Q3 2025 CF Industries Holdings Inc Earnings Call
Good day and welcome to the CF Industries, Q3 2025 earnings conference call.
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I would now like to turn the conference over to Martin Jurassic vice president of in Treasury and investor relations. Please, go ahead. Good morning, and thanks for joining the CF Industries earnings conference call with
Me today are Tony will president CEO, Chris bone, Executive, Vice President, 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 as results for the first 9 months and third quarter of 2025 yesterday afternoon.
On this call, we'll review the results. Discuss our Outlook and then host a question and answer session.
Statements made on this call. And in the presentation on our website that are not historical facts, are a forward-looking statements, these statements are not guarantees of future performance. And involve risks, uncertainties and assumptions that are difficult to predict therefore actual outcomes and results May differ materially from what is expressed or implied in any statements.
More detailed information about factors, that may affect your performance, may be found in our filings with the SEC, which are available on our website. Also, you will find reconciliations between gaap and non-gaap measures in the press release and presentation posted on our website.
Before we begin today's call, I want to provide an update on the incident we experienced at our Yazoo City, Mississippi complex last evening.
All employees and contractors are safe and have been accounted for and there are no significant injuries. The incident has been contained and an investigation is underway.
Now, let me introduce Tony Will.
Results for the first 9 months of 2025, in which we generated adjusted Eva of 2.1 billion.
These results reflect outstanding execution, by the CF Industries team across all aspects of our business. And most importantly, our team continued to work safely.
at the end of the quarter, our trailing 12-month average, recordable incident rate was 0.37 incidents, per 200,000 work hours,
5 years ago, October 2020.
We announced a significant shift in the company's strategic Direction.
Including an ambitious plan to begin decarbonizing our production Network.
A plan to become the world's leader in clean ammonia and a model example of environmental stewardship and how to Abate an energy-intensive business in a financially responsible way.
Today, that Vision has been realized.
I'm very excited to announce that the plans, we launched 5 years ago, have begun, delivering real value to our shareholders and broader benefits to the society as a whole
We have made great strides over the last 5 years and have reduced our ghg emissions intensity by a whopping 25% from our original Baseline.
And every single one of the initiatives that contribute to this remarkable achievement have been highly NPV positive, creating substantial value for shareholders.
We are the best example of how.
Environmentally responsible can actually go hand in hand with creating significant shareholder value.
On our journey, we have executed all of the following initiatives.
We closed 2 of our least efficient highest emissions plants that were also borderline uneconomic to continue operating.
We commissioned 2 new, highly efficient, lower emissions plants that have returned profiles exceeding. 20% irr.
We acquired the Wagman Louisiana ammonia plant a very efficient plant with relatively low ghg. Emissions intensity and increased production at that facility, significantly from 75,000, 77750 thousand tons annually, to over 900,000 tons resulting in an irr of over 20%.
We installed N2O abatement systems into certain nitric acid plants. The resulting carbon credits from these systems are being sold at high values, more than recovering our costs within just a single year.
And finally, we've begun sequestering, approximately 2 million metric tons per year of CO2 from our Donaldsonville complex.
The 45q tax credits. From this project will more than pay our installation costs within 2 years, generating, an irr over 20%
And we are currently selling the resulting, low carbon ammonia at a premium.
What is otherwise a commodity product, chemically identical to ammonia produced anywhere else in the world, has become differentiated and now commands a premium in the marketplace.
These initiatives have helped reduce our emissions intensity by roughly 25% from our Baseline, while creating significant value for our shareholders.
And now we are embarking on the development of the world's largest ultra-low emissions ammonia plant at our Bluepoint Complex in Louisiana.
We have 2 world-class Equity partners, jera and mitsui with us in this Venture. And I fully expect the financial and societal benefits will be equally as impressive as the initiatives. We have already completed.
Additionally, we have a second carbon capture and sequestration project underway at our Yazoo City Mississippi complex, and numerous other initiatives yet to be announced.
The end result is that we have a robust High return, growth trajectory in front of us, through the end of the decade, that will continue to dramatically reduce our ghg emissions. Intensity, while providing exceptional Financial returns
Before I turn the call over to Chris to talk more about our operating results. I do want to take a moment and highlight what I consider to be a great misconception in the market.
I want to refer you all the slides numbered 10 11 and 12 in our materials.
So it's 10 and 11, show, our consistently strong free, cash flow generation and our Relentless share repurchase program.
Slide, 12 shows our remarkable free cash flow conversion efficiency from ibida. And yet amazingly how we trade at a shockingly low valuation.
Often times, CF Industries is compared to agricultural companies, and yet we are very different from most of those.
The seed and chemical companies, face challenges of products coming off, patent and declining margins, or of distribution, channels, being stuffed full and having to go through the pain of destocking.
Who are really and truly subject to grow a profitability.
However, our sole product nitrogen.
Is fundamentally different.
Even in periods of relatively weak grower profitability. Nitrogen demand is unaffected almost completely inelastic.
This year, when there was great hand ringing due to subdued grower, profitability High planted corn, acres and Global nitrogen Supply production disruptions in other parts of the world.
Creators situation, where nitrogen demand and resulting pricing was very, very strong.
As Bert will talk about in a few minutes, we see the same strong demand Dynamic shaping up for next year.
Nitrogen. And certainly CF Industries. Financial performance is not impacted by most of the factors affecting the rest of the a sector companies.
While other times we were compared to Industrials or material sectors. Again we have very little in common with most of those companies either especially the chemical companies.
We do not suffer from Global overcapacity, nor from sluggish or declining demand.
Our free cash flow generation is consistently High.
And yet is shown on page 12, we have traded and an anemic, average cash flow. Multiple of barely 7.5 times, free cash flow,
Realistically, that should be the low end of an ebitda. Multiple, not a cash flow, multiple
Oddly businesses that are on a whole more volatile and structurally way less Advantage than CF trade at a higher valuation.
The industrial sector trades at 27 times, cash flow, the material sector trades at 30 times. Cash flow.
While our consistently High cash flow generation on average has traded at a sickly 7.6 times.
All of this is a long way of saying the market doesn't really understand our business or our consistently High free cash generation.
as Greg will talk about shortly, we have made great progress in our share repurchases, and continue to do so,
We around this table. Believe CF represents an amazing value. Especially when only trading in an average 7.5 times, cash flow,
And we will continue aggressively repurchasing shares from the non-believers and those that don't take the time to understand why we are fundamentally different from most a industrial and materials companies.
With that, I'll now turn it over to Chris to provide more details on our operating results. Chris
Thanks Tony, see if Industries, manufacturing network has operated well, throughout the year with a 97% ammonia utilization rate for the first 9 months of 2025.
As is typical for the third quarter, we had significant maintenance activity, which reduced production volumes compared to the first 2 quarters.
We continue to expect to produce approximately 10 million tons of gross ammonia for the full year.
We also have made significant progress on strategic initiatives that are now generating ibida and free cash flow growth for the company.
in August, we are able to fully utilize expanded diesel exhaust, fluid rail load out capabilities at our Donaldsonville complex for the first time,
This enabled us to capture incremental high-margin DF sales and led to a monthly record for Deaf shipments from the site.
Also, at Donaldsonville, the carbon dioxide dehydration and compression unit, which was commissioned in July continues to run. Well,
We are generating, 45 Q, tax credits and move to full rate safely through the quarter.
Finally, in October, we completed a nitric acid plant abatement project at our Verdigris. Oklahoma facility.
This project is expected to reduce carbon dioxide equivalent emissions at the site. By over 600,000 metric, tons on an annual basis, which we are monetizing through the sale of carbon credits.
By the end of the decade, we expect the returns generated by our CCS projects. Along with the Verdigris. Abatement project will add a consistent incremental, 150 to 200 million dollars to our free cash flow.
Longer term.
We remain excited about the compelling growth opportunity that the blue point project offers us.
Particularly given the sales team success, and selling low, carbon ammonia from Donaldsonville, for a premium.
Detailed engineering activities and the regulatory permitting process are progressing. Well, with capital expenditures for 2025 expected to be within the range we projected earlier this year.
We expect sight construction to begin in 2026.
Estrogen market and the growing interest in low carbon pneumonia.
B, thanks Chris. The global nitrogen Supply, demand balance remained tight in the third quarter of 2025
Demand led by North America India and Brazil was robust. Additionally product availability remained constrained due to low Global inventories, and outages during both the third quarter and earlier in 2025
China's re-entry into the area, export Market provided tons, the world needed but did not substantially alter these Dynamics.
Looking ahead. We expect the global nitrogen Supply, demand balance to remain constructive.
We believe supply availability will continue to be constrained.
Global inventories are low including in North America. Additionally major planned and unplanned outages are occurring. Now while geopolitical issues and natural gas availability, particularly in Trinidad, remain a challenge
The startup of new capacity. Also continues to be delayed.
At the same time, we expect Global demand to remain strong. India is likely to Tender for urea in the near term, especially given the result of their most recent tender.
Nitrogen, demand in Brazil, and Europe has picked up recently and in North America. Economics, favor corn, planting over soybeans. Next spring, based on the December 2026 corn contract, which is currently priced at approximately $4.70 per bushel,
Farmer economics across the globe, remain a key Focus as crop prices have not kept price up pace with the price of inputs equipment, rent, and other costs.
That said, we believe nitrogen offers clear value for Farmers relative to other nutrients for its immediate impact on yields.
Given where crop prices are today and we expect Farmers to focus on optimizing yield which should support healthy nitrogen applications.
we believe that the strong uptake of our uan Phil program and our robust fall ammonia program and the order book that that supports it supports that Outlook
We're also preparing for the implementation of the European Union's Carbon Border Adjustment Mechanism, or CBAM, which takes effect in less than 2 months.
While there remains some uncertainty about the final structure that these regulations will take, we feel very confident about our competitive position.
Thanks to our Donaldsonville CCS project, we have the largest certified, low carbon ammonia volume in the world.
And over the last few years, our team has put in a great deal of time to build relationships with customers, including those who will be affected by CBAM.
This has enabled us to sell certified low-carbon ammonia at a premium to conventional ammonia today as customers begin to adapt their supply chains.
Based on our conversation with customers, we also believe cbam will drive significant demand for other low carbon nitrogen products such as uan.
We see this as a tremendous opportunity for CF Industries on top of our already high-performing, nitrogen business.
We look forward to working with customers to build out a low-carbon ammonia and nitrogen derivatives supply chain.
With that, I'll turn it over to Greg.
Thanks, Bert for the first 9 months of 2025. The company reported net earnings attributable, to Common stockholders of approximately, 1.1 billion dollars.
Or $6.39 per diluted share.
Ibida and adjusted ibida were both approximately. 2.1 billion dollars.
for the third quarter of 2025 reported net earnings attributable, to Common stockholders of 353 million or $2.19 per diluted share
Ibida and adjusted ibida were both. Approximately 670 million.
On a trailing 12-month basis. Net cash from operations was 2.6 billion and free cash flow was 1.7 billion.
We continue to be a fishing converters of ibida to free cash flow.
Our free cash flow to adjusted. EBA conversion rate for this time. Period was 65%.
As you saw in the press release, we updated our projection for capital expenditures on our existing network to approximately $50.075 million for 2025.
This reflects additional maintenance we were able to complete efficiently during planned outages.
As well as the timing of strategic Investments that Chris mentioned this morning and he spoke about it. Our investor Day in June,
We returned $445 million to shareholders in the third quarter of 2025.
And approximately 1.3 billion for the first 9 months.
Outstanding shares at the start of the program.
Our share repurchase program continues to create strong value for long-term shareholders.
Net earnings increased approximately 18% compared to the first nine months of 2024, while earnings per share were approximately 31% higher, reflecting our significantly lower share count.
the same positive in Impact can be seen in our shareholders participation in our production capacity.
And the free cash flow. It generates.
We are not executing the 2 billion share repurchase program authorized in 2025 with over 1.8 billion dollars of cash on hand at the end of the third quarter.
We are well positioned to continue returning substantial Capital to our shareholders. While in also investing in growth through bluepoint and other strategic projects.
With that Tony who provides some closing remarks. Before we open it, I'll call to Q&A.
Thanks Greg for me. This is earnings conference. Call number 48, and my very last 1 is CEO of CF Industries.
Over the past 12 years, traditionally, at this point in the call is when I have thanked, the entire CF industry's team for their hard work and contributions to Our Success.
I'm eternally grateful to the entire team.
Today, may be more so than usual.
And I am particularly aware of what an amazing team we have here. So indeed, thank you. All said, perhaps a bit more heartfelt than the past 47 times.
I'm exceptionally proud of the company and the organization I'm leaving.
The highly ethical way in which we conduct ourselves, our unwavering commitment to employee safety.
And our absolute focus on value creation.
In addition to the entire CF team, I also want to thank our board of directors who have always been supportive of me, providing insight and guidance through the years and importantly, always aligned with me on the objective of value creation.
I also want to particularly thank the CF.
Senior leadership team with whom it has been a truly great pleasure to work alongside.
I can honestly say this is the best Group 1 could possibly hope for.
And not only respect them, as individuals, along with their business acumen,
But I also thoroughly enjoy their company and our camaraderie.
Finally, I want to thank and congratulate Chris bone on being named CEO.
Chris has been a consistent thought partner in Devil's. Advocate working with me as we navigated foundational decisions.
Like the Terra acquisition, the sale of our phosphate business, the capacity expansion, projects are strategic repositioning of the company.
The Wagman acquisition and most recently, our bluepoint joint venture.
Chris has been hugely successful in leadership roles across the company including heading fpna supply chain, manufacturing CFO, and his current role as Co
Chris, as my complete faith and confidence that he will successfully lead the company to new heights. Again, thank you. And congrats.
It has been some kind of a thrilling ride for me as CEO and incredible honor and a very great privilege.
We've accomplished many things over the years.
as I say, success as many parents, and indeed, all of our successes were team efforts and I'm delighted to say that the team remains in place,
Therefore, I am steadfastly confident that the company's best years are in front of it.
With that operator, we will now open the call to your questions.
Before Q&A. Um, I want to take a moment to acknowledge Tony's retirement and his contributions to CF over his 18-year tenure.
Tony's influence and impact on CF. Cannot be overstated from his time, leading manufacturing where he generated and Champion, the do it right. Phrase is a core statement of cf's values and culture to his Relentless pursuit of personal and process safety.
CF has improved through his leadership.
Tony's leadership which can be best described as biased towards action. This has been exemplified through the growth. The company has experienced under his guidance.
Through the CHS transaction. Donaldsonville in Port Neil expansion projects. Waggaman acquisition to the recent announcement of the Blue Point joint venture increasing CF ammonia production in free cash flow generating assets by 45% during his time as CEO and over 200%, since he started at CF as a member of the senior leadership team.
His Safety First, mentality Keen decision-making and focused on discipline Investments and execution is what is positioned CF where we are today?
Leading asset utilization and Superior Capital, allocation.
Over the years, he's not only been a great mentor but also a great friend.
I look forward to building on what Tony is established and wish him the best in his next ACT.
Thank you, Tony. Thank you.
We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone,
If you are using a speaker-phone, please pick up your handset before pressing the keys. If at any time your question is been addressed and you would like to withdraw your question. Please press star then 2
First question comes from Ben Thor. Thorir from Barclays. Please go ahead.
Hi. Yeah, good morning and, uh, thanks for taking my questions. So, first of all, uh, Tony all the best in retirement, I'm pretty sure. Uh, you have plenty of things you want to do is sell and enjoy that. And um,
That's, uh, it. It was quite a run, I guess. So if that's um, that's, that's never bad. So, enjoy that piece and, um, maybe, um, as well for you, Chris, all the best on your on your new assignment, the CEO. Um, so 2, quick questions I have. So 1, you've, you've talked about in your presentation material, um, about like kind of like the mid cycle where you are right now in the mid cycle, where you think you're going to be and and and free 4 years time, as you get like these additional projects uh come through. So just want to understand like
the current market conditions are obviously still seem
To a degree stretched, right with the European gas price somewhat elevated versus what maybe mid-cycle in the past was. So I wanted to get your view in terms of like the the bull versus the bear around that 2 and a half billion mid-cycle Mark. Um and how we should think about uh that evolving uh from a from a feed cost.
Um, standpoint of view into, uh, the period of 2130. And then I have a very quick follow-up on, on pricing premiums. Yeah. So I I'll, I'll
Start. It's Greg. So so clearly today, right? When we built the 2 and a half billion dollars, we had a $3.50 gas strip in there for Henry Hub, and and a price realized price on urea $3.85 as of today. And and through the year, we've obviously traded below that on the Henry Hub. So, we're from a feed stock. Uh, we've been benefiting um, uh, in our results. And then lately you've definitely seen a price move up uh through the course of the year on the AIA. So from from a results standpoint hopefully you're seeing that and appreciating that and the results that we've printed at 2.1 billion dollars of ibida through the first 3 quarters. I think as you think about it going forward in the spread between what we see here in the US and in Europe uh our view is at all there be some tightening. Their we expect to have a competitive advantage and remain uh lower priced, on a nominal basis as well relative basis uh versus what?
We're seeing in European production, which continues to be a tailwind to us for our financial performance.
I mean I I guess a lot it's a long way of saying been that um we would agree with you. The current conditions are well above mid-cycle and our expectation. Just based on history of how fourth quarter Paces against the other quarters.
Um, should deliver full year results? Well, above mid-cycle this year. And, uh, you know, I, I think that's consistent with kind of what you said, industry conditions, um, gas price in Europe, kind of what's going on in terms of the energy space. And, and overall, demand, it does feel stronger than I would say mid-cycle, but we're delivering against it. And the the only other point I would add is on the growth, that, you know, Greg talked about going to, the 3 billion that is identified in motion being executed on today. So that is not things that are in the pipeline. That is what we know today and that will likely grow as time goes on as well.
Okay. Got it and then that price premium on the ammonia you're selling in Europe, the blue ammonia that you're getting out of Donaldson. Will can you give us a little uh sense of magnitude as to the premium that you're getting here with your customers?
And been, you know, that that was never contemplated as being, um, part of the economics, when we went with the dehydration compression plant. Um, so the cost of the plant was a, you know, just under 200 million. Um, the the 45 Q benefit when we're sequestering at a rate of 2 million tons a year is going to be about 100 million of, you know, of cash. And then we're adding another roughly almost 40ish to 50 from product premium. So we're picking up an extra 50%, um, even though that was never, you know, initially part of the justification of that project. And so it it's, uh, kind of nothing but goodness across the board in terms of our, you know, that project,
fantastic. I'll pass it on.
The next question comes from edlane, Rodriguez from mizuho. Please go ahead.
Uh, thank you and good and good morning everyone. Again B. I'm in Tony. Uh, clearly you you you, you you will be missed. Uh, that's clearly the case, uh, and good luck with everything. Um, so so so quick question, uh, again maybe for you Tony and maybe for for Birds, uh, in terms of, I mean as you noted, the nitrogen Outlook looks very constructive. But if you were digging for possible, uh Boogeyman, you know, in terms of, you know, trying to find something to worry about in the near or medium terms.
Like, where would you look?
Well, uh, actually I we do every day assess the forward Market, the spot Market, the product market and where we try to be constructive in terms of how we build our order book and thinking about the customer base. That's why we're broad-based in terms of a business, industrial business export business and we're Levering those along with our terminalling activity. How do we enter and exit the market and play the market. But when you look at the market today, then it's a global market. You're seeing a constrained Supply and that happened through the global conflicts, as well as uh, plants coming offline in Saudi Arabia Bangladesh.
And a few other places and gas limitations in Trinidad, high cost gas in Europe. And not a lot of new capacity coming online in low-cost areas. So, constructively Supply is is, I would say consistent to on a limited basis while demand continues to grow at that 1 to 2% per year and we're seeing very healthy demand in India, Brazil, North America and we can plan to continue with that uh, level of demand. And so uh, when I look at the negatives, I think what it's it's from your side. It's always, yeah. But yeah, but this is going to be negative and we've been hearing about China for 10 years. We've been hearing about other uh issues for years and we continue to outperform in the market. So looking at the negatives, I would say, I like the current market. I think the current market
It's going to extend into the 2026. That's as far as we give a viewpoint.
But uh, China's demand for internally to consume the tons. They produced
is pretty well tied to that. So this 4 million tons of exports that we see coming out in 2025 is probably needed.
And then, um,
You know, India hasn't performed on their production internally. They've been importing. Consistently high levels of urea and Brazil's continues to grow. So I'm I have a hard time finding a negative Boogeyman out there. See I I was uh, I'd like to give you a little more flip in the answer. I was going to say, all you have to do is read some of your other colleagues uh, out there in the industry, uh, or so you'll get kind of the, we had the boogeyman set. So even though we don't really believe. A lot of that is accurate.
So so 1, 1 1 quick phone follow up uh for you. Uh again this is for for Tony and Chris, I mean Tony, you've talked about, you know, the valuation disconnect in your shares you know. Clearly, you know, I guess like you failed to convince uh, those jetted investors. Uh, like what else do you think Chris and Chris, you know, you could answer that too. What else do you think you you will need to do to convince investors or of that you know, valuation Gap that you you clearly see in? I mean I I we did a a European Road show this summer or this fall and talked to investors over there. And you know, that there was a little bit of
think there just isn't a recognition that we're, we
Our financials are very different from most of the companies in that sector. And I, you know, I think, at some point, when there are few enough shares out, we'll start getting a, you know, um, a a more realistic valuation against what's remaining. Um, and I, you know, I think fortunately we're we're generating enough cash and the shares are such a, a screaming value that, I think continually just to buy shares out of the market is the only way we can eventually get there. Yeah. The and the only thing I would add to that is, you know, when you ask what, what should we do is, do you know, it's to continue to do what we are doing. We have exceptional, operational performance, you know, focused on safety and a conversion to free cash flow that I think we as a company reflect on more than anybody else. That, you know, I see both in the chemical and the AER.
And really all industries. And so at some point, that has to resonate with people: cash is king. Whether it's buying back the shares, as Tony said, or making high-growth investments that have great return profiles, um, you know, it'll pay off at some point. So it's continuing to execute the way we're executing.
Okay, thank you.
The next question comes from Joel Jackson from BMO Capital markets. Please go ahead.
Hi, good morning, Tony congrats again. Um,
A couple questions. If you brought forward 75 million of Maintenance capex this year. Does that mean that next year? You should be renovating 425 capex on your um, leg, uh, like non Blue Point Network.
Yeah, Jill. Uh, I'll start with that, and then if anybody needs to add something to it. But that increase, you know, we were probably a little light on the $500 million. Generally, we start the year running at about $550 million, which is kind of the range we're performing in. But it was really affected by three things: 1. We completed more projects than we typically do at this time. There are a lot more, uh, I would say smaller dollar projects that are easier to finish during this particular time frame. And then we also had part of it be the timing of a nitric acid, you know, precious metal purchase, which was quite a bit that we do from time to time. And then we had, you know, to be honest, slightly higher, uh, labor and capital costs related to some of the inflation, um, by a few percentage points than what we had been forecasting. So, as I look at 2026, I would still use the $550 million as our range going forward for sort of, let's call it our base capex and then adding cf's component of.
Blue point on top of that.
Okay. And I know it's early like very early and it's great that when something goes any injuries but um, do you know if what's happening Yazoo City, is this going to be an outage that sort of magnitude days weeks or months. Yeah, it's it's way too early to to speculate on that. Um, I, you know, I would say the ammonia plant was not, um, directly affected. It's still operating as of this morning, um, but at some point you run into inventory containments, um, depending upon how long the upgrades are down. So we're, you know, we're thankful that um, that everyone is accounted for and is safe and that really there is only just a couple of very minor, um, uh, you know, injuries nothing serious or significant that that was our, our biggest concern. And then also that there is, um, a site as has been secured. Now we're in the, the process of kind of, really understanding, um, what you know, what, what the condition of things are.
And what the, um, the root cause was. And then, we'll start worrying about, um, turning things on, after we do a thorough investigation, I, I would say Joel that this is our smallest segments and a relatively small plant in our smallest segment. So, um, you know, we're we're not, um,
You know, uh focused on kind of potential financial implications at this time. And as Chris said, we're still expecting to be able to produce the 10 million, tons of ammonia this year, like like we had, um, planned on
Thank you very much.
The next question comes from Chris Parkinson. From Wolfe research, please go ahead.
Awesome uh Tony I'm not willing to always say like say great quarter but I'll give you a shout out and I'll say great 12 years and um through all the, you know, debates agreements and at times disagreements. Um you've always challenged me so I'd like to personally thank you for that. Thank you.
There's been a lot of instances since Steve Supply throughout this entirety of this year and you have things in Russia, Germany, Poland, uh, Romania. I mean perhaps this becomes a, a broader intermediate to longer term question, but how much of the demand and the price strength? Do you attribute to the supply side of it versus the fact that demand? I I think broadly speaking throughout the you know year to date has also been pretty healthy and kind of led to these um you know these these price rallies at times at non-seasonal times. So I'd really appreciate your perspective and kind of how to think about 26 and the context of what we've actually been seeing experience what we've been experiencing in 2025. Thank you. Yeah. I I think the demand piece of the equation is much easier to
move forward in this. Bert said earlier given where um where you know the different products are priced at in the corner to be in ratio. And and just looking at what we saw in the way of
The uan Phil program as well as fall application of ammonia that's going on right now. We're anticipating the demand side of the equation to be very strong. Um for you know, the planting year of of 26.
Um, the supply side's a little harder to kind of peel back. And as you said, it's an integrated kind of question in terms of how much it is that the S and how much of it is the D. I would say, a lot of the places that you mentioned, not so much to Russia and and Iran. But a lot of the places that you mentioned where there was some Supply disruption are on the relatively higher end of the cost curve,
So those tons don't necessarily you know, move things dramatically up in terms of price.
Um, but there's no doubt that conditions that we saw this year do due to both the assay and the d-side. Um, we're, you know, we're quite strong and that's why our anticipation is delivering a, a result that's well above what our, you know, our mid-cycle, uh numbers.
you know, um,
When when, uh, Greg talked about it at investor day, when he gave, um, we expect to be well above that.
Yeah, I think for see if in particular how we view the world and being students of the world, geopolitically economically and systematically and how it affects our business.
Uh, Tony touched on the specifics. But we did lose 5 million tons, uh, from the market to the conflicts for Iran and Egypt Algeria and some in Russia and Turkmenistan. And then the, I think the lack of China or the late coming in of China in June, uh, probably
push the market higher than than anticipated, but we're still tight and like, Tony articulated in terms of Demand with India, pulling 8 to 9 million tons, Brazil, 7, 8 million, tons,
North America, 6 million, tons and Europe, producing less, and not having the access and and the lack of inventory in any major destination Market. Sets up 2026 very, very I think very well and we're going to see uh I think higher than anticipated corn acres and North America due to just the economic opportunities and impacts which is constructed for CFS.
And just as a quick follow up, I mean, Tony you, you've gone through your fair share of, you know, capacity expansions both, you know, well, I should actually say very large brown Fields, um, and other, yeah, brownfields and everything. With your network, what have you burped? And Chris learned the most from all of those efforts over the last, you know, 12 or so years that Chris and his team, uh, can essentially apply to Blue Point to perhaps, mitigate a lot of the things is is there a kind of a, a track record of lessons that you can really apply here? Or is it just going to be every Project's different at the end of the day?
Yeah. I I would say um we learned a ton that is currently in um direct application of this project 1 of which was we did a full-blown feed study in detailed engineering of this plant, before we announced it and went to FID. And so we have a much better perspective of the actual construction hours and the, the, um, unit build, um, material list. And we did when we announced the expansion projects back in 2012.
The other thing I would say is, you know, the size of our Network and the expertise, we have across the network. And the scale, we have brings tremendous.
Um, you know, there, there are a few of those out there right now. And so I, I think, um, both the fact that a number of the people involved in this construction project were also involved in. Um, the big portal diesel expansions in in 2012, through 16, as well as just some of the broader lessons like the, you know, the engineering and feed study. I, I feel very confident in this and we also have, um, expertise from our partners that we're going to be able to leverage as well with, uh, with Jared mitsui that are equally if not even more. So comfortable doing very, very large capital projects like this and and they're bringing some of their best resources to bear as well.
I would say, uh,
and Chris said in his comments, Tony
You being bold and but that boldness is based on market knowledge, understanding, and we've looked at plants all around the world. We've looked at a lot of opportunities. Over the years, we've had some great debates and discussions and
disagreements at times on where to go and how to grow. But in the end have made some very good decisions on on that and blue points are good example, we're the company that does it right builds. Uh, stays within, I think our Fairway and and brings these plants on safely and they operate above name plate and so it's that old step of of taking it. And when, when the market is growing and needs these times,
Yeah, and the only thing I would add is, you know, that's different from last time. Chris is is uh, we've talked about before is we're going with modular construction last time, you know, on a stick build uh, time and material. You started to see labor costs, get out of control. So I think that was something that we did a lot of evaluation on and also looking at who we're going to select to build those modules. And then, lastly, something that we'll do that we did last time that uh, the whole teams working on which is We Begin hiring operators and Engineers today. Even though the plant will not be up for 4 and a half, 5 years or whatever. And what that allowed us last time, was to get to over name plate production within, you know, a couple months after startup, which nobody else was able to do. So again, as Tony said leveraging, our overall network not just for engineering expertise, but to train uh, operators and other individuals that will be working at these sites.
Thank you for the color, as always.
The next question comes from Andrew Wong from RBC Capital markets. Please go ahead.
Hey, good morning and um, just echoing everybody else's comments, Tony, congratulations on a very successful career and guiding CS through a lot of market up ups and downs. We've seen a lot. So, um, enjoy your, your next chapter? Um, thank you, Andrew.
Yeah, I think. Um and and so just maybe on on the comments you made earlier.
Around the valuation, I think you made some very fair points. Um, so maybe a question for you and also for Chris, you know, just giving the value and shares and BuyBacks seem to be the path to kind of realize that value. You have a very strong balance sheet.
Um, would there be any consideration for using debt to fund?
New point and and maybe using the cash flows and and the cash generation to buy back shares. Like with that make more sense right now.
I mean, I I think that the problem with doing that, a little bit of the Andrew is, it's a, it's sort of a 1-time sort of benefit that you get and then you're living with much higher fixed costs as you go. And I think 1 of the things that we've seen in this business is having a, you know, having a balance sheet with low fixed costs. And a lot of liquidity gives us opportunities to move when there's um you know, things that that are available to us like the wagon deal which we, you know, did in cash. And so instead of this being a, you know um
kind of trying to rush a, um,
Where we're seeing next year and even the mid-cycle, we're going to have enough cash to do both at a significant level. Just as we've done over the last decade under Tony where we've been able to grow. And also, uh, do significant share repurchases. So, the ability to do both, I would Echo Tony's comments, like, uh, having fixed charges in line. Having a, uh, I would say flexible balance sheet is very important when you're in a commodity business, as we're seeing more of our industry or business here, go to rateable more industrial with premiums and things. We can make different decisions from there, but I think the cash flow that we're generating due to the conversion rate that we do allows us to do whatever we want to do. Really? Yeah the only thing I would add to it is just emphasize the numbers that we talked about today, write 1.3 billion dollars of cash back to the shareholders for the first 3 months. 700 million in capex. So 2 billion dollars and we have 1.8 billion
dollars of cash on hand today.
That creates incredible flexibility for the company.
Okay, understood. Um, and then maybe just 1 on costs, um, I think sgna looked to still just a little bit elevated for the quarter, obviously not hugely, but just curious if there's anything there and then also on just some of the non- gas costs. I I suspect that the turnarounds this quarter
Contributed to some of that just wondering if there's anything the flag or, or anything like that. Yeah. And and it's Greg on the scna side, we continue to just update our our bonus approval for for the company for the year. And there was a small catch up as well as a plan for the third, so that's the elevated level on the sgna. On the, on the non, uh, gas side of of, uh, of production cost. Really the 1. 1 that stuck out to me, is I climbed through them was, was really around pneumonia, uh, and the in that segment and the point to make their, as we did, have an increase mix around our purchase tons, uh, which obviously come into the system at a higher value than what we can produce them at, but it also contributed to gross margin dollars in the ammonia segment being up 30% year-over-year. So other than that, in the timing of some turnarounds, there was really nothing to speak of in the non-production cost. Yeah. And and on the purchased front, just to remind um, you know
To remind you.
Tons that are produced in Trinidad. We purchase and we realize the value, um, in Trinidad. And then that comes through equity earnings instead of, you know, directly into the ammonia segment. And then into the UK, we're purchasing ammonia and then upgrading it to a margin, and then that's going to come through, kind of...
Of our other op segment, uh, but the but the price, you know, because we're buying it at Market shows up in cogs for ammonia, so that that kind of helps dimensionalized. Um, what Greg was talking about,
Okay, gotcha. Thank you very much.
The next question comes.
Question. Um, I do want to start with, with a more strategic, uh, Long View here. Just given some of the prepared remarks about the valuation disconnect and given your comments on whether it's cban, uh, where those blue point ammonia, tons will go. Um, even some of your comments on, on death, um, help us understand if we're looking at this business model and in that 2030 framework, you know how much exposure really is a anymore, um, versus some of these more industrial applications and how should we think about that mix contributing to that, that sort of mid cycle framework?
yeah, I mean a is
still going to represent the Lion Share um for the foreseeable future of where we sell our our products. And you know the the simple reason for that um Kristen is that the margins in a are far, superior to the margins in industrial, we could move all of our products into the industrial Marketplace which tends to be routable and and then um, but we would we would end up doing it.
At a significantly lower price point and we wouldn't get the benefit of our distribution and Logistics Network by doing so. And so some of the, you know, even though it is kind of quote unquote, a little bit,
You know, some um and and that'll continue to increase. Um that does tend to be a little more routable uh with predictable margin structures but we're going to be, you know, we're we're 75 80% in a company today and it's going to be like that for a very long time. I think you have to also think about how our company is structured with our unique distribution internally assets that are throughout the Midwest on the best Farmland in the world with the lowest cost access logistically, if you compare our cost to get to the middle of Iowa for, let's say, $30 for urea, against taking that to Modern grow. So from, I don't know.
Or Santos. It's significantly uh cheaper and the yields are significantly better and the farmer economics better as well.
On top of, we have low-cost gas in those regions. So we are structured to serve, uh, the a business which is Tony mentioned is
Spiky, but profitable. But we balance that with this industrial book and export book that places us in, I think.
Globally, it's a very unique position, and we're benefiting from that.
Sure, and appreciate that. Perhaps a little clarification on on my side. I'm not suggesting that there are some major move out of the egg markets. It's more just how much more meaningful can the earnings potential be on the industrial side, given the uplift of of some of these markets. So, so, perhaps a slight clarification there. And while I'm here, I'll just ask my follow-up question. Um, just given the cost curve in China, a little bit more affordable to keep those, um, uh, a little bit more domestic affordability. So, just any thoughts on on China? Exports in 2026. Thank you.
Yeah, we've been fairly consistent regarding China.
Ton range, and that's how they seem to perform. We're expecting them in 2025 to be in the 4% to 4.5% range, and in 2026, but I would just bet on the same. Probably coming out in sometime in Q2, with exports in May or June, and exporting into the early part of Q4 because their domestic market is so big. Their domestic demand, both industrial and where they are capacity-wise and operationally, that 4 to 5 or 3 to 5 million tons of exports make sense as you build kind of what their structure should be. Yeah, Chris, I'll just add one thing back to your first question. Um, you know, if you think about the 45Q tax credit associated with...
uh,
You know, both deal and and Yazoo City, when it comes online, will probably be close to 150 million of cash. And that's not depend, you know, um, net of net of taxes and everything that is not dependent upon where market, pricing is for any of our products, um, between what bird is able to realize and price premium and some of the other initiatives we have like selling carbon credits, you know there, there could be another, um, 25 to 50 million of additional, um, value that a cruise to us that is also not tied to the market. So you're starting to get to the point where, you know, there's probably uh, could be 200 million a year that's coming in. That is very radical and predictable. And just part of the base, then that, um,
Everything else kind of rides above?
Thank you.
The next question comes from. Lucas Bowmont from UBS. Please go ahead.
Okay, thanks. Good morning. Um, uh, good luck with uh, your time at Tony. Congrats on your career, man. Thank you for the cinnamon with the others.
Yes. Um, yeah, I just wanted to kind of ask you about BluePoint to see you guys noted that you'd procure all the long lead time equipment now. Um, so kind of just where did the costs come in there compared to the budget, um, kind of what percent of the project spend was that, and kind of just remind us of any cost escalation components that are built in there for like inflation and towers, etc., between now and sort of when the delivery occurs.
And, um, those have been fixed fee bids, in which we had, which was part of our overall 3.7 billion dollars. So that, that part, we still feel very confident about as we look at, I think your question probably would tariffs. I mean, you know, with the Supreme Court, you know, hearing arguments right now. There's still a lot of uncertainty, what happens? A lot of the equipment that would be tariff
Is most likely going to be coming in in a 3 years from now. So there's still quite a bit of time frame and I'm certain more will change between now and then but what I would say is we forecasted uh quite a bit into tariffs were slightly higher than that. That's going into our 500 million dollar contingency, but not anything that would have us concerned at this time. I think, you know, additionally there there potentially could be upside dependent on what the Supreme Court rules. But there I'm certain there would be some reactions by the administration as well on additional tariffs and other areas. So uh, again, tariffs side, a little uncertain, but we feel like we're covered their long lead items. Uh those are in path but um those are more some of the uh the more um uh engineered uh complex items that like compressors and such.
All right, thanks. And then, I guess just on the pricing outlook, I mean you guys have kind of uh.
Felt the length of that. I mean, the money has been very tight. You know, the pricing is strong. Uh, UA and pneumonia imports are sort of running below trends. So, heading into the uh...
fall and spring. So I mean, the new term setup looks quite attractive. Um, I mean same time the uh, ttf Futures has sort of been coming off the past couple of months. It's sort of gone from 12 and looking to flatter you on, you sort of, you know, low 10's kind of now down about 50. Um, so I guess, just how do you kind of see those 2 factors uh, resolving each uh, together as we go through 26? Or uh, I guess if you don't think they'll resolve then um, why not, thanks?
Maybe I'll start with the with the gas side with the TGIF T. I mean ttf has come off about a dollar. So you're still sitting near $11 on the forward strip with that with the us, sitting anywhere from 350 to 4. Um, so you still have that differential, that is very constructive. As Greg said longer term, you know, when we get into 28.29 we may see that contract some but not nearly to the level. Uh, just given that the Project's being built to have to have a return profiles with those as well and the additional demand that will be drawing on LG. So from a constructive standpoint, we still think the gas differential is going to be very strong uh even if
If it comes in a dollar or two from where it is today.
Regarding the market and the tight tightness we're experiencing today with Saudi, uh, the plant, the ammonia plant being down and the late start of some of these new capacities, as well as Trinidad. And then the the suboptimally operating in Europe, the ammonia Market is I think going to maintain tightness until these new plants. Come on and
We'll see what happens but the United States today is it a net import negative on uan and pneumonia probably balanced on urah. And so again looking around the world where we participate and where we have communication, you have a tight inventory position and all of the destination markets. And so uh, looking at gas and costs and
Kind of upside. Um, I think we roll very well into 2026 and probably through the first half easily in a positive way.
The next question comes from Vincent Andrews, from Morgan Stanley. Please go ahead.
Uh, thank you very much. Uh, I'm I'm actually late to something else, but I wanted to stick around and just congratulate you Tony, and, and say thank you. Um, and good luck in the future. Thank you, Vince. And I appreciate that.
The next question comes from Matthew de deuil from Bank of America, please go ahead.
Good morning. Uh, tell me I I
Congrats. Uh, congrats on the run. I know I didn't cover you directly from much of the time but Steve always, you know, held you with the highest regard. So I know that goes for the rest of us here at uh at Team B of A thank you, man.
Yeah, I wanted to ask, I guess a little bit on the slide where we talked about like ammonia expansion and closures. Certainly, we don't disagree that a number of European plants need to close across a lot of chains. But if we look at that 3 to 4 number, I mean, what's the
That's been announced. What do you think? The rates are that those plants are running, and then like...
I just know that closing plants is expensive and and not really done easily. So I love a little bit more, kind of commentary around your outlook for, for that capacity.
Yeah. So this as you may recall is a study we did uh, about a year and a half ago where we analyze every ammonia plant in Europe, based on, you know, how its ownership structure was what its maintenance structure. What its cost structure was going to be to try to identify which of those plants would come off in Europe, used to have about 48 ammonia assets that were operating. Um, and how we have it leveled was, you know, red yellow green. And what we've seen is the red plants have come off as we expected. And in fact, we're probably ahead of that particular schedule, uh, with the number of curtailment and um, and shutdowns that are occurring in Europe from that. But that 48 assets today, is probably around 30 assets or maybe 31 assets, and we expect that to drop another 4 to 5 assets over the next couple years. You have to remember the decision we made,
In the UK was because we had a significant turnaround coming forward, and these turnarounds are 50 to 60 million dollars. So when you're entering into that, you have to make certain you're going to get that return on that cash. Additionally, where ttf is today at the 10 to 12 dollar range? Makes it difficult to be producing throughout 12 months of the year for really selling. And you know what may be 3 months a year maybe 4 months a year. Uh so you're you're making a risk decision based on that. So what we're seeing today is with some of the pricing there's just a little bit more curtailment going on but eventually uh through our study and what we've seen, you're going to see some of those plants continue to go off. So the European side we feel very confident that that 3 to 4 million is going to come off. Now whether all that gets imported is net ammonia or is upgraded product. That'll that'll be determined but I think the other aspect here is as Bert
mentioned there is just not a lot of new supply coming on. We have visibility of what plants are being built, and with the exception of ours and the two in the Gulf Coast that are about to come on probably sometime in 2026, and one in Qatar, there's really not much coming on. The other plants that are coming on are upgrade plants that are consuming ammonia and making the ammonia market even tighter. So what we see is...
Strong, uh, constructive gas differential, where we'll make money off of that versus TTF. And then we also see a very tight supply and demand balance that not only continues here in 2026, but really goes all the way to 2030.
Thanks for that. I'll hand it back.
Includes our question and answer session. I would like to turn the conference back over to Martin Jaric for closing remarks.
Thanks everyone for joining us today. We look forward to speaking with you at Future conferences.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect