that's kind of my worst-case buffer at least? It can't get worse than that. And when I do that, it's like $40 a ton on ammonia equivalent. I don't know if that sounds right to you or...

So we look at it -- we've done study after study of looking at -- so you have -- we start with the efficiency of the plants that exist and the age of the plants and the necessary investment. A turnaround is $60 million. If you're not making money, and this is our decision in the U.K. Those plants were older plants, inefficient plants, and we came up to a turnaround and your gas cost is here, your price -- your product pricing is here, that's going to be the question of longer-term investment in Europe and does it -- there was a good article in the Wall Street Journal about just the whole chemical side. Ammonia is in that mix.

And so then you throw in carbon costs, we're going to have low carbon products, and we're going to be taking that to our U.K. operations, and we're going to have low-carbon ammonium nitrate that we produce in the U.K. So there -- I think there are a number of options that have to be looked at for us. We see 3 million or 4 million tons of ammonia still to come offline in Europe due to some of those factors. And then it's -- the cost curve works. And so you bid in the marginal ton when prices are high and that when prices move into a lower level, the high-cost producer shuts down. And today, those are in a few different countries. That's what balances supply and demand.

Fair. Okay. Maybe if we could jump -- we'll run out of time here. I'd love to ask questions for another hour. But capital allocation, I guess, what should investors expect from you guys over the next several years as far as where your capital is going to end up going? Obviously, we're making a lot of money today with where nitrogen prices are this year and what it looks like in the next year. So we're at a good point in the cycle. What do we end up doing with that cash in your view? Or what would you like to do with that cash?

I think you're going to see a continuation of the balanced and disciplined capital allocation we've had for the last 5, 10 and 15 years. We first look to invest in our existing assets and existing capacity in high-margin projects or to add capacity like purchasing the Waggaman ammonia facility or investing in new capacity additions like Blue Point and decarbonizing projects like our Donaldsonville CCS project.

And then beyond that, we look to return capital to shareholders primarily through share buybacks. And if you look back over those 5-, 10- and 15-year periods, there's some pretty large share repurchase activity, the largest use of cash in those periods. And we repurchased 19% of the company with our last authorization. And since 2010, we've repurchased over half of the shares.

Yes, which is admirable. I'm a fan. But I guess when you look back, well, a couple of things, do you think the fertilizer industry has the right structure right now, both kind of the Americas and then globally? And if you don't, would you guys be a participant in kind of reshaping that inorganically?

I think we always look at opportunities to add to our network. It is a global business, as Bert mentioned. And we've looked at all the assets that have pretty much ever been available globally. And it's hard to make things work outside of North America.

Okay.

I think it's an exciting time in our space. There's so many moving parts and dynamics and the things to pay attention to, not only as an investor, but as an operator and how we manage our cash and how we manage those investments and the things that we're doing with our cash and positioning ourselves for the future. The CF of today is amazing from where it was the CF of yesterday and how we are the market leader in so many ways of whether that's low carbon or in terms of our performance and free cash flow and what we do with that and how we are, I think, shareholder-friendly.

Okay. And the idea of maybe going away from nitrogen, is there anything that you guys would look at? Obviously, you've had a competitor that's done that historically when you look over the last 30 years, kind of put together all the nutrients gotten into retail. Some others do stuff around biologics because they feel like they got a connection to the farmer. When we look 5 or 10 years from now, is CF going to be just a nitrogen company like it's always been? Or is there a chance that there might be another leg in there?

Well, I would say, not just. Well, should I? I don't want to minimize it.

That's a phenomenal business.

And I think the way -- we are very good at what we do, very safe in how we operate. We have a great employee base. We're well positioned. And we sold off our phosphate business in 2014 to Mosaic. That was a very good decision because mine life was for us and them. And so I did retail in Brazil for 8 years. It's a tough business. We are very happy with our channel partners. The co-ops do a great job and they take care of the farmer in so many ways. And so we want to be a part of that, but that doesn't mean we need to be in that space.

Fair enough. Well, listen, thank you guys so much for coming and spend a little time with us today. Thanks, Bert. And thanks, Martin. Thank you.

Thank you.

Thank you.

Good day, and welcome to the CF Industries Q3 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Martin Jarosick, Vice President of Treasury and Investor Relations. Please go ahead.

Good morning, and thanks for joining the CF Industries earnings conference call. With me today are Tony Will, President and CEO; Chris Bohn, Executive Vice President and Chief Operating Officer; Bert Frost, Executive Vice President of Sales, Market Development and Supply Chain; and Greg Cameron, Executive Vice President and Chief Financial Officer. CF Industries reported its results for the first 9 months and third quarter of 2025 yesterday afternoon. On this call, we'll review the results, discuss our outlook and then host a question-and-answer session.

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

Also, you'll find reconciliations between GAAP and non-GAAP measures in the press release and presentation posted on our website. Before we begin today's call, I want to provide an update on the incident we experienced at our Yazoo City, Mississippi complex last evening. All employees and contractors are safe and have been accounted for, and there are no significant injuries. The incident has been contained, and an investigation is underway. Now let me introduce Tony Will.

Thanks, Martin, and good morning, everyone. Yesterday afternoon, we posted results for the first 9 months of 2025 in which we generated adjusted EBITDA of $2.1 billion. These results reflect outstanding execution by the CF Industries team across all aspects of our business. And most importantly, our team continued to work safely. At the end of the quarter, our trailing 12-month average recordable incident rate was 0.37 incidents per 200,000 work hours.

Five years ago, October 2020, we announced a significant shift in the company's strategic direction, including an ambitious plan to begin decarbonizing our production network, a plan to become the world's leader in clean ammonia and a model example of environmental stewardship and how to abate an energy-intensive business in a financially responsible way. Today, that vision has been realized. I'm very excited to announce that the plans we launched 5 years ago have begun delivering real value to our shareholders and broader benefits to the society as a whole.

We have made great strides over the last 5 years and have reduced our GHG emissions intensity by whopping 25% from our original baseline. And every single one of the initiatives that contributed to this remarkable achievement have been highly NPV positive, creating substantial value for shareholders. We are the best example of how being environmentally responsible can actually go hand-in-hand with creating significant shareholder value. On our journey, we have executed all of the following initiatives.

We closed 2 of our least efficient, highest emissions plants that were also borderline uneconomic to continue operating. We commissioned 2 new highly efficient, lower emissions plants that have return profiles exceeding 20% IRR. We acquired the Waggaman, Louisiana ammonia plant, a very efficient plant with relatively low GHG emissions intensity and increased production at that facility significantly from 750,000 tons annually to over 900,000 tons, resulting in an IRR of over 20%.

We installed N2O abatement systems into certain nitric acid plants, the resulting carbon credits from which are being sold at high values, more than recovering our costs within just a single year. And finally, we have begun sequestering approximately 2 million metric tons per year of CO2 from our Donaldsonville complex. The 45Q tax credits from this project will more than pay our installation costs within 2 years, generating an IRR over 20%. And we are currently selling the resulting low-carbon ammonia at a premium.

What is otherwise a commodity product, chemically identical to ammonia produced anywhere else in the world has become differentiated and now commands a premium in the marketplace. These initiatives have helped reduce our emissions intensity by roughly 25% from our baseline while creating significant value for our shareholders. And now we are embarking on the development of the world's largest ultra-low emissions ammonia plant at our Blue Point complex in Louisiana.

We have 2 world-class equity partners, JERA and Mitsui with us in this venture, and I fully expect the financial and societal benefits will be equally as impressive as the initiatives we have already completed. Additionally, we have a second carbon capture and sequestration project underway at our Yazoo City, Mississippi complex and numerous other initiatives yet to be announced.

The end result is that we have a robust high-return growth trajectory in front of us through the end of the decade that will continue to dramatically reduce our GHG emissions intensity while providing exceptional financial returns. Before I turn the call over to Chris to talk more about our operating results, I do want to take a moment and highlight what I consider to be a great misconception in the market. I want to refer you all to Slides #10, 11 and 12 in our materials. Slides 10 and 11 show our consistently strong free cash flow generation and our relentless share repurchase program.

Slide 12 shows our remarkable free cash flow conversion efficiency from EBITDA and yet amazingly how we trade at a shockingly low valuation. Oftentimes, CF Industries is compared to agricultural companies, and yet we are very different from most of those. The seed and chemical companies face challenges of products coming off patent and declining margins or of distribution channels being stuffed full and having to go through the pain of destocking.

We are also very different from capital equipment companies or those selling more discretionarily applied products like phosphate and potash who are really and truly subject to grower profitability. However, our sole product, nitrogen, is fundamentally different. Even in periods of relatively weak grower profitability, nitrogen demand is unaffected, almost completely inelastic.

This year, when there was great hand ringing due to subdued grower profitability, high planted corn acres and global nitrogen supply production disruptions in other parts of the world, created a situation where nitrogen demand and resulting pricing was very, very strong. As Bert will talk about in a few minutes, we see the same strong demand dynamic shaping up for next year. Nitrogen and certainly CF Industries' financial performance is not impacted by most of the factors affecting the rest of the ag sector companies.

While other times, we are compared to industrials or material sectors, again, we have very little in common with most of those companies either, especially the chemical companies. We do not suffer from global overcapacity nor from sluggish or declining demand. Our free cash flow generation is consistently high. And yet as shown on Page 12, we have traded at an anemic average cash flow multiple of barely 7.5x free cash flow. Realistically, that should be the low end of an EBITDA multiple, not a cash flow multiple.

Oddly, businesses that are on the whole more volatile and structurally way less advantaged than CF trade at a higher valuation. The industrial sector trades at 27x cash flow. The materials sector trades at 30x cash flow, while our consistently high cash flow generation on average has traded at a sickly 7.6x. All of this is a long way of saying the market doesn't really understand our business or our consistently high free cash generation. As Greg will talk about shortly, we have made great progress on our share repurchases and continue to do so.

We, around this table, believe CF represents an amazing value, especially when only trading at an average 7.5x cash flow. And we will continue aggressively repurchasing shares from the nonbelievers and those that don't take the time to understand why we are fundamentally different from most ag, industrial and materials companies. With that, I'll now turn it over to Chris to provide more details on our operating results. Chris?

Thanks, Tony. CF Industries manufacturing network has operated well throughout the year with a 97% ammonia utilization rate for the first 9 months of 2025. As is typical for the third quarter, we had significant maintenance activity, which reduced production volumes compared to the first 2 quarters. We continue to expect to produce approximately 10 million tons of gross ammonia for the full year. We also have made significant progress on strategic initiatives that are now generating EBITDA and free cash flow growth for the company.

In August, we were able to fully utilize expanded diesel exhaust fluid rail loadout capabilities at our Donaldsonville complex for the first time. This enabled us to capture incremental high-margin DEF sales and led to a monthly record for DEF shipments from the site. Also at Donaldsonville, the carbon dioxide dehydration and compression unit, which was commissioned in July, continues to run well. We are generating 45Q tax credits and moved to full rate safely through the quarter.

Finally, in October, we completed a nitric acid plant abatement project at our Verdigris, Oklahoma facility. This project is expected to reduce carbon dioxide equivalent emissions at the site by over 600,000 metric tons on an annual basis, which we are monetizing through the sale of carbon credits. By the end of the decade, we expect the returns generated by our CCS projects, along with the Verdigris abatement project will add a consistent incremental $150 million to $200 million to our free cash flow.

Longer term, we remain excited about the compelling growth opportunity that the Blue Point project offers us, particularly given the sales team's success in selling low-carbon ammonia from Donaldsonville for a premium. Detailed engineering activities and the regulatory permitting process are progressing well with capital expenditures for 2025 expected to be within the range we projected earlier this year. We expect site construction to begin in 2026. With that, let me turn it over to Bert to discuss the global nitrogen market and the growing interest in low-carbon ammonia. Bert?

Thanks, Chris. The global nitrogen supply-demand balance remained tight in the third quarter of 2025. Demand led by North America, India and Brazil was robust. Additionally, product availability remained constrained due to low global inventories and outages during both the third quarter and earlier in 2025. China's re-entry into the urea export market provided tons the world needed, but did not substantially alter these dynamics. Looking ahead, we expect the global nitrogen supply-demand balance to remain constructive.

We believe supply availability will continue to be constrained. Global inventories are low, including in North America. Additionally, major planned and unplanned outages are occurring now while geopolitical issues and natural gas availability, particularly in Trinidad, remain a challenge. The start-up of new capacity also continues to be delayed. At the same time, we expect global demand to remain strong. India is likely to tender for urea in the near term, especially given the result of their most recent tender.

Nitrogen demand in Brazil and Europe has picked up recently. And in North America, economics favor corn planting over soybeans next spring based on the December 2026 corn contract, which is currently priced at approximately $4.70 per bushel. Farmer economics across the globe remain a key focus as crop prices have not kept price up -- pace with the price of inputs, equipment, rent and other costs. That said, we believe nitrogen offers clear value for farmers relative to other nutrients for its immediate impact on yields.

Given where crop prices are today, we expect farmers to focus on optimizing yield, which should support healthy nitrogen applications. We believe that the strong uptake of our UAN fill program and our robust fall ammonia program and the order book that supports it will support that outlook. We're also preparing for the implementation of the European Union's Carbon Border Adjustment Mechanism, or CBAM, which takes effect in less than 2 months. While there remains some uncertainty about the final structure of these regulations, we feel very confident about our competitive position.

Thanks to our Donaldsonville CCS project, we have the largest certified low-carbon ammonia volume in the world. And over the last few years, our team has put in a great deal of time to build relationships with customers, including those who will be affected by CBAM. This has enabled us to sell certified low-carbon ammonia at a premium to conventional ammonia today as customers begin to adapt their supply chains.

Based on our conversation with customers, we also believe CBAM will drive significant demand for other low-carbon nitrogen products such as UAN. We see this as a tremendous opportunity for CF Industries on top of our already high-performing nitrogen business. We look forward to working with customers to build out a low-carbon ammonia and nitrogen derivatives supply chain. With that, I'll turn it over to Greg.

Thanks, Bert. For the first 9 months of 2025, the company reported net earnings attributable to common stockholders of approximately $1.1 billion or $6.39 per diluted share. EBITDA and adjusted EBITDA were both approximately $2.1 billion. For the third quarter of 2025, we reported net earnings attributable to common stockholders of $353 million or $2.19 per diluted share. EBITDA and adjusted EBITDA were both approximately $670 million. On a trailing 12-month basis, net cash from operations was $2.6 billion and free cash flow was $1.7 billion.

We continue to be efficient converters of EBITDA to free cash flow. Our free cash flow to adjusted EBITDA conversion rate for this time period was 65%. As you saw in the press release, we updated our projection for capital expenditures on our existing network to approximately $575 million for 2025. This reflects additional maintenance we were able to complete efficiently during planned outages as well as the timing of strategic investments that Chris mentioned this morning, and he spoke about at our Investor Day in June.

We returned $445 million to shareholders in the third quarter of 2025 and approximately $1.3 billion for the first 9 months. In October, we completed our 2022 share repurchase authorization, having repurchased 37.6 million shares, which represents 19% of the outstanding shares at the start of the program. Our share repurchase program continues to create strong value for long-term shareholders. Net earnings increased approximately 18% compared to the first 9 months of 2024, while earnings per share were approximately 31% higher, reflecting our significantly lower share count.

The same positive impact can be seen in our shareholders' participation in our production capacity and the free cash flow it generates. We are now executing the $2 billion share repurchase program authorized in 2025 with over $1.8 billion of cash on hand at the end of the third quarter. We are well positioned to continue returning substantial capital to our shareholders while also investing in growth through Blue Point and other strategic projects. With that, Tony will provide some closing remarks before we open the call to Q&A.

Thanks, Greg. For me, this is earnings conference call #48 and my very last one as CEO of CF Industries. Over the past 12 years, traditionally at this point in the call is when I have thanked the entire CF Industries team for their hard work and contributions to our success. I'm eternally grateful to the entire team. Today may be more so than usual, and I am particularly aware of what an amazing team we have here. So indeed, thank you all said perhaps a bit more heartfelt than the past 47 times.

I'm exceptionally proud of the company and the organization I'm leaving. The highly ethical way in which we conduct ourselves, our unwavering commitment to employee safety and our absolute focus on value creation. In addition to the entire CF team, I also want to thank our Board of Directors who have always been supportive of me, providing insight and guidance through the years and importantly, always aligned with me on the objective of value creation.

I also want to particularly thank the CF senior leadership team with whom it has been a truly great pleasure to work alongside. I can honestly say this is the best group one could possibly hope for and not only respect them as individuals along with their business acumen, but I also thoroughly enjoy their company and our camaraderie. Finally, I want to thank and congratulate Chris Bohn on being named CEO.

Chris has been a consistent thought partner and devil's advocate working with me as we navigated foundational decisions like the Terra acquisition, the sale of our phosphate business, the capacity expansion projects, our strategic repositioning of the company, the Waggaman acquisition, and most recently our Blue Point joint venture. Chris has been hugely successful in leadership roles across the company, including heading FP&A, supply chain, manufacturing, CFO, and his current role as COO. Chris has my complete faith and confidence that he will successfully lead the company to new heights.

Again, thank you, and congrats. It has been some kind of a thrilling ride for me as CEO, an incredible honor and a very great privilege. We've accomplished many things over the years. As I say, success has many parents and indeed, all of our successes were team efforts, and I'm delighted to say that the team remains in place. Therefore, I'm steadfastly confident that the company's best years are in front of it. With that, operator, we will now open the call to your questions.

Before Q&A, I want to take a moment to acknowledge Tony's retirement and his contributions to CF over his 18-year tenure. Tony's influence and impact on CF cannot be overstated. From his time leading manufacturing where he generated and championed the do-it-right phrase is a core statement of CF's values and culture to his relentless pursuit of personal and process safety. CF has improved through his leadership. Tony's leadership, which can be best described as bias towards action.

This has been exemplified through the growth the company has experienced under his guidance through the CHS transaction, Donaldsonville and Port Neal expansion projects, Waggaman acquisition to the recent announcement of the Blue Point joint venture, increasing CF ammonia production and free cash flow generating assets by 45% during his time as CEO and over 200% since he started at CF as a member of the senior leadership team.

His safety-first mentality, keen decision-making and focused on disciplined investments and execution is what has positioned CF where we are today, tremendous safety performance, industry-leading asset utilization and superior capital allocation. Over the years, he's not only been a great mentor, but also a great friend. I look forward to building on what Tony has established and wish him the best in his next act. Thank you, Tony.

Thank you.

[Operator Instructions] First question comes from Ben Theurer from Barclays.

So first of all, Tony, all the best in retirement. I'm pretty sure you have plenty of things you want to do. So enjoy that. And that's -- it was quite a run, I guess. So that's never bad. So enjoy that piece. And maybe as well for you, Chris, all the best on your new assignment as CEO. So 2 quick questions I have. So one, you've talked about in your presentation material about the mid-cycle where you are right now and the mid-cycle where you think you're going to be in 3, 4 years' time as you get these additional projects come through.

So I just want to understand the current market conditions obviously still seem to a degree, stretched, right, with the European gas price somewhat elevated versus what maybe mid-cycle in the past was. So I wanted to get your view in terms of the bull versus the bear around that $2.5 billion mid-cycle mark and how we should think about that evolving from a feed cost standpoint of view into the period of 2030? And then I have a very quick follow-up on pricing premiums.

Yes. So I'll start. It's Greg. So clearly, today, right, when we built the $2.5 billion, we had a $3.50 gas strip in there for Henry Hub and a price -- realized price on urea at $3.85. As of today and through the year, we've obviously traded below that on the Henry Hub. So from a feedstock, we've been benefiting in our results. And then lately, you've definitely seen a price move up through the course of the year on the urea. So from a results standpoint, hopefully, you're seeing that and appreciating that in the results that we printed at $2.1 billion of EBITDA through the first 3 quarters.

I think as you think about it going forward and the spread between what we see here in the U.S. and in Europe, our view is that there'll be some tightening there, we expect to have a competitive advantage and remain lower priced on a nominal basis as well as relative basis versus what we're seeing in European production, which is -- will continue to be a tailwind to us for our financial performance.

I mean, I guess it's a long way of saying, Ben, that we would agree with you that current conditions are well above mid-cycle and our expectation just based on history of how fourth quarter paces against the other quarters should deliver full year results well above mid-cycle this year. And I think that's consistent with kind of what you said, industry conditions, gas price in Europe, kind of what's going on in terms of the energy space and overall demand, it does feel stronger than, I would say, mid-cycle, but we're delivering against it.

And the only other point I would add is on the growth that Greg talked about going to the $3 billion, that is identified in motion being executed on today. So that is not things that are in the pipeline that is what we know today and that will likely grow as time goes on as well.

Okay. Got it. And then that price premium on the ammonia you're selling in Europe, the blue ammonia that you're getting out of Donaldsonville, can you give us a little sense of magnitude as to the premium that you're getting here with your customers?

Sure. This is Bert. And we've been fairly consistent with our goals of as we build the supply, which has come on stream and over time, as we add additional locations and then Blue Point, we want to build correspondingly demand. And so we've been working very synergistically with our European customers, North African customers and even in the United States. So today, the premium is $20 to $25 per ton. As demand grows and we don't see the supply, we would anticipate that those will be matched on as demand grows. So very positive for CF.

But again, Ben, that was never contemplated as being part of the economics when we went with the dehydration compression plant. So the cost of the plant was just under $200 million. The 45Q benefit when we're sequestering at a rate of 2 million tons a year is going to be about $100 million of cash. And then we're adding another roughly almost 40-ish to 50 from product premium. So we're picking up an extra 50% EBITDA that was never initially part of the justification of that project. And so it's kind of nothing but goodness across the board in terms of our -- that project.

The next question comes from Edlain Rodriguez from Mizuho.

Tony, clearly, you will be missed. That's clearly the case, and good luck with everything. So a quick question, again, maybe for you, Tony, and maybe for Bert. In terms of -- I mean, as you noted, the nitrogen outlook looks very constructive. But if you were digging for possible bogeyman in terms of trying to find something to worry about in the near or medium term, like where would you look?

Well, actually, we do every day, assess the forward market, the spot market, the prompt market, and we try to be constructive in terms of how we build our order book and thinking about the customer base. That's why we're broad-based in terms of ag business, industrial business, export business, and we're levering those along with our terminaling activity, how do we enter and exit the market and play the market.

But when you look at the market today, then it's a global market, you're seeing a constrained supply, and that happened through the global conflicts as well as plants coming offline in Saudi Arabia, Bangladesh and a few other places and gas limitations in Trinidad, high-cost gas in Europe and not a lot of new capacity coming online in low-cost areas. So constructively, supply is, I would say, consistent on a limited basis, while demand continues to grow at that 1% to 2% per year.

And we're seeing very healthy demand in India, Brazil, North America, and we plan to continue with that level of demand. And so when I look at the negatives, I think what -- it's -- from your side, it's always yes, but yes -- but this is going to be negative. And we've been hearing about China for 10 years. We've been hearing about other issues for years, and we continue to outperform the market. So looking at the negatives, I would say I like the current market.

I think the current market is going to extend into 2026. That's as far as we give a viewpoint. But China's demand internally to consume the tons they produce is pretty well tied to that. So these 4 million tons of exports that we see coming out in 2025 is probably needed. And then India hasn't performed on their production internally. They've been importing consistently high levels of urea and Brazil continues to grow. So I have a hard time finding a negative bogeyman out there.

See, I was -- Edlain, I'm going to give you a little more flip in answer. I was going to say all you have to do is read some of your other colleagues out there in the industry, you'll get kind of where the bogeyman sits, even though we don't really believe a lot of that is accurate.

So one quick follow-up for you, this is for Tony and Chris. I mean, Tony, you've talked about the valuation disconnect in your shares. Clearly, I guess, like you failed to convince those jittered investors. Like what else do you think Chris -- and Chris, you could answer that, too. What else do you think you will need to do to convince investors of that valuation gap that you've clearly seen?

I mean we did a European roadshow this summer or this fall and talked to investors over there. And there was a little bit of kind of not understanding why the valuation was what it was, but also -- there was also, frankly, a little bit of just we trade you as part of this broader group of other companies. And when there's a lot of automated trading going on and there's something that affects, like I said, either the ag sector or something else, all of the company's kind of move.

And I think there just isn't a recognition that we're -- our financials are very different from most of the companies in that sector. And I think at some point, when there are few enough shares out, we'll start getting a more realistic valuation against what's remaining. And I think, fortunately, we're generating enough cash, and the shares are such a screaming value that I think continuing just to buy shares out of the market is the only way we can eventually get there.

Yes. And the only thing I would add to that is when you ask what should we do, it's to continue to do what we are doing. We have exceptional operational performance focused on safety and a conversion to free cash flow that I think we, as a company, reflect on more than anybody else that I see both in the chemical and the agri and really all industries. And so at some point, that has to resonate with people. Cash is king and whether it's buying back the shares, as Tony said, or making high-growth investments that have great return profiles, it will pay off at some point. So it's continuing to execute the way we're executing.

The next question comes from Joel Jackson from BMO Capital Markets.

Tony, congrats again. A couple of questions. If you brought forward $75 million of maintenance CapEx this year, does that mean that next year, you should be run rating $425 million CapEx on your non-Blue Point network?

Yes. Joel, I'll start with that and then if anybody needs to add something to it. But that increase, we were probably a little light on the $500 million. Generally, we start the year running at about a $550 million is kind of the range we're performing in, but it's really affected by 3 things. One, we completed more projects than we typically do at this time. There's a lot more, I would say, smaller dollar projects that are easier to finish during this particular timeframe.

And then we also -- part of it was a timing of a nitric acid precious metal purchase, which was quite a bit that we do from time to time. And then we had, to be honest, slightly higher labor and capital costs related to some of the inflation by a few percentage points than what we had been forecasting. So as I look at 2026, I would still use the $550 million as our range going forward for sort of, let's call it, our base CapEx and then adding CF's component of Blue Point on top of that.

Okay. And I know it's early, very early, and it's great that no significant injuries. But do you know if what's happening in Yazoo City, is this going to be an outage that's order of magnitude days, weeks or months?

Yes. It's way too early to speculate on that. I would say the ammonia plant was not directly affected. It's still operating as of this morning. But at some point, you run into inventory containments depending upon how long the upgrades are down. So we're thankful that everyone is accounted for and is safe and that really there is only just a couple of very minor injuries, nothing serious or significant. That was our biggest concern. And then also that there is -- the site has been secured.

Now we're in the process of kind of really understanding what the condition of things are and what the root cause was, and then we'll start worrying about turning things on after we do a thorough investigation. I would say, Joel, that this is our smallest segment and a relatively small plant in our smallest segment. So we're not focused on kind of potential financial implications at this time. And as Chris said, we're still expecting to be able to produce the 10 million tons of ammonia this year like we had planned on.

The next question comes from Chris Parkinson from Wolfe Research.

Awesome. Tony, I'm not one to always say like say great quarter, but I'll give you a shout out and I'll say great 12 years and through all the debate, agreements and at times disagreements, you've always challenged me. So I'd like to personally thank you for that. It's been a pleasure. A question to both you and Bert. There's been -- and it shows you outside the market to me. There's been a lot of inconsistency of supply throughout the entirety of this year.

And you have things in Russia, Germany, Poland, Romania. I mean perhaps this becomes a broader intermediate to longer-term question. But how much of the demand and the price strength do you attribute to the supply side of it versus the fact that demand, I think, broadly speaking, throughout the year-to-date has also been pretty healthy and kind of led to these price rallies at times at nonseasonal time. So I'd really appreciate your perspectives and kind of how to think about '26 in the context of what we've actually been seeing experience and what we've been experiencing in 2025.

I think the demand piece of the equation is much easier to forecast going forward. And as Bert said earlier, given where the different products are priced at in the corn-to-bean ratio and just looking at what we saw in the way of the UAN fill program as well as fall application of ammonia that's going on right now, we're anticipating the demand side of the equation to be very strong for the planting year of '26. The supply side is a little harder to kind of peel back. And as you said, it's an integrated kind of question in terms of how much it is the S and how much of it is the D.

I would say a lot of the places that you mentioned, not so much Russia and Iran, but a lot of the places that you mentioned where there were some supply disruptions are on the relatively higher end of the cost curve. So those tons don't necessarily move things dramatically up in terms of price. But there's no doubt the conditions that we saw this year due to both the S and the D side were quite strong, and that's why our anticipation is delivering a result that's well above what our mid-cycle numbers when Greg talked about it at Investor Day, what he gave, we expect to be well above that.

I think for CF in particular, how we view the world and being students of the world geopolitically, economically and systematically and how it affects our business. Tony touched on the specifics, but we did lose 5 million tons from the market through the conflicts for Iran and Egypt, Algeria and some in Russia and Turkmenistan. And then I think the lack of China or the late coming in of China in June probably pushed the market higher than anticipated. But we're still tight.

And like Tony articulated in terms of demand with India pulling 8 million to 9 million tons, Brazil, 7 million to 8 million tons, North America, 6 million tons and Europe producing less and not having the access and the lack of inventory in any major destination market sets up 2026, I think, very well. And we're going to see, I think, higher-than-anticipated corn acres in North America due to just the economic opportunities and impacts, which is constructive for CF.

Got it. And just as a quick follow-up, I mean, Tony, you've gone through your fair share of capacity expansions, both -- well I should say, very large brownfields and other brownfields and everything within your network. What have you, Bert and Chris learned the most from all of those efforts over the last 12 or so years that Chris and his team can essentially apply the Blue Point to perhaps mitigate a lot of the things. Is there kind of a track record of lessons that you can really apply here? Or is it just going to be every project is different at the end of the day?

Yes. I would say we learned a ton that is currently in direct application of this project, one of which was we did a full-blown FEED study and detailed engineering of this plant before we announced it, went to FID. And so we have a much better perspective of the actual construction hours, and the unit build material lifts than we did when we announced the expansion projects back in 2012.

The other thing I would say is the size of our network and the expertise we have across the network and the scale we have brings tremendous skill sets and capabilities to bear against a project like this. And you see that when you're looking at other people that are trying to start up ammonia plants that are years late because they just don't have the capability and expertise running ammonia. And there are a few of those out there right now.

And so I think both the fact that a number of the people involved in this construction project were also involved in the big Port Neal, Dville expansions in 2012 through '16 as well as just some of the broader lessons like the engineering and FEED study, I feel very confident in this. And we also have expertise from our partners that we're going to be able to leverage as well with JERA and Mitsui that are equally, if not even more so, comfortable doing very, very large capital projects like this, and they're bringing some of their best resources to bear as well.

I would say, as Chris said in his comments, Tony, being bold and -- but that boldness is based on market knowledge, understanding -- we've looked at plants all around the world. We've looked at a lot of opportunities over the years. We've had some great debates and discussions and disagreements at times on where to go and how to grow. But in the end, have made some very good decisions on that. And Blue Point is a good example. We're the company that does it right, builds -- stays within, I think, our fairway and brings these plants on safely, and they operate above nameplate. And so it's that bold step of taking it when the market is growing and needs these tons.

Yes. And the only thing I would add is that's different from last time, Chris, as we've talked about before, is we're going with modular construction. Last time on a stick build time and material, you started to see labor costs get out of control. So I think that was something that we did a lot of evaluation on and also looking at who we're going to select to build those modules.

And then lastly, something that we'll do that we did last time that the whole team is working on, which is we begin hiring operators and engineers today, even though the plant will not be up for 4.5, 5 years or whatever. And what that allowed us last time was to get to over nameplate production within a couple of months after start-up, which nobody else was able to do. So again, as Tony said, leveraging our overall network, not just for engineering expertise, but to train operators and other individuals that will be working at these sites.

The next question comes from Andrew Wong from RBC Capital Markets.

Just echoing everybody else's comments, Tony, congratulations on a very successful career and guiding CF through a lot of market ups and downs. We've seen a lot. So enjoy your next chapter.

Thank you, Andrew.

Yes. And so just maybe on the comments you made earlier around the valuation, I think you made some very fair points. So maybe a question for you and also for Chris. Just given the value in shares and buybacks seem to be the path to kind of realize that value, you have a very strong balance sheet. Would there be any consideration for using debt to fund Bluepoint and then maybe using the cash flows and the cash generation to buy back shares? Like would that make more sense right now.

I think the problem with doing that a little bit, Andrew, is its sort of a onetime sort of benefit that you get and then you're living with much higher fixed costs as you go. And I think one of the things that we've seen in this business is having a balance sheet with low fixed cost and a lot of liquidity gives us opportunities to move when there's things that are available to us like the Waggaman deal, which we did in cash.

And so instead of this being a kind of trying to rush an equity swap for debt, which benefits kind of near-term shareholders. We're really playing the long game here, and it's about trying to make sure that we retain all of the long-term operating and strategic flexibility and at the same time, rewarding the truly long-term shareholders who eventually, I think, will start valuing the company properly. But given my perspective, I'm not going to be here in a couple of months. So this is probably -- Chris and Greg can talk about it.

Yes. From my perspective, well, just for starters, I think the numbers that Greg presented and where we're seeing this year, where we're seeing next year and even the mid-cycle, we're going to have enough cash to do both at a significant level, just as we've done over the last decade under Tony, where we've been able to grow and also do significant share repurchases. So the ability to do both.

I would echo Tony's comments, like having fixed charges in line, having a, I would say, flexible balance sheet is very important when you're in a commodity business. As we're seeing more of our business here go to ratable, more industrial with premiums and things, we can make different decisions from there. But I think the cash flow that we're generating due to the conversion rate that we do allows us to do whatever we want to do really.

Yes. The only thing I would add to it is just emphasize the numbers that we talked about today, right? $1.3 billion of cash back to the shareholders for the first 3 months, $700 million in CapEx, so $2 billion, and we have $1.8 billion of cash on hand today. That creates incredible flexibility for the company.

Okay. Understood. And then maybe just one on costs. I think SG&A looked still just a little bit elevated for the quarter, obviously, not hugely, but just curious if there's anything there. And then also on just some of the non-gas costs, I suspect that the turnarounds this quarter contributed to some of that. Just I'm wondering if there's anything to flag or anything to add.

It's Greg. On the SG&A side, we continue to just update our bonus accrual for the company for the year, and there was a small catch-up as well as a plan for the third. So that's the elevated level on the SG&A. On the non-gas side of production cost, really the one that stuck out to me as I climbed through them was really around ammonia in that segment.

And the point to make there is we did have an increased mix around our purchased tons, which obviously come into the system at a higher value than what we can produce them at, but it also contributed to gross margin dollars in the ammonia segment being up 30% year-over-year. So other than that and the timing of some turnarounds, there was really nothing to speak of in the non-production cost.

Yes. And on the purchase front, just to remind you, the tons that are produced in Trinidad, we purchased, and we realize the value in Trinidad and then that comes through equity earnings instead of directly into the ammonia segment. And then into the U.K., we're purchasing ammonia and then upgrading it to a margin, and then that's going to come through kind of our other ops segment. But the price because we're buying it at market shows up in COGS for ammonia. So that kind of helps dimensionalize what Greg was talking about.

The next question comes from Kristen Owen from Oppenheimer.

I do want to start with a more strategic long view here, just given some of the prepared remarks about the valuation disconnect. And given your comments on whether it's CBAM, where those Blue Point ammonia tons will go, even some of your comments on DEF, help us understand if we're looking at this business model in that 2030 framework, how much exposure really is ag anymore versus some of these more industrial applications? And how should we think about that mix contributing to that sort of mid-cycle framework?

Yes. I mean ag is still going to represent the lion's share for the foreseeable future of where we sell our products. And the simple reason for that, Kristen, is that the margins in ag are far superior to the margins in industrial. We could move all of our products into the industrial marketplace, which tends to be ratable and then -- but we would end up doing it at a significantly lower price point, and we wouldn't get the benefit of our distribution and logistics network by doing so. And so some of the -- even though it is kind of "a little bit less predictable," it's at a lot higher volatility.

And I'm going to refer back to, I think, sort of something I've heard attributed to Warren Buffett, which is give me a 15% spiky return over a 10% flat, we'd way rather have a spiky to the upside return profile associated with serving the ag marketplace than we would the other way. Now we're starting to build some and that will continue to increase. That does tend to be a little more ratable with predictable margin structures. But we're going to be -- we're 75%, 80% in ag company today, and it's going to be like that for a very long time.

I think you have to also think about how our company is structured with our unique distribution and terminaling assets that are throughout the Midwest on the best farmland in the world with the lowest cost access logistically, if you compare our cost to get to the middle of Iowa for, let's say, $30 for urea against taking that to Mato Grosso from Paranagua or Santos, it's significantly cheaper and the yields are significantly better and the farmer economics is better as well.

On top of, we have low-cost gas in those regions. So we are structured to serve the ag business, which, as Tony mentioned, is spiky but profitable. But we balance that with this industrial book and export book that places us in, I think, globally, a very unique position, and we're benefiting from that.

Sure. And I appreciate that. And perhaps a little clarification on my side. I'm not suggesting that there's some major move out of the ag markets. It's more just how much more meaningful can the earnings potential be on the industrial side given the uplift of some of these markets. So perhaps a slight clarification there. And while I'm here, I'll just ask my follow-up question. Just given the cost curve in China, a little bit more affordable to keep those a little bit more domestic affordability. So just any thoughts on China exports in 2026?

We've been fairly consistent regarding China in that 3 million to 5 million ton range, and that's how they seem to perform. We're expecting them in 2025 to be in the 4 million to 4.5 million ton range. And they've announced this additional export quota. They haven't announced their program for 2026, but I would just bet on the same, probably coming out in sometime in Q2 with exports, May, June and exporting into the early part of Q4. Because their domestic market is so big, their domestic demand, both ag and industrial and where they are capacity-wise and operationally, that 4 million to 5 million -- 3 million to 5 million tons of exports makes sense as you build kind of what their structure should be.

Yes. Kristen, I'll just add one thing back to your first question. If you think about the 45Q tax credit associated with both Dville and Yazoo City when it comes online, we'll probably be close to $150 million of cash, and that's not net of taxes and everything that is not dependent upon where market pricing is for any of our products.

Between what Bert is able to realize in price premium and some of the other initiatives we have like selling carbon credits, there could be another $25 million to $50 million of additional value that accrues to us that is also not tied to the market. So you're starting to get to the point where there's probably -- could be $200 million-ish a year that's coming in that is very ratable and predictable and just part of the base then that, everything else kind of rides above.

The next question comes from Lucas Beaumont from UBS.

Good luck with your retirement, Tony. Congrats on your career [indiscernible] the others. Yes, I just wanted to kind of ask you about Blue Point. So you guys noted that you'd procured all the long lead time equipment now. So kind of just where did the costs come in there compared to the budget? Kind of what percent of the project spend was that. And kind of just remind us of any cost escalation components that are built in there for like inflation and tariffs, et cetera, between now and sort of when the delivery occurs?

Yes. Thanks. This is Chris. Well, for starters, I would say the projects were way too early in the phase to say we're under significantly or we're slightly over or whatever. I would say we're right where we thought we'd be. The products that we -- or the equipment that we ordered as long lead time is like your boilers, your compressors, different equipment like that. The modular equipment, which is going to be the significant dollar amount that we'll be selecting the modular yard here shortly.

And those have been fixed fee bids in which we had -- which was part of our overall $3.7 billion. So that part, we still feel very confident about. As we look at, I think, your question probably with tariffs, I mean, with the Supreme Court hearing arguments right now, there's still a lot of uncertainty what happens. A lot of the equipment that would be tariffed is most likely going to be coming in, in 3 years from now. So there's still quite a bit of time frame, and I'm certain more will change between now and then. But what I would say is we forecasted quite a bit into tariffs.

We're slightly higher than that, that's going into our $500 million contingency, but not anything that would have us concerned at this time. I think additionally, there potentially could be upside dependent on what the Supreme Court rules, but I'm certain there would be some reactions by the administration as well on additional tariffs and other areas. So again, tariff side, a little uncertain, but we feel like we're covered there. Long lead items, those are in path, but those are more some of the more engineered complex items like compressors and such.

And then I guess just on the pricing outlook, I mean, you guys are kind of talked at length about it. I mean, ammonia has been very tight. The pricing is strong. UAN and ammonia imports are sort of running below trends heading into the fall and spring. So I mean the near-term setup looks quite attractive. I mean, at the same time, the TTF futures have sort of been coming off the past couple of months have sort of gone from 12 and looking flattish year-on-year, sort of low 10s kind of now down about $1.50. So I guess just how do you kind of see those 2 factors resolving each together as we go through '26? Or I guess, if you don't think they'll resolve, then why not?

Maybe I'll start with the gas side with the TTF -- I mean, TTF has come off about $1. So you're still sitting near $11 on the forward strip with that with the U.S. sitting anywhere from $3.50 to $4. So you still have that differential that is very constructive. As Greg said, longer term, when we get into '28, '29, we may see that contract some, but not nearly to the level just given that the projects being built have to have return profiles with those as well and the additional demand that will be drawing on LNG. So from a constructive standpoint, we still think the gas differential is going to be very strong even if it comes in $1 or $2 from where it is today.

Regarding the market and the tightness we're experiencing today, with Saudi, the plant -- the ammonia plant being down and the late start of some of these new capacities, as well as Trinidad and then suboptimally operating in Europe. The ammonia market is, I think, going to maintain tightness until these new plants come on, and we'll see what happens.

But the United States today is at a net import negative on UAN and ammonia, probably balanced on urea. And so again, looking around the world where we participate and where we have communication, you have a tight inventory position in all of the destination markets. And so looking at gas and costs and kind of upside, I think we roll very well into 2026 and probably through the first half easily in a positive way.

The next question comes from Vincent Andrews from Morgan Stanley.

I'm actually late to something else, but I wanted to stick around and just congratulate you, Tony and say thank you and good luck in the future.

Thank you, Vincent. I appreciate that.

The next question comes from Matthew DeYoe from Bank of America.

Tony, congrats on the run. I know I didn't cover you directly for much of the time, but Steve always held you with the highest regard. So I know that goes for the rest of us here at Team BofA. I wanted to ask, I guess, a little bit on the slide where we talk about like ammonia expansions and closures. Certainly, we don't disagree that a number of European plants need to close chemicals across like a lot of chains.

But if we look at that 3 to 4 number, I mean, what's the -- how much of that has been announced? What do you think the rates are that those plants are running? And then like I just know that closing plants is expensive and not really done easily. So I'd love a little bit more kind of commentary around your outlook for that capacity.

Yes. So this, as you may recall, is a study we did about 1.5 years ago where we analyzed every ammonia plant in Europe based on how its ownership structure was, what its maintenance structure, what its cost structure was going to be to try to identify which of those plants would come off. In Europe used to have about 48 ammonia assets that we're operating and how we have it leveled was red, yellow, green. And what we've seen is the red plants have come off as we expected.

And in fact, we're probably ahead of that particular schedule with a number of curtailments and shutdowns that are occurring in Europe from that. But that 48 assets today is probably around 30 assets or maybe 31 assets. And we expect that to drop another 4 to 5 assets over the next couple of years. You have to remember, the decision we made in the U.K. was because we had a significant turnaround coming forward. And these turnarounds are $50 million to $60, so when you're entering into that, you have to make certain you're going to get that return on that cash.

Additionally, where TTF is today at the $10 to $12 range makes it difficult to be producing throughout 12 months of the year for really selling in what may be 3 months a year, maybe 4 months a year. So you're making a risk decision based on that. So what we're seeing today is with some of the pricing, there's just a little bit more curtailment going on. But eventually, through our study and what we've seen, you're going to see some of those plants continue to go off.

So the European side, we feel very confident that, that 3 million to 4 million is going to come off. Now whether all that gets imported as net ammonia or as upgraded product, that will be determined. But I think the other aspect here is, as Bert mentioned, there is just not a lot of new supply coming on. we have visibility of what plants are being built. And with the exception of ours and the 2 in the Gulf Coast that are about to come on probably sometime in 2026 and one in Qatar, there's really not much coming on.

And the other plants that are coming on are upgrade plants that are consuming ammonia and making the ammonia market even tighter. So what we see is a strong constructive gas differential where we'll make money off of that versus TTF. And then we also see a very tight S&D balance that not only continues here into 2026 but really goes all the way to 2030.

This concludes our question-and-answer session. I would like to turn the conference back over to Martin Jarosick for closing remarks.

Thanks, everyone, for joining us today. We look forward to speaking with you at future conferences.

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

Good day, ladies and gentlemen, and welcome to the CF Industries First Half and Second Quarter of 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the presentation over to the host for today. Mr. Martin Jarosick with CF Investor Relations. Please proceed, sir.

Good morning, and thanks for joining the CF Industries earnings conference call. With me today are Tony Will, President and CEO; Chris Bohn, Executive Vice President and Chief Operating Officer; Bert Frost, Executive Vice President of Sales, Market Development and Supply Chain; and Greg Cameron, Executive Vice President and Chief Financial Officer. CF Industries reported its results for the first half and second quarter of 2025 yesterday afternoon. On this call, we'll review the results, discuss our outlook and then host a question-and-answer session.

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

Now let me introduce Tony Will.

Thanks, Martin, and good morning, everyone. Yesterday afternoon, we posted results for the first half of 2025 in which we generated adjusted EBITDA of $1.4 billion. These results reflect outstanding operational performance by the CF Industries team against the backdrop of a tight global nitrogen supply-demand balance. We are also executing well on our strategic initiatives. The Donaldsonville Carbon Capture and Sequestration Project began operating in early July and is running at designed rates and progress on the new Blue Point joint venture is well underway. And we continue to return substantial capital to shareholders.

Over the last 12 months, we have returned approximately $2 billion. This includes repurchasing more than 10% of our outstanding shares since last July. Given our world-class operating performance, the favorable global nitrogen industry dynamics, the financial benefits we generate from our strategic initiatives and our ongoing capital return programs, we are well positioned to create value for shareholders over both the near and longer terms.

With that, I'll turn it over to Chris to provide more details on our operating results. Chris?

Thanks, Tony. For the first half of 2025, we continue to differentiate CF Industries from peers through safety and operational excellence. We had 3 recordable incidents in the first 6 months of 2025 and 0 loss time days. This is particularly impressive given our scale and level of activity in the first half. Through the end of June, we produced 5.2 million tons of gross ammonia, representing a 99% utilization rate. For the full year, we expect to produce approximately 10 million tons of gross ammonia.

The third quarter, as is typical for CF will have lower production volumes in the first 2 quarters due to planned maintenance activity.

Turning to our strategic initiatives. We started up our Donaldsonville Complex Carbon Capture and Sequestration Project in July. The carbon dioxide dehydration and compression unit has ramped up very well and we achieved full nameplate capacity within the first week. In addition to reducing carbon dioxide emissions by up to 2 million metric tons per year or earn a significant return from this project. We are generating 45Q tax credits and selling low-carbon ammonia for a premium.

For the Blue Point project, we, along with JERA and Mitsui, have been building out the project team and have begun ordering long lead time items. We also continue to evaluate opportunities to further derisk the project by leveraging best-in-class capabilities. For example, the joint venture signed an agreement with industry leader, Linde, to build and operate [indiscernible] air separation unit which will supply nitrogen and oxygen for the ammonia production process. We remain excited about the compelling growth opportunity at Blue Point, given the tightening of the global nitrogen supply-demand balance, and the interest that has been generated in the ultra low carbon ammonia that will be produced there.

With that, let me turn it over to Bert to discuss the global nitrogen market. Bert?

Thanks, Chris. Around the first half of 2025, the global nitrogen supply-demand balance continued to tighten. Strong global nitrogen demand led by North America and India had to contend with low global nitrogen inventories and production disruptions in key supply regions. This included geopolitical events late in the second quarter that temporarily halted production in Egypt and Iran, as well as 2 facilities in Russia. CF Industries team navigated these dynamics exceptionally well, especially as the North American spring application season lasted longer than normal. Backed by a strong production we leveraged our leading logistics and distribution capabilities to capture incremental opportunities well into July.

For example, last month, we continue to make spot UAN sales at in-season prices, as supply from other sources was largely unavailable after the strong spring application season. As a result, our UAN inventory at the end of June was the lowest we have seen entering the third quarter in the last decade. This led us to delay our UAN fill program until next week, which is the latest we have ever launched. The delay has given us time to better understand customer requirements and communicate that fill prices will be significantly higher than 2024, given the tight global supply-demand balance.

Farmer economics in North America have been an industry concern as the price of corn has not kept up with the price of inputs. However, we expect nitrogen demand in the region to remain robust. The corn to soybean ratio favors corn and farmers will be incentivized to optimize yield, supporting resilient demand for this nondiscretionary nutrient. In fact, our ammonia fill and fall prepay programs which were closed at the beginning of July, saw a strong uptake from customers. In the near and medium term, we believe the global nitrogen supply and demand balance will remain tight. Global nitrogen inventory is low and the global demand is expected to be strong. Brazil and India alone [indiscernible] more than 8 million metric tons of urea imports through the end of the year, while the Northern Hemisphere, which will begin purchasing for 2026 applications.

The global industry, even with the needed urea exports from China does not have excess capacity to easily meet this demand. In fact, India closed its most recent tender at a price much higher than expected. Additionally, natural gas availability in Egypt, Iran and Trinidad has become chronic problems for their nitrogen industries. And the high natural gas prices in Europe and Asia continue to challenge nitrogen producer margins in those regions. These structural challenges are further exacerbated by the uncertainty created by geopolitical events. Longer term, we expect the global nitrogen supply-demand balance to tighten further through the end of the decade as projected, new capacity growth is not keeping pace with demand growth for traditional fertilizer and industrial applications.

We also believe demand for low carbon ammonia for new applications, such as power generation, will only further tighten the global supply-demand balance. We are seeing this transition now. With the Donaldsonville CCS project operational, we will ship our first cargo of low-carbon ammonia in the coming weeks and at a premium. We have steady demand today and growing interest in Donaldsonville low-carbon pneumonia volumes for new applications in addition to the longer-term demand for ultra-low carbon volumes from Blue Point.

With that, Greg will cover our financial performance.

Thanks, Bert. For the first half of 2025, the company reported net earnings attributable to common stockholders of $698 million or $4.20 per diluted share. EBITDA and adjusted EBITDA were both approximately $1.4 billion. For the second quarter of 2025, we reported net earnings attributable to common stockholders of $386 million or $2.37 per diluted share. EBITDA and adjusted EBITDA were both approximately $760 million.

As you will recall, we have begun consolidating the Blue Point joint venture into our financial statements. This is reflected in both our first half and second quarter 2025 financial reporting. On a trailing 12-month basis, net cash from operations was $2.5 billion and free cash flow was $1.7 billion. This includes a net benefit in the second quarter from the Blue Point project as capital contributions from our joint venture partners exceeded the project's capital expenditures. This will be the case for some time as we build cash in the joint venture ahead of expenditures. We returned approximately $280 million to shareholders in the second quarter of 2025, including $202 million to repurchase 2.8 million shares. We remain committed to a balanced capital allocation strategy, investing in growth through the Blue Point joint venture while returning substantial capital to our shareholders.

With the nitrogen and oxygen agreements with Linde that Chris mentioned, the cost of the Blue Point project is expected to be $3.7 billion. CF Industries portion of the project along with the wholly owned common facilities, is expected to total approximately $2 billion over the next 4 years. Over that same time frame, we have $2.4 billion authorized for share repurchases. We expect to complete the $425 million remaining on the current authorization before the end of the year. At that point, we will begin the $2 billion authorization.

Finally, with the startup of the Donaldsonville CCS project, we will deliver incremental EBITDA and free cash flow beginning in the third quarter. We expect EBITDA and free cash flow to be north of $100 million annually from the tax incentives and product premiums. This is a significant step towards the 2030 mid-cycle projections we shared at Investor Day of $3 billion in EBITDA and $2 billion in free cash flow.

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

Thanks, Greg. Before we move on to your questions, I want to thank the entire CF team for their contributions to an outstanding first half of 2025. We are delivering world-class operational performance across all aspects of our business. and most importantly, doing so safely.

I want to acknowledge Ashraf Malik, our Senior Vice President of Manufacturing and Distribution, who recently announced his intention to retire in the spring of 2026. I recruited Ashraf into CF from our GrowHow joint venture in 2011. He was my right-hand person when I ran manufacturing as he also was for Chris when he ran it. Appropriately, Ashraf took over as Head of Manufacturing when Chris moved into the CFO role in 2019. Ashraf is an experienced leader who has helped drive our culture of safety and operational excellence. We're fortunate to have him with us for the next 9 months, but I do want to take this opportunity to personally thank him for his many contributions and to congratulate him on a tremendous career.

Although CF Industries has been around for almost 80 years. In a couple of days, we'll be marking the 20th anniversary of our company's IPO. Over the last 20 years, CF Industries has built an extraordinary high-margin, focused business where we consistently execute at the highest levels, a global leader in every sense of the word. Our balanced approach to capital allocation, driving disciplined growth while executing consistent share repurchases has increased shareholder participation in our assets and the cash flow they generate.

As you can see on Slide 13, we have driven a nearly threefold increase in nitrogen capacity per share since 2010 and this approach has led to superior shareholder return compared to all industry participants and even broader comparison groups. CF Industries is well positioned to build on this track record in the years ahead. In the near and medium term, industry dynamics remain very favorable for our low-cost North American production network. Longer term, we are investing in much-needed low-carbon ammonia capacity and have $2.4 billion authorized for continued share repurchases. Taken together, we expect to continue to drive strong cash generation and create substantial shareholder value.

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

[Operator Instructions] And today's first question comes from Richard Garchitorena with Wells Fargo.

You're progressing on the Blue Point, obviously, we've consolidated results. My question is on the outlook for returns. Obviously, we had the Big Beautiful Bill come out. I think there's some treatment of depreciation, which may be changing. Can you talk about how that impacts potentially the return calculations and how that may impact taxes from Blue Point and CCS?

Yes. So it's Greg. I'll take that one first. So when we look at the joint venture, there's a number of items that are going to run through that P&L from the tax side that we're going to need to be coordinated with our JV partners on it. Not only will our depreciation of the assets be important the timing of the earnings to make sure we're maintaining our basis in the assets as well as the monetization of the 45Q credit. So we're in the process with our partners and with our advisers of modeling out those different variables.

But what I can tell you, in particular, too, as we look at the depreciation, what we had in our original expectation within the model was already on an accelerated basis. So if you get to day 1 complete amortization, depreciation of the assets, we don't expect it to materially change the overall returns of the project that we've shared with you before. But we'll continue to model that out over the next few years and make sure that we understand how all these variables interplay against each other.

And the next question comes from Edlain Rodriguez with Mizuho.

I mean, Tony, just kind of when you look forward into 2026 and beyond, I mean, again, given where crop prices are and where fertilizer prices are like what are you thinking there? I mean, again, kind of there's a disconnect between prices and put cost for farmers. So how do you see that develop over the course of next year?

Good morning Edlain, this is Bert. And that is the question in the industry today is how does the farmer solve the calculus of planting and at the end, profitability. Fertilizer represents about 25% of the input costs for a crop. And so nitrogen, even less so of that 25%, then you've got diesel equipment, crop insurance, feed, crop protection. And the big question is land rent and land value. The majority of farmers today are renting a portion if some places all of their land and at $200, $300, $400 an acre, that's where the push has to come, we believe in that calculus. We're a global product, globally traded, globally moved, globally valued product in the context of urea, UAN and ammonia. And so we compete for imports and exports with the world.

And so the U.S. farmer in the same vein for corn, soybean, [indiscernible] whatever product has to compete, and I think it will be some economizing with different subparts of that calculus that I gave. But nitrogen is the nondiscretionary nutrient and will have to be applied. And I think then farmers plant and apply for yield, and they earn their way out of this difficult market.

Bert, I totally agree on that, which is, I think once you've gone through the -- all of the other expenses that you talked about, you are going to go ahead and try to optimize yield because it's the last couple of bushels that will actually make the difference in terms of profitability or not. And so at least with respect to nitrogen, we continue to see and expect full application rates because that's really how you're going to get profitable. It's not trying to save a couple of bucks by reducing your nitrogen application. Now [ PK ] is a [indiscernible] story, but at least nitrogen, we expect to go down.

And the next question is from Joel Jackson with BMO Capital Markets.

Can you talk about a report that came out yesterday around the time you reported, it seems like maybe if it's true, you've got a few days or a week of no loading happening at [ Devil ]. Is that about demand, but your -- you had a huge quarter, [indiscernible] in Q2, volume is so good, demand so good, you're out of inventory. Does that speak about the strong dynamic for yourselves market? Is there any production problems and you can elaborate?

Yes. So Joel, this is Chris. I'll start. So the report was incorrect in the sense that it said that it was an operational issue with our loading at the Donaldsonville facility. We continue to have full access to loading production and utilization there, as you can see in the second quarter, continues to be outstanding.

I'm going to let Bert talk to some of the inventory levels and some of the customer direction that we've done that was probably more the source of that than it was operational.

Several figures for issues at play, Joel, with the dynamic nature of this spring application. And in the summer, we just did not have the inventory due to high demand in some of the previous remarks of being one of the last companies standing with available supply. So every day, we had full. And in Donaldsonville, this is a reflection of team dynamics and discussion on how we work collaboratively, but the urea product manager, along with production and allocation and logistics folks work together. We had 2,000 tons of inventory yesterday. We produced [ 7,500 ] tons per day at Donaldsonville and when you throw in [ Fort Neal and Medicine ] now, we produced about 14,000 tonnes a day.

So to have that low of an inventory, and you're loading 4 to 6 barges a day at 1,500 tonnes per barge you want to have inventory for consistent and reliable loading. So this was just a reflection of team coming together, making a decision and saying, let's build the inventory over the weekend, and then we'll be able to load barges more seamlessly as being sporadic. That's just good management and safe management for the team.

And our next question comes from Lucas Beaumont with UBS.

Is there saw some cost pressure in the first half this year, both like on SG&A and your controllable non-gas production costs, which were both sort of higher year-on-year. So could you please just kind of talk us through what the drivers were there, if there's anything that was kind of more onetime and kind of think about the trajectory there going forward into the second half of next year?

Yes, I'll start, and then I'll pass it to Chris. So let's start with SG&A. Listen, I've been here now 13 months and continue to be impressed by the organizational structure we have and the operating efficiencies that the business has. And when I compare our SG&A to any benchmark in the industry, we are a very lean organization. So any small movements in the number will -- small number will move that number on a percentage basis. This is specific to the quarter and specific to the second quarter, there was 2 discrete items to talk about.

One was around our legal fees associated with us closing our Blue Point joint venture, not only with the partner, but all the other agreements we had to put in place. That was about half of the difference versus last year. And the second part of the difference was almost all of the employees here at CF are on some type of variable compensation. And given what we're seeing from the operating performance of the company, as well as the market pricing that is there we made an adjustment within the quarter for our expectation and how that variable incentive will pay out in the year. So those are the 2 main items that explain the SG&A difference year-over-year. And as you think about it going forward, third quarter, fourth quarter probably look more similar to what we saw within the first quarter.

Now on the cost side, I'll let Chris talk to it in particular, but just to make a couple of points as we try to analyze it. One, and you're right to do it ex gas, when you look at any 90-day period within the company, it's going to be impacted by timing of maintenance, either planned or unplanned. So we tend to look at things over a longer period of time. If I look at it over the first half, in fact, our controllable costs were down minimally low single digits versus last year. If you look at it, in particular, on the second quarter, you remember in the first quarter of last year, we had maintenance events associated with weather that drove an acceleration of our maintenance from the second quarter into the first quarter. So if I look at the variance in the second quarter of 2025, it has more to do with what happened in 2024 than '25. In fact, first quarter to second quarter, when you adjust for maintenance events is fairly similar.

Yes. And just to add on to that. So as Greg mentioned, we do look at a longer time frame because it could just be timing when something hits. But during the quarter, we had really 2 events that drove up some of that controllable cost, and one was unplanned outages at a couple of facilities, even though we had very high utilization throughout the rest of the network, there were 2 facilities that had some extended unplanned downtime.

And what that resulted in bringing it back to what Bert talked about with tight inventory, we had tight inventory at all our locations. And as a result, to meet some of the customer commitments we had, we had increased logistics costs, making those moves in order to service and provide the customers with their products. So a little bit some unplanned outages and then also the logistical moves, just given how tight inventory is in the industry.

And our next question comes from Jeff Zekauskas with JPMorgan.

On the DCS project, you talked about $100 million benefit. And I think I get that, there's an $85 a ton tax credit and maybe it's costing you $35 a ton for various isolations of the CO2. And so that gets you to an annualized rate of $100 million. In general, these are tax credits. When does the cash come in? And how do you account for it? That is you take the tax credits on an ongoing basis. When do you get paid from the government? How does that work?

Yes. So Jeff, it's Greg. I'll answer it 2 ways. One is from our financial statements and then from our tax cash payments. So on our financial statements, we will begin accruing this into our EBITDA as the gas flows and we've talked about that being an $85, 45Q credit that we'll net about $50 on up to 2 million tons, and we begin to see that in our third quarter reported financials as part of our EBITDA calculation.

Now on the cash side, obviously, we won't settle up on our cash tax position until the later part of 2026 but we will begin to withhold our expectations around what we're going to receive back for the 45Q credit as early as our September payments that we make in, our estimated September payments that we make into the IRS. So you'll begin to see the cash benefits of that almost immediately. And then obviously, at the end, when we file our final return next year, it will all be part of that return.

Great. And just one follow-up. Can you talk about the theoretical relationship between the amount of ammonia made and the amount of CO2 capture? Sometimes, when you read the literature, it seems that CO2 capture should be much more in tonnage than the ammonia made? And what you have is something that's pretty close to 1:1. Can you describe what's going on?

Yes, Jeff, let me start off with that, and then I'll turn it over to Chris. But all of our existing ammonia plants today are conventional steam methane reforming. And in general, you end up with about 1/3 of the natural gas used to drive the process from an energy and heat perspective. And about 2/3 of the natural gas goes into the actual process and the synthesis of ammonia. And so the total amount of gas, about 32 on average [ MMBtus ] per ton of ammonia will generate about kind of, call it, 1.8-ish, 1.7, 1.8, 1.9, depending upon the plant in question, tons of CO2 per ton of ammonia.

With the existing process, though, because we're not doing flue gas capture on SMRs, you can only capture about 2/3 of that, which is related to the process side of the equation. And then Donaldsonville is one of our large upgrade facilities, and when you're making urea either as granular or as part of DEF or going into UAN. You have to use a lot of that process CO2 to make urea. So you actually have to use it downstream in the process and therefore, it's not available for CCS.

When we move to Blue Point, because it's a different process, auto-thermal reforming we can capture a much, much higher percentage of the CO2, in that case, probably close to like 95% to 98%.

I'm not -- clearing there's much I can add to that.

And the next question is from Chris Parkinson with Wolfe Research.

Great. I'd love to hear your thoughts on the current supply side dynamics into the second half and into '26. I mean there's been essentially everything there have been attacks on Russian facilities, geopolitics, gas shortages in Eastern Europe and Trinidad. I mean, there's literally been everything. But -- and ultimately, demand has been stable to solid on the other side of that. But how should investors be thinking about the sustainability of these dynamics into 2026. And have you seen actually anything improved? Or are we still essentially at the status quo?

Chris, this is Bert. And this has been an incredibly interesting market for the aspects that you articulated tax, geopolitical tax being tariffs, gas shortages and just issues in high demand than on the opposite side.

So starting with the tariffs. We've been in this discussion since March, it was going to be April. And so that delayed imports or even cut imports into North into United States for Q2. And we are exiting Q2 and into Q3 inventory that needs to be rebuilt in the United States and Canada. And so we are doing our best at CF in terms of running as we do at very high rates and being efficient and moving our product. But as I mentioned in an earlier comment, nitrogen and fertilizer is a global commodity that moves based on price and based on needs. And we're now entering the peak season for the Southern Hemisphere and you're seeing India step in yesterday closing 2 million tons. That's the first time they've been able to close that ton, but at prices in the $500, [ $2,500 ], $30 range, very attractive compared to historical values.

And so you've got high demand in the Southern Hemisphere. And I talked about in my prepared remarks, Brazil needing probably 1 million tons a month for the next several months. to satisfy their first planting and then getting ready for their second crop that gets planted in January. And then you've got to quickly pivot to the Northern Hemisphere entering 2026 for Europe and North America. And I think that's going to be a very hard or a very difficult calculation to close because of our inventories and the need the imports and the disruptions of tariffs.

And then you go to the gas shortages that were created during the conflict in Iran and the cutoff of gas to Egypt, a low gas supply in Trinidad, just between, I'd say, those 3 areas just regarding what we lost just between Egypt and Iran over 1 million tons. And so then you have China entering the market with an additional 5 million tonnes, it doesn't close the balance. This is why we're constructively positive in the market for Q3 and Q4, but into '26 with the current pricing dynamic that we're experiencing. Couple that with the low gas prices that North America that we're seeing at $3 makes for a very attractive position for CF.

And just if I may parlay that question into another, the second half is setting up pretty well in terms of ASPs and obviously, we'll have to have our own views on operations and ultimately, volumes sold. But if you we tend -- if you set up favorably on the free cash flow side, just even given the historical 60%, 70% at times, how should investors be thinking about the uses of cash? Because on the one hand, obviously, a lot of people are going to be looking for buybacks. At the other, you are entering a CapEx cycle with Blue Point and there have been some debate on basically derisking at least the beginning of that cycle. So how should we be balancing those 2 views under the presumption that free cash flow should be a little bit better as we progress throughout the year?

Yes. I would say, in general, Chris, we do have $2.4 billion open to buy on share repo. And we have, I think, a pretty good view of what expenditures look like for Blue Point going out initially. And these kind of projects, they start off a little on the slower side and then start accelerating then the big spend is really kind of year 3 and 4 as you're paying for all of the deliveries of the large modules and doing the construction work to put them together and get the plant kind of commissioned.

But in general, as we're generating kind of more cash than what maybe an LRP would look like or even what the expectation of certain market segments look like, then we will probably go ahead and deploy that capital against the share repurchase more expeditiously than otherwise we might pace it out.

The next question is from Kristen Owen with Oppenheimer.

This is [ Mason Manor ] on for Kristen. I just wanted to follow up on the carbon capture at Donaldsonville question, in particular, the contribution of the credit [indiscernible], understanding that the 45Q for enhanced oil recovery is different from the permanent registration credit. Can you just help us understand the economics of the EOR credit? And is there any additional costs related to that process? Or should we just think about the similar flow-through just off that lower credit value?

Yes. Thanks. This is Chris. Mason, I would start with that our base case assumptions for not only the Donaldsonville, but also the Blue Point in [ Yazoo City ] is that it goes to Class 6 permanent sequestration. And as far as the tax law, that particular allocation of $45 to $85 per metric ton did not change. The EOR data up from $60 to $85 per metric ton. And as you may know, we've begun sequestering at Donaldsonville while Exxon is in the process of getting their Class 6, utilizing EOR and putting in permanent geological frustration through EOR. That does allow us potentially to go from the $60, say, $85, however, we don't believe that, that's going to really make any type of difference from our economics as we have equivalent economics, whether it's EOR or the Class 6 permit.

The one thing I would mention is Exxon was granted a draft Class 6 permit for its [ Rose-CCS ] project in July and the comment period for that with the EPA ended earlier this week. And so it's our expectation that we'll be moving to that Class 6 relatively soon here before the end of the year.

The next question is from Vincent Andrews with Morgan Stanley.

I'm wondering, I think the press release talked about an expectation that China will not export further this year, at least after 3Q. So just curious what's driving that view, if it's anything in particular you're picking up on the ground with your sources in China?

So we've been fairly consistent with our Chinese expectations that there is exportable tons available. The issue with China today is a lot of those tons are prilled urea and prilled urea is not desired by many places outside of India, Mexico, a few other Asian. And so what they offered to initiate our initial volume target was 2 million tons through Q3, and then they start building for their spring season through Q4 and Q1 of next year. Subsequent to that, they announced an additional 1 million tons. And again, our commentary is that those are tons that are needed with the losses that have taken place in different parts of the world and the high demand position that the world is in, bringing those Chinese tons an additional 1 million, so to hit 3 million tons.

But so far, they've been underperforming in terms of those exports out in June and July. So we'll see if they're able to hit those numbers. There was a rumor that India might be able to buy some Chinese tons. Those were -- I would say forbidden, but they were not to be exported to India that might still happen. And so constructively positive for world supply, not impacting, I think, pricing. They have since raised the minimum price in China for both the pills and the granular product. So we'll see what happens over the ensuing months.

What about for the fourth quarter? It sounds like you don't expect it for the fourth quarter?

Further announcements, that's all I'm going on is no.

And our next question comes from [ Matthew Dale ] with Bank of America.

Look, I know you made some comments about insufficient nitrogen supply additions. But what do you make of some of the larger capacity functions for urea that CRU has kind of noted or flagging coming to the market in the next 5 years in China. It's kind of the prevailing assumption that China won't build that or it just won't get exported given some of the current policies?

You have several factors going on in world supply and demand and focusing on the supply side, there are plants in Russia, Iran and Turkey totaling about 2.7 million tons. And then the 4 plants in China, I think you're referencing, targeting 2.6 million tons that are scheduled to start up in the ensuing, I'd say, this year and next year and then some ongoing construction. But you've had plants taken offline and then the gas issues that we've talked about in different parts of the world.

So as you look at overall growth in the 1% to 1.5% growth each year that we see in the need for urea against, that's a 200 million ton supply, you need 2 world-scale plants to 3 per year to be built just to stay steady with the growth. And so again, coupled with the restrictions, whether that be Europe or Trinidad or different parts of the world that have gone offline, we don't see that keeping pace. And you're seeing that reflected today in continued strong demand, Brazil is a great example. Brazil is going to be 9 million tons. It has steadily grown year after year with, again, yield accompanying that, whether that be corn, wheat or cotton, yields improving, they're going to need additional and they don't have any urea plants coming on. They've talked about with Petrobras bringing several of those plants back online, that's going to take some time. And we're seeing India, even though they built these new plants, they're not operating to expectations. And so they're underperforming in terms of their total production based on expectations. So you go world around the world, Ukraine is not operating, Pakistan is not operating. You got different parts that are driving the supply shortage and demand increasing.

I would just add to that on Bert's comments that generally in China, when new production is going on, a lot of times that is replacement of old, less efficient or higher particulate matter plants that are going offline. So it's a bit of a replacement. Additionally, our view on the tightening S&D balance from a nitrogen perspective, specifically ammonia is based on there's a lot of upgrade urea plants that are going in to consume that ammonia. So as we see this tightening of the ammonia market, part of it is just new upgrade plants going in both here in the U.S. and globally that are consuming that ammonia and tightening that market even more. And then coupled with what Bert said, with European production continuing to be challenged, we expect that to continue as well. So I think it's still going to be a very tight market as we move through the end of this decade.

I appreciate that. And one more, I guess, if we think about the blue and green ammonia market, how much do you think ultimately could get moved into, say, Asian energy markets for shipping, right? Like what's the -- how much tonnage can that ultimately be?

Yes. I would say the base case right now between now and 2030, we're looking at is probably 3 million tons of low-carbon ammonia would be moving in there, primarily for power generation. However, with that, I think what we're seeing with our announcement actually moving forward is more interest from other parties who are contacting not only Bert but also bidding through different areas for low carbon production, both in power gen, and then you're also seeing a little bit more starting to grow in the marine side. I still think the marine side is a bit further out than 2030, but you are beginning to see ammonia engine vessels being constructed.

And the next question comes from Ben Theurer with Barclays.

Just wanted to understand a little bit better the sequential dynamics in ammonia. If we take a look at 2Q versus 1Q, it feels like the gas price came down, but at the same time, gross margin was actually significantly worse on a sequential basis. So I just want to understand what's been happening here and how we should think about the back half of the year as it relates to -- assuming gas prices where they are right now, what that should do to your [indiscernible] adjusted gross margin per ton?

Yes. No, no, I'll start and pass it over to Chris. This is Greg. So as we talked about before, and Chris talked about in particular, with some of the unplanned outages we saw as well as the distribution cost of moving product around to meet customers' needs that ran through, particularly in the ammonia segment into the second quarter.

Yes. And we also, as Greg mentioned earlier, we look at it more than just on a quarter-by-quarter, given some of the timing. And now as we look at the back half of the year, as we mentioned in our prepared remarks, Q3 is generally a little bit heavier of a turnaround period. So we may see a couple of hundred thousand tons less of gross production of ammonia during that period as well.

And on the movement of the product, Q3 is generally an industrial export quarter with Q4 being more ag based. We've built a very solid order book for Q4 for weather dependent, but the weather always cooperates with CF Industries. So we're going to see that be a positive time of -- and the pricing has been very positive and the demand uptake very positive.

The next question is from Andrew Wong with RBC Capital Markets.

Maybe a topical question for today to start. What's your view on how a Russia and Ukraine trues or some sort of p-settlement could impact on nat gas prices and also on the nitrogen market?

Yes. I have several Russian friends and Ukrainian friends. And I am I would take it to peace. I would love to see peace break out, and this situation ends. And it bothers me that we take it economically, and that I understand that's a reflection of our business. The Russian tons that are coming to the United States, it amazes me that we are sending bombs and missiles there but bringing fertilizers here. So I would hope that, that is addressed in some form or fashion.

But the impact on natural gas, that's not going to come back anytime soon as the [ Nord ] Stream system is not going to be rebuilt anytime soon. The frustration, I believe, with the European NATO allies and the purchasing of Russian product, whether that be gas or in the form of nitrogen probably is not going to come back anytime soon. There's tariffs and sanctions coming that will only increase on Russian product. And so I think for the world, you're going to see much more North American natural gas moving to Europe and other places, and we're going to see on Bcf type basis probably going from 15 in the United States up to the mid-20s in the next several years.

On a nitrogen basis, again, it's a world, it's a globally traded commodity. I think the pricing and the product moves as relation to product needs as well as the values communicated. Russian product is traded at a discount to Brazil and India. I expect that to continue for a while. And then we see what happens with these peace talks. But hopefully, that progresses before we have to talk about other issues.

Yes. I would just add just on the energy front, anything -- it have to be solved relatively quickly to stop some of the pressure that's already in motion, specifically for European producers given the maintenance activity that these plants require the working capital and the demand timing as you're building production for 2 points of the year of demand. So I think from our perspective, what we see from a European curtailment and shutdown is expected to continue no matter what happens just given the time frame it would take in order to build back Nord Stream or bring in more Russian LNG through that time frame.

Okay. I appreciate all that. And then maybe just switching over to Europe. With the implementation of C-band, can you just talk about how you see that impacting the markets, both in Europe and globally. And how does that change to all of Europe at the marginal cost better?

Yes. So I'll start, and I'll see if anybody else wants to add in. But right now, just to put in context, CBAM in a transitional phase where right now, importers have to report their carbon intensity. So it goes into place in January of next year. And there's quite a few details that are still being worked out that our hope is by the end of the year here. The specifics to that particular program are put in place. But what it will allow us, based on today where it's roughly an $80 per metric ton carbon tax on producers that we should begin to see with our low carbon ammonia coming out of Donaldsonville something that's probably in the $25 per metric ton benefit. That continues to increase through the years that by 2030 would be equivalent of $100 per metric ton advantage that low carbon production out of Donaldsonville would have.

So from our perspective, it's going to be something that -- we haven't really worked into all of our models of upside, and that's why we feel confident that we've been probably overly conservative, but will be something that will be an advantage and almost our carbon arbitrage opportunity for CF as we're able to move our product in there.

Yes, I agree with Chris. In terms of how we're looking at CBAM, but also working with our existing operating units in the U.K. and planning to send low-carbon ammonia to produce low carbon ammonium nitrate for that market as well as other customers, industrials as well as fertilizer producers. We see a tremendous opportunity in the near term with the products we're already making due to our CCS and longer term with the Blue Point operation.

And I would just add, we are seeing a -- as Bert commented in his remarks, we're seeing demand in a premium for the low-cost -- the low-carbon intensity product already today, that's even before you get into the CBAM situation. So this has been a great kind of initiative for us, not only because the 45Q makes it a really highly accretive investment the CO2 capture and dehydro compression injection, but also because on top of the 45Q we're getting paid incrementally differentiated product margin for the attribute. So this is just another step up as Chris said, which will add to that with the C-band that wasn't worked in or expected in any of the initial calculations around Blue Point.

And maybe just the other part of the question just on the nitrogen market itself, like what is the impact there and on EU in its marginal cost role?

The impact, I assume what you're asking for is what's the impact on low carbon product to the market?

No, just in general, like EU right now is the marginal cost setter kind of, right, with the high cost as -- does that raise your cost profile? Does it change like how the market works and maybe they're a different part of the market now or kind of that?

Yes. I think what it's going to do is it is going to raise the cost of the product going into Europe, obviously, as you're having to pay for that carbon tax that's there. But I don't think it changes anything with European production. So as demand grow their and you're seeing that constraint, that's why we're very strongly believe that you're going to have to incent new production globally to be bid in and what we've seen recently with the exception of our project, a lot of these other projects that were in FID state have either deferred those FIDs or cancel the projects all together.

So we see the back half of this decade just getting tighter and that's at the same time that we'll be bringing on our production. So we think the cost curve from that perspective, given demand growth will probably move up along with some of these other carbon initiative globally.

And the next question comes from Aron Ceccarelli with Berenberg.

What is CF's perspective on nitrogen fixation products? Do you see these products as a growing risk traditional nitrogen producers? Or do you expect farmers to adopt them as a complementary solution? And perhaps additionally, would CF be interested in entering the nitrogen fixation market?

This has been a topic, nitrogen fixation, microbials, biologicals, different applicated -- applied products for years. And I've been following this phase for a couple of decades and there have been many new entrants and we have a lot of access to farmers. We have paid attention to the studies from the various universities and I would say today, it's a questionable segment. They haven't performed as advertised, they've been tried in their variables. I've talked to 2 farmers most recently with all the variables controlled being water, the only variable being weather, but water seed, crop protection, fertilizer being constant and the variable being the active products. And at times, they work and at times, they don't. Are we interested? Well, we follow these things because it has an impact on our business. We want to align with the retailers and farmers that are doing best practices and so far, we haven't seen the performance as advertised.

The other thing I would just add to that is, our expectation is that the value associated with any kind of, as Bert said, biological or other approach, is really to drive increased yield as opposed to a cost reduction based on nitrogen. If you think about a couple of hundred pounds of nitrogen going down per acre, even at relatively strong values for nitrogen, it's worth a lot more to the grower to increase yield by 3% or 4% than it is to try to take 5% of the nitrogen off the field. There's just more dollars associated with the end grain. And so we don't really see this as a necessarily as a competing technology, more of a value enhancement to the grower.

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

Thank you, everyone, for joining us, and we look forward to seeing you at the upcoming conferences.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.

Good morning, everyone, and thanks for joining us for CF Industries Investor Day. I'm Martin Jarosick, Vice President, Treasury and Investor Relations. Before I introduce our first presenter, I'd like to cover a few points.

First, statements made during this event that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available on our website. Also, you'll find reconciliations between GAAP and non-GAAP measures in the presentation posted on our website.

Second, a quick safety briefing and orientation. In case of emergency, please exit the room through these doors and proceed to the emergency stairwells, descend to the ground floor and exit the building. Additionally, please silence all devices.

Now for today's agenda. Presenting today are Tony Will, President and CEO; Bert Frost, Executive Vice President, Sales, Market Development and Supply Chain; Chris Bohn, Executive Vice President and Chief Operating Officer; and Greg Cameron, Executive Vice President and Chief Financial Officer. After their prepared remarks, we'll have a brief break before we have a live question-and-answer session immediately followed by a reception in the South suite.

Now we're ready to begin.

[Presentation]

Good morning. Thank you all for joining us here today. We are very excited to be able to host the 2025 CF Industries Investor Day. I'm Tony Will, President and Chief Executive Officer since 2014. And prior to that, I ran manufacturing and distribution and before that corporate development. CF Industries is poised at the very forefront of the global ammonia and nitrogen industry, and we are ready to move forward into the future, leading with low-carbon ammonia production. We're excited to be here and share more about our story with you today.

But I want to begin by recognizing the senior leadership team of CF Industries who have driven our success and continue moving the company forward. Many of you already know Bert, Chris and Greg. And as Martin said, they'll all be presenting this morning. I also want to introduce the rest of the senior leadership team. This is a strong team of senior leaders, many of whom I've had the privilege of working with for quite some time. And as a group, they work together extremely well. The SLT, along with some additional key leaders from CF, look forward to talking with you during this reception later this morning, and hopefully, you've had a chance to meet a number of them during registration.

Our story begins nearly 80 years ago in 1946, when we were founded as an agricultural cooperative called Central Farmers Fertilizer Company, with a mission to source and distribute fertilizer for our member owners. Through the decades that followed, we had ownership interest in nitrogen, phosphate, potash production. And when the company delved into barging operations and oil refining, our name was changed to CF Industries.

Over the ensuing years, many of those lines of business were shed and the modern CF industries began to take shape with our initial public offering 20 years ago in August of 2005. This shift from co-op to publicly listed company began a significant evolution for CF Industries. When I joined the company, we produced about 3 million tons of gross ammonia per year and still had a phosphate business, and we've certainly come a long way since then.

The really key events that formed the company that we are today are shown on the time line. Over this time and through these initiatives, we've built the premier ammonia nitrogen company in the world. We have the highest asset utilization, leading EBITDA margins, leading free cash flow and leading value creation for long-term shareholders. The key themes that you'll hear about today include how we relentlessly focus on operational excellence in order to deliver superior cash flow and enable disciplined growth, all with the aim of delivering superior shareholder value.

Our corporate mission is to provide clean energy to feed and fuel the world sustainably. But our success is rooted in our values. Do it right is fundamental to who we are. We put safety first with no compromises. We do it well. Our focus is on execution and results. We expect to be the best operators in our industry. We execute as a team. Our 2,800 employees have shared goals and shared incentive plan metrics that reward employees for the success of the total company, not the success of one individual or one part of the company over another. And we take the long-term view in an industry with very long asset life and investment cycles, we know the decisions we make today need to be based on where our industry and the world in general is going in the next 5, 10, 20 years and beyond.

Bert will cover our advantaged production and unmatched distribution and logistics network. Chris will discuss operational excellence and the real differentiation that, that creates for us. Greg will focus on our disciplined capital stewardship and how we balance growth with consistent return of capital to shareholders. And all 3 will talk about how we invest in selected slices of our value chain where we execute better than anyone else. This includes low-carbon ammonia production and our recently announced Blue Point joint venture, which you will hear much more about today.

We also pursue margin-enhancing projects within our existing network that often have return profiles well in excess of 30%. This includes projects that you're likely familiar with, such as our carbon capture and sequestration project at Donaldsonville and at Yazoo City. We also pursue margin-enhancing projects that may not make front page headlines but help drive our financial results. For example, we recently completed a project that expanded diesel exhaust fluid loadout capacity at our Donaldsonville complex, which will allow us to ship an additional 140,000 tons of very high-margin DEF per year.

We consistently evaluate accretive acquisitions. A recent example is our purchase of the Waggaman, Louisiana ammonia production facility in 2023. And we remain committed to returning capital to shareholders. Last year alone, we returned $1.9 billion to shareholders through share repurchases and dividends. This has resulted in a balanced approach to capital allocation. Over the last 15 years, we have deployed $24 billion. $10 billion or 40% was used to fund growth, $14 billion or 60% was returned to shareholders through share repurchases and dividends. This has created a strong track record of total shareholder return.

Our performance particularly stands out compared to our closest industry peers, Nutrien, Yara and Mosaic. We outperformed the S&P 500 materials sector and have very favorable results compared to an even broader comparison set of the S&P 500 industrial sector.

Our balanced approach to capital allocation continues today. We're investing roughly $2 billion into our Blue Point joint venture and also have a concurrent share repurchase program for $2.6 billion. Selectively investing in the business to increase cash generation while we reduce the share count has clearly served our long-term shareholders well. When we reach the end of this year on a pro forma basis compared to 2010, which was the year we acquired Terra Industries and issued a lot of additional shares in order to be able to fund that acquisition.

We expect to have decreased the share count outstanding by 56% while increasing our production capacity 36%. As a result, shareholder participation in our assets and the cash that they generate will be 3x higher than it was in 2010, which is a 7% compounded annual growth rate. Growth has consistently been a key element of our company's story and a key success factor for our shareholders. We're very proud of the track record we have built, and we're focused on how we can continue to drive superior value creation for long-term shareholders.

With that, I'm going to turn it over to Bert to discuss our sustainable competitive advantages.

[Presentation]

Good morning. It's great to be here and great to see everyone. I'm Bert Frost, and I joined CF Industries in 2008 to lead the company's sales and market development team. Today, my role also includes our supply chain group, which brings together everyone who is customer-facing. I spent most of my career in agriculture, having been with ADM prior to joining CF. My love for agriculture started long before I joined the corporate world. I grew up in rural Kansas, a little place on the Oklahoma, Kansas border, and my family still owns a family farm in Colorado. So I have a deep understanding and appreciation for the growers who use our product and the impact our company and companies like CF have in the agricultural value chain.

Let's start first with nitrogen itself and the role it plays in agriculture. People call nitrogen the building block of life because it is essential for plant formation and growth. For row crops, it's vital for corn, cotton canola and sugar. It's a commodity, but with unique characteristics. It's the only discretionary, nondiscretionary nutrient and has to be applied every year. Nitrogen is critical to the production of another commodity, food and fuel that the world is always cycling.

It's applied year-round for 2 major growing cycles, one in the Northern Hemisphere and one in the Southern Hemisphere. The price of nitrogen is set on the global nitrogen cost curve by the marginal producer. Marginal production must be bid into the market every year at a price that allows these high-cost producers to cover their costs, the majority of which is natural gas,

the most common feedstock for ammonia. The nitrogen value chain is long from natural gas production to end use. We use a commodity to make a commodity that is critical for the production of another commodity.

There are a lot of places to participate in the value chain. For example, some ammonia producers are also in retail or in the mining and processing of other macro nutrients. We at CF have chosen to focus where we can extract maximum value for capital deployed, manufacturing, distribution and sales of ammonia and ammonia derived products to retailers and wholesalers. We focus here because it provides the highest margin opportunity and the lowest risk, thanks to structural and operational advantages CF has developed throughout the years.

Our structural advantage is rooted in our North American operations. We produce all of our ammonia here in the United States and Canada as well as the vast majority of our upgraded products. Operating in North America gives us access to low-cost and plentiful natural gas. As a result, we are one of the lowest cost producers in the world and firmly positioned on the low end of the global cost curve.

North America has a highly productive agricultural sector. Because of the ideal growing conditions and weather, advanced agricultural practices and access to global markets, North American farmers will always plant these acres and fully fertilize them. This ensures consistently strong demand where our production is. Finally, North America is an import-dependent region. This means that purchasers here have to bid in the high-cost natural -- or nitrogen ton to meet demand. Our margin opportunity is defined by the difference between our production cost and the production cost of the marginal producers that set the global price.

For our North American producers like CF, this is a significant advantage. North America offers additional advantages as well. We are one of the only producers with direct access to low-cost natural gas and a distribution network strategically positioned near end users.

Let me illustrate the margin impact this creates. For example, our Port Neal, Iowa complex and a producer in the Middle East manufacture a ton of urea for $3.50 per MMBtu and gas costs at the plant. But not all the tons of urea are created equal, even when compared with other producers with low-cost manufacturing positions.

There are additional cost to transport the Middle Eastern urea ton to Iowa, ocean freight, tariffs, barge, trucking that we do not have for most of our sales from Port Neal, Iowa. As a result, the Middle Eastern ton has a delivered natural gas cost to Iowa of nearly $10 per MMBtu, over $6 per MMBtu of margin that we retain that other low-cost producers do not. Our structural advantages are significant, but our operational advantages truly set us apart in our global industry. These have been developed over decades with investment into our network.

Let's start with our production network. We have approximately 60 production units across 8 sites strategically located in North America. As Chris will talk about, we operate these units at industry-leading utilization rates. Collectively, they have an average annual capacity of approximately 10.5 million metric tons of gross ammonia. Then with that ammonia, we produce approximately 20 million product tons for sale on an annual basis. We sell all the tons we produce. Our production sites are fully integrated into our distribution network, allowing us to move that volume efficiently, thanks to our logistics capabilities.

Today, we have approximately 45 distribution terminals that we either own or lease with a portion of the terminals distributing multiple products. The terminals primarily serve ammonia and UAN customers in key growing regions. We actively manage product flows to and from our distribution facilities to ensure our product is in the right place at the right time to achieve the highest netback. This includes leveraging nearly 3 million tons of product storage across our terminals and production sites to give us the flexibility to store product if we believe product prices are increasing.

Managing our extensive network is truly a collaborative effort among our sales, demand planning, transportation, agribusiness analytics, manufacturing and distribution teams. What also makes us uniquely positioned is our production and distribution flexibility. Our production flexibility is integral to how we build our order book, which is based on achieving the highest margin possible. We're able to switch between products, which we are maximizing urea or UAN within our network within a matter of hours, depending on which offers the highest margin opportunity.

Collaboration is critical to how we make decisions. Earlier this year, for the first time in my memory, urea was selling at a premium to diesel exhaust fluid or DEF. Both products use the same intermediary, urea liquor, so choosing to make one more than the other means less of the other. Our sales team came together, discussed the situation and decided to be best for the company to granulate more urea and produce less DEF. This is the right call for the business, but one that is only possible if you have the flexibility and a culture of collaboration.

In addition to production flexibility, we have unmatched distribution flexibility. Our production sites have access to multiple modes of transportation to ship products. We have 2 production facilities and 10 distribution terminals tied to the Sunoco ammonia pipeline, allowing us to safely and efficiently transport ammonia through our network to the highest-yielding crop area in the United States. We also ship ammonia, urea and UAN and -- which is ammonium nitrate by barge throughout the United States inland water system. In 2024, we shipped over 5 million tons of product via barge, including delivery directly to customers and supply to our terminals.

All our North American production facilities are located on Class 1 railroads, giving us access to all key growing areas in the United States and Canada. We have truck loadout at our production and distribution terminals as well. These are typically for local sales and achieve a higher price for smaller volumes.

Finally, we can export via oceangoing vessel. We have strategically developed our export business and have made tremendous inroads in Europe, Brazil, Argentina and Australia over the last 10 to 15 years, shipping over 2 million tons per year because of our reliability and advanced location. This set of structural and operational advantages are hard to replicate, some would say impossible, and I would agree with that. We strongly believe that they are set for the long term.

So taken together, by operating in North America with an advantaged production and distribution network, we sell a necessary nutrient producing a low-cost -- by using low-cost natural gas at a price set by the global high-cost producer for the best and most efficient farmers in the world at the lowest delivered cost in our industry. As a result, we consistently achieve the highest value for our product in the industry.

Let's pull back and look at how nitrogen trades around the world. The best way to look at the global nitrogen market is through the lens of granular urea, which is produced in widely traded around the world, approximately 55 million to 60 million metric tons of urea per year are traded between continents. Net importers generally reflect where the product -- productive crop lands exist. Some regions produce significant volumes of urea, for example, India and the United States, but consumption is higher than production. However, many other -- in other parts of the world, importing natural gas regions of the world that are disadvantaged with natural gas and have a small nitrogen industry, if any, at all. This includes Brazil, which is the largest importer of urea in the world.

Their farmers have become increasingly more efficient and low-cost grain producers to meet growing demand within the country of Brazil for the consumption of corn for feed and the production of ethanol. This in turn has driven urea consumption, which required over 8 million metric tons of urea imports last year. Brazil imports all nitrogen products. For example, CF, we regularly ship UAN to Brazil. From 2016 through 2024, our product sales into Brazil of UAN has grown at a 22% annual compound growth rate. We've achieved this through partnerships with Brazilian distributors rather than investing CF capital into building a distribution network there, an example of disciplined use of capital and securing a lower risk profile.

Some exporters tend to have or had, in some cases, access to substantial natural gas, which helped their nitrogen sector develop. Most do not consume much nitrogen for domestic agriculture such as Qatar and Saudi Arabia. In recent years, several regions with significant nitrogen production capacity have faced difficult natural gas dynamics, resulting in a growing structural constraint on global nitrogen availability. This starts with Europe, whose manufacturing industries in general have been challenged by high natural gas prices for this entire decade. Because of these high gas prices, European natural nitrogen producers face challenging production economics as the global marginal producer. This has led to capacity closures and ongoing curtailments.

Countries such as Egypt, Iran and Trinidad face different natural gas issue, and that's availability, declining natural gas production and in the case of Egypt and Iran, diversions of natural gas for growing electricity and heating demands, have become a chronic problem for their nitrogen producers with shutdowns. It's a challenge with no clear path to improve natural gas availability for these producers who have been significant nitrogen exporters for decades.

These structural constraints on nitrogen supply availability have been exacerbated by recent unfortunate geopolitical events. In the last few weeks, the Israel-Iran conflict has led to the complete shutdown of nitrogen production in Iran and Egypt. At full capacity, exports from both countries together totaled 9 million to 11 million metric tons. That's 20% of the global traded urea supply. The industry is losing at least 175,000 metric tons of tradable urea production per week from these 2 countries.

The Ukrainian drone attacks on 2 nitrogen complexes in Russia have an outsized impact on another product, UAN. For those 2 facilities have 1.5 million metric tons of UAN production capacity and total Russian UAN capacity is just over 3 million metric tons annually, of which 2 million tons are totally -- are typically exported. So assuming the remaining Russian UAN production will be directed to serve domestic customers, the world is losing approximately 30,000 tons of tradable UAN equivalent to a single UAN vessel per week. This represents approximately 25% of the global UAN seaborne trade.

In the aftermath of these events, we saw global nitrogen prices rising rapidly. While the shutdown may be for a short duration, the impact on the global nitrogen supply has a longer tail. These are tons that the world relies on and the global industry today does not have the excess capacity or capacity to easily make them -- make up for them. And there is substantial demand to be met in the second half of the year. For example, just 2 countries, Brazil and India are behind in their urea imports for the growing seasons that are rapidly approaching. As a result, we expect the global nitrogen supply-demand balance to be in a tighter-than-expected position going into 2026.

Some market observers believe that a significant increase in Chinese urea exports is imminent, turning a tight global urea market into a loose one. However, we believe that the approach to urea exports that we have seen over the past few years from China is now the new normal. It's important to remember that the level of Chinese urea exports is heavily influenced by government policy. Urea exports have been on a constant steadily decline since 2015, driven by large-scale capacity closures due to high costs, subsidy rollbacks, government environmental mandates and other issues. So today, the focus is on food security in China and achieving a low price of fertilizer for the domestic market. So urea exports have been restricted.

In addition to the volume of urea available for export has shrunk as urea consumption within China has risen by a significant volume over the last 5 years, hitting 70 million metric tons of supply and demand. We expect that the domestic market in China will be served first and any remaining tons, tons the world does need will be available for export, but at a significantly lower level than 10 years ago.

While global supply is facing constraints, global demand for nitrogen keeps growing. Over the next 5 years, we expect annual demand for nitrogen on an ammonia equivalent basis to grow by 12 million to 14 million metric tons. Demand for nitrogen grows with population and income growth, and we have to feed more people. And as the world become wealthier, it wants to consume more protein, which relies on feed grains for cattle, pork and poultry. Demand for nitrogen for industrial application also grows with the economy. Ammonia is a key feedstock for plastics, explosives, synthetic fibers and other areas. A growing economy means more demand for these products.

Longer term, we believe industry fundamentals will become more constructive for our business as the global nitrogen supply-demand balance tightens through the end of the decade. Today, there is not enough new capacity under construction to meet projected growth. We also expect additional ammonia capacity in Europe to permanently close by 2030. As a result, we project that the world will need at least 7 more world-scale ammonia plants in the next 5 years just to reach balance, and those plants are not under construction today, which should lead to a tighter and a higher, steeper global cost curve in the years ahead. We believe this will offer CF Industries an increased margin opportunity.

Over time, we believe the demand for ammonia will accelerate as it is increasingly used for clean energy applications. The opportunity reminds me of what we saw in 2010 for diesel exhaust fluid. DEF demand is driven by government policy designed to reduce nitrous oxide emissions from diesel trucks. The technology solution that diesel truck industry adopted required a product we already made, urea liquor, but that we didn't sell as DEF, offering CF a capital-efficient way to pursue that business. We did this because there was a compelling pathway to grow a DEF business, considering the size of the diesel truck fleet in the United States that would have to adopt this technology.

DEF has been a tremendous success story for CF Industries. DEF operates with ratable offtake and low working capital, and it consistently sells for a significant premium over granular urea. From a negligible production capacity in 2010, we identified the growth opportunity, we then invested in our network and grew our DEF sales volume faster than the 8% market growth rate. We now have 900,000 urea equivalent tons of DEF capacity available, and that's the size of a world-scale urea plant, after receiving or recently completing the investment Tony mentioned earlier to increase our DEF loading capacity at Donaldsonville. This project demonstrates the strategic nature of our decision-making.

We increased DEF capacity we could bring to the market by making a relatively small investment in logistics capabilities that was a capital-efficient choice that will drive increased cash generation. To bring the analogy back to the beginning, just like DEF, global demand for low-carbon ammonia is being driven in large part by government policies. And just like DEF, ammonia is a product we already make with the ability to adapt our existing network in a capital-efficient way to produce a low-carbon version. Just like DEF, we expect low-carbon ammonia to achieve significant premiums over conventional ammonia prices. We have several contracts in hand today that with the option to sell low-carbon ammonia when it is available. And we believe we will achieve at least a $25 premium over conventional ammonia.

With the European Carbon Border Adjustment Mechanism or CBAM projected today at $100 per ton of carbon, we would expect to eventually capture much of that as a premium from the sale of our low-carbon ammonia, which we will produce at Blue Point. And just like DEF, we see a pathway for substantial long-term demand growth for low-carbon ammonia, not just for traditional applications, but for new applications as well. We believe this will be a strong growth platform for the company, as Chris will cover next.

[Presentation]

Good morning. I'm Chris Bohn, CF Industries' Chief Operating Officer since last year. And prior to that was the company's CFO. And before that, I led our manufacturing and distribution group, along with previous roles leading our supply chain and also our corporate finance group.

Tony discussed earlier our performance in total shareholder return against a broad set of peers. Bert gave you many of the reasons why, which are grounded in our North American structural advantages and our CF operational advantages. This sets the foundation for what distinguishes CF from other companies, our safety and operational excellence alongside disciplined capital and corporate stewardship.

The CF team delivers operational excellence consistently year after year, a tremendous safety record, high asset utilization and leading capital and operating efficiency. Applied to the world's largest ammonia production network, our operational excellence magnifies our ability to deliver growth, provide exceptional free cash flow and create value for our long-term shareholders. At the heart of our operational success is a culture of safety excellence. We've developed and nurtured over decades. We equip employees with the proper safety knowledge, tools and procedures, and we work across our locations to share our best practices and understand our near misses.

Most importantly, we empower our employees to take action whenever they deem necessary. A good example of this happened recently. An operator on the night shift at our Port Neal complex was doing his rounds when he noticed a hotspot on a pipe. He didn't have to run that information up multiple levels of management and wait for a response. He initiated a shutdown on the plant on his own, ensuring he and his coworkers remain safe and preventing what could have been a greater significant issue. That is our culture of safety excellence at work. Individual events like the Port Neal example, manifest themselves at a macro level over time in our company's recordable incident rate.

I think back to 2011, and 2011 was the first full year we had the Terra assets integrated into our network. And these were assets that had a history of relatively poor safety performance. We embedded our do-it-right culture across these plants and terminals. And since then, it's been a journey of continuous safety improvement with approximately 85% fewer incidents in 2024 compared to 2011. And we're doing the same thing today at our Waggaman facility that we recently acquired. In the end, this focus results in safe workplaces, safe communities and an outstanding environmental stewardship.

Alongside our culture of safety, our scale and expertise provide a critical operational advantage. Our scale is the world's largest producer of ammonia and our willingness to partner in areas outside our expertise rather than organically invest, try to build a competency that is not core to CF, allows us to accumulate and develop focused expertise within our teams. This allows our teams to do what they do best, operate the plants and drive improvements, not at one plant or at one site, but across our entire network. It enables the transfer between our teams, and it supports procurement and shareable spare parts that limit our downtime. Simply put, our scale provides advantages that cannot be replicated overnight, if ever.

Together, our culture and scale lead to industry-leading utilization rates. Over the past 5 years, we have averaged 8% greater ammonia capacity utilization than our North American peers who have the same incentive that we do in order to operate at full capacity. This is equivalent to saving $3.5 billion in capital that would have been required to produce that same amount of volume. This is the financial result of the operational efficiency I was speaking about earlier. Our ability to do this is a considerable advantage and one that is the result of years of investment and culture building. Again, not something that can be replicated overnight.

In 2020, we refined our corporate vision to include a commitment to decarbonization and the production of low-carbon ammonia. We established a goal to reduce our Scope 1 carbon emissions intensity per product ton by 25% by 2030. And as you can see, we're well on our way to achieving that goal by 2030. This year, we'll make meaningful progress, reducing greenhouse gas emissions as we commission our Donaldsonville CCS project and complete an N2O abatement project at our Verdigris, Oklahoma facility. Together, these 2 projects will reduce greenhouse gas emissions by over 2.5 million metric tons of CO2 equivalent annually. That's equivalent to taking almost 600,000 cars off the road.

We'll be the first to decarbonize our network at a measurable level. Our investments provide CF tangible benefits, long-term sustainability, a significant return profile and a product offering to our existing and new customers. We expect to accrue both structural and market benefits. First, we'll earn structural incentives just by decarbonizing. So think tax incentives in the United States, carbon tax avoidance in Canada and Europe. In addition, there are market-based opportunities. First and foremost, this includes selling low-carbon nitrogen products for a premium.

As Bert explained earlier, demand for these products and a willingness to pay a premium exists today. But we also have the opportunity to monetize decarbonization through the sale of carbon credits. This is the approach we're taking with our Verdigris N2O abatement project. We expect this initiative to be fully funded and earn an ongoing rate of return through the sale of carbon credits generated by the project with 3Degrees Low Carbon Fertilizer Alliance. This group's goal is to link fertilizer producers with CPG companies who are focused on reducing their greenhouse gas emissions in their supply chain.

We are pleased to share that our Donaldsonville CO2 dehydration and compression unit is fully commissioned. This will enable us to permanently sequester 2 million metric tons of CO2 annually. When Exxon receives its Class VI permit, which we expect to be later this year, we'll begin to move it to a Class VI permanent sequestration wells. In addition to the Donaldsonville project, we have many opportunities to decarbonize in the years ahead. We already have projects in motion that will sequester approximately 4.8 million metric tons of CO2 annually, and we have 2 additional locations that will add another 1.8 million metric tons of CO2. Again, all these projects provide long-term financial opportunities in the form of government incentives, product premiums or sale of carbon credits.

Our path to decarbonizing our existing network reflects our disciplined approach to capital investments, focused on earning rate of return well in excess of our cost of capital and mitigating risk by partnering with industry leaders. The same is true of our approach to building greenfield low-carbon ammonia capacity. The truth is that ammonia projects are easy to announce, but difficult to commercialize. 232 low-carbon ammonia projects were announced over the past several years. The concern of an oversupplied market became a hot topic by many in this room. However, few are moving forward. In fact, just 6, that's less than 2.5% of the original announcements have made positive FID. Why? Well, new ammonia capacity in general has been constrained in recent years by capital cost escalation, long-term feedstock costs and the uncertainty created by geopolitical events.

Additionally, many announced projects realize the difficulty of operating a stand-alone plant. There are plenty of examples in the recent years of new entrants encountering challenges operating or even commissioning a single plant site. Alongside operational challenges, not having an established logistics and distribution network to move that product presents significant execution challenges. Again, it's easy to announce a project, difficult to execute on it.

So what makes our project different from the so many that have been announced? We start with the nitrogen industry fundamentals. As Bert explained, there is not sufficient ammonia capacity under construction to keep up with demand growth. Tightening of the global nitrogen S&D balance will require more ammonia plants to be built. In contrast to new entrants, we have substantial expertise in building and operating ammonia plants. And choosing to build and operate in the United States gives us access to low-cost natural gas, rule of law, geopolitical stability, ample CO2 storage and export capability to reach anywhere in the world.

The final piece of our investment decision was how we leverage our partnerships. We formed a joint venture with global leaders who are committed to product offtake. We believe JERA and Mitsui are at the forefront of what will be strong global demand for low-carbon ammonia. For our portion of the product, we have a natural home in our U.K. complex, which will be facing a version of CBAM soon, allowing us to capture that opportunity. To mitigate project risk even further, we looked at Blue Point scope to determine where we can leverage best-in-class capabilities. We partnered with Oxy and their subsidiary 1.5 to transport and sequester CO2. We brought in Topsoe for their ATR technology and Technip for engineering.

And as was announced yesterday, we've partnered with Linde, to build and operate the air separation unit to supply nitrogen and oxygen for the ammonia production process. Where we have expertise, we retained operational control, including ownership of hydrogen and ammonia production. This ensures Blue Point remains a first quartile low-cost plant on the global ammonia cost curve. Together with our partners, we have significantly derisked the Blue Point project for cost overruns. With the recent Linde announcement, our cost estimate for the project is now $3.7 billion with equivalent economics. A substantial portion of that estimate is for fixed fee components, and we have a conservative contingency for the remaining activities.

Our capital contribution for our 40% of the project is up to $1.5 billion to be spent over 4 to 5 years. We also expect to spend approximately $550 million to construct common facilities that the joint venture will pay CF to own and operate. Much of this work, too, is fixed fee, such as the ammonia tanks, the cooling towers and the dock. The common facilities are also expected to have aspects that are scalable for our future growth. We feel strongly that the disciplined investment, subscribed offtake, global partnerships and demand for low-carbon ammonia will serve our long-term shareholders very well.

Blue Point will be an export-oriented facility strategically located on the Mississippi River to provide access to global markets. Our Donaldsonville complex is just down river, and our Waggaman facility is nearby. This will enhance the effectiveness of all 3 of those sites as we leverage capabilities already in place, including engineering expertise, spare parts and likely operators as well. This is what we're building to. The ammonia production facility will have a nameplate capacity of 1.4 million tons of ammonia on an annual basis. We expect it to be the largest ammonia plant in the world when completed, operated by the best ammonia operator in the world.

Linde will locate their air separation unit on the Blue Point property and Oxy will transport and sequester 2.3 million metric tons of CO2 annually. We'll construct 3 ammonia tanks that have a combined capacity of 165,000 metric tons to support ratable shipping of product to the partner's global destinations. Blue Point truly is at the forefront of global low-carbon ammonia production. We believe low-carbon ammonia is the future of our industry, NCF. We chose a site that has room for growth. Over time, we have the potential to turn Blue Point into the next Donaldsonville with room to add another 4 low-carbon ammonia plants as global demand develops. We'll approach these future opportunities with the same discipline we have done with the Blue Point joint venture.

The benefits we realize today from our operational excellence are the culmination of years of culture formation, talent acquisition and disciplined investing, knowing where our competencies reside. The result delivers incremental improvement to our financial performance with each growth initiative we execute. Without this, we'd be a mid-tier performer rather than an industry leader in safety, utilization and cost efficiency. Without this, CF would not have the significant growth trajectory we have today.

With that, I'm going to turn it over to Greg Cameron to talk about capital allocation.

[Presentation]

Good morning. I'm Greg Cameron. I've been the CFO at CF Industries for a year. When I was evaluating the opportunity to join CF, there are many things that attracted me to this company. The dedication to process safety, the experience of the team, the commercial advantages and a culture that values doing it right as a team. These were all strong positives. But there were 2 attributes that really spoke to me. First was the mission of providing clean energy to feed and fuel the world sustainably. I was attracted to a company that positions itself as a problem solver and a change agent to improve our world profitably.

For me, this was best described in 2020 when the company evolved their mission to meet the challenges of a changing world while remaining true to their core strengths. Second was the financial strength of the company. Strong cash flows, healthy balance sheet, operational excellence enables companies to meet their mission while rewarding their shareholders.

Now throughout my career, I've seen companies with admirable visions, especially in the decarbonization space, but their path to profitability and free cash flow were challenged and their journey was long. That's not the case at CF Industries. We're making meaningful progress today, and we're doing it profitably. At CF Industries, we deliver for our shareholders through competitive advantages in production and distribution, combined with disciplined capital allocation. As we shared in May, over the past 12 months, the company reported approximately $2.5 billion in adjusted EBITDA, which we converted to $1.6 billion in free cash flow, a 63% conversion rate and returned approximately $2 billion to our shareholders.

This performance is not new for CF. Our last organic capacity additions were completed in 2016. These investments, combined with our production and distribution network have powered our financial performance. Over the past 8 years, CF has recorded $19 billion in adjusted EBITDA and generated over $12 billion in free cash flow. That is an industry-leading EBITDA to free cash flow conversion of over 62%. We've used our cash to reduce debt, acquire attractive assets like the Waggaman facility and returned approximately $8 billion to shareholders in the form of dividends and share repurchases.

Now earlier, Tony shared our total shareholder performance compared to our fertilizer peers as well as a broader set of materials and industrial companies. But when you look at a key set of performance indicators over the last 5 years, our results on EBITDA margin and free cash flow conversion are also compelling. We are top of our industry, top of materials. Against industrials top 10% in EBITDA margin, top 40% in cash flow conversion and top quartile in total shareholder return. Now you can even expand this out to the entire S&P 500. We're top 15 in EBITDA margin, top 40% in free cash flow conversion and top 15 in total shareholder return.

However, when you look at free cash flow, there's a free cash flow yield, there's a disconnect between our performance relative to these peers and how we're valued. When I arrived at CF, I was troubled by this disconnect. While I can understand some variation between industries or companies, this valuation difference appeared inconsistent with CF's demonstrated operational performance and free cash flow generation, and I believe it fundamentally underestimates the consistency of our financial performance and the growth capability of our company.

Let me explain. As we look to the future, we're doing so with a strong balance sheet and ample liquidity. We keep a low level of debt for a company of our size and maintain strong cash balances. We also have an investment-grade rating across all 3 rating agencies, a rating we are proud of and are committed to maintaining. This strong balance sheet enables us to be flexible and opportunistic. For example, we expect to fund our portion of the Blue Park (sic) [ Blue Point ] project from our cash while we continue our share repurchases. With our financial strength and our approach to capital allocation will remain the same, investing in our business at good returns, looking for inorganic opportunities that are tightly aligned with our strategy and continuing to return capital to our shareholders through share repurchases and dividends.

Now when I joined the company, I was often asked how we think about our earnings potential through a commodity pricing cycle, effectively our mid-cycle or through-the-cycle EBITDA. As our capacity is relatively fixed in the near term, and we sell everything we produce, the most sensitive variables to our earnings is the input cost of natural gas and the selling price of our products. So a simple way to view our mid-cycle is how we performed over past cycles. Looking back over the past 8 years, we've seen cycles in both nitrogen and natural gas prices. Now these movements in prices naturally impacted our reported adjusted EBITDA. If we look over the same period, we've averaged an annual EBITDA of roughly $2.4 billion.

While the early part of the cycle was impacted by historically low selling prices, the later part of the cycle has been fairly consistent with the exception of the spike in 2022 during the Russian full-scale invasion of Ukraine. So using a simple average over past cycle suggests a $2.4 billion mid-cycle. Another way we look at mid-cycle is what is the market pricing that is required to incent new investment into the nitrogen space. We see 3 logical regions to build new urea capacity that could be imported into the U.S., the Middle East, Nigeria and Russia. Based on our experience with construction costs, coupled with our most recent FEED studies, we know the capital required to add urea capacity. So we begin with the capital cost and then we adjust it for local labor differentials.

We then use the local natural gas cost and add the transportation cost to bring that urea to the United States. We use these input costs to calculate the price per ton required for the investor to achieve an acceptable rate of return. Based on our analysis, we calculate that the NOLA price would have to be at least $355 a short ton for urea for the producers to achieve that acceptable rate of return on their investment.

Now with our logistics and distribution capabilities, CF has consistently realized a premium in its reported annualized realized urea price of approximately $25 per ton compared to the NOLA benchmark. So adding $25 to NOLA price gives us a CF realized price of $380 a short ton of urea. Annually, we've shared an adjusted EBITDA sensitivity table that lays out the outcomes under our current cost structure based upon our realized pricing of natural gas versus the realized price of urea. This table can inform how our current year adjusted EBITDA moves in relation to those 2 variables.

Now if we use the $380 per ton realized urea price and a $3.50 natural gas per MMBtu, our current sensitivity table yields an adjusted EBITDA of about $2.5 billion. So using a historical average and an incentivized urea price methodology, we get roughly the same result of a $2.5 billion adjusted EBITDA as our current through-the-cycle EBITDA, which coincidentally aligns with our past 12-month performance.

Now we have a clear road map to grow our mid-cycle in the coming years. First, we have decarbonization projects coming online. We expect that Donaldsonville will begin this year to contribute a net $100 million in annual 45Q benefits. We also have a smaller project eligible for 45Q incentives at our Yazoo City plant that is targeted to begin in 2028. Together, these projects provide an annual increase of approximately $115 million by 2030.

Second, we believe there will be a price premium for selling lower carbon products. As Bert discussed, we've begun marketing these tons and believe a minimum of $25 per ton is highly likely. So with 2 million tons of low-carbon product sales earning $25 to $50 per ton premium, we would conservatively generate another $50 million to $100 million of EBITDA. So we estimate the total EBITDA benefit for our decarbonization projects once fully operational to be approximately $200 million annually.

I've talked a lot about Blue Point today, and we also expect Blue Point to be accretive to our EBITDA as well. But I do want to spend some time on the returns we expect to generate when we begin operating the plant and selling our share of production. When we did the analysis of the Blue Point facility for senior management and the Board of Directors, we performed a conservative analysis with a few key elements. As Chris showed, we have approximately $500 million in contingency included in our now $3.7 billion of project cost. Reducing our capital cost by not spending that contingency would improve our returns.

We've also assumed that the plant would produce at its nameplate design of approximately 1.4 million metric tons annually. Our Ammonia 6 plant in Donaldsonville produces 10% greater than nameplate on a daily basis. At Blue Point, we expect similar performance and that performance will contribute to our expected EBITDA and returns.

And lastly, we assumed we'd sell our tons at conventional ammonia prices, so no premiums for CBAM or other incentives. They weren't included. Achieving the premium Bert described will also increase the project's EBITDA and further improve the returns. So when you're thinking about the returns from Blue Point, we have an underwriting case and we have an expected case. Our underwriting case is a conservative approach, but it is our expected case, the lower capital cost, the higher operating rates and the price premium where this management team fully anticipates the returns. Under the expected case, the run rate when the plant is fully operating is roughly $300 million of annual EBITDA with a mid-teens rate of return.

So let's return to our current mid-cycle EBITDA of approximately $2.5 billion, then include $200 million from our expected decarbonization projects and as well as our expected outcome of Blue Point for an additional $300 billion. With that, we would expect our mid-cycle EBITDA to increase to $3 billion annually by 2030. In addition, given the list of projects we have and initiatives, we believe we can continue to grow that mid-cycle at a similar growth rate in 2030 and beyond, growth that I believe is not currently reflected in our valuation.

Now applying our historically adjusted EBITDA to free cash flow conversion, adjusted for the tax-free nature of these incentives, we would expect the $3 billion in EBITDA to result in a 33% increase in our free cash flow and should result in an increased enterprise value. Historically, we have often traded in the free cash flow yield of 8% to 10%. So applying this yield would suggest a market capitalization approaching $25 billion. Coupling the increase in our market cap with a continued reduction in our share count through our share repurchase program, you can see a significant opportunity to increase on our value on a per share basis. Clearly, CF Industries is positioned to deliver growth at what I believe is a very attractive valuation, and I'm excited to be part of the team that executes this vision. Thank you.

[Presentation]

Thank you all for being with us here today, including all of those watching online. I hope you can sense how proud the team is of our global leadership and how excited we are for the opportunities ahead. I also want to thank very broadly every member of the CF Industries team. Their commitment and dedication helped drive everything that we achieve.

Okay. I want to quickly recap what we talked about today. Bert shared the numerous structural and operational advantages that our company has. These advantages are enduring and underpin the significant margins and cash generation that we achieve. He also provided an overview of the global nitrogen industry. It's an industry that is set to tighten substantially, through the end of the decade, which we expect will provide enhanced margin opportunities for our network.

Chris talked about really the foundation of our business, safety and operational excellence. These capabilities have been developed very purposefully, enabling us to extract more value from our assets than any other producer anywhere in the world. He also laid out the significant opportunity we have to grow free cash flow through decarbonization projects within our existing network, but also our investment in Blue Point.

And Greg highlighted our strong balance sheet, our view of CF's mid-cycle. He then showed why we expect mid-cycle EBITDA to grow substantially over the next 5 years, including the cash generation that goes with that. Greg also pointed out what we believe to be a valuation disconnect compared to peers that we have consistently outperformed. Over a long time frame, we have dramatically superior margins, free cash flow, total shareholder return. All of this, I believe, points to significant upside opportunities for long-term CF shareholders. Yes, we are a commodity company. But because of our significant structural and operational advantages, we're a commodity company with a consistent track record of delivering outstanding financial performance and growth.

And as I pointed out earlier, since 2015 -- sorry, since 2010, 15 years ago, we have grown shareholder participation in our assets and cash generation at a rate of 7% on a compounded annual growth rate. And we have a road map in place today that will continue that consistent growth CF Industries has delivered for shareholders. We're investing to increase cash generation and also reducing share count. And we're also investing into a marketplace that we expect there to be a tightening on the supply-demand balance for nitrogen products. We have $2.6 billion allocated to share repurchase, and we will further reduce our share count.

This approach on a pro forma basis will add an incremental 25% growth to our shareholders by 2030. This continues our 7% compounded annual growth rate in shareholder participation in the cash that we generate. And as Greg mentioned, the cash that we generate is supposed to increase more than that due to the fact that some of that cash has tax advantage nature to it. We have an advantaged high-margin business where we consistently execute at the highest level of our industry. We have substantial financial strength and flexibility.

We generate significant free cash flow even during periods when we invest in growth. And we have an emerging clean energy business that is a growth platform for the future. Taken together, we are well positioned to continue creating significant value for long-term shareholders. Thank you all for being here.

Now before we move into the live Q&A session, we're going to give everyone a short 10-minute break to stretch your legs, get a refreshment, come back in. We'll see you in 10 minutes, and we'll get to the questions that exist out there in the audience. Thank you.

[Break]

All right. Welcome back, everybody. Before we start Q&A, just a housekeeping note. We do have folks with a microphone. So if you have a question, please raise your hand. If you can introduce yourself and your affiliation and ask your question, we'll be happy to take questions.

Chris Parkinson of Wolfe Research. In your assessment of the European closures, could you just give us some insights on your expectations for natural gas costs given pipelines, LNG availability, everything towards the end of the decade versus your assumptions on CBAM CapEx walls and some of the hurdles that these facilities are facing over the next couple of years?

Chris, I'll just start off, and then I'll hand it over to Chris Bohn here, who is weighing the details on this. But from a very high-level perspective, most of the ammonia capacity in Europe tends to be on the older side. And most of it did not go through a lot of the kind of energy retrofits that the U.S. had to go through during the '90s and early 2000s because gas costs in Europe at that time was actually below that in the U.S. So a lot of that capacity is running at 35 to 40 MMBtus. So first of all, it tends to be relatively inefficient from the standpoint of what a modern plant runs at.

And the second issue is -- and we saw this, honestly, in both Ince and Billingham in the U.K., which is when you need to bump up against a turnaround, you're looking at EUR 50 million to EUR 60 million. And a lot of those plants today are -- even at today's prices, given what Bert talked about in terms of geopolitical challenges are just barely above water. And so to think about putting another 60 million in is a really challenging proposition unless you are in a very isolated protected area or you're not at threat from imports.

And so in general, we went through a detailed evaluation of every single ammonia plant. We hired an international consulting agency that went and took people out for dinner and interviewed them and built a very detailed cost structure for each one of these. And it's on the basis of that, that informs our view of what is still to be retired.

Yes. Just on top of what Tony said, I think it's also the timing of when that gas that you're talking about does come back and you see sort of the convergence versus Henry Hub. So if that takes a year or 2 years, a lot of the situation that Tony mentioned is going to play out. So we've layered it by almost years as to what we think will occur. we do expect that there'll probably be a little bit of a convergence from where we are today in TTF.

I wouldn't call it convergence. I would just say a little bit of softening of the spread, but...

Okay. Between TTF and Henry Hub. But you're also seeing so much of that European gas is brought in, is imported in, and that creates a lot of volatility, which plays right back to what Tony said about the cycling of these plants and building inventory that may not be sold for 6 months. A lot of these owners who are not state-owned have to make that decision, are they willing to put that money out. So it even goes beyond the turnaround capital that Tony mentioned.

And then just the last thing I would mention, which is -- and I'm sure this is a topic we're going to talk about in a minute. But once we announce the Blue Point project and even, in fact, the decarbonization at D'ville, we have had a lot of outreach from European producers that are looking at bringing in low-carbon ammonia because it will slide underneath the CBAM and that is a real cost that ultimately some of that production is going to face.

And on the gas spreads today, when you're at $350 in Henry Hub for the United States and you're at $1,350 or, let's say, $12 to $14 today, it's where is that gas going to come in the future? Where is that LNG going to be shipped from? And will Russia come back up? Will Nord Stream 2? And we would say those are challenged positions with the growth of energy demand that's taking place, not only with AI and data centers, but just overall conversions from coal to gas. So -- and then the cost to build these new LNG facilities with the cost escalation that's taking place, I think it's a challenged position to say that, that compresses too much.

Lucas Beaumont from UBS. So just on the $2.5 billion mid-cycle assumption that you've got there with the $355 short ton urea. What's your assumption that's built in there on the cost curve for energy? And are you including any tariff assumption in that? Or would that be upside if that was sustained in the medium term?

Yes. So this is kind of based on what I would just call sort of fundamental economic principle. And there's a couple of things that underpin it, right? The first one is, do we believe that demand for nitrogen products consistently grows. And our view is absolutely yes, right? So population grows, as you see the burgeoning of middle class in certain regions, you end up with increased protein consumption.

And as Bert mentioned, as you are looking deeper and deeper into the earth for copper and rare earth metals and other things that are required in order to electrify sort of the world, you have all of that demand plus given the challenges from an environmental and a climate change perspective, there's emissions abatements and other products. So we absolutely believe that the historical rate of somewhere around $1.2 billion plus or minus a little bit per year continues to hold going forward, okay? So that's the first principle.

The second one is, as you look around the world, right, are there enough projects under development that actually satisfies that requirement by the end of the decade? And we would say absolutely not.

The third one is in the analysis that I think Bert showed where there was 3 million tons of capacity coming offline in Europe, we would argue that probably understates what's going on globally. We have a half interest in a plant in Trinidad. I will tell you the economics of doing the next turnaround there for $60 million are also very challenged. So I think the notion that the existing asset base continues to operate unimpeded is probably a little bit of an aggressive assumption. So our view is when you look at the projects that are under construction, when you look at the growth that Bert laid out, when you look at the contraction that's going to happen, there is absolutely a deficit situation going on in the U.S. or in the world.

Okay. So then the question is, back to your point, where are you at in energy price and what's going on in the way of where is marginal capacity or do you have to build -- bid in new? And assuming you have to bid in new, then as Greg walked through, anyone who is building and sponsoring one of these projects in low gas cost, low labor cost portions of the world has got to expect a reasonable rate of return or they're not going to dedicate that capital. So our view is based on sort of some very fundamental economic principles that build us to a place that says $380 urea in the U.S. is kind of what we would expect, not every day, but sort of through the cycle or as a mid-cycle kind of number in order to justify new capacity being built.

And by the way, as capital costs continue to rise, which is they have dramatically, that $380 continues to ratchet up. And -- relative to energy costs, other places, Bert mentioned AI and data centers, but you've also got sort of just increased electrification in parts of the world and a reduction of coal generation -- power generation in favor of cleaner fuel, of which natural gas is one. But the fact that liquefaction capacity capital continues to rise like crazy, and those people expect for their shareholders a reasonable rate of return on that. That means the gap, which used to be about $3 an MMBtu roughly between Henry Hub and destination markets is closer to $4.50.

And so when you build all of that stuff in along with transport costs, even before you get to tariffs, we're very comfortable with the $380 number that Greg laid out and believe that Blue Point is going to be a fantastic project.

Joel?

Two questions. I think your commentary today is that you expect at least a low carbon ammonia premium of $25 a ton, you've laid out where it can get higher over time. Can you talk about that number a little more, how squishy or firm that is based on is it stuff in your contracts to have from the first tons at a D'ville, they take or pay? Are they committed? What percent is committed? So that's the first question.

And second question, maybe it's for Bert, is just on the near term here, what is this fill season if there's going to be a summer fill? What does this near term look like in the world in nitrogen in a very unique time?

Yes. Thanks, Joel. Second question first. It's going to be great. We're doing very well. And the world is -- what Tony articulated in terms of the demands for our product, what's being called for the needs of the world and where we are today price-wise at close to $500 a metric ton, FOB, Middle East, FOB, North Africa. That's going to moderate down over time probably. But where we are in North America for fill season and for forward demand is demand is solid. We're coming out of a very good planting season application season, Q2 with very low inventories.

So it sets us up for a fill season with high demand and preparation for next year, but a condensed season because we're going to have applications going through July. We don't expect to announce a fill program for our UAN until probably August sometime, which is the latest we've ever done. And ammonia is also in a very good position. So if you're going to bid in those tons, again, we've talked about, we're an import-dependent location. We need to bid in that marginal ton, which today is at $500. So we'll see, I would say, how that rolls, but the back half looks very positive.

I'd also add to that, sorry. As Bert mentioned in his materials around geopolitical turmoil, the Ukrainian drone bombings of the 2 EuroChem facilities has taken a big slug of UAN capacity off the market in the near term. So we don't know how long it's going to take for that to kind of get back up and running again. But if that's gone from the globally traded UAN tons, you may not see a historical like fill program the way that it's run in the past, just given where the tightness is in the market. Sorry.

And regarding premiums for low-carbon product, we're expecting that low-carbon product to be available in the back half of this year, and Chris can comment more on the workings that we are -- or the position we're in today. But we have been actively at work over the last several years with customers regarding contracts, both domestic and international. In Europe, we already have contracts in place for when that product is available, already communicated that what we're expecting for a premium over and above what the global price structure is. And with the domestic market in the United States and Canada, we're working -- this is a value chain issue. So we represent the production side and the product side of nitrogen.

We work with our retail customers predominantly in that area, it's the co-ops and a few independents. And then it's the farmers and what price they're going to receive for a premium for a low-carbon product. And then it's the POETs, ADMs and the processing group as well as the CPGs. Each of these groups we're working with in conversation, the contractual side of that will come with the retail partners. As I articulated, we sell to retailers and wholesalers. We don't sell to farmers. But as we work together to decarbonize the system, we represent a very attractive position for the end user who is marketing the starches, the wheats, the flowers and using those in the packaged products that they'll sell to the consumer. So the $25 premium that we have communicated to you, and we've also discussed with them is being received very well. and we'll see that as we move forward.

I will just add that we don't do a lot of ag as take-or-pay and long-term contracts. The market provides a lot of premium for in market and available when it's needed in the near term. Most of our take-or-pay kind of ratable stuff tends to be more industrial. Some of that, there's a level of interest, but a lot of what Bert is talking about is very specific announcements we've made relative to POET CHS for decarbonized ethanol and CPG companies.

The other thing I would just add to that is initially here, there's just not a lot of volume that's going to be low carbon outside of what our volume take is even post Blue Point will be similar. So I think to get that type of premium based on not only what Bert mentioned here is happening domestically, but what Tony said earlier, about the interest that we received about low-carbon ammonia product and low-carbon product in Europe, given the CBAM coming. I think that just builds on top of that as well.

Second row, Ben?

Ben Theurer from Barclays. Just coming back to the shortfall on the demand growth side. Can you maybe put that into perspective what like the last 5 years of growth was versus what your expectation is that 12 million to 14 million metric tons? And if there is such a shortfall, why does that not trigger in low-cost environments like, for example, the U.S., more capacity expansion, including you guys, if there is such an opportunity given the shutdowns that you expect to see in Europe and other regions like Trinidad, et cetera?

Yes, Ben, thanks for the question. I would just say a lot of this has to do with the factors that Chris laid out. You've seen capital costs go almost on a hockey stick basis. And so you have to be willing to bite off that level of capital. And if you do it with partners, the way that we did, where there's already committed offtake and you're not looking at a potential situation that you're overloading the marketplace, that's a fundamentally different place than if you're doing it on a spec basis where you're just expecting the market to absorb it.

The second thing is if you build $4 billion or $4.5 billion for a greenfield facility and that's just ammonia and you want to sell it as urea, you're talking about at least another $1 billion, $1.5 billion for urea loadout or the urea plant to go along with it. So the quantum of capital starts becoming significant for those that are already not -- or that are not already nitrogen producers and don't have an established distribution network and logistics operations like Bert walked through. So for us, because it is still a significant capital bite, but we've got all of the things in place where we can go ahead and move the product and get the best price realization for it, and we're already in this business, and this is not something brand new.

It's, I think, difficult for a lot of people to want to do that. And then you've got a lot of geopolitical uncertainty. And I think all of those things weigh on people's willingness to put new capital into the ground.

No, I would agree.

Let's go with Edlain.

Edlain Rodriguez of Mizuho. So as demand grows over time for blue ammonia, is CF still or will still be in the best position to add capacity to meet that demand? Or do you expect to see significant competition in the market over time?

Well, I think there's always going to be competition, right? But the numbers don't lie, right? Our ability to get more tons of production out of a nameplate asset compared to anybody else in the world says that we are going to be the low-cost producer relative to how other people run their assets. And the larger our network gets and the bigger that we have from an engineering capability, spare parts, being able to leverage the core competencies and learnings that we have across the whole system, the harder it is -- as both Chris and Bert pointed out in their presentations, the harder it is for somebody to catch up. And so there is a huge scale advantage in this industry. And our intent is to continue to leverage that to deliver more tons, more cash flow out of the same kind of capital investment. And therefore, we are very much the logical company to add capacity.

And I'd say who else? When you look across the world with -- back to the geopolitical issues, back to the balance sheet issues, back to the capability and the geological understanding of the Class VI wells that exist and our core capabilities that Tony just outlined, when you structure those all together, where else, who else and what else -- this is the place to be. You can go east, you can go west from NOLA and loading out a vessel. You have a substantial flexibility. You're not going to invest in a place that you're unsure of in 5, 10, 15 years, if your contract is good, if your gas contract is good, if you can get money out of the country, you can do all that, and we can do that, and we are doing that. So I think -- and the first mover status is very important.

Back row far right, Jeff?

Jeff Zekauskas from JPMorgan. On Slide 69, you lay out the benefits that you'll get from the 45Q tax credit. And what you say is that it's $115 million. And I think on Slide 47, you say that there's 6.6 million tons of carbon dioxide, you could sequester. So if you do the calculation, it's about $17.50 per ton as your benefit from the 45Q credit.

No, I think you're misreading the 2 slides. The 6.6 million tons is the total opportunity across the network for things that are already happening or are in the pipeline to happen. And the $115 million is only for the first 2, which is D'ville and Yazoo City. So we haven't reached FID on the other projects that are that are displayed there, which would include Waggaman and Medicine Hat and...

Our share of Blue Point.

And our share of Blue Point, Well, we've reached FID there, but that's still to come, so the near-term $115 is just D'ville and Yazoo.

And the Blue Point benefit is embedded...

It's embedded in the $300 million, and that's why the sort of as EBITDA rises to mid-cycle to $3 billion. The cash flow gen actually goes up a little higher because the 2.4 million metric tons of CO2 coming out of Blue Point is a tax advantaged set of cash generation that comes out of that. And so that's why cash flow coming out of Blue Point is higher than like the historical rest of the asset base.

Maybe if I could just rephrase it. So how much do you think you'll benefit per ton from sequestering carbon dioxide after you pay for carbon dioxide to be concentrated and you pay Occidental or Exxon to put it in the ground? What will you net...

Yes. So $115 million is what we expect to net out of Donaldsonville and Yazoo City. That's on a basis of about $280 million of capital investment. And again, the $115 million is tax advantage because that's a tax incentive. So that's not EBITDA, that's cash. So the return profile on that for the next 12 years looks awesome to use a Bertism.

Relative to Blue Point, we have not made the commercial terms of the agreement with Oxy public, but we are very happy with the partnership that we have developed there, and the team did a lot of hard work. And it's going to be somewhere in that range.

Front row, Vincent.

Vincent Andrews from Morgan Stanley. Just a quick housekeeping question, then I've got another question. What's the rate of return? There's been a lot of conversation about people getting a rate of return and on your mid-cycle net incentive price? What rate of return are you assuming is needed to move people forward at that price?

Go ahead.

Yes. It's a little bit different based on the region, but it's double digits, 10% to 12%.

Okay. Very good. And then I was wondering if you could talk a little bit about China. If you look at some of the consultant reports, they'll show an awful lot of capacity coming, particularly in urea in 2027 plus. What do you think their strategy is there? Clearly, right now, they are very focused on local supply and low prices and they're keeping product off the market, which is obviously been beneficial to prices in the rest of the world. But they're also building a lot of inventory, and then they're supposedly adding all this capacity. So what's the endgame there? What are they actually looking to achieve?

Well, I'm going to start with one thing, and I'll turn it over to Bert, who tends to be much more embedded in what's going on real time in China. But from the standpoint of energy, urea is basically just a different form of energy. And they are big LNG or gas pipeline buyers, so they're not long that. They are long coal, but coal-derived urea or other way around, urea derived from coal, tends to be high particular matter emissions and very large users of freshwater.

And so from a policy perspective when they removed a lot of the incentives that were allocated toward coal and towards chemical companies and even freight movement of that stuff. The goal was to get rid of a lot of those zombie industries.

So our belief is that China is not focused on trying to export energy in the form of urea over the long term, that they may be trying to upgrade the fleet or make it more efficient or lower cost, but it's not meant to flood the world with urea the way that they did back in 2015.

Yes. I think just comment on top of that, and that's how we do see it. It's the capacity additions, coupled with closures and coupled with a sometimes inefficient position on the cost curve positions China to supply the Chinese market. The amazing thing to me, though, has been the growth in Chinese consumption for ag and industry for urea, which has been in the 50 -- low 50 million-ton range to today almost 70 million tons. So you've had growth.

Yes, you have growth of capacity, but we see capacity coming off-line as well, and that capacity is still high cost, high polluting. And I don't see that coming into the world market to the degree that Tony mentioned. And I think even today with how they've limited with restrictions, with import inspections, with timing. We're seeing a couple of hundred thousand tons per month right now, and that's de minimis to what the world needs.

Especially given what's offline from historically significant urea exports.

Yes.

So Sal, second row.

Salvator Tiano from Bank of America. So if we can go to Slide 70 on the EBITDA for the Blue Point project where you have the bridge to $300 million, can you unpack a little bit some of the base components. Obviously, you have the decarbonization, have a price premium. But when you go to the base EBITDA, how much of that comes from the infrastructure payment you're going to get from your partners? And how should we think about essentially the base EBITDA per ammonia ton you're getting on this project?

Yes. So I'll start. Some of those numbers we've released publicly before. So we've talked about an ammonia price at $4.50 and that is where we start there on a production standpoint. We've included all of the 45Q benefits associated with production of the CO2 also included in our economics going forward.

And then we have built into it the capital cost that you've seen and the gas cost similar to what we showed you in our mid-cycle of the $3.50. And those are the basic components of the model that we've run.

But again, there's a big piece of this that tends to -- the operational efficiency tends to be more the 10% above nameplate than it does reduce capital because we're still early on in the project, and there's all kinds of things that can happen. So we are protecting the $500 million that is the contingency right now, even though some would argue that's fairly conservative.

And then the benefit that we expect to get on the price premium is based on CBAM. For our portion...

Of which has not been built into...

Yes, which isn't built in the base economics. We did build in all of the capital cost for the common infrastructure, the $550 million, which we're receiving a healthy targeted return from the joint venture for them to leverage those facilities. So that's 1/4 of our total invested at $2 billion.

All right. Kristen, fourth row.

Kristen Owen from Oppenheimer. I do want to dig into the capital cost assumptions because a lot has changed just in the last few weeks from when the $4 billion number came out. We have the announcement yesterday with Linde. We've had steel tariffs go into place. So I'm wondering if you can help us unpack some of the scenario analysis that's embedded in that $500 million of contingency.

And related, your free cash flow outlook, I believe, implies about a 10% improvement in free cash flow conversion by 2030, going from 60% to 66%. So aside from the tax advantage assets that are going into that, any additional upside to that free cash flow that we should be considering?

Why don't you handle the capital piece and you can handle the cash piece.

Yes. So I'll start with the Linde announcement and just saying that we are extremely excited to have Linde be part of the Blue Point project. And the capital that we looked at when we were evaluating whether to do this internal or to go with an outside partner was the $300 million that we had built into the project, and that's what you've seen from the $4 billion down to the $3.7 billion.

Part of the reason we did go with Linde, I'll just touch on that is really, they're high utilization and their commitment to what we want from a utilization standard, given they're the industry experts in this. It was an opportunity where we felt from a capital standpoint, we could make that trade-off fairly easily there.

And then related to tariffs and how much of that's going into contingencies. I think I would start with there's a lot of uncertainty still, right? So we're not certain where things are really going to fall in the end. And a lot of the componentry about 1/3 of it is what would be somewhat tariffable, and that probably isn't going to be delivered for 2 to 3 years' time frame.

And in that, we're working with our partners because there are certain areas globally that have the same quality where we could go to that have lower tariff maybe than where they've used different yards elsewhere. So working with our partners on that, that hasn't been necessarily defined 100% yet. I would say given that it's the 35% and where we are scoping to go, really the tariffs don't go that material into the contingency that we have set aside.

On the free cash flow conversion, the last 8 years, it's been 62%. We got it in our go-forward estimate at 65%, maybe 66% on the round. Now remember with the tax incentives. So when I talk about the $115 million, that's on a net basis. The actual free cash flow coming off that will be non-taxed is greater than that because it also have the cost in the $115 million. So to get a 200 or 300 basis points just from the 45Q credits, we'll get you that 300 basis points.

Great. And then the other piece of that is the same sort of roughly $100 million associated with Blue Point that's going to be tax advantaged cash flow for the exact same reason.

Third row, Richard?

Richard Garchitorena, Wells Fargo. First question on Blue Point. You showed 80% of volumes essentially subscribed. Obviously, you have the offtake partners taking a chunk of that. So can you talk about the remaining 20%? How that is -- you expect to get that signed up over the next couple of years? Obviously, you have a lot of time to do that.

And then a broader question. In the past, you've talked about on some of the parts basis, the cost per tonne of production of capacity and comparing that to present transactions, I was wondering if you could talk about that in relation to your distribution assets where you have a broad distribution network. And obviously, you're investing the $550 million in the Blue Point, but how does that reflect compared to your current distribution network as well?

Do you want to start off?

On the distribution facility with the $550 million, I would say that the return profile that we get out of our distribution facility is what Greg sort of presented by having in-market distribution and our ability to do that. On the Blue Point project, given that's going to be a set -- established $550 million return profile that we'll get from our partners on that, that CF will own and operate. That's sort of, as Greg mentioned, at a healthy return in the, I would say, mid-teens area.

Right. But relative to the 80%, which is the other part of your question. So our equity partners, JERA and Mitsui, own 60% of the offtake. And so those tonnes are our expectation going to Asia. And then half of our remaining 40% are earmarked currently for the U.K. because the U.K. is going to face their own version of the European CBAM, and we'll be able to upgrade that into nitric acid, ammonium nitrate, either for consumption within the U.K. or export into Europe, which should be tax advantaged given the ultra-low carbon nature of that product.

We have an additional, call it, 350,000 tonnes or roughly 20%. And that Bert is in conversations to begin to think about where the best options for. But I'll tell you, once we announce this project with partners like JERA and Mitsui, so this was clearly a project that was going ahead. We've had more inbound inquiries about capacity, then we have capacity left to allocate. So we're not worried about finding a home for it.

Right. More questions? Got a follow-up from Vincent.

It's Vincent Andrews again. Just following up on that Blue Point, you had the slide where you showed it could be Blue Point 2, 3 and 4. Could you talk about the sort of the time frame at which you start contemplating a second one? And do JERA and Mitsui you have a right of first refusal to participate in that? Or would you have other options or other ways to go forward with that?

Yes. I mean, I would just say we are really happy with the partners that we've selected. And if it comes to building another one, we would be delighted to have the same kind of partnership structure because they really -- it was mentioned in one of the video clips there that not only do we align in terms of how we view the world and the importance of decarbonized ammonia going forward. But from a values and a focus on safety and environmental integrity. I think all of those things line up really well to make us feel very comfortable with them.

Chris, do you want to talk about time frame and how we're thinking about if there is Blue Point 2 and beyond?

Well, I want to get through Blue Point 1 a little bit, at least the initial phases here. But just to go on what Tony said, there -- we do believe the underlying nitrogen market is tightening. And by 2030, it's going to be something that when the Blue Point sites coming on that we believe is going to be coming into a very tight market. And additionally, because of that, I don't believe we're the only one seeing that. We're getting a lot of inbound interest that's saying, if we were to look at a second plant, would they be able to participate from an equity standpoint, that goes beyond our partners.

Now like I said, we're focused on Blue Point 1 right now and ensuring that we execute that like we've done on our past expansion projects. But I would say there's definitely an interest, given as Tony mentioned earlier, not many people are making the decision to move forward. Having an already established infrastructure that moves the molecule, whether it's low carbon or conventional today, is a huge point.

And as I mentioned in my remarks, I think people are starting to do the math on what it means, okay, I have a plant. Now I've got to move it someplace and realizing they have to add in a whole other component that we don't talk about, and we don't talk about it even in the mid-cycle of bidding in new plants.

You want to talk about the Korean regulatory environment for hydrogen and how that's changed and why that also looks like a very attractive market for us.

I do now. So what we were seeing is Korea was more restricted with what, I would say, their specs of low-carbon ammonia would be compared to Japan. And I think what they realized is, just to be honest, some of the promises of what technology could deliver them cannot be delivered. And they're realizing what we had been saying all along about what is the amount of sequestration of CO2 and the hydrogen content was probably more accurate and where Japan was headed with METI and their specifications. So we've seen Korea now move to a similar spec with that, which is opening up additional conversations with some of those parties that we had, had earlier back in 2022 and such. Now that those government, I would say, specifications have been more defined.

So Vincent, we're not announcing Blue Point 2 or 3 right now. But there's a lot of global interest out there, and we just want to kind of make progress here and then we'll evaluate as we do.

And some of that goes into the extra 20% of the product that hasn't been spoken to from a markup, given this kind of demand for people who not only want to have the product, but an equity position, it would probably transition first with product.

A follow-up. Sal?

Salvator Tiano, again. So indeed, if this Investor Day was 1 or 2 years ago, probably the energy market in Northeast Asia would have been much more prominent than the crops and ethanol and other demand uses now for low carbon ammonia. So can you refresh a little bit on where things stand in Japan when it comes to fuel market? And also, if you can talk a little bit about the maritime opportunity as a fuel.

Yes. So let me start where the process is maybe with the METI and the submission that JERA and Mitsui have made for their applications. So the applications we're due in March of this particular year in 2025 where the submission was what was the ammonia going to be used for? Who is going to be the partner that was building it? How it's going to be transported, all that. So a lot of information had gone to METI.

The original decision was supposed to be made in the October time frame. It looks like that's going to move back to something later in Q4, maybe even possibly Q1 for some of the larger projects. So more to come on that, but all the submissions have been in. I know both the government's third party has been asking questions of our partners about their submission. So we'll have more of that comes that way.

Related to maritime, I think maritime originally, if I go back to 2020, I think we are a little bit more optimistic that, that would move faster than it has. You are seeing ammonia vessels being built and contracted, I should say, in built, along with a lot of testing on ammonia engines, and we're part of the Mærsk Mc-Kinney Møller foundation to help with the safety aspects of using ammonia as a maritime.

But I still think that is a little bit longer dated. Some of the other things that may have moved in is like low-carbon ethanol based SAF and having SAF be more of a, I would say, a demand center than what we've seen before.

And by the way, we think Europe is probably going to be leading the way on SAF and having a decarbonized fertilizer product will go into the calculation around the carbon intensity of SAF. And so that's setting up very nicely for when our product becomes available.

Right. I've got Edlain and then we'll go with Jeff.

Edlain Rodriguez from Mizuho. You guys -- you've talked about trading discount of CF versus your fertilizer peers. Tony, what do you think that discount exists? And what do you think investors are missing? And what do you need to do to now eliminate that discount?

Yes. I mean I'll start, then I'm happy to open it up to the group here. But I think historically, people are still [indiscernible], where the best product in the world was potash and nitrogen was the cyclical beast that you couldn't count on. And then the fact that China came out in '15 and '16 and sort of flooded the market, kind of, I think, just reinforce that notion that said anyone could build one of these plants and the market is not as consistent or sustainable as the other nutrients.

And I think what you're seeing today is and Bert mentioned this, nitrogen is the only nondiscretionary nutrient. And when grower margins start getting tight, they tend to mine the soil for P&K, but they fully apply N. And being in -- from a production center in North America with access to some of the lowest cost natural gas being an import-dependent region having in-market production assets and the distribution network that we have, our belief is, even though, yes, there is some volatility. It's much lower than historically it has been in the past, and there's much more consistency in terms of what our cash gen is.

And I think what we do about it is we just continue to buy shares out at what looked like discounted prices until the market finally wakes up and realizes that, well, this is a great stock with a long history of terrific cash generation.

Yes. When I was doing my underwriting, it's true. It's like I looked at the EBITDA multiples across the industry and a little bit broader than that, we're very tightly bound together even though the free cash flow was dramatically different from each of the businesses. And that free cash flow has a lot to do with the operational excellence, I think, of this company and where it's positioned in the value chain and how it delivers EBITDA that is really tightly correlated to the cash flow generation.

The other part that I think people fundamentally underestimate using an EBITDA multiple is the growth trajectory of the company, right? As we grow from $2.5 billion to $3 billion, the story doesn't end there. Now whether or not we choose to continue to build at Blue Point or we build and look at other opportunities, we've got that optionality ahead of us because of the free cash flow that's coming off of the company gives us the optionality to really look to where we can create the most value for our shareholders long term.

I think those 2 points, as I did my underwriting, I felt like some of the investment thesis that are out there are missing those points.

Jeff?

Jeff Zekauskas from JPMorgan. Two questions. Can you speak a little bit about the tariff situation and that tariffs on Nigeria and Algeria are more elevated. And I think Russian product is carrying no tariffs. Can you talk about how much sort of tariff confusion and changes in shipments might have affected the urea price or the UAN price? And how you expect that to evolve for next year?

I'll start, and then I'll hand it over to Bert, who usually manages logistics on an integrated and global basis. Jeff, you're absolutely right. As crazy as it sounds, Russian product flows here unimpeded by any sort of tariff in the world. And yet countries for whom we would view much more closely, politically aligned, have tariffs associated with product that they're sending here. So that, from my perspective, anyway, makes no sense at all.

I think the tariff regime is a lot like if you're playing golf in Scotland. If you don't like what it is today, wait 10 minutes and it will change tomorrow. So it's really hard for us to kind of think about where the natural evolution of this is. I will say my belief is and our belief is that the tariff regime that's in place to now is not the end into itself. It is a mechanism to try to get to a different pathway around what trade looks like holistically.

And so it's impossible for us to have great visibility into where that's headed. But I think in general, anything that increases cost of movement of this kind of product creates friction and just cost the farmer at the end of the day. Does it help us in the current environment? Maybe a little bit, but our thinking is we're better off in an environment where there is relatively free trade and open access.

And the tariffs that came in or were applied were at the beginning of Q2. So fairly late for the American growing season to put that product on a vessel, arrive to NOLA or a U.S. port, move that to the interior. So the impact for the growing season that is ending now was fairly de minimis. However, going forward, if a trader or a producer is going to take a position at 10% to 14% to whatever percent of tariff, that's a tough choice to make against 0 tariff to Russian product. So you're seeing more Russian UAN, more Russian urea to north -- or to the United States and less from the countries you mentioned. And specifically, Trinidad. And Trinidad has 1.4 million tonnes of UAN capacity, which probably will not make its way to the U.S. as much as we'll go to Europe or other destinations.

And so -- but we have been tariff American product into Europe into the U.K., which we think that should come off as well as they need these tonnes and they don't -- and they are tariffing Russian product. So there's a lot of puts and takes going on in the world. We're participating in all the major markets. We're monitoring those things on how to best position our products and to achieve that netback that we've been talking about and that improvement over the world denominated marginal producer price.

And there was a second question that I didn't get to quickly ask. For Chris, when you think about sending ammonia over to Japan or to Korea, and what they're going to do is they're not to burn coal. But of course, we use natural gas and there's natural gas leakage in the United States as it goes into the atmosphere. So what's the carbon dioxide savings for Japan or Korea in using ammonia as a fuel relative to burning coal, if there is one?

Well, I think there is a significant one when it's relative to coal. If it was relative to LNG or some of the other or natural gas -- well, LNG, you could see your argument a little bit, but the fact is, especially on the Blue Point project, we're going to be sequestering 98% of the CO2 that comes off of that system and the reason why we're going with an ATR is to get that higher CO2 sequestration.

Additionally, the natural gas in which we're bringing in, we have looked at ways to have lower slip methane, and we're seeing a lot of that development by the E&P companies, even the 2 of which we have the CO2 sequestration projects with as well. So I think -- I don't think it is that even going to Japan and doing the coal firing at the 20%, Jeff, is going to be significantly lower than burning coal.

And we already have in place an agreement with BP, where we're buying low slip methane, natural gas. It is not a substantial increase in cost, and it's certified by MiQ to ensure that it's, I think, less than 10% or it's...

I think it's in 90%.

90% improvement over the standard tons that are MMBtus that are moving through the pipeline network.

Jeff, I thought you were going to ask about carbon capture sequestration.

I was disappointed when you said my name. I was already...

You can ask it of ourself.

Chris, Jeff would like to know about carbon capture sequestration.

Let me start with, we are extremely excited that the CO2 or the CCS dehydration and compression unit at Donaldsonville is commissioned and ready to flow gas. Exxon has submitted their permit where the CO2 will be going. The expectation is that they will receive that later this year.

One of the things that we are looking at because we want to start flowing gas and to earn money, but to do a lot of different other things from a market development is potentially going to 45Q compliant enhanced oil recovery in the interim period. So that's the one thing that we're in discussions with right now if we would do that until they got the Class VI later this year.

And I would certainly expect gas to flow for sequestration in that manner within the next 6 weeks if not sooner. So we expect to begin actually being able to bank 45Q credits like in the near term, definitely in Q3.

Thanks for not disappointing, Jeff.

Darla, do we have a question from the web?

Okay. First of all -- first, a couple of questions on Blue Point, but one being separate from that. Air Products is looking for a partner at their project down in Louisiana. Is this something that CF would consider?

Yes. So let me just step back from that specific question and talk about some of the other projects in the U.S. that are under development currently.

Air Products is also developing the Gulf Coast ammonia project and they are producing the hydrogen in more traditional kind of gray fashion. They're not capturing it or sequestering the CO2 that comes off of that. And then selling that hydrogen into the back-end ammonia plant at Gulf Coast at something in the neighborhood of $8 to $10 per MMBtu equivalent for natural gas costs. So immediately, that takes that plant that is a U.S.-based asset, at least on the ammonia side and turns it into a third or fourth quartile asset on the cost curve. So Gulf Coast is paying sort of their piece of the capital and then they've got a take-or-pay on the hydrogen that's coming in their direction. And that is a position that we don't want to be in.

Now let's talk about the other kind of significant project that is similar, which is the Woodside project. And again, they've partnered with Linde. Linde is, at some point, going to be at least as we understand it, capturing the CO2 coming off of the ATR that they're going to be providing the hydrogen across the fence to Woodside in order to make a decarbonized ammonia product. Again, that hydrogen is going to flow with the equivalent of somewhere in the $8 to $10 per MMBtu cost structure. So again, Woodside paid over $2 billion for an asset that's deep in the third quartile from a cost curve perspective.

It's also a take-or-pay contract if there's any sort of sloppiness in the market, they got to continue to produce because they're paying for those molecules anyway. And in that instance, Linde because they're the ones that are running the ATR, get to capture and claim the 45Q benefit.

So now I'm going to take those 2 examples and compare it to our Blue Point project, which is, as Chris mentioned, we own the ATR along with our partners. We're going to be producing the hydrogen at $3.50-ish, Henry Hub-ish kind of gas cost. We're going to be capturing all of CO2 that comes off of it. So that stays within the partnership economics. And so we are going to be a first quartile asset from a cost structure perspective.

Yes, the capital is a little more. But if you look at the incremental benefit that you get from the standpoint of cash flow coming off that asset versus the incremental capital, this one a no-brainer.

So it's a long way of saying to whoever asked that question. No, we have no interest in getting into that kind of situation with Air Products in Louisiana. We don't think it makes economic sense. And all it does is it provides a reasonable rate of return to the upstream hydrogen producer and puts all of the risk downstream and puts you deep in the third quartile, if not fourth quartile of production costs. So not no, but hell no.

All right. Last call for questions in the room.

All right. Thanks, everyone, for joining us.

Thanks very much.

Thank you.

Thank you.

Thank you.

We're now going to have a reception in the south salon directly behind us.