CF Industries Holdings, Inc.

Good day, ladies and gentlemen, and welcome to CF Industries' Full Year and Fourth Quarter 2024 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. We will facilitate a question and answer session towards the end of the presentation. To pose a question at any time, please press star, then one on your touch-down phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the presentation over to the host for today, Mr. Martin Jarosik, with CF Investor Relations. Sir, please proceed.

Good morning, and thanks for joining the CF Industries' earnings conference call. With me today are Tony Will, president and CEO, Chris Bone, 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 full year and fourth quarter of 2024 yesterday afternoon. 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 forward-looking statements. These statements are not guaranteed to feature performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available on our website. Also, you'll find recommendations between GAAP and non-GAAP measures in the press release and presentation posted on our website. Now let me introduce Tony Will.

Thanks, Martin, and good morning, everyone. Yesterday afternoon, we posted results for the fourth quarter of 2024, in which we generated adjusted EBITDA of $562 million. Adjusted EBITDA for the full year was $2.3 billion. This strong performance enabled us to return $1.9 billion to our shareholders through dividends and share repurchases in 2024, which is our highest level of capital return in more than a decade. The CF team is operating at a high level, advancing our strategic initiatives and, most importantly, working safely. Given our fully engaged employees, our low-cost manufacturing system with the highest on-stream factors in the industry, our expansive distribution and logistics network, and very constructive nitrogen industry fundamentals, we are well positioned to continue our track record of generating superior free cash flow that enables the company to both grow and return substantial capital to shareholders. With that, I'll turn it over to Chris to provide more details on our operating results and the status of key initiatives.

Chris? Thanks, Tony. Our production network operated extremely well through year end. We produced over 2.6 million tons of gross ammonia in the fourth quarter, which reflects 100% ammonia utilization rate. We finished the year with 9.8 million tons of gross ammonia production. Our manufacturing network has continued to operate well to start 2025 and did not experience any significant disruptions from recent winter weather events. We expect to produce approximately 10 million tons of gross ammonia in 2025. We are making good progress on our key strategic initiatives. The completion of our carbon capture and sequestration project at our O'Donnell symbol complex is in sight. Commissioning activities for the carbon dioxide dehydration and compression unit have begun alongside final construction activities. We expect start-up of carbon sequestration and 45-q

tax

credit generation this year. Our evaluation of a Greenfield low-carbon ammonia plant at our Blue Point complex in Louisiana is also nearing completion. As Greg will detail shortly, we completed the FEED study for an autothermal reforming ammonia plant, marking a major milestone towards this strategic initiative. We continue to assess the project in light of our outlook for the global nitrogen supply demand balance, cluster requirements for carbon intensity, and the regulatory environment. We are working to complete the partnership structure. We expect that our ownership of the project will range from 40 to 75%, depending on the number of equity partners at the outset. If we were to make a positive final investment decision at a 75% ownership level, we believe we would have the option to sell down that level if we chose to, given ongoing discussions with other potential partners. We continue to target the first quarter of 2025 for final investment decision. With that, let me turn it over to Bert to discuss the global nitrogen market.

Thanks, Chris. CF Industries had a positive fourth quarter of 2024 that has carried over into 2025. We had a very strong full ammonia application season and have built a strong order book for all products as retailers and wholesalers layer in product tons for what they believe will be a good spring application season. We ended the year at lower than average inventory levels in our network and believe the North American channel is at low levels as well due to lower than normal imports into North America. As we move through the fourth quarter, global nitrogen market participants began to appreciate how much the global supply-demand balance has tightened. Nowhere was this more evident than India's inability to secure the volumes they targeted for the last two urea tenders. Given the high urea consumption in the country and lower than targeted production, we expect India to issue another tender later in the first quarter just as the Northern Hemisphere demand ramps up for spring, demand that we expect to be very strong. World corn stocks and world corn stocks to use ratios, excluding China, are at a 13 and 30-year low respectively. Given the need to replenish global corn stocks and a corn to soybean ratio favorable to corn, we expect robust planted corn acres and strong nitrogen demand in the United States in 2025. Longer term, we expect a global nitrogen supply-demand balance to tighten through the end of the decade. Capital availability, long-term feed stocks, and costs in global events have limited 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. We believe demand for low carbon ammonia for new applications, such as power generation, would only further tighten the global supply-demand balance. With that, Greg, we'll cover our financial performance.

Thanks, Berg. For the full year 2024, the company reported net earnings attributable to common stockholders of approximately $1.2 billion, or $6.74 per diluted share. EBITDA and adjusted EBITDA were both approximately $2.3 billion. For the fourth quarter of 2024, the company reported net earnings attributable to common stockholders of approximately $328 million, or $1.89 per diluted share. EBITDA was $582 million, and adjusted EBITDA was $562 million. Net cash from operations was $2.3 billion, and free cash flow was approximately $1.45 billion. We continue to be efficient converters of EBITDA to free cash flow. Our cash flow to adjusted EBITDA conversion rate for the year was 63%, which far exceeds our peers, as you can see on slide five. We returned approximately $1.9 billion to shareholders in 2024. This included $364 million in dividend payments and over $1.5 billion in share repurchases. For the year, we repurchased 18.8 million shares, representing 10% of the outstanding shares at the beginning of 2024. Entering 2025, we had a little over $1 billion remaining on our current share repurchase authorization, which we intend to complete before its expiration in December. Based on market capitalization at the start of the year, we have the capacity to repurchase approximately 7% of our outstanding shares through the end of 2025. As Chris mentioned, we completed the feed study for a 1.4 million metric tons per year ATR ammonia plant with carbon capture and sequestration technologies. The study estimates that the cost of a project with these attributes would be approximately $4 billion, which would be divided among the equity partners. At this level of capital investment, with the incentives of carbon capture and an ammonia price of $450 per metric ton, we'd expect to earn a return above our cost of capital. There is an additional $500 million required for scalable common infrastructure, which would be CF industry's sole responsibility and could be leveraged for future growth at the Blue Plant Complex. Should we move forward, we'd expect the common infrastructure would also earn a rate of return above our cost of capital due to the payments from the ammonia plant owners for the use of the facilities. With that, Tony will provide some closing remarks before we open up to call the Q&A. Thanks,

Greg. Before we move on to your questions, I want to thank everyone at CF Industries for their contributions in the fourth quarter and for the full year. As a company, we have a lot to look forward to in 2025, from constructive global nitrogen industry dynamics to the startup of our first CCS project and a final investment decision on our Blue Point Complex. We're excited for what's ahead. Investing in our business to increase cash generation while dramatically reducing our share count has served our shareholders well. As you can see on slide eight, in the last decade, since most of this team has been together running CS, we have increased production capacity by almost 20% while reducing our shares outstanding by almost 30%. What this drives is clearly shown on slide five of our deck, and we have boxed the most relevant data. This is how we run our business, to generate more free cash flow while reducing our share count. It is exactly this ratio that demonstrates the superiority of our business model. In the very near term, in this year of 2025, we have a couple of initiatives that we'll continue to build on this track record. The 45Q tax credit is expected to begin this year as we sequester CO2 from Donaldsonville. We will also complete our share repurchase authorization, which, as Greg mentioned, should take out another roughly 7% of our outstanding shares pro forma. Over the longer term, we expect investments in our network and in low carbon ammonia production capacity will provide a robust growth platform for the company, add to our cash generation, and continue to drive that all-important golden ratio shown on slide five, creating substantial value for our long-term shareholders.

With that,

operator,

we will now open the call to your questions.

We will now begin the question and answer session. To ask a question, you may press star then one 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 has been addressed and you would like to withdraw your question, please press star then two. At this time,

we will pause momentarily to assemble our roster. The first question comes from Joel Jackson with BMO Capital Markets.

Please go ahead.

Todd, good morning. I wanted to ask you about your hedging. You were talking about in the past couple quarters that maybe you weren't layering on as many strips or hedging as you had in the past. Looks like you did quite well in Q4 to get ahead of the higher gas prices. We've now seen, of course, U.S. gas prices surge. Talk about how open you are, what your gas hedgers are like for Q1, Q2, for the rest of the year, and what we're seeing in the more volatility, Tony and team, is this making you rethink your gas hedging strategy going forward?

Good morning, Joel. This is Bert. How we look at gas is how we look at the dynamic nature of our business. It's just one reflection of that. In terms of how we manage margin, how we manage cost, how we manage capex, gas is a substantial cost for us, and we look at it holistically. And so we have been much more in the cash market in 2024. We do hedge front months for our gas contracts, but we've been much more opportunistic in 2024, believing in the resource base that exists in North America for our system. How we're looking at 2025 is we've approached it very similarly, where we were and have been hedging front month for our commitments and then just for the weather volatility of January and February as well. And we anticipate that the gas team will continue to perform very well and position CF in a great place.

And Joel, relative to the second half of your question, I would just say we operate, you know, the vast, vast majority of our production capacity in the best place on earth to operate, which is, you know, North America with some of the largest resource, most dependable production and quickest to respond. And so while we'll continue to evolve our thinking around hedging and burden and continue to do that actively, you know, I think that the most important thing

is where we've built our

plans. And then if I can ask a second question?

An observation I had last night, and I'd like you to give me the comment, Anani, is you gave and appreciated a new sensitivity table you do every year around now based on 2024 numbers where you show, you know, where your EBITDA level is in a grid for different gas price realizations and different urea price realizations. It looks like when you look at the 24 table versus 23 table on a similar volume around 19 million times at any given cell in that grid, so any combination of urea and gas prices, you're pointing to EBITDA being maybe two or $300 million lower. Can you talk about what that means, if it means anything?

Yeah, so let me just describe how that grid is put together. And it is not meant to be, strictly speaking, you know, instructive about what the future holds. It's based on last year's actual product price differentials between ammonia and urea, urea, UAN, ammonium nitrate, and the rest of the products and how they fit in there. And so to the extent that in any given year you see the differential between urea and, say, UAN move one direction or the other, that's going to change kind of how that grid is created because there's more or less value than across the system based on selling one ton of urea. So it's purely a heuristic. It's just a way to kind of sanity check the numbers. It's not a pinpoint estimate of where we're at. To do that you'd really have to get into the details of where gas is really moving kind of across the network, not just in the aggregate because, of course, we're consuming the vast majority of our gas in the combination of Henry Hub and Ako. And so what the other pricing points, trade-out matters, but it's very specific to the year movements and the product movements. And so you have to get a little more granular, but at the very high level that gives you kind of directional information of where it is, and that's why it tends to move one year to the next. It's strictly based on the previous year's differentials.

Yeah, Joel, this is Chris. The other thing I would add, Tony talked about the price and basically the relationship between each of the products. But additionally, since we are using a look back to 2024, our cost structure is also the 2024 cost structure. And if you recall, in Q1 we had pretty heavy maintenance events where at 1.15 of the 17 ammonia plants needed maintenance, and that was about 100 to 150 million. So as Tony said, it's really indicative of what you could see for the year, but it is based off of empirical data rather than what we expect for the go-forward.

Thank you. The next question comes from Chris

Parkinson with Wolf Research. Please go ahead.

Hey, guys. Good morning. It's actually Andrew sitting in for Chris. How should the street think about 2025 cash conversion and the balance of uses between buybacks and then future CapEx? And then on top of that, would you be able to talk about sort of the potential for long-term off-takes in conjunction with any Blue Point FID, and how does that fit into the picture here as well?

Yeah. Andrew, thanks for the question. It's Greg. I'll start and pass it over to Chris. On the capital allocation for the year, we've outlined where our CapEx is expected to be over $500 million of our normal run. That would obviously change if we went to a positive FID, and we'd update you on those numbers when we made that decision. On the capital allocation, we came into the year with a billion of 60 of share repurchase that we expect to get done by the end of the year, and those would be our primary uses of cash. Don't expect any change in difference on our EBITDA conversion rate. We still expect to be very, very above our peer group on our ability to convert that EBITDA out of free cash flow, so no change in that at all. But we'll update you on the CapEx number when and if we make a positive FID, and we've already laid out the share repurchase we expect to do for the year.

Yeah, Andrew. And in relation to long-term supply off-take related to the Blue Point project, I think a lot of that's going to be dependent on where we end up from a partnership equity share piece. If we're at the 75% that CF has as we go through, as I mentioned, we are having discussions with other global partners who are interested in this particular facility with an off-take agreement that would happen there. But if we go with the 40% where we have the Mitsui, Jara, and CF themselves, a large portion of our product, given that we purchased ammonia already for the UK, could find its way going to the UK, and that incremental amount that we would have for a long-term off-take contract would probably be smaller. So a lot of it's going to be dependent on what is the final ownership structure that we'll know here in the next couple weeks.

But I would say, back to Chris's point, there's a lot of interest out there. And I think what you've seen is a bunch of these kind of people waiting in or making initial announcements and then getting cold feet backing up has led a bit of pent-up demand out there. And so if we ultimately do go forward with a positive FID decision here, I would expect there to be more than adequate demand for the production that we

have left.

The next question comes from Richard Gartutina with Wells

Fargo. Please go ahead.

Great. Thanks for taking my question. Just to follow up on the blue point, obviously, the FED study completed negotiating with the partners. Still nothing determined yet, but it sounds that basically the outlook from a demand and market perspective you've found to be, I guess, positive for the project. So I guess in terms of final decision, how much does the potential for 45Q to be changed, that'll have any impact at all? Is it really just a function of marking down where you want to stay in terms of your equity stake, whether it's 40 to 75 percent? And then in terms of just all the final decisions with the partners getting ratified.

Yeah, I mean, I think the big issue there, obviously, the 45Q is a benefit to the project and the required ammonia price to earn above cost capital return would go up if we didn't have the 45Q. But there's nothing really that we're seeing on our end when our government folks talk to people in Washington that indicates to us that the 45Q is in jeopardy. I think if you were banking on an EV subsidy or credit, then you'd have to think twice about it. I think the 45Z and 45V potentially have a little more risk, but there's really been no news from our perspective that jeopardizes the 45Q. So we're pretty confident that that's going to stay in place and we're making plans accordingly. But there's a lot of moving pieces out there and there's a lot of policy things that are uncertain at the moment. Of all the policy issues, I think that one we feel probably the most certain of. And I do think what is kind of not delaying, but the process that we're going through is really dotting I's and crossing T's on all of the subsidiary contracts that go along with being able to actually build and move the thing forward. It's not so much with the partnership structure themselves because we feel really good about that. It's just kind of getting all of the other

EPC kind of stuff done. The next question comes from Lucas Belmont with UBS. Please go ahead.

Good morning.

So yeah, I was just going to continue on the Blue Point projects. So depending on where you guys kind of come in there on that equity range, if you go ahead, it could be quite, it's a pretty wide range, you know, from sort of $2 billion up to maybe $3.5 or so. I think what we previously sort of discussed the outlook there was assumed to probably get built over the four years and the capital commitment's more sort of back half-weighted. So given kind of the range you're putting out there now, it's just wondering how you'd look to kind of fund that. Would you sort of add some more debt in there to do that? I mean, it looks like potentially depending where sort of microprices are, you could do it at a cash flow if you sort of didn't have any repurchases anymore. But just wanted to kind of get your latest thoughts on sort of how you can progress there.

Yeah, thanks for the question, Luke. It's Greg. So when we look forward and look at the commitment, you're right, it's going to be determined by the size of the equity we have, commitment and where that ultimately ends up. If you looked at it at the 40 percent and you thought about it over four years, and even including the common facilities, it's roughly about $500 million that we would need to create in addition. Given where we are on a free cash flow basis and the investments that we tend to make within our network on a -to-year basis, including the growth capbacks that we put in, it's not dramatically larger. It's obviously larger, but not dramatically larger. So as we think about where we are from a capital standpoint, we've got $3 billion of debt. We've obviously got some of that coming due next year that we'll have to look into. But there's a bunch of options as we think about how we would fund it, first starting with the cash that we have on the balance sheet and we go to cash from operations. And to the extent we would want to think about building some more security, there's a number of instruments we could look at to pull in, and we're in the process of evaluating that all right

now. I mean, I think if you just look at last year, we generated $1.4 billion of free cash. And we're going to spend $1 billion, as Greg said, on a little over on Share repo. That still leaves a big chunk to be able to deploy against the other uses of cash. And we ended the year with over $1.6 billion of cash on the balance sheet. So our uses of cash this year, even though we're going to buy $1 billion of shares back out of the market, is not going to dip very hard into our cash on the balance sheet. And during this period of time, we have indications that the pricing environment today is stronger than it was a year ago. And so that portends very well for cash gen in 2025 versus 2024. So I think all of that is a way of saying we think the business model is kind of hitting really well. And it gives us a lot of flexibility in terms of how we think about financing

a potential project should we

go

forward. The next question comes from Andrew Wong with RBC Capital

Markets.

Please go ahead.

Hey, Lee. Good morning. Thanks for taking my questions. So long-term focus for CF has been on increasing nitrogen production or participation per share over time, which has gone up pretty significantly. When you look at Blue Point, given the increase in capex, while the shares are roughly flat year over year right now, how would you compare the project versus potentially using that cash for more of a buyback in terms of raising that nitrogen per share metric? And how does that factor into your decision on Blue Point?

Yeah. I mean, Andrew, I think throughout our business management teams time together, you could have made that comment about anything that's gone on, whether it was the acquisition of Terra back in 2009, 10, whether it was the construction of our capacity expansion projects back in the 12 to 16 timeframe, the acquisition of the third of Medicine Hat that we didn't own or the 15 percent of the vertigris plant that was traded as an MLP. I mean, any of those things you could have made that same argument for and yet look at the share growth in terms of value we've created over that period of time. And so I think the general strategy and philosophy of if we can deploy capital in our core business and earn above the cost of capital rate of return and then for capital that is in excess of that, we take down share account, that is a winning formula. And if you look at our one, three, five, seven, ten year TSR against all of our competitive set, we blow them out of the water. So it's just a winning formula. If we can stick to our net and be very focused to deploy capital in things that we do better than anyone else, which is running ammonia plants, we're going to perform better over the long run and that's how we're focused on running this company.

Okay, great. And maybe just one more on Blue Point. The commentary in the past would highlight how the project can make a good, and even now too, can make a good risk adjusted return even without an off take or some sort of blue ammonia premium. And I understand you're looking at that and you're still thinking that that's going to be the case, but you know, CapEx has gone up quite significantly from the beginning of when we started seeing some of the numbers like last year, like what's changed on that return profile so that that's still the case?

Well, I mean, it's really based on where ammonia pricing is in the market. And as Greg mentioned earlier, what we need is an ammonia price of $4.50 per MAD, so call it $4.10 per short. And you know, the average selling price we had in, you know, last year was above that. And so where the market is right now would support a project with an above the cost of capital rate of return. And we expect, as Chris mentioned, the market to tighten rather than get, you know, get slack. And so there's a lot about just industry fundamentals that we feel we're in the best place to really be able to exploit, again, given our operating history with these kind of assets. The other thing I would say is Bert has done a great job of being out there working with customers on the low-carbon intensity or blue product coming out of Donaldsonville that we're going to be generating here later this year. And he is seeing an ability for the market to pay, you know, a premium on that. So that's before we even get into the premium. We're just saying we can, you know, this project is an interesting investment for us before the premium.

The other thing I would add, Chris, is that when we were looking at some of those CapEx numbers about a year ago, those CapEx were based on SMR technology, so existing what we have in our plants. The ATR technology will give us two different things, one, about 10% more in production, even just that nameplate than what we're producing on our other units, and then also 50% greater carbon capture with the 45Q that allows a significant benefit there. So with those two additional pieces put in, I would also say, you know, if you've been following CF long enough, you would understand that we're a pretty conservative company and we model things straight. So we haven't taken into account, you know, increased utilization rates, which we've been able to perform on not only assets we've built, but assets we've acquired. Additionally, if there is any low carbon premium that Tony announced or suggested there. And then lastly would be anything related to the CBAM that would give us, you know, a bit of a fast mover advantage where we'd see additional margin. And then lastly, I'd just add this new technology and what we'd be doing is why we have the partners we have. It's fostering new demand that just makes that balance that we believe is tight enough just with conventional ammonia, all the tighter by the time this particular plant comes online.

Okay, thank you. Very helpful. The next question comes from Kristin Owen with Oppenheimer. Please go ahead.

Hi, good morning. Thank you for taking the question. I wanted to ask a little bit more on some of the fundamentals for 2025. Specifically, your expectation of things really remaining quite tight. The cost curve has changed or at least been fairly volatile over the last several weeks. I'm just wondering, can you speak to what your expectations are in terms of the cost curve now with a potential resolution between U.S. and Ukraine on the table? And then I have a follow-up question.

Yeah, good morning, Kristin. This is Bert. And we do see the fundamentals. They have improved and they are improving. When you look at what has transpired globally, you do have a tight nitrogen balance. And that's driven by very healthy demand in India and Brazil and a lot of secondary countries like secondary in terms of demand of urea, Australia, Argentina, South Africa, Thailand. Turkey has pulled more in 2024 than they have historically. And then you look at the tight corn balance that we've talked about for stock-fuse ratios, whether that's domestic or globally, and where we are. It's very competitive to 2012 or 2013 where we saw a very nice rally in the price of corn. That's driving acres and additional acres to corn. And I would have said a couple months ago we would have expected 90, 91 million acres of corn. And today we've talked about 93, but I would say that's to the positive. And every million acres that comes in is just additional nitrogen demand that has to be satisfied. And to date we're behind in North America. We're behind on imports of urea, of UAN, and we're very close to the beginning spring application season that could begin as early as March. And so that product has to be put into position for supply. So tight North America, tight globally, and the fundamentals of where we are with gas in Europe. Europe production is down or some of it, 20 to 30 percent of it is. And so you have a tight demand market for the products that use nitrogen being corn. You have a tight supply market with product needed in a number of places. And if there's an India tender in the next couple of weeks, it gets even tighter. And so relative to the cost curve then, we're at three to four dollar gas in North America. And the world for LNG or JKM or TTF being Japan and Europe are at 14 to 15 dollars. So your cost curve, you need to bid in very expensive tons to satisfy this global demand that's coming. And your last question about Russia and Ukraine, I would say it really doesn't matter right now. Well, the Russian tons have been making it out throughout the last couple of years, even with sanctions.

And I would just say, you know, we certainly all hope for a resolution to the conflict and ending the suffering and the image going on over there. To Bert's point, all of the Russian production is making its way out into the global marketplace. So that doesn't change. And our expectation is it would take quite some time to get, you know, additional production, whether that be Eastern Europe or Western Europe or even Ukraine, kind of back up and running. And it's going to miss the first half of the, you know, the applications used in the Northern Hemisphere anyway. And so from our perspective, the first half, you know, while I wouldn't call it baked yet, is looking very positive based on the factors that Bert just highlighted there. But we're certainly all, you know, hoping for a peaceful resolution to that and other conflicts going on.

Thank you for that, Keller. One follow-up question related to your own production. You did call out some of the maintenance costs last year, some of the shutdown time that you experienced in Q1. Is there anything we should be thinking about here in the first quarter, given some of the earlier ice storms across the southeast and how that will compare or influence your 10-ton outlook? Thank you.

Yeah, so as I mentioned in the prepared remarks, through Q1 so far, the manufacturing operations have been operating, you know, just as well as they were in Q4, even with some of the significant weather events. Some of that's from the learnings that we had last year and just the teams doing an outstanding job at the particular sites. So the 10 million ton gross ammonia number, which is higher than the 9.8 million we did this year, is still our expectation for full year 2025.

Thank

you. The

next

question

comes

from Stephen Byrne with Bank of America Securities. Please go ahead.

Yes, thank you. Byrne, I'd like to hear your view on your order book through the rest of the first quarter and, you know, what that order book looks like for the second quarter. How would you compare it to historical levels as of mid-February, and does this reflect your views of the U.S. being behind on imports?

Thanks for the question, Steve, and we're pleased with our order book. I think the team has done a great job of watching, participating, and layering in. Normally, in this time of year, you know, we try to be, I'd say most periods were one to two months sold or with orders on the books. I think this year has been a little bit different because of the positive anticipation that we saw with, relative to the last question, on a tight market and some dynamics globally that are taking place. And we positioned ourselves well and have been capturing as the market has escalated. What you've seen over the last eight weeks has been pretty amazing. We've seen a $100 rally in Uria at NOLA from about 320 to 420, which has since stalled out, but we believe that you're going to see additional demand. We're behind on imports, as I said earlier, and we believe you need to bring in 700,000 to 800,000 tons per month March, April, May to satisfy demand as well as domestic production to remain fully operating. And so as we look to Q2, we've got a lot of open orders to satisfy, and we'll be executing that into the market. And as Chris said earlier, our plants are operating at 100%, and we're positioning product now for that eventual demand. So that gives you the Q1, Q2 outlook.

Very good. Thank you. And just wanted to follow up a little bit on the Brownfield project at DeVille for the Blue Ammonia. Do you have any idea when that actually could start up? I'm not sure whether you're still in installation or whether you are in commissioning mode, but do you have a better idea when that might start? And perhaps more importantly, do you have an order book for that Blue Ammonia that you could be selling sometime this year? And does it not make some sense to wait for that to be on stream and to see what demand really looks like when you have that product available before you commit to FID on the Greenfield project?

I think there's a bunch of questions in there. We'll start off with how's the dehydration compression plan coming, when to go in, and then what's the premium or the demand profile look like? And then I'll finish up with the answer to the last one.

Steve, this is Chris. So we're continuing. We are not in commissioning yet, so we're still in installation, but our expectation is that we will finish that here in second quarter. And what we're looking at is that we'd be in commissioning and ready to begin sequestering it really second quarter, first half, second half of the year here as we look at that. We continue to work with Exxon as they're evaluating different areas for their Class 6 permit that they have in there, given the flexibility they have with the Denberry pipeline. So all that continues to move well. And so I would say, you know, our estimation is by second half of this year, we'll have low-carbon product that we can feed to Burton and his team. And

regarding the premium, we've been actively discussing marketing and preparing for that. Whether that be ammonia or an upgraded product. And I think the first mover looks to be industrial, where we have a number of participants or customers desiring to have low-carbon products in their system. And then we're working, obviously, agriculturally with our co-op and retail customers to market a whole package to the farming community of how that can benefit their system and their carbon scores. And so, yes, I do believe there will be a premium. And yes, that product is coming for the back half of the year.

And, you know, finally, Steve, because of the success Burt has had and the level of interest that he's had, we don't need to wait until we're producing it. We've already, you know, got registration of interest from more parties than we have tons to be able to sell at this point. And again, let me just remind you of the, you know, kind of the math on the new project. So if it's 1.4 million tons and we get, you know, 50% share, just say, as a number, you know, we're looking at 700,000. As Chris mentioned, we're going to consume 350,000 tons of that in our, you know, upgrade at plants in the UK. So we'll have a low carbon AN product in the UK with access to the European market. That only leaves us 300,000, 350,000 tons left to go in terms of, you know, places to sell it. And we have more than enough interest to be able to move that because we've already got expressions of interest that can consume the full 2

million tons coming out of DeVille.

Thank

you.

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

Thank you. And good morning, everyone. Just on Blue Point, if I could ask you, Tony, the $4 billion and the $500 million, I assume that's the standard, you know, midpoint of, you know, there's a plus or minus 15% on that or is there something different about this? And is there any part of that that you think you can really lock in, you know, whether it's labor equipment, what have you, to really sort of ring-fence the risk around that estimate, you know, moving too far in the wrong direction?

Yeah, Vincent, thanks for the question. This is a little bit different than the midpoint of the estimate. You know, we sort of learned our lesson last time when we began this, you know, the projects back in 2012, which was more or less the midpoint. And then we saw escalation happen and it was a painful process to have to get out there on conference calls and talk about delays and overruns. So I would call this a number that we're putting forward to the marketplace that we feel highly confident in our ability to achieve. And there's, you know, there's quite a bit of contingency baked into that. So if you just think about the $4 billion for the plant itself, we are taking a different approach. The previous projects were what I would call stick construction where everything was individually built. And in this approach, we're doing more modular construction where large sections of the plant will be constructed and then they're basically positioned and put together. Because of that, we can take almost $2 billion of the production and have it be lump sum fixed in terms of these modular constructions. So the amount of kind of potential open to overrun is dramatically reduced in this instance relative to the way we approached these in the past. And then there's other sections, whether it's the ammonia storage tanks or the docks or, you know, a variety of other things that we can convert into fixed fee kind of arrangements as well. So there's much less I would call at risk in that quote, which is why we're, you know, highly confident we can deliver the project.

And the only thing I would add to that is, you know, on those last projects, what really caused the cost overrun was the labor expense. And as Tony mentioned with process modules, a lot of that labor percentage is going to be significantly lower than what we've seen in the past. So for instance, on those particular projects, we may have had 5,000 contractors on site at one point. In this particular one, maybe at peak, we had had 1,500 because so much of it would already be modularized. And that we feel comfortable with within that contingency. The other part I would say that is probably one of the primary differences just beyond the experience the team has with doing the last projects is we did a complete feed study this time. We've been analyzing this for over two years. What would be the best technology? Understanding exactly how we go about doing this. If you think about the last project, our speed to move as fast as we could, we didn't even have full feed studies on those particular. So I think the planning process, the reduction in actual construction labor time is going to be helpful in this as well.

Okay. And just as a follow-up on the 40 versus 75 percent, I mean, it sounds like you're very confident in terms of the demand outlook and so forth. So I'm just curious what's going to drive the delta for you between the 40 and 75 percent? I mean, in one case, you have complete control over the project and in the other case, you don't. So what makes it in your best interest to bring it down to 40 percent versus just going out at 75 percent?

Yeah, I think to be sort of perfectly honest, it's whether it's with one partner or two. And we have received very strong degree of confidence that it's going to be both partners. And because we have been on this journey for such a long time, we've made a commitment to them that they're in if they want to be in. And so, you know, but you're not over the finish line until everyone signs on the dotted line and you make an announcement. But that's the difference. And at the end of the day, Vincent, you know, part of what we're trying to do with this, you know, this first plan is to help spur development of new applications for clean ammonia because we think, you know, that's just good for our business in general, good for the world from an environment standpoint. And having more people involved that are going to be direct consumers and take this all the way to its, you know, to its final use is, I think, good in helping develop this marketplace. And so, you know, we're doing a little I would call primary demand stimulation by having these people participate with us.

Thank you very much. The next question comes from Edline Rodriguez with Mizzouho.

Please go ahead.

Thank you. Good morning, everyone. A quick one for me. I mean, I think earlier, Bert, you talked about the positive drivers for the nitrogen market. Do you see any risk at all that could have an impact on supply domain and prices, like any concerns whatsoever that, you know, we should be thinking of?

Yeah, thanks for the question, Edline. I always look at the risks and I always probably say too, I'm probably a nitrogen nerd when it comes to following the global markets and producers, suppliers, consumers and where that's going to go and how it's going to go. And we modeled that out on a continual basis with what's going on in the world and feathering in then geopolitical impacts. And so where we are on the drivers, it is a strict supply and demand market today. As we're quickly approaching the Northern Hemisphere demand, we believe Europe is under supplied or the Northern Hemisphere is over there. And we believe North America's footprint in the United States is under supplied with the positive dynamic of the nitrogen consuming crops. Not only prices increasing, which is profitability to the farmer, which is then willingness to further utilize nitrogen capabilities for crop yields. You have that dynamic that maybe a couple of years with the -to-use ratios that we talked about earlier on corn. And so there are always risks on the up and down side or I'd say on the supply side with potential outages due to gas or geopolitical issues that we've seen in Ukraine or just limits. And then it's economic. Do customers purchase at the right time, have it at the right place when it's needed? And are there spot differentials that take place? And we believe that will happen in the United States with the normal differentials to NOLA, to the Midwest, to Canada have already expanded and may expand even more. So we do see a positive first half. And as Tony said earlier, the second half, we'll cross that bridge when we come to it.

Okay. Thank you very much.

The next question comes from

Jeff Tsikoskas with JPMorgan. Please go ahead.

Thanks very much. I'm still a little puzzled about the sequestration of carbon dioxide from Donaldsonville. I don't think any any Bundy has been granted a Class 6 permit to sequester carbon dioxide. And even if you are granted a Class 6 permit, then you have to build the well. So how is it that you can sequester carbon dioxide sometime in 2025 or by sequester do you mean enhanced oil recovery?

Hey Jeff, this is Chris. I think in both instances it's not as if there are things that are not moving in parallel. You are correct, there would take some time for the well piece to be implemented. However, most the pipeline work towards the areas where we're looking to sequester, given some of the acquisition work that Exxon has done, we believe that we will be able to. I think EOR is always an opportunity. However, our agreement is for Class 6 permitted wells. So one of the reasons we went with Exxon is our confidence in the work that they've done, not only at the sequestration points that they have listed themselves, but some of the partnerships that they're looking at as well. So we still feel confident that second half of the year we will be sequestering CO2 from this Donaldsonville project.

Okay, and then as a second question, the value of CF Industries goes up and down, and I guess more recently it's come in. And it seems to be because people believe that the probability of there being a resolution in Ukraine is higher. When you think over a longer period of time and you think about what the gas price in Europe might be or what nitrogen production in Russia might be, is it the case that for North American companies, sort of a more peaceful globe is negative for profits and profitability over a longer period of time? Or do you think that it really doesn't matter and the market has it wrong?

Yeah, well, I would start with the fact that, as Bert mentioned, product is getting out. If you even look at what your Russian Urea exports were this past year in 2024, they were up over a million tons from the prior year. So over nine million tons were being exported. So similar to the Iran sanctions, product is moving globally. It's just moving to different locations and maybe at lower margins for those particular producers in that area. As far as the European gas movement, if you look at Russia's gas pre-war and where they exist today, gas is still flowing into Europe by a pipeline, about 4 BCF per day. And it's mainly going to those particular countries that are willing to take Russian gas post the resolution or even pre the resolution that would happen. I think the availability of gas, the actual volume quantity, has been sold by Europe and it's been pretty remarkable how quickly they were able to do that through LNG imports from the US and from the Middle East as well. So while we do see maybe some contraction that may happen with TTF, if a ceasefire were to be announced, there's still that spread there. And then I think you're talking about the timing in which that would occur. These plants, as Bert mentioned, you have 25% of the ammonia production down already. I think what we've seen is continually as these turnarounds come up where you have $50 million maintenance decisions to make, our expectation is that the plants that are down will not start back up and other plants will continue to come down. So even post the resolution, you're still going to have that short that we show in our earnings slides in Europe for ammonia that's going to have to be sourced from other places around the globe.

Jeff, this is Bert. In further comments to that is what Tony said earlier is the principal position of we want peace everywhere. There is no need to have a war and there's no need to be fighting over some of the things that are being fought over. That's the tragedy. But moving forward, and the Russian terms are making their way out to the market. They're fully supplied, whether that's Urea, UAN. The limit has been ammonia, which Chris referenced. Even if there's peace declared, ammonia is not going to be loaded out of Ujnyi anytime soon. And maybe that's Taimen, maybe that's the Baltic ports of Rus Luga. Okay, so that can happen. Maybe the Ukrainian tons come back up, but there weren't that big of a supplier to the world. But you have to take a step back and remember this is a global market of 200 million tons of products that's produced and demanded every year. And we've had gas limitations in Europe, gas limitations in Trinidad, Egypt, Iran, and we've had product export limitations of China. So there are different places in the world where this is, again, back to the puts and takes to how we get to the markets that we get to. And it's not necessarily determinate by one company or country being sanctioned or inability to move. And again, that's where I think the benefit of CF and our global look, global reach and team and how we're able to execute against these continued changes.

I would echo kind of both those things, and in particular what Chris said about once the European plants have been offline and curtailed for a period of time, they're not coming back. I mean, we had two manufacturing facilities, two ammonia plants in the UK, and we talked long and hard about whether it was worth kind of the option value of being able to bring them back online if gas costs in the UK came down. And our conclusion was the cost of doing that was fairly high to maintain their ability to be brought back. And even so, the plant would still be operating on the third or fourth quartile as opposed to deploying capital in the US where we've got, you know, first quartile kind of cost structure. And that was one of the reasons we went kind of down the road of Wagamon and closing the UK ammonia plants. And so I think, again, it's, you know, where your plants are located, and I'm really happy with where ours are. And on the volatility of our share price, I mean, yeah, it is unreasonably volatile for all kinds of reasons that, you know, I don't pretend to understand. But what that does is it gives us the opportunity to be very opportunistic on our share repurchases. And as, you know, Greg mentioned earlier, coming into this year, we had a little over a billion dollars to spend. And at that time, it was 7 percent the way the volatility is when we disproportionately buy on the dips. You know, we can probably do well better than that. So it really does benefit our long-term shareholders that there is that volatility because it allows us to opportunistically take shares from people that don't, you know, see the fundamentals and the value the way that we do.

Great. Thank you so much.

The next question comes from Aaron Cattirelli with Barenburg.

Please go ahead.

Hello. Thanks for taking my question. I have one on Bluepoint, and you clearly mentioned strong interest in the asset. And I remember the 1.4 million tons was the plant with Jera. And incremental to that, there was evaluation for another plant of at least one million tons with Mitsui. So maybe can you help me understand the announcement you made yesterday? Does it include potentially Mitsui as well, and therefore you are not going to go ahead with the second plant? And how do I relate this considering the comments you made on really strong demand? Is it just a risk management approach where you want to start maybe a little bit smaller? How can I think about that? Thank you.

Yeah. So the – we're thinking about – or you're thinking about two different plants. The first plant that we began to do the analysis around that we had announced in conjunction, you know, that we were evaluating it with Mitsui was a conventional steam methane reformer, SMR, plant very similar to our Donaldsonville number six plant. And that's a bit of a smaller plant compared to the ATR, the autothermal reformer, that Chris talked about today and Greg talked about today. And so we were evaluating two different technologies. And in between those two technologies, we also brought – Mitsui is still part of the evaluation process and part of the partnership, but Jera has also joined as well. And so what we've done is we've gone from at the time what was one partner looking at an SMR of a little over a million tons or a million two to two partners looking at an autothermal reformer at 1.4 million. So the SMR, the kind of the smaller, more conventional plant, is not being actively considered at this time. It is really the autothermal that we're focused on and that's with both Jera and Mitsui as potential

partners.

Thank you very much.

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

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

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