Q1 2025 CF Industries Holdings Inc Earnings Call

Operator: Earnings Conference Call All participants will be in lesson only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

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Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your questions, please press star, then 2.

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Operator: Please note, this event has been recorded.

Please note. This event has been recorded.

Martin Jarosick: I would now like to turn the conference over to Mr. Martin Jarosick, Vice President, Treasury and Investor Relations. Please go ahead.

Speaker Change: I would now like to turn the conference over to Mr. Martin Jurassic Vice President Treasury and Investor Relations. Please go ahead.

Martin Jarosick: Good morning and thanks for joining the CF Industries Earnings Conference. 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.

Martin Jurassic: 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 quarter of 'twenty two.

Martin Jarosick: reported its results for the first quarter of 2025 yesterday. On this call, we will 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 for 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 these statements. More detailed information about factors that may affect your performance may be found in our filings.

Speaker Change: Five yesterday afternoon.

Speaker Change: This call will review the results discuss our outlook and then host a question and answer session.

Speaker Change: Payments 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.

Speaker Change: Actual outcomes and results may differ materially from what is expressed or implied in any statements.

Speaker Change: More detailed information about factors that may affect our performance may be found in our filings with the SEC to available on our website.

Martin Jarosick: are available on our website. Also, you will find reconciliations between GAAP and non-GAAP measures in the press release and presentation.

Also you'll find reconciliations between GAAP and non-GAAP measures in the press release and presentation posted on our website.

Tony Will: Now let me introduce Tony Welch. Thanks, Martin. And good morning, everyone.

Tony: Let me introduce Tony well.

Speaker Change: Thanks, Martin and good morning, everyone yesterday afternoon, we posted results for the first quarter of 2025 in which we generated adjusted EBITDA of $644 million.

Tony Will: Yesterday afternoon, we posted results for the first quarter of 2025, in which we generated adjusted EBITDA of $644 million. These results reflect outstanding performance by the CF Industries team against the backdrop of very constructive global nitrogen industry conditions. We are operating safely and at a high level across all aspects of our business.

Speaker Change: These results reflect outstanding performance by the CF industries' team against the backdrop of very constructive global nitrogen industry conditions.

Speaker Change: We are operating safely and at a high level across all aspects of our business.

Tony Will: Over the longer term, we have positioned the company for attractive growth through our Blue Point joint venture with Jira and Mitsui. This industry-defining project will not only supply ammonia that the world desperately will need, but it will also add, develop, it will also develop additional demand for low-carbon ammonia into brand-new applications.

Speaker Change: Over the longer term, we have positioned the company for attractive growth through our bluepoint joint venture with Jarrett and Mitsui.

Speaker Change: Industry defining project will not only supply of ammonia, but the world desperately need but it will also add developed it will also develop additional demand for low carbon ammonia into brand new applications.

Tony Will: We also remain committed to returning capital to long-term shareholders. Since the beginning of 2022, we have returned $5 billion to shareholders through share repurchases and dividends. Given the confidence we have in our free cash generation going forward, and the disciplined nature of our investment in Blue Plane, the Board has authorized an additional $2 billion share repurchase program. This new program will begin immediately after we complete our existing authorization. It will run through the end of 2029.

We also remain committed to returning capital long term shareholders.

Speaker Change: At the beginning of 2022, we have returned $5 billion to shareholders through share repurchases and dividends.

Speaker Change: Given the confidence we have in our free cash generation going forward and the disciplined nature of our investment in Blue plan. The board has authorized an additional $2 billion share repurchase program.

Speaker Change: This new program will begin immediately after we complete our existing authorization.

Speaker Change: Run through the end of 2029.

Chris Bohn: With that, I'll turn it over to Chris to provide more details on our operating results and the status of key strategic initiatives. Thanks, Tony. Our production network continued to operate very well in the first quarter. For the second quarter in a row, we produced over 2.6 million tons of gross ammonia, which reflects 100% utilization rates. We continue to project approximately 10 million tons of gross ammonia production in 2025.

Speaker Change: With that I'll turn it over to Chris to provide more details on our operating results and the status of key strategic initiatives Chris.

Chris: Thanks, Tony our production network continue to operate very well in the first quarter for the second quarter in a row, we produced over two 6 million tons of gross ammonia, which reflects a 100% utilization rate.

Chris: We continue to project approximately 10 million tons of gross ammonia production in 2025.

Chris Bohn: Turning to our strategic initiatives, we are nearing completion of our landmark Donaldsonville Complex carbon capture and sequestration project. Commissioning Activities for the Carbon Dioxide Dehydration and Compression Unit are in advanced stages and we expect start-up of sequestration in the second half of 2025. This will also initiate the 45Q tax credit generation on up to 2 million metric tons of carbon dioxide on an annual basis.

Chris: Turning to our strategic initiatives, we are nearing completion of our landmark Donaldson Bill complex carbon capture and sequestration project.

Chris: Commissioning activities for the carbon dioxide dehydration and compression unit are in advanced stages, and we expect startup of sequestration in the second half of 2025.

Chris: This will also initiate the 45 Q.

Chris: Tax credit generation on up to 2 million metric tons of carbon dioxide on an annual basis.

Chris Bohn: Longer term, we believe our Blue Point joint venture presents a compelling growth opportunity for the company. Given the tighter global nitrogen supply-demand balance we project for the end of the decade. Additionally, our positive FID announcement has advanced existing conversations and spurred interest in our portion of Blue Point ammonia production. We are pleased that the joint venture includes world-class partners in JIRA and Mitsui, with whom we will share costs and offerings.

Chris: Longer term, we believe our bluepoint joint venture presents a compelling growth opportunity for the company given the tighter global nitrogen supply demand balance we project for the end of the decade.

Chris: Additionally, our positive spread.

Chris: But is it advanced existing conversations and spurred interest and our portion of bluepoint ammonia production.

Chris: We are pleased that the joint venture includes World class partners, and Geron, Mitsui, with whom we will share costs and offtake the.

Chris Bohn: Joint Ventures Priorities for the rest of 2025. are to build out our project team, order long lead equipment items, and further prepare the site for construction.

Chris: The joint venture as priorities for the rest of 2025.

Chris: Or to build out our project team order long lead equipment items and further prepare the site for construction.

Bert Frost: With that, let me turn it over to Bert to discuss the global nitrogen market. Thanks, Chris. The CF Industries team navigated a dynamic environment through the first part of 2025, driven by a tight nitrogen supply demand balance. In particular, we have seen strong global demand as the very low corn stocks-to-use ratio points to a need to replenish global corn production. In North America, Farmer Economics Favor Corps. The USDA reported corn planting expectations of 95 million acres in the United States. However, based on the nitrogen demand we are seeing, we believe that the final planted corn acres for 2025 will likely be higher.

Speaker Change: With that let me turn it over to Bert to discuss the global nitrogen market.

Bert: Thanks, Chris CF industries team navigated a dynamic environment through the first part of 2025.

Bert: Tight nitrogen supply demand balance in.

Bert: In particular, we are seeing strong global demand as the very low corn stocks to use ratio points to a need to replenish global corn stocks.

Bert: In North America farmer economics favor corn.

Bert: The USDA reported corn planting expectations of 95 million acres in the United States. This year.

Bert: However, based on the nitrogen demand we are seeing we believe that the final planted corn acres for 2025 will likely be higher at.

Bert Frost: At the same time, channel inventories of nitrogen fertilizer are low due to high demand and industry production outages, as well as lower than typical net imports of UAN and urea. This is supported prices well into the second quarter. Given the strong demand and tight availability across our network, we expect to end the spring season low with low inventory across all our products. Thank you for positioning us well for our fill programs and the rest of 2025. We expect the global nitrogen industry conditions to remain constructive into the second half of the year. Globally, we believe nitrogen inventory is average to lower throughout the key consuming regions.

Bert: At the same time channel inventories of nitrogen fertilizer are low due to high demand and industry production outages as well as lower than typical net imports of UAS area.

This is supportive prices well into the second quarter.

Bert: Given the strong demand and tight availability across our network. We expect to end the spring season, low with low inventory across all of our products positioning us well to fill for our fill programs and the rest of 2025.

Bert: We expect the global nitrogen industry conditions to remain constructive into the second half of the year.

Bert: Globally, we believe nitrogen inventory as average to lower throughout the key consuming regions supporting strong demand. This.

Bert Frost: Supporting Strong Demand. Includes Brazil, the world's largest importer of urea, as well as India, which has not secured target volumes for its last few urea tenders. However, the expected startup of new ammonia capacity in North America this year may bring more volatility in global ammonia prices as trade flows adjust. Longer term, we expect the global nitrogen supply-demand balance to tighten through the end of the decade. Capital availability, long-term feedstock costs, and geopolitical events continue to limit the number of new projects. As a result, projected new capacity growth is not keeping pace with demand growth for traditional fertilizer and industrial applications.

Bert: This includes Brazil, the world's largest importer of urea as well as India, which is not secured target volumes for the last few urea tenders.

Bert: However, the expected startup of new ammonia capacity in North America. This year may bring more volatility in global ammonia prices as trade flows adjust.

Bert: Longer term, we expect the global the global nitrogen supply demand balance to tighten through the end of the decade capital availability long term feedstock costs and geopolitical events continued to limit the number of new projects.

Bert: As a result projected new capacity growth is not keeping pace with demand growth for traditional fertilizer and industrial application.

Bert Frost: We believe demand for low carbon ammonia for new applications such as power generation will only further tighten the global supply-demand balance.

Bert: We believe demand for low carbon ammonia for new applications, such as power generation will only further tightening the global supply demand balance.

Greg Cameron: With that, Greg, we'll cover our financial... Thanks, Bert.

Bert: With that Greg will cover our financial performance. Thanks, Bart for the first quarter of 2025. The company reported net earnings attributable to common stockholders of approximately $312 million or $1.85 per diluted share.

Greg Cameron: For the first quarter of 2025, the company reported net earnings attributable to common stockholders of approximately $312 million or $1.85 per diluted share. Net earnings increased approximately 60% compared to the first quarter of 2024, while earnings per share were approximately 80% higher, reflecting our significantly lower share EBITDA was $617 million and adjusted EBITDA was $644 million.

Bert: Net earnings increased approximately 60% compared to the first quarter of 2024 earnings per share were approximately 80% higher reflecting our significantly lower share count.

Bert: EBITDA was $617 million and adjusted EBITDA was $644 million.

Greg Cameron: On a trailing 12-month basis, net cash from operations was $2.4 billion, and free cash flow was approximately $1.6 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 63%.

Bert: On a trailing 12 month basis net cash from operations was $2 $4 billion and free cash flow was approximately $1 $6 billion.

Bert: We continue to be efficient converters of EBITDA to free cash flow.

Bert: Our free cash flow to adjusted EBIT, our conversion rate for this time period the 63%.

Greg Cameron: We returned $530 million to shareholders in the first quarter of 2025. This included $434 million to repurchase 5.4 million shares. Over the last 12 months, we've returned approximately $2 billion, repurchasing nearly 20 million shares for approximately $1.6 billion, and returning another $353 million in dividends. Entering the second quarter, we had approximately $630 million dollars remaining on our current share repurchase authorization. We anticipate completing the remainder of this program before its expiration in December.

Bert: We returned $530 million to shareholders in the first quarter of 2025. This included $434 million to repurchase five 4 million shares.

Bert: Over the last 12 months, we've returned approximately $2 billion repurchasing nearly 20 million shares for approximately $1.6 million and returning another $353 million in dividend payments.

Bert: Entering the second quarter, we had approximately $630 million remaining on our current share repurchase authorization, we anticipate completing the remainder of this program before its expiration in December.

Greg Cameron: Upon completion, we will begin an additional $2 billion share repurchase program, which expires at the end of 2029.

Bert: Upon completion, we will begin an additional $2 billion share repurchase program, which expires at the end of 2029.

Greg Cameron: For the full year, we expect CF Industries capital-funded expenditures will be approximately $650 million. This includes approximately $500 million related to activities within our existing network and approximately $150 million related to our portion of the Blue Point activity.

Bert: For the full year, we expect CF industries capital funded expanding expenditures will be approximately $650 million.

Bert: This includes approximately $500 million related to activities within our existing network and approximately $150 million related to our portion of our bluepoint activities.

Greg Cameron: As we will be consolidating the Bluepoint joint venture into our financial statements, our reported capital expenditures will also include the portion of the Bluepoint activities funded by the joint venture partners going forward.

Bert: As we will be consolidating the bluepoint joint venture into our financial statements are reported capital expenditures will also include a portion of the bluepoint activities funded by the joint venture partners going forward.

Tony Will: With that, Tony will provide some closing remarks before we open up the call to Q&A. Thanks, Greg. Before we move on to your questions, I want to thank everyone at CF Industries for their contributions to an outstanding first quarter of 2025.

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

Tony: Thanks, Craig before we move on to your questions I want to thank everyone at CF industries for their contributions to an outstanding first quarter of 2025.

Tony Will: I also want to note that we are holding an Investor Day June 24th in New York. Martin and Darla will be contacting you with specific details and invitations. We look forward to talking in more detail about our strategy, initiatives, and long-term outlook at that time.

Tony: Also want to note that we are holding an investor day June 24th in New York Martin did Darla, we'll be contacting you with specific details and invitations.

Tony: We look forward to talking more detail about our strategy.

Tony: Initiatives and long term outlook at that time.

Tony Will: CF Industries is exceptionally well-positioned for the years ahead. In the near term, industry dynamics remain favorable for our low-cost North American production network. Longer term, we expect the global nitrogen supply-demand balance to tighten, while our investments in low-carbon ammonia production provide a robust growth platform with attractive returns. Taken together, we expect to continue to drive strong cash generation and create substantial value for long-term shareholders.

Tony: So if industries is exceptionally well positioned for the years ahead.

Tony: In the near term industry dynamics remain favorable for our low cost North American production network.

Tony: Longer term, we expect the global nitrogen supply demand balance to tighten well, while our investments in low carbon ammonia production provide a robust growth platform with attractive returns.

Tony: Taken together, we expect to continue to drive strong cash generation and create substantial value for long term shareholders.

Operator: With that, operator, we will now open the call to your questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

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

Tony: Thank you.

Tony: Moving now begin the question and answer session.

Tony: I'll ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.

Tony: If at any time. Your question has been address and you would like to withdraw your question. Please press Star then two.

Operator: At this time, we will pause momentarily to assemble our roster.

Tony: At this time, maybe just pause momentarily to assemble a rush too.

Tony: Yeah.

Stephen Byrne: The first question comes from Stephen Byrne with Bank of America Securities. Please go ahead. Thank you. You're only a couple months away from having some blue ammonia to sell out of Deauville. Do you have any offtake lined up for this as of yet?

Speaker Change: The first question comes from Stephen Byrne with Bank of America Securities. Please go ahead.

Stephen Byrne: Thank you.

Speaker Change: There are only a couple of months away from having seen blue ammonia.

Speaker Change: So a lot of diesel do you have any offtake.

Speaker Change: I end up for this as of yet.

Tony Will: So we've been working on that, Steve, for quite a while, having a lot of conversations. And yes, we do have agreements in place for when that product is available. They're structured for growth. And so as we bring on the tons and some of these are tied to exports to Europe and some other locations, as well as some industrial contracts, we're not fully booked yet and don't anticipate that. We're anticipating demand to grow as the understanding and this product becomes available. We're the first and only producer with these tons to the market. And I think when you look around the world with what people are trying to do with their own carbon structures.

Speaker Change: So we've been working on that Steve for quite a while having a lot of conversations and yes, we do have agreements in place for when that product is available they are structured for growth and so as we bring on the tons and and some of those fees are tied to exports to Europe and some other locations as well as.

Speaker Change: Some industrial contracts without fully.

Speaker Change: <unk> booked yet and don't anticipate that we're anticipating demand to grow as the understanding in this product becomes available we the first and only producer with these tons up to the market and I think when you look around the world with what people are trying to do with their own carbons structures.

Tony Will: as well as CBAM, a lot of opportunity in front of us.

Speaker Change: As well as C band a lot of opportunity in front of us.

Stephen Byrne: And I'm sure you're aware, also in Ascension Parish with Deville and your Bluepoint project is, is the project that Air Products is trying to get on stream and, and they would like to either bring on a partner or, or just, you know, sell off the ammonia loop. And I'm, I'm just curious, is this a potential project that you might be interested in? You would be the, the only one that might be able to put that product into the New Star Pipeline if, if that opportunity for, you know, low carbon corn really develops down the road is, is, is that of interest?

Speaker Change: And I'm sure you're aware.

Speaker Change: Also we didnt essentially parish with diesel and your Bluepoint project is.

Speaker Change: Is that the project that air products is trying to get an extreme in and they would like to either bring on a partner or or just.

Speaker Change: You know sell off the ammonia loop and then I'm. Just curious is this a potential project that you might be interested in you would be the only one that might be able to put that product into the new store pipeline. If it's about opportunity for you know low carbon corn.

Speaker Change: It really develops down the road is that it'd be interesting and you. You also highlighted your view of tightening supply and demand in nitrogen through the end of the day.

Stephen Byrne: And you, you also highlighted your view of, of tightening supply and demand in nitrogen through the end of the decade.

Tony Will: So is this a potential project you might also get involved in?

Speaker Change: Decades. So is this a potential project you might also get involved.

Tony Will: Yes, Steve, this is Tony, I think this project, at least from an ammonia producers perspective, suffers from some of the challenges that we saw with the the OCI project, and why we we opted not to participate in that, that discussion, which is the hydrogen producer, in this case, air product. is looking to earn a nice return risk free off of the production of hydrogen and enter into take or pay agreements with the ammonia loop operator at something that is a very high operating cost. Basically, it puts your gas cost in the third or fourth quartile.

Speaker Change: Yes, Steve This is Tony I think that's projected at least from an ammonia producers perspective.

Speaker Change: Suffers from some of the challenges that we saw with the the OCI project and why we opted not to participate in that.

Speaker Change: That discussion, which is the hydrogen producer in this case air products.

Speaker Change: As looking to earn a.

Speaker Change: Nice return risk free off of the production of hydrogen.

Speaker Change: And enter into take or pay agreements with the ammonia loop operator.

Speaker Change: It's something that is a very high <unk>.

Speaker Change: Operating costs basically puts your gas costs in the third or fourth quartile. So while you might get a little bit of a break on cat backs, if you're on the hook to buy gas at you know 10 Bucks and M. M. B to you come at you know hacker high water you are going to be pan.

Stephen Byrne: So while you might get a little bit of a break on CapEx, if you're on the hook to buy gas at, you know, 10 bucks an mm BTU, come at, you know, Hacker High Water, you're going to be paying on a gas cost basis, $300 of energy content for a ton of ammonia, whereas our project doesn't, you know, doesn't that we would be interested in in any way, because we don't want to deploy that level of capital against non competitive assets. Understood. Thank you.

Speaker Change: I'm on a gas cost basis $300 of energy content for a ton of ammonia, whereas our project doesn't it doesn't suffer from that so that is not a project that we would be interested in and in any way because we don't want to deploy that level of capital against noncompetitive assets.

Speaker Change: Understood. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Thank you. The next question comes from Richard Gotta Keep Tory now with Wells Fargo. Please go ahead.

Richard Garchitorena: The next question comes from Richard Garchitorena with Wells Fargo. Please go ahead. Thanks, and a nice quarter. Just a question on Bluepoint, congrats on the close of JV. But just on the partnership stakes, Jara has an option to reduce your stake before the end of the year. If you can just give us some clarity on some of the conditions there and in terms of like what the potential in terms of changes and offtake for the other partners would be if you took. I guess the remaining state.

Speaker Change: Thanks, and nice quarter.

Speaker Change: A question on Bluepoint, congrats on the close of the JV.

Speaker Change: But just on the partnership Thanks, Jarrod has an option to reduce your stake.

Speaker Change: For the end of the year. If you can just give us some clarity on some of the conditions there and.

Speaker Change: In terms of like what the potential is.

Speaker Change: Some of the changes and off take for the other partners would be if you took.

Speaker Change: I guess the remaining stake.

Tony Will: Taking you up to 60%, how would that impact sort of marketing of the towns going forward type of thing? Thanks. Yeah, so we fully expect that JIRA is going to want to maintain their ownership level at 35%. On the other hand, if they opt to return kind of 15% of the economics back to us, we're very comfortable with that. But it still only puts us at 55% ownership of the overall project. And we believe that the economics around this project are very attractive. And so having incrementally a little more of the equity and the offtake, offtake is proportionate to equity ownership, is something that we are 100% comfortable with.

Speaker Change: Taking up to 60% how would that impact sort of.

Speaker Change: Any of the towns like Florida, Tennessee. Thanks, Yeah. So we we fully expect that Jarrod is going to want to maintain their ownership.

Speaker Change: Level at 35%.

Speaker Change: The other hand if.

Speaker Change: They are if they opt to.

Speaker Change: Return kind of 15% of the economics back to us.

Speaker Change: What we're very comfortable without it it's still only puts us at 55% ownership of the overall project and we believe that the economics around this project are very attractive and so having incrementally a little more of the equity and the off take off take is proportional to equity ownership.

Speaker Change: As you know it is something that we are under percent comfortable with but we don't believe that's going to be the ultimate outcome.

Tony Will: But we don't believe that's going to be the ultimate outcome of all of this. And the incremental... The tonnage that you're talking about on that 15% is, call it roughly 200,000 tons. And Bert has plenty of options in terms of where to take those tons, both at home and abroad.

Speaker Change: Outcome of all of this and the.

Speaker Change: Incremental.

Speaker Change: Tonnage that youre talking about on that 15% as you know call it roughly 200000 tons.

Speaker Change: And Bert has plenty of options in terms of where to take those tons both at.

Richard: At home and abroad. So again, we have no issues at all with that Yeah, just building on that Richard.

Bert Frost: So again, we have no issues at all with that. Yeah, just building on that, Richard, as we've mentioned in our prepared remarks, we're seeing more interest since the announcement of this particular project with individuals looking for low-carbon production assets or production offtake. So I don't think it would be that big of a stretch for us to find a home to that. But I agree with Tony that I would find that to be somewhat of an unlikely case, given Jarrah's position.

Richard: As we mentioned in our prepared remarks, we're seeing more interest since the announcement of this particular project with individuals looking for low carbon production assets or.

Speaker Change: For production Offtake, So I don't think it would be that big of a stretch for us to find a home to that but I agree with Tony that I would find that to be somewhat of an unlikely case given jurors position.

Richard Garchitorena: Thank you.

Speaker Change: Thank you.

Joel Jackson: The next question comes from Joel Jackson with BMO Capital Markets. Please go ahead.

Joel Jackson: The next question comes from Joel Jackson with BMO capital markets. Please go ahead.

Bert Frost: I'm Tony Bertini. Maybe talk about the market. It's obviously been quite a hot spring market in the US for Urea and UAN. Maybe talk about what you've seen. It seems like now we're starting to cool off. What your views are going into the spring and summer? You know, do you have a view on where fall, summer market would be and be able to capture, you know, in Q2 here, a lot of the surge or what was your book You know, we're pleased with our order book. Normally, through this type of environment in a commodity business, you're always building your order book for the, you know, the approximate one, two, three months.

Joel Jackson: Tony Bert can you maybe talk about the market, it's obviously been quite a.

Speaker Change: Hot spring markets in the U S for me anyway, and maybe touch on what you've seen it seems like now we're starting to cool off what your views are going into the spring and summer do you have a view of our fall summer market would be and when you're able to capture in Q2 here a lot of the surge or what was your buffet.

Speaker Change: Yeah, we're pleased with our order book is normally through this type of environment in a commodity business Youre always building your order book for the approximate one two and three months and so as you see the results in Q1, we exceeded expectations and for Q2, we had a book coming in but also open.

Bert Frost: So as you see the results in Q1, we exceeded expectations. And for Q2, we had a book coming in, but also open positions, which we're executing against today. And you're seeing those in the publication. It has been a very positive market. A lot of that's related to some of the issues we've talked about, which the inventories coming in to North America were lower. And I think because of the tariffs, you've seen some diversions of vessels, which limited probably prompt availability for the April, May, June timeframe. And our plants have operated very well, and our network was prepared.

Speaker Change: [noise] positions, which we're executing against today and you're seeing those in the publications.

Speaker Change: It has been a very positive market a lot of that is related to.

Speaker Change: Some of the issues, we've talked about which are the inventories coming in to North America were lower and I think because of the tariffs you've seen some diversions of vessels, which limited probably prompt availability for the May or April may June time frame and our plants have operated very well and our network was prepared or I got.

Bert Frost: I got to give a shout out to our logistics team, Mike Muller, and the folks in the supply group of putting the product in the terminals at the right time, understanding where, because of weather, where demand would be. And so we capitalized on that. And so some of the prices you're seeing in the market, we're executing against that. Feel very good about Q2. And that'll probably then extend into Q3. And I would say the fill programs are going to be later than anticipation, just because of low inventories in North America, outside of CF, as well as CF.

Speaker Change: To give a shout out to our logistics team, Mike Butler and the folks in the supply.

Group are putting into the product and the terminals at the right time understanding where because of weather where demand would be and so we capitalized on that.

Speaker Change: And so some of the prices you're seeing in the market, we're executing against that feel very good about Q2 and that'll probably then extend.

Speaker Change: Into Q3, and I would say the fill programs are gonna be later than anticipation just because of the low inventories in North America outside of CF as well as C F.

Tony Will: And we'll execute accordingly, but believe that we have a positive market in front of And then on different tact here, you know, Tony, when you did do the FID about a month ago on Bluepoint, it was obviously remained, you know, a very interesting macro and tariff environment. You know, just thinking about historical context, you, CF, other golf producers, the capital inflation we saw on projects a decade ago, early last decade, the problems with labor rates and getting good labor and what gets paid for it.

Speaker Change: And we will execute accordingly, but believe me we have a positive market in front of us.

Speaker Change: And then on different tact here.

Speaker Change: Tony when you did the F. I E about a month ago on Bluepoint. He was obviously remains a very.

Speaker Change: Interesting macro and tariff environment.

Speaker Change: Just thinking about historical context, you see at other golf producers the capital inflation, we saw on product a decade ago early last decade problems with labor rates and getting good labor and what gets paid for it how do you you know.

Tony Will: How do you, you Mitigate what, you know, could be very strong capital inflation or not, like, what can you do with your partners to make this so it's not going to really affect the level of buyback you can do in the next four years?

Speaker Change: Mitigate well you know could be very strong capital inflation you are not like what can you do with your partners to make this so it's not going to really affect the level of buybacks you can do in the next four years, yeah. Joel So we what we're taking a fundamentally different approach to the construction of this plant.

Tony Will: Yeah, Joel. So we were taking a fundamentally different approach to the construction of this plant than what we employed historically. And by that, I mean, the last projects we did, and in fact, the ones we did prior to that, were all what you'd call stick build. So individual, you know, I-beams going up and creating attachment points for the vessels and continuing to build it kind of piece by piece by piece. And when you're doing that, the vast majority of construction content is happening, you know, here on site. And you are subject, because of the way that those are contracted on a reimbursable basis, to the possibility of inflationary pressures and potential time delays.

Speaker Change: Then what we are employed historically.

Speaker Change: And by that I mean, the the last projects, we did and in fact the ones. We did prior to that were all what you'd call stick built so individual.

Speaker Change: IBM is going up and creating attachment points for the vessels and continuing to build it kind of piece by piece by piece and when Youre doing that the vast majority of construction.

Speaker Change: Construction content is happening you know here on site.

Speaker Change: And you are subject because of the way that those are contracted on a reimbursable basis to the possibility of inflationary pressures and potential time delays the approach that we're.

Tony Will: The approach that we're taking on this project is really one of modular construction. So these very large integrated modules are being constructed overseas and will be shipped here and basically just positioned in place, secured to the mounting locations, and then connected together. So the amount of on-site construction content here in the U.S. is dramatically reduced. And we are choosing with our partners and our EPC, or our, I guess, EPC provider, to find locations where we can construct it, which are much less likely to be affected by any kind of tariff regime, should it be in place in the long term.

Speaker Change: We're taking on this project is really one of of modular construction. So these very large integrated modules are being constructed overseas and will be shipped here and basically just positioned in place.

Speaker Change: <unk> secured to to the mounting locations and then connected together so the amount of on site construction content here in the U S is dramatically reduced and we are choosing with our partners and are already P. C.

Speaker Change: Our our I guess, our E P C provider to to find locations where.

Speaker Change: We can construct it which are much less likely to be affected by any kind of tariff tariff regime should it be in place in the long term and those modules are all being constructed on a fixed price basis. It's so much more of the content is what you'd call.

Tony Will: And those modules are all being constructed on a fixed price basis. So much more of the content is what you'd call LSTK. And therefore, lump sum turnkey, therefore you are not subject to the kind of inflationary pressures or the potential overrun of, you know, labor content that we were the last time we were doing.

Speaker Change: L S teekay and therefore lump sum turnkey. There. Therefore, you are not subject to the kind of inflationary pressures or the.

Speaker Change: The potential overrun.

Speaker Change: You know if labour content that we were the last time, we were doing this.

Chris Parkinson: Thank you. The next question comes from Chris Parkinson with Wolfer Research. Please go ahead. Great, thank you so much. So, Tony, there's been a lot of debate around the intermediate to long-term cost curve, just given, you know, gas supply issues elsewhere in the world, geopolitics, so on and so forth. Can you just give us an update on how you're thinking about that as it relates to the nitrogen cost curve? And within that, basically, how you're thinking about free cash flow conversion, and your ability not only to buy back shares, but also obviously fully facilitate the CapEx updates, which you gave us today, which were roughly in line with our expectations.

Speaker Change: Thank you.

Speaker Change: The next question comes from Chris Parkinson with Wolfe Research. Please go ahead.

Chris Parkinson: Great. Thank you so much Tony Theres been a lot of debate around the intermediate to long term cost curve, just given you know gas supply issues elsewhere in the world geopolitics. So on and so forth can you just give us an update on how you're thinking about that as it relates to the nitrogen cost curve your.

Chris Parkinson: And within that basically how you're thinking about free cash flow conversion and your ability not only to buy back shares but also obviously fully facilitate the capex updates, which you gave us today, but which were roughly in line with our expectations. Thank you Yeah you bet. So.

Chris Parkinson: I think it's regardless of which service or whose analysis, you're looking at it's pretty undeniable that the U S. As the one of the lowest cost regions in the world from a gas production first back then and really with the rule of law and the access to capital.

Chris Parkinson: And space for Ccs and supportive regulation.

Chris Parkinson: Thank you.

Chris Parkinson: I think that the best place in the world to build these kind of assets, we expect that to be true not only today, but but going forward into the future and despite the fact that there are some LNG.

Chris Parkinson: Capacity coming online in the U S. The level of demand for natural gas continues to go up at a rate that I think is equal to or above the.

Level of liquefaction capacity that is coming online, that's particularly true when you consider the number of data centers going into support AI and other applications and the power consumption that that those things draw. So as we look at it we do not see subsea.

Tony Will: Substantial long-term compression between gas costs in Europe and parts of Asia and the U.S. We think that's going to be much more sticky than what some people are forecasting doom and gloom in that regard, but as you look through what energy consumption continues to be in demand for natural gases, we couldn't be happier locating this production asset in the U.S. And, you know, when we take a step back and we think about the ultimate return for BluePoint, you know, presumably we're looking at a site fee, tax credits, as well as the return on your proportion of what's produced.

Chris Parkinson: Substantial long term compression between gas cost in Europe, and parts of Asia and the U S. We think that's going to be much more sticky than what I'm. You know some people are forecasting doom and gloom in that regard, but I you know as you look through what energy consumption.

Chris Parkinson: Continues to be in demand for natural gas is.

Chris Parkinson: We couldn't be happier locating these this production asset in the U S.

Chris Parkinson: Got it and you know when we take a step back and we think about the ultimate return for bluepoint, presumably there we're looking at a site the tax credits as well as the return on your proportion of what's produced you know can you kind of walk us through how we should be thinking about not only those baselines and whats.

Tony Will: You know, can you kind of walk us through how we should be thinking about not only those baselines and what's locked in versus the variability of the tons, and then also presumably you'll be selling some of those tons to yourself in the UK and, you know, getting a benefit there. So can you help us just conceptualize, like, the structure of how we should be forecasting that? Thank you. So at a 40% ownership, we're going to have about, just call it roughly 650,000 tons. It'll likely be a bit more than that, given that historically we are operating assets at above their nameplate capacity, and certainly did with Deauville, number six, and Portneal, number two.

Chris Parkinson: Locked in versus the variability of the tons and then also presumably you'll be selling some of those tons to yourself in the U K and you are getting a benefit there. So can you help us just conceptualize like the structure of how we should be forecasting that thank you.

Chris Parkinson: So so at a 40% ownership, we're gonna have about right just call it roughly 650000 tons, it'll likely be a bit more than that.

Chris Parkinson: Given that historically, we are operating assets at above their nameplate capacity.

Chris Parkinson: And it certainly did with Beeville number six in Port Neal number two.

Tony Will: And so about half of that is tentatively earmarked to go into the UK to be able to produce extremely low-carbon ammonium nitrate for the UK and European marketplace, which should have a significant advantage given the CBAM regime that's getting put in place. The rest of it, we have a lot of options for, as Burt has talked about, we've been working on this for a while, just on the Deauville CCS project, but are beginning to now talk about extremely low-carbon. intensity product coming out of Blueprint. And so we're talking about a relatively small number of tons, given the scope of our ongoing operation.

Chris Parkinson: And so.

Chris Parkinson: About half of that is tentatively earmarked to go into the U K.

Chris Parkinson: To be able to produce extremely low carbon ammonium nitrate for.

Chris Parkinson: The U K and European market place, which should have a significant advantage given the C.

Chris Parkinson: C band.

Chris Parkinson: Regime, that's that's getting put in place the.

Chris Parkinson: The rest of it we have.

Chris Parkinson: A lot of options for it but as Bruce talked about we've been working on this for a while just on the D. Ville Ccs project, but are beginning to now talk about extremely low carbon.

Chris Parkinson: Intensity product coming out a blueprint and so where we're talking about a relatively small number of tonnes given the scope of our ongoing operation and again <unk> got more I would say demand then we do have tons available given half of that is going to go to the U K the rest of the tonnes.

Tony Will: And, again, Bert's got more, I would say demand, and we do have tons available, given half of that is going to go to the UK, the rest of the tons are being offtake. The offtake is for our partners who are going to be using that product largely in Asia. And so that's going to disappear. And they're basically, because they're into the project at on the equity side are going to be paying kind of full costs on those the same as we are and will receive production economics just just like we will as well. Thank you.

Chris Parkinson: Our being offtake.

Chris Parkinson: Off takers for our partners, who are going to be.

Chris Parkinson: Using that product largely in Asia.

Chris Parkinson: So that's going to disappear and there theyre basically because they're into the project.

Chris Parkinson: On the equity side are going to be paying kind of full cost on those the same as we are in and will receive production economics, just just like we will as well.

Chris Parkinson: Thank you.

Chris Parkinson: Yeah.

Lucas Beaumont: The next question comes from Lucas Beaumont with UBS. Please go ahead. Good morning.

Speaker Change: Thank you. The next question comes from Lucas Beaumont with UBS. Please go ahead.

Tony Will: I just wanted to ask about tariffs. I just want to get your view on how you see that kind of impacting the various sort of nitrogen derivative markets in the US, I guess, over the near term to start with. And then if we look a bit further out 12 to 18 months, to give trade flows the chance to adjust. I mean, would you expect to sort of see pricing uplift in the range of sort of where the marginal importer is? So at least kind of 10%? And do you think that could be kind of see those factors playing out?

Lucas Beaumont: Good morning, Yeah, I just wanted to ask about the tariffs.

Tariffs I was just.

Speaker Change: Want to get your view on how you see that kind of impacting the various set of nausea and derivative markets in the U S. I guess I got a knee tend to start with and then if we look at each other at 12 to 18 months to get tried slides a chance to adjust I mean would you expect to sort of say pricing uplift in the range of sort of where the.

Lucas Beaumont: Marginal importer and sell at least kind of 10%.

Lucas Beaumont: That could be reduced either Tom or how do you kind of see those factors playing out thanks.

Tony Will: Yeah, in a weird way, and I'm gonna let Bert kind of get into some more specifics. But in a weird way, even though there tends to be tariffs and or sanctions on a lot of Russian product, Russian fertilizer comes unabated into the US with no tariff regime at all. So in a lot of ways, we are creating trade policy that is advantaging the Russians to access this marketplace. At potentially the expense of much more closely allied countries. And so there is a perversion in terms of what's going on with trade policy in that particular event.

Speaker Change: Yeah in a weird way and I'm going to let Bert kind of get into some more specifics, but in a weird way, even though there tends to be tariffs and door.

Speaker Change: Sanctions on a lot of Russian product Russian fertilizer comms unabated into the U S with no tariff regime at all so a lot of ways. We are creating trade policy that disadvantaging the Russians to access this marketplace at potentially at the expense of.

Speaker Change: Much more closely allied.

Speaker Change: So there is a perversion in terms of what's going on with trade policy and in that particular.

Bert Frost: But I'll let Bert go into some of the more details here. Qatar at 10%, Algeria at 30%, Nigeria at 14, Oman, UAE, Egypt all at 10. So you are going to have an impact. And you're exactly right, there's going to be a trade flow movement of probably tons going different directions in the meantime. But the US has been one of the lowest priced markets consistently in the world. And I think this will have an impact and will probably move closer to a Brazil parity or even maybe slightly above that. And it'll be as this unfolds, I think it'll impact behavior in terms of when and how people are purchasing their imported tons.

Speaker Change: Event.

Speaker Change: But I'll, let Bert go into some of the more details and when you look at the tariff structures that are in place for today for certain countries and Tony is 100% correct. The frustration, Russia is the largest importer of U a N and urea to the United States that almost one 5 million tons of urea at zero tariff.

Speaker Change: Canada as well as not tariff so of the total we have almost 2 million tons of common tariff free so if your structure.

Speaker Change: We import four to 5 million tons a year the rest of it comes from basically the middle East and North Africa, Qatar at 10%, Algeria at 30%, Nigeria, 14, Oman UAE, Egypt, all at Tat. So you are going to have an impact and you're exactly right, there's going to be a trade flow movement of probably.

Speaker Change: John.

Speaker Change: In different directions in the meantime, but the U S has been one of the lowest priced markets consistently in the world.

Speaker Change: And I think this will have an impact and will probably move closer to our Brazil parity or even maybe slightly above that and it'll be as this unfolds I think it'll impact behavior in terms of when and how people are purchasing their imported tons. We feel very confident are the north American market.

Tony Will: We feel very confident that North American market is the best market in the world. And we've got great customers, and we're working with them to make sure that they're adequately supplied today, as well as in the forward market. And we may be positioning more of our tons domestically, which is a perfect solution, Thank you. Thanks. And then...

Speaker Change: It's the best market in the World and we've got great customers and we're working with them to make sure that they're adequately supplied today as well as in the forward market.

Speaker Change: And we may be positioning more of our tons domestically, which is a perfect solution.

Speaker Change: Yeah.

Speaker Change: Thank you and then.

Lucas Beaumont: Sorry, and then I just had a follow-up on Blue Points.

Speaker Change: Alright, and then I just.

Speaker Change: I had a follow up on a boy points.

Tony Will: So I just wanted to kind of, you called out a couple of other components there to the agreement. I just sort of wanted to check. So you said there was like some. Ed Service Revenue Components on the management of the facility and then just with regard to sort of the credits, I was assuming that would be split evenly based on the ownership percentage and the offtake as well, would that be right? Yeah, so from from the common facility standpoint, CF will be funding that and that's that 550 million that will be spent over the five year period, in which we'll receive a fee and payment that will more than cover the cost of capital and then some on that from our partners as we go forward.

Speaker Change: So I just wanted to kind of you called out a couple of other components stay to the agreement I just said I wanted to check. So you said there was like seven.

Speaker Change: Yeah, I'd say this revenue components.

Speaker Change: Management at that facility and then just with regard to sort of the credit side I was assuming that would be split evenly by suddenly your ownership percentage and the offtake as well.

Speaker Change: That'd be right.

Speaker Change: Yes, so from from the common facility standpoint, CF will be funding that and that's that 550 million that'll be spent over the five year period, and which will receive a fee and payment that will more than cover the cost of capital and then some on that from our partners as we go forward.

Tony Will: Related to the 45 Q tax credit incentive related associated with the carbon we sequester there that will be spread throughout the JV and essentially go back on equity percentage term. Right.

Speaker Change: <unk> to the 45 to a tax credit our incentives associated with the carbon we sequester there that will be spread throughout the JV and essentially go back on the equity percentage terms.

Tony Will: Thanks very much.

Speaker Change: Alright, thanks very much.

Speaker Change: Okay.

Operator: Thank you.

Andrew Wong: The next question comes from Andrew Wong with RBC Capital Market. Please go ahead. Hey, good morning. Some things down on tariffs here.

Speaker Change: Thank you. The next question comes from Andrew Wong with RBC capital markets. Please go ahead.

Andrew Wong: Hey, good morning.

Speaker Change: Now on tariffs chair.

Tony Will: If the EU implement tariffs on Russian product, what's your thought on how like UAN trade flows rearranged. So, you know, could you see more Russian UAN go into the U.S. And then maybe it doesn't make more sense for the U.S. I understand that there's a benefit from the tariffs right now on other sources, but Russian doesn't allot into the U.S. on the UAN. Like, does it make more sense to then send it into Europe if tariffs are quite high on Russian product in two years? So there are those are being discussed and implemented for Russian product into the EU.

Speaker Change: The EU implemented tariffs on Russian product.

Speaker Change: What's your thought on how.

Speaker Change: UAE and trade flows rearrange so could you see more rush in UA ankle into the U S. And then maybe it doesn't make more sense for the U S. I understand that theres a benefit from that.

Speaker Change: Tariffs right now on other sources, but Russian doesn't have a lot to the U S. On the UAS like does it make more sense inside it into Europe.

Speaker Change: I'm curious are quite high on Russian product into Europe.

Speaker Change: So there are those.

Speaker Change: Those are being discussed and implemented for Russian product into the EU and so there are various discussions on.

Tony Will: And there are various discussions on But that could be an eventual outcome.

Speaker Change: Current structures, but that could be an eventual outcome. We are of exports to the EU and the U K for U a N and have been for years and have some very good partners. There that Oh, we were in conversations with and supply. So I think with a few years ago.

Bert Frost: We are an exporter to the EU and the UK for UAN and have been for years and have some very good partners there that we are in conversations with and supplying. So I think with a few years ago, there was a urea plant that was dropped in, then took away some of the UAN capacity that Russia had, Akron. And I do think they're more balancing in terms of what we see from behavior of in terms of what's the value of the end molecule in terms UAN Urea Ammonia or Ammonium Nitrate. And so the volume that comes to the U.S.

Speaker Change: There was a urea plant that was dropped in and took away some of the UA and capacity that Russia had a crime.

Speaker Change: And I do think there more balancing in terms of what we see from behavior of a in terms of the what's the value of the molecule in terms of.

Speaker Change: UA and urea ammonia and ammonium nitrate and so the volume that comes to the U S. Today.

Bert Frost: today, I would assume that continues, at least in the present structure of tariffs and zero tariffs on Russian product, probably continue at the same level.

Speaker Change: Assume that continues at least in the present structure of tariffs zero tariffs on restaurant product probably continue at the same level.

Bert Frost: And then we'll see how the rest of the world settles down.

Speaker Change: And then we'll see how the rest of the world settles out.

Bert Frost: Okay, thank you.

Speaker Change: Okay. Thank you.

Bert Frost: And then maybe just on clean ammonia pricing, when you are discussing with your potential customers, I'm just curious, like, what factors do you talk about? Like, do you talk about, you know, like, energy content equivalent, and then look at that from, you know, pricing, equivalent pricing? Do you, for industrial users, you take, like, a merchant ammonia and then put a clean ammonia premium on it? If it's, you're building a new plant? Do returns factor into those pricing conversations? Any of that detail would be great. In terms of how this is being laid out in the market, it's a fairly understood value proposition of low carbon.

It's simply an ammonia pricing when you are discussing with your potential customers I'm just curious like what factors you talked about like you talked about.

Speaker Change: Energy content equivalent and then look at that.

Speaker Change: Price equivalent pricing do you for industrial users you take like a merchant ammonia and ethylene ammonia premium on that just yet.

Speaker Change: You're building a new plant.

Speaker Change: Returns factor in to those pricing conversations any any of that detail would be great. Thanks.

Speaker Change: In terms of how this is being laid out in the market. It's a fairly understood value proposition of low carbon and so as companies look at their scope emissions and their structures and what they're doing what they need whether that'd be in AG with the corn value chain or with an industrial production such as a synthetic fiber pro.

Tony Will: And so as companies look at their scope of emissions... and their structures and what they're doing and what they need, whether that be an ag with the corn value chain or with an industrial production such as a synthetic fiber producer or ammonia as a chemical intermediate, everyone's trying to improve their position and obviously cost structure. So the conversations with the customers are, we have this product, it is a unique product, it's coming online and this is part of the preparation of get ready, are you interested, okay you're interested, at what level, how does this work with contracts, because we want to contract generally on an industrial basis we have annual or multi-year contracts.

Speaker Change: <unk> or ammonia is a chemical intermediate.

Speaker Change: Everyone's trying to improve.

Speaker Change: Improve their position and.

Speaker Change: The cost structure. So the conversations with the customers are we have this product is a unique product that is coming online and this is part of the preparation of get ready are you interested okay. You're interested at what level. How does this work with contracts because we want to contract generally on an industrial basis, we have annual or multi year contracts.

Tony Will: And then you're exactly right. One factor we talk about is we're going to have a separate line item for the value of low-carbon ammonia. And the intention is that initially that will start off at a fairly lower level, and then as demand builds, then there'll be a competition for the molecule. But the first series of low-carbon ammonia that's coming off of Donelsonville with the CCS program in Q3 is in preparation for the new plant that will come on in 2029. And that will be, I would say, if not low, close to zero carbon product. And that's even more attractive to the market.

Speaker Change: And then you're exactly right.

Speaker Change: One factor we talk about is where we're going to have a separate line item for the value of low carbon ammonia and the intention is that initially that will start off at a fairly lower level.

Speaker Change: And then as demand builds and there'll be a competition for the molecule.

Speaker Change: But the first series of low carbon ammonia, that's coming off of Donaldson Bill with the Ccs program in Q3, it's been in preparation for the new plant that will come on in 2029 and that will be a I would say if not low close to zero carbon product and that's even more attractive to the market. So.

Tony Will: So what you see from CF is, like anything, we're well-prepared. We're in the market. We're communicating clearly with our customers. with the expectation of a carbon premium for this product. Very great, thank you.

Speaker Change: What did you see from CF is a prep like anything we're well prepared we are in the market, we're communicating clearly with our customers with the expectation of them or carbon premium for this product.

Speaker Change: Okay, great. Thank you.

Operator: Thank you.

Speaker Change: Thank you.

Benjamin Theurer: The next question comes from Benjamin Theurer with Barclays. Please go ahead. Thank you very much for taking my question. One quick one is we saw news that the Chinese government is setting an export window from May through September for urea as it relates to the potential quota to be similar to the 2023 level. So when we look through your materials, is that something that's basically as expected from you guys or is that more meaningful from a negative perspective just as it goes out?

Speaker Change: The next question comes from Benjamin J R.

Speaker Change: Barclays. Please go ahead.

Speaker Change: Yeah. Thank you very much for taking my question.

Speaker Change: One quick one is you saw news that the Chinese government are set.

Speaker Change: And export window from May through September for urea.

Speaker Change: As it relates to the potential quota to be similar to the 2023 level. So when we look through your materials is that something that's basically as expected from you guys or is that is that more meaningful from a from a negative perspective, just as it goes out and I'll say, if you could comment anything around.

Tony Will: And also, if you can comment anything around the fact that the Chinese are restricting this to India, which seems to be to be a big purchase and another quick follow up on gas markets. Yeah, so the world is very tight and arguably short urea capacity. So the world really needs these tons to become available and part of the global trade flow. We're fully expecting and have considered somewhere in the neighborhood of 3 million, maybe 4 million tons to come out of China during this period of time. And so I, you know, I think that's wholly consistent with our expectations.

Speaker Change: The fact that the Chinese are restricting us too.

Speaker Change: Yeah, which seems to be to be a big purchases.

Speaker Change: Quick follow up on gas markets.

Speaker Change: Yeah. So the the world is very tight and arguably short urea capacity, so that the world really needs these tons to become available and part of the global trade flow, we're fully expecting it and have considered somewhere in the neighborhood of 3 million, maybe 4 million tons to come out of it.

Speaker Change: China during this period of time, and so I think that's wholly consistent with our expectations.

Tony Will: What, you know, one of the things to keep an eye on is what happens to the domestic price of urea within China, because the last time that quote, unquote, door got opened, and price started rising, they rescinded providing export licenses to people. And so what came out was actually a lot less than what was expected. But we, you know, we think that the world really needs these tons. And so it's helpful to the overall functioning market.

Speaker Change: Well you know one of the things to keep an eye on is what happens to the domestic price of urea in China, because the last time the quote unquote door got opened and price started rising they rescinded providing export licenses to people and so what came out was actually a lot less than what was expected.

Speaker Change: Acted but we you know we think that the world really needs these tons and so it's helpful to the overall.

Speaker Change: Functioning market.

Tony Will: Okay, and then there has been noise that goes into different directions. Some say there might be U.S. and Russia trying to work together to figure out the gas flow back to the European Union, what basically was cut with the invasion back a few years ago. But others say that the European Union, excuse me, is considering a potential embargo actually on Russian gas. Have you seen or heard any news, any comment that you have as to the expectations for that Russian gas into Europe? We want to think about this for the gas price in Europe. Yeah, the initiative that we've been kind of following is the plan to basically completely wean Europe off of Russian gas by 27 and really provide a restriction on access to that marketplace.

Speaker Change: Okay, and then there has been a noise that goes into different directions.

Speaker Change: Direction, some say there might be a U S and Russia are trying to work together to figure out the gas flow back to the European Union, what basically was cut with the innovation back a few years ago, what others say that the European Union.

Speaker Change: Excuse me is considering a potential embargo actually on Russian gas have you seen or heard any news any any any common did you have as to the expectations for that Russian gas into Europe.

Speaker Change: However.

Speaker Change: I've always wanted to think about this for the gas price in Europe, Yes. The initiative that we've been kind of following is the plan to basically completely wean the Europe off of Russian gas by 27 and really.

Speaker Change: Provide a restriction on an access to that marketplace. So I don't know what the U S has to say about that or the role that we play because if the Europeans decide they don't want it theres very little other people can do to make them take it so.

Tony Will: So I don't know what the U.S. has to say about that or the role that we play because if the people can do to make them take it. That is very much a European policy issue, which I'm afraid is these days almost as opaque as Washington.

Speaker Change: That.

Speaker Change: That that is very much a European policy issue, which I'm afraid is these days almost as opaque as Washington Us.

Operator: Alrighty, thank you very much. Thank you.

Speaker Change: Alright, Thank you very much.

Speaker Change: Thank you.

Jordan Lee: The next question comes from Jordan Lee with Goldman Sachs. Please go ahead. Hi, thank you. We're seeing a pretty strong divergence between urea and ammonia prices currently. In terms of the delta and margin between the two, can you talk about how it compares to history and how you expect that to play out going forward? We're seeing a divergence internationally, and in ammonia today, the market is, and I talked about this in my prepared remarks, with the two plants that are coming online in the Gulf Coast, today the market in the east is longer, and you've seen a price differential between east and west markets.

Jordan Lee: The next question comes from Jordan Lee with Goldman Sachs. Please go ahead.

Jordan Lee: Hi, Thank you.

Jordan Lee: We are seeing a pretty strong divergence between urea and ammonia prices currently.

Jordan Lee: In terms of the Delta in margin between the two can you talk about how it compares to history and how you expect that to play out going forward.

Jordan Lee: You're seeing a divergence in internationally and they're in pneumonia today the market is and I talked about this in my prepared remarks with the two plants that are coming online in the Gulf Coast.

Jordan Lee: Today, the market in the east as long or longer and you've seen a price differential between east and west markets.

Bert Frost: And then with the expectation of these two plants, which would be probably in excess of 200,000 tons a month coming online, needing to find a home, that's the projected And you're correct, there is a divergence, and urea is staying fairly strong worldwide, almost close to ammonia parity at $400 a ton coming into North America or Brazil. And so that's a reflection of supply and demand and additional supply coming on. And in terms of how that looks historically, that's an imbalance, and I would expect that to be corrected through the addition of additional urea plants being built.

Jordan Lee: And then what's your expectation of.

Jordan Lee: These two plants, which would be probably in excess of 200000 tonnes. A month are coming online and needing to find a home. That's the projected weakness at your Youre correct. There is a divergence in urea staying fairly stronger worldwide almost close to ammonia parity at $400 a ton.

Jordan Lee: Coming into North America, or Brazil, and so.

Jordan Lee: So that's reflected reflection of supply and demand.

Jordan Lee: And additional supply coming on and you know in terms of how that looks historically, that's been imbalance and I wouldn't expect that to be corrected through the addition of additional urea plants being built to soak up some of that extra ton as well as what we've talked about is the growth in consumption of ammonia as a feedstock.

Bert Frost: I'd also, though, add to that, it's important to separate the price of traded ammonia, you know, Tampa, North Sea, other pricing points versus the price of ammonia in the interior used for agricultural applications. Those two are, you know, historically fairly different, and the ton, or the new plants that Bert is referencing, those don't have access to in-market terminals in the corn belt for use in agricultural applications, so those are going to be focused exclusively on the merchant market globally, and so, you know, that's why you see a little bit of, as Bert said, kind of that overhang and divergence, but from a in-market agricultural application, the price of ammonia is still very strong, although you're also getting near the end of the application window, whereas, you know, urea requirements are still very, very strong, and that's also part of the reason why you see a difference there as well.

Jordan Lee: In low carbon markets I would also though add to that.

Jordan Lee: It's important to separate.

Jordan Lee: The price of traded ammonia Tampa North sea other pricing points versus the price of ammonia in the interior used for agricultural applications. Those two are are historically fairly different.

Jordan Lee: And the ton or the new plants that bird is referencing.

Jordan Lee: Those don't have access to in market terminals in the corn belt for use in agricultural applications. So those are going to be focused exclusively on the merchant market.

Jordan Lee: Globally and so that.

Jordan Lee: Why.

Speaker Change: You see a little bit of as Bert said kind of that that overhang of divergence, but from a from a in mark yet.

Speaker Change: Cultural application price of ammonia is still very strong although youre also getting near the end of the application window.

Speaker Change: Whereas urea requirements are still very very strong and that's also part of the reason why you see a difference there as well.

Bert Frost: Got it. Okay, thank you. And the general sense was that farmers underapplied last fall. Do you think US farmers will get down all of the nitrogen that they would like to this spring? Or are there any constraints such as the urea or UAN supply that you would call out? I think there's a question on availability of the N or type of N that farmers in different regions are wanting. So Tony talked about ammonia in the Midwest, and it has been very attractive. Out of our terminals, that's probably around $650 a ton, where you talk about the international market at $400.

Speaker Change: Got it okay. Thank you and the general sense was that farmers under applied last fall.

Speaker Change: Do you think U S farmers will get down all of the nitrogen that they would like to the spring or are there any constraints, such as urea or UA and supply that you would call out.

Speaker Change: I think there's a question on availability of the N type.

Speaker Change: Type of and that farmers in different regions are wanting so Tony talked about ammonia in the Midwest.

Speaker Change: And it has been very attractive out of our terminals, that's probably around $650 a ton.

Speaker Change: You talked about the international market 400.

Bert Frost: But there is a very tight market today in North America for urea and UAN, and we expect that maybe additional side dress of ammonia will take place that maybe it wouldn't have in other years. But today, when you look at the corn-bean ratio and the crop insurance for the revenue guarantees that are available to a farmer, selecting corn this year makes economic sense. And then if that's the case, maximizing yield through the use of nitrogen makes ultimate sense. And so we're actually seeing, and we talked about this in the prepared remarks of... The 95 million acres is probably going to be higher, just based on what we're seeing with demand.

Speaker Change: But.

Speaker Change: There is a very tight market today in North America for urea in UAS, and we expect that maybe additional side dress ammonia will take place that maybe wouldn't have in other years, but today. When you look at the corn bean ratio and the crop insurance for the revenue guarantees that are available to a farmer.

Speaker Change: Selecting corn this year makes economic sense and then if that's the case.

Speaker Change: <unk> yield through the use of nitrogen makes ultimate sense and so we're actually seeing.

Speaker Change: And we can talk about this in the prepared remarks of the.

Speaker Change: The 95 million acres is probably going to be higher just based on what we're seeing with demand and exactly your question on application rates I would say today, they're probably going to be higher and youre going to see yields an irrigated areas in high yielding areas of the I states, probably pretty good but the dry land.

Bert Frost: And per exactly your question on application rates, I would say today they're probably going to be higher. And you're going to see yields in irrigated areas and high-yielding areas of the ice states probably pretty good. But the dry land places, I think, will be interesting as well. So we do have a stocks-to-use ratio that's very low for corn globally. And so there's a need for this product to be produced in North America. And it's been a very exciting market.

Speaker Change: Places I think will be interesting as well. So we do have a stocks to use ratio that's very low for corn globally, and so theres a need for this product to be produced in North America, and it's been a very exciting market.

Bert Frost: Thank you.

Speaker Change: Thank you. The next question comes from Edlin Rodriguez with Mizuho. Please go ahead.

Edlain Rodriguez: The next question comes from Edlain Rodriguez with Mezoho. Please go ahead. Thank you and good morning everyone. So guys, when you're looking at, you know, given the level of grain inventories, crop prices, you know, as you said, start to use ratio levels, like how would you describe the current ag fundamentals? Like good, great, mixed, and it could be like globally or in the U.S., like how would you describe the ag fundamentals right now? Yeah, it would be differentiated based on obviously location, crop and activity and time. So the inventories for that specific to corn, as we've been talking about, and that's our favorite consumer of nitrogen.

Edlin Rodriguez: Thank you and good morning, everyone. So guys when you're looking at given the level of Glen inventories club fly season, or are you, saying stocks to use ratio levels like how would you describe the current AD fundamentals like good great mix.

Edlin Rodriguez: And it could be either globally or in the U S that kind of how would you describe the AD.

Edlin Rodriguez: Under Windows like though.

Edlin Rodriguez: Yeah, It would be differentiated based on obviously location crop and activity and timing.

Edlin Rodriguez: So the inventories for that specific to corn, because we've been talking about and that's our favorite consumer of nitrogen or very low global urea, you're a decade's lows are globally, excluding China and that's kind of a question Mark and always has been with what inventories are there but.

Bert Frost: are very low globally. You're at decades lows, globally excluding China. And that's kind of a question mark and always has been with what inventories are there.

Bert Frost: But the fundamentals at the farm gate are not as positive they have been in the previous several years, based on cost of inputs, cost of rent, land rent, and, and, and the output values of corn, soybean And so with crushed margins suffering and soybeans a little bit lower, that's why we believe corn will be the preferred choice where available in North America. What has happened in other years is sometimes like in places like Brazil or Argentina have devaluations that assist farmers and The World Bank. So it's different in different places. Europe is subsidized, India is subsidized, and an interesting side note is also the growth of urea consumption in China, both for ag and industry, that China's consumption has grown substantially of urea.

Edlin Rodriguez: The fundamentals at the farm gate are not as positive as they have been in the previous several years based on.

Edlin Rodriguez: Cost of inputs cost of rent land rent and and the output VAT.

Edlin Rodriguez: Values of corn, soybeans, and wheat, and so with crush margins suffering in soybeans, a little bit lower that's why we believe corn will be the preferred choice where available in North America.

Edlin Rodriguez: What has happened in other years is sometimes like in places like Brazil, or Argentina, devaluations that assist farmers in terms of their profitability you've seen some taxes come off in Argentina, and so we see those countries continue to grow but also growth along the side of protein <unk>.

Edlin Rodriguez: Shannon ethanol production is specific to Brazil, so it's different in different places Europe, a subsidized India subsidized.

Edlin Rodriguez: And and.

Edlin Rodriguez: An interesting side note is also the growth of urea consumption in China, both for egg in an industry that China's consumption has grown substantially of urea, but again, it's subsidized with low cost coal and a very inexpensive product is related to the world market. So.

Bert Frost: But again, it's subsidized with low-cost coal and a very inexpensive product is related to the world market.

Bert Frost: So, All to say, differentiated market, I think, for the US farmer or North American farmer, a challenged but acceptable historical regard to returns, but they need to watch their dollars Okay, thank you very much. Thank you.

Edlin Rodriguez: All to say differentiated market I think for the U S farmer or North American farmer are challenged but acceptable historical regard to returns, but they need to watch their their dollars and cents.

Edlin Rodriguez: Okay. Thank you very much.

Edlin Rodriguez: Thank you.

Jeffrey Zekauskas: The next question comes from Jeff Zekauskas with J.P. Morgan. Please go ahead. Thanks very much. Was the quarter in some ways unusually profitable in that sequentially your gas costs were up maybe $1.25 per mm BTU? and maybe sequentially, that's something like 130 million in cost inflation. And your cost of goods sold was up sequentially maybe by about 90 million. Can you talk about the, you know, I get it, you sold, you know, a few more tons in the first quarter than you did in the fourth, and your price per ton was a little bit higher.

Speaker Change: The next question comes from Jeff <unk> with Jpmorgan. Please go ahead.

Edlin Rodriguez: Thanks very much.

Edlin Rodriguez:

Edlin Rodriguez: What is the quarter in some ways unusually profitable and that sequentially. Your gas costs are up maybe $1.25 per M. N V to you.

Edlin Rodriguez: And maybe sequentially, that's something like that.

Edlin Rodriguez: No.

Edlin Rodriguez: $30 million in cost inflation and your cost of goods sold was up sequentially, maybe by about $90 million.

Edlin Rodriguez: Can you talk about the you know I got it you saw you know a few more tonnes in the first quarter than you did before.

Edlin Rodriguez: And your price per ton was a little bit higher but when you net it out you know it it seemed that.

Greg Cameron: But when you net it out, you know, it seemed that the sequential change was a little bit larger. Yeah, I think it comes down to, as you said, just a couple of big moving pieces here, which is Bert was able to get great price realization against a little bit of a headwind of higher gas costs, which, you know, subtracted from that a little bit, and the demand was very robust. But the way we think about this business, so we continue to come back to this over and because we try to run our plants 24-7, 365, there is a maximum amount of capacity that we have, and we run it, you know, as close to full as we possibly can.

Edlin Rodriguez: Sequential change was a little bit larger than expected.

Edlin Rodriguez: Yeah, I think it comes down to as you said.

Edlin Rodriguez: Just a couple of big moving pieces here, which is where it was able to get great price realization.

Edlin Rodriguez: Against a little bit of a headwind of higher gas costs, which you know subtracted from that a little bit and that the.

Edlin Rodriguez: Demand was very robust, but the way we think about this business. So we continue to come back to this over and over again, which is.

Edlin Rodriguez: Because we try to run our plant to 24 seven 365, there is a maximum amount of capacity that we have and we run it as close to full as we possibly can and we can only produce or sell what we produce and Fortunately the you know the plants and the whole network ran really.

Greg Cameron: And we can only produce or sell what we produce. And fortunately, the, you know, the plant and the whole network ran really, really well in the first quarter and are continuing to run really well in the second quarter.

Edlin Rodriguez: Really well in the first quarter and are continuing to run really well in the second quarter.

Edlin Rodriguez:

Greg Cameron: And you get a little bit of, you know, inventory fluctuations here or there, but we think about the business on a half-year and a full-year basis, not on an individual quarter basis. And you know, like you said, though, which is good price realization, a little bit of headwind on the gas front, but going into the second quarter, we've got much more moderated gas environment and even stronger pricing environment than where we entered into Q1. And so, you know, we're excited about what the first half of this year looks like. And Jeff, I would actually add to that, that our controllable costs per ton were actually significantly lower than what they have been in the past.

Edlin Rodriguez: And you can get a little bit of inventory fluctuations here or there, but but we think about the business on a half year and a full year basis, not on an individual quarter basis.

Edlin Rodriguez: And.

Edlin Rodriguez: Like you said, though which is good good price realization a little bit of headwind on on the gas front, but going into the second quarter. We've got much more moderated gas environment and anything you've been strong stronger pricing environment than where we entered into Q1 and so you know we're we're excited.

Speaker Change: Bout with the first half of this year looks like and Jeff I would I would actually add to that that our controllable costs per ton were actually significantly lower than what they had been in the past. So that's our cost of goods sold less our gas and depreciation in our in our distribution. So we're actually to Tony's point, how we're producing at 100 per se.

Greg Cameron: So that's our cost of goods sold, less our gas and depreciation and our distribution. So we're actually, to Tony's point, how we are producing at 100% utilization, we saw those benefits come through in controllable. What you're seeing in the COGS is related, as you've mentioned, to a higher gas cost on a sequential basis, but also the purchases that come into the UK and also our LSB agreement, where we purchased some of their ammonia tons and then additionally our point leases. So as those prices were elevated a little bit, you see that in COGS. When you back those out from that perspective, you're actually going to see a much more efficient quarter than what we had in Q4 and definitely what we had prior year quarter.

Speaker Change: On utilization, we saw those benefits come through in controllable what youre seeing in the Cogs related as you mentioned to a higher gas costs on a sequential basis, but also the purchases that come into the U K and also our OSB agreement, where we purchased some of their ammonia tons and then Additionally, our point Lee.

Speaker Change: So as those.

Speaker Change: Prices were elevated a little bit you see that in Cogs. When you back those out from that perspective, you're actually you're going to see a much more efficient quarter than what we had in Q4 and definitely what we had a prior year quarter.

Greg Cameron: Okay.

Speaker Change: Okay.

Greg Cameron: And in terms of your capital expenditure, that are actually your own.

Speaker Change: In terms of your capital expenditures that are actually our own.

Greg Cameron: Unknown Speaker What might they be in 2026 or 27? Ballpark exclusive of the monies that Yeah, I mean, I, I think Our business historically has run about $500 million a year for the legacy business. That includes a little bit of, you know, improvement capital like we've done with the CCS projects and expanding our DEF capacity and some of those things, and also allowing us to invest in infrastructure on the, you know, IT side and so forth. So $500 is a pretty reasonable estimate year in and year out for how we've been able to manage the business.

Speaker Change: What might that be in 2026, or 27 ballpark exclusive of some monies that would come from.

Speaker Change: I think.

Speaker Change: Our business historically has run about $500 million a year for the legacy business that includes a little bit of it.

Speaker Change: Improvement capital like we've done with the Ccs projects and and expanding our <unk> capacity in some of those things and also allowing us to.

Speaker Change: Invest in infrastructure on it.

Speaker Change: Side, and so forth Tso 500 is a pretty reasonable estimate year in year out for how we've been able to manage the business and then as we look at.

Greg Cameron: And then as we look at our portion of the CapEx for Bluepoint next year, you know, it's not really until you get out to 27 and 28 that the bulk of that money starts getting spent. Chris said we are going to be doing some site prep and whatnot this year. There's going to be a little bit of civil work that gets done next year. I'd expect next year to run somewhere in the neighborhood of about $300 million in terms of 26. And so, you know, we're still talking, I don't know, 750 to 800 ish of our capex.

Speaker Change: Our portion of the Capex for Blue point next year, you know, it's not really until you get out to 'twenty, seven and 28 that the bulk of that money starts getting spent Chris.

Speaker Change: Chris said, we are going to be doing some site prep and whatnot. This year, there's going to be a little bit of civil work that gets done next year I'd expect next year to run somewhere in the neighborhood of about 300 million.

Speaker Change: In terms of.

Speaker Change: 26.

Speaker Change: And so you know, we're still talk and I don't know $7 50 to 800 ish of our Capex.

Tony Will: and and then Where is the carbon dioxide going to be stored for Donaldsonville exactly and who's going to store it? Yeah, so we, you know, we have an ongoing active dialogue with, with our partner ExxonMobil, and they have a number of different alternatives, and different permits that are in kind of advanced stages. And so we're working through the details on that to partner with them. And, and it may mean that we go to EOR for a couple of months until the class six permit comes through, or we may opt to just wait until the class six is ready to go.

Speaker Change: Okay.

Speaker Change: And then.

Speaker Change: Whereas the carbon.

Speaker Change: Carbon dioxide quite a piece to word for Donaldson Nobel exactly.

Speaker Change: Who's going to store it.

Speaker Change: Yeah. So we you know we have an ongoing active dialogue with our with our partner Exxonmobil and they have a number of different alternatives.

Speaker Change: <unk>.

Speaker Change: Different permits that are in.

Speaker Change: Kind of advanced stages, and so we're working through the details on that to partner with them in and it may mean.

Speaker Change: We go to EUR for a couple of months until the classics permit comes through or we may opt to just wait until the classics is ready to go those are ongoing conversations between the two of us to make sure is that we.

Tony Will: Those are ongoing conversations between the two of us to make sure that, you know, we maximize the economics around the project. But as, you know, as we've mentioned, in our earlier remarks, we expect to begin likely flowing gas here in the second, third quarters. And, you know, we're excited about that, the outcome, not only from the standpoint of reducing greenhouse gas emissions, but also getting the 45 Q credit, and having a low carbon product done that BERT can take into the marketplace with a premium.

Speaker Change: <unk> maximize the economics around the project, but.

Speaker Change: You know as we've mentioned in our earlier remarks, we expect to begin likely falling gas here in the second and third quarters and we're excited about the outcome not only from the standpoint of reducing greenhouse gas emissions with getting the 45, Q credit and having a low carbon product then that Bert can.

Speaker Change: Take into the marketplace with the premium.

Tony Will: Thank you.

Speaker Change: Thank you.

Vincent Andrews: The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead. Thank you and good morning.

Speaker Change: The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.

Vincent Andrews: Thank you and good morning, its a while away, but I'd be curious what's your what's your plan is in terms of how youre going to report bluepoint within your financials or are you intending to just.

Greg Cameron: It's a while away, but I'd be curious what your plan is in terms of how you're going to report Bluepoint within your financials. Are you intending to just put it in the existing ammonia segment or is this an opportunity for some differentiation and maybe or maybe not, including your other ammonia facilities that have contracted volume, that have sort of less volatility in their profitability through the cycle? How are you thinking of disclosing everything to us? Yeah.

Vincent Andrews: Put it in the existing ammonia segment or is this an opportunity.

For some differentiation in and maybe maybe or maybe not including your other ammonia facilities that have contracted volume.

Greg: Have sort of a less volatility in their in their profitability through the cycle. How are you. How are you thinking of of of disclosing everything to US Yeah, Hey, Vincent it's Greg. So first big step we've gone through is made the determination that we're going to consolidate the entire entity into our financials and thats our plan to do that so the first part will be.

Greg Cameron: Hey Vincent, it's Greg. So first big step we've gone through is made the determination that we're going to consolidate the entire entity into our financials, and that's our plan to do that. So the first part will be all the revenue and costs associated with Bluepoint for our share, as well as our partners will come through our statement, and then we'll take that out at the end through the 60% that goes to them and then through the non-controlling interest side. Given that the product is ammonia, our expectation is that we will likely report this in the ammonia segment and keep our business segment intact as the way they are.

Greg: All the revenue and costs associated with bluepoint for our share as well as our partners will come through our statement in that.

Greg: We'll take that our that the add through the 60% that goes to them through their noncontrolling interest side.

Greg: Given that the product is ammonia our expectation is that we will likely report this AR in the ammonia segment and keep our business segment.

Greg: Got it.

Greg: Intact as the way they are there's a way in which we run the business that's consistent with how we report it and the team that runs the ammonia segment from a commercial standpoint will be is responsible for these times as they are for the other times coming out of our out of our other facilities. So I don't foresee a change at all in that and then as we do get in.

Greg Cameron: There's a way in which we run the business that's consistent with how we report it, and the team that runs the ammonia segment from a commercial standpoint will be as responsible for these tons as they are for the other tons coming out of our other facilities. So I don't foresee a change at all in that. And then as we do get into reporting, and you're going to see this in the second quarter, you saw it in our press release this time where we talk about the capex of the entire entity. When you get to the second quarter financials, since we're receiving cash from the joint venture, our cash balances will include what the joint venture is consolidated in.

Greg: Reporting and Youre going to see this in the second quarter you saw it in our press release. This time, where we talk about the capex of the entire entity when you get to the second quarter financials. Since we're receiving cash from the joint venture our cash balances will include what the joint venture is consolidated in but we will break that out through the footnotes another disclosure.

Greg Cameron: But we will break that out through the footnotes and other disclosures so people have perfect clarity on what the legacy business is in addition plus where the JV is to get to the total. So we'll make it as easy as we can to make sure that you can do your comparisons year over year, quarter over quarter as we move forward.

Greg: So people have perfect clarity on what the legacy businesses.

Greg: In addition, close where the JV is to get to the total so we'll make it as easy as we can to make sure that you can do your comparisons are.

Greg: Year over year quarter over quarter as we move forward.

Tony Will: Thanks, and as a follow-up, you know, you're obviously in conversations both for the blue product out of D-Val and then ultimately for Blue Point.

Greg: Okay. Thanks, and then as a follow up Youre, obviously in conversations both for the Blue product out of D. Ville and then ultimately for bluepoint.

Tony Will: What type of offtake agreements are you looking for? Do you feel the need to have them or is there some percentage of the volume you'd like to have on them? You know, what are the thresholds or are you just sort of open to anything at this point, given it's so far away? Yeah, I mean, I would say in general, when you are locking in prearranged offtake agreement, you tend to do it off of some type of either gas plus basis or there may be a mix of gas plus and market kind of impact on it.

Greg: What what what type of off take agreements or are you looking forward do you do you feel the need to have them or is there some percentage of the volume we'd like to have on them.

Greg: You know what what are the thresholds are you just sort of open to anything at this point given it's so far away.

Greg: I would say in general when you are walking in.

Greg:

Greg: Pre arranged.

Greg: Offtake agreement.

Greg: You tend to do it off of some type of either gas plus basis or there may be a mix of gas plus end market kind of impact on it and in as just a broad brush generality that tends to be.

Tony Will: And as just a broad brush generality, that tends to be lower margin over long periods of time than us having an ability to move it into the marketplaces and take advantage of some of the upside, you know, opportunities that the market provides. So, for instance, our historical contracts on ammonia supply to Mosaic, while it played a very important role as we brought on the Donaldsonville project and actually was, you know, what was helpful to us as a natural hedge in the first year or two because the contract was above where market price was, it has been a fantastic deal for Mosaic ever since because it's trading it.

Greg: Lower margin over long periods of time than us, having an ability to move it into the marketplaces and take advantage of some of the upside.

Greg: You know opportunities that the market provides so for instance, our historical contracts on ammonia supply to mosaic.

Greg: Played a very important role as we brought onto Donald Seville project and actually was what was helpful to us as a natural hedge in the first year or two because the contract was above where market price was it has been a fantastic deal for mosaic ever since because it's trading at.

Tony Will: The contract formula is well below what we've otherwise been able to achieve. And so, based on the scope and size of our operation, you know, we may consider small pieces of it that make sense, but we're certainly not looking to pre-contract the whole of our production volume because, again, historically, we've been able to get much better returns by allowing Byrd to do what he does best.

Greg: The contract Formula is well below what we've otherwise been able to achieve and so based on the scope and size of our operation.

Greg: We may consider small pieces of it that makes sense, but we're certainly not looking to.

Greg: Pre contract the whole of our production volume because again historically, we've been able to get much better returns by allowing bird to do what he does best.

Tony Will: Okay, thanks very much.

Greg: Thanks very much.

Operator: Thank you.

Greg: Thank you.

Joel Jackson: The next question comes from Joel Jackson with BMO Capital Markets. Please go ahead. Sorry for the follow-up. I think, Tony, I think you said that runway, sorry, CapEx next year might be $750 to $800 million. But when you look at your slide 11, I think, you add up the numbers, assuming 500 million maintenance, you get to something like $9 to $950 million. Can you just clarify?

Speaker Change: The next question comes from Joel Jackson with BMO capital markets. Please go ahead.

Speaker Change: Sorry for the follow up.

Speaker Change: I think Tony I think he said that run rate sort of Capex next year might be $750 million to $800 million, but when you look at your slide 11, I think you add up the numbers excuse me 500 million maintenance you get to something like nine to 950 can you just clarify yes, Joe I think what Tony was talking about one was the CF portion.

Greg Cameron: Yeah, Joel, I think what Tony was talking about, one, was the CF portion. And what you should look at, probably 25 and 26, we're going to have 10 to 15 percent each of those years of our total amount. So, as he mentioned, we have 500 million. That is our EHS and sustaining CapEx. And then incremental to that, you can kind of plan about circa $150 million over the next two years. It's really 27 and 28, as you're referencing the slide in our deck, where you start to see a little bit larger, which would be a couple hundred million dollars for CF coming out in 27 and 28, and then a light tail in 29 when the project comes online.

Speaker Change: And what you should look at probably 25% and 26, we're going to have 10% to 15% each of those years of our total amount. So as he mentioned we have 500 million that is our EHS and sustaining capex and then incremental to that you could kind of plant about circa 150 million over the next two years.

Speaker Change: It's really 27 and 28 as you're referencing the slide in our our deck, where you start to see a little bit larger which would be a couple of hundred million dollars for CFS coming out and 27% 28, and then our light pale in 29 when the project comes online.

Greg Cameron: So I was going to say, so if you had a kind of bundle where we think we're going to be this year, it's about 650 this year, probably slightly north of that next year, not by much. And then, you know, increasing in the 27, 28 period. But I'm still confused because that slide, if you add up the numbers suggest it's a little over 900 next year. So what where am I wrong? Or what's what's missing? So are you are you taking it just as CFs portion of that, which is a 40% 40%? Yeah, 500 million maintenance, that's 40%.

Speaker Change: So I've already or is that no sorry, I was going to say so if you. If you add up kind of bundle, where we think we're going to be this year. It's about $6 50. This year, probably slightly north of that next year not by much and then increasing in the 27 28.

Speaker Change: Period.

Speaker Change: I'm still confused because that slide if you add up the numbers suggest that well over 900 next year, so where am I wrong or what what's what's nice are you are you taking it just as CFS portion of that which is a 40% 40%.

Speaker Change: 500 million maintenance about 40%.

Greg Cameron: of the 15% and then 100% of the 35%. Yeah. Isn't that over 900? 100% of Yeah, if you if you take the if you take the chart as we have it, we've tilted them. So there's a range that we work with internally and close ties close to the tilde, but there's some tilde here. So if you take into account our sustaining at the four to 500 that it's been before, and then blue point this year, we've got in 150 that that is about the same as Chris said next year up slightly. And then as well, when you take in the scalable infrastructure for a little bit more, it does move you up closer to that date that that that number that you gave there.

Speaker Change: Of the 15% and then 100% of the 35% yeah.

Speaker Change: Isn't that over 900.

Speaker Change: 100% of the Yep.

Speaker Change: Yes, if you take the if you take the charges, we have and we've told them. So there is a range that we work with internally at close tie it's close to the tilda, but theres. Some tilda here. So if you take into account our sustaining at the $4 to 500 that its been before and then bluepoint. This year, we've got it at 150 that that.

Speaker Change: It is about the same as Chris said next year up slightly and then as well when you take in the scalable infrastructure for a little bit more it does move you up closer to that date that that number that you gave there.

Greg Cameron: Thank you very much. Thank you.

Speaker Change: Thank you very much.

Martin Jarosick: This concludes the question and answer session.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mr. Martin Jurafsky for any closing remarks.

Martin Jarosick: I would like to turn the conference back over to Mr. Martin Jaroscki for any closing remarks. Thanks for joining us today. We look forward to seeing you at upcoming conferences.

Speaker Change: Thanks for joining us today, and we look forward to seeing you at upcoming conferences.

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

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

Speaker Change: [music].