CF Industries Holdings, Inc. (CF) Earnings Call Transcript & Summary

Well, listen, thanks, everybody, for spending some time with us. We're very happy to welcome CF Industries up on the stage with us, spend some time with us today with Greg and Bert. This is -- again, I think most of you know, I haven't covered ag the last couple of years here at Goldman. Adam stepped down a couple of months ago, so it's a space I'm going to pick back up, but it's near and dear to my heart. I own pieces of a couple of farms in the U.S., I've spent most of my career or adult, even my childhood around farming. So it would be fun to kind of pick that back up. So thank you guys for coming up and spend a little bit of time with us. I think maybe to level set, it's interesting, if you look at the input guys, whether it's fertilizer or ag chem or seeds, their cycle has looked a little bit different the last couple of years than the farmer cycle. Farmer economics have been quite healthy. We've had some issues with the inputs where profitability has kind of been on the lower side. So maybe just level set where you're at in the cycle and juxtapose that what farmers are seeing where maybe they're going to see stuff roll over and historically, how those 2 have played when the cycles have moved against each other.

So I think just to own up to it, we are in a tougher spot in the ag community today for a farmer, a soybean corn farmer and less so in wheat as well but also for the South American big farmer also. And so what that is, is it's a price issue. So with corn around $4 and cash corn sub-$4, when you put together your cost structure, and starting with land, equipment, crop protection, seed and the most important thing is fertilizer and especially nitrogen fertilizer. There is a question, where is -- how do you make that economic structure match and with a profitability position that allows for continual reinvestment. And that today is constrained. So what we're seeing with Deere and you have them here, you can ask that question of they've cut back and so cutting back in people, cutting back on expense because people are buying less and spending less. You're going to see a move to generic crop protection or cost cutting and feed. I think for our space, what we're seeing is not a lot of changes. And that's because you can't change the nitrogen structure too much without a yield impact, especially for your coarse grains, corn and wheat, cotton, sugar. So I think how that matches is high prices, cure high prices and low prices, cure prices. So today, you probably high end of the cost curve producer of corn is going to be challenged. That might mean a change or an idling of some acres worldwide. We have an over -- not an overabundance, we've had some very good production years and especially this year, whether that be South America or North America in corn. And -- but we're still seeing 90 million acres for next year. Part of that is a part of the rotation. So we're structurally positive demand for our products but recognizing the challenges that are in place for a farmer today.

Okay. And historically, when you've looked at the cyclicality of demand for N? How much of that has been driven by farmer economics? How much of that has been driven by weather? How much of that has been driven by, let's say, inventories. There's a number of things at play when you look at a 20- or 30-year run of demand for N from producers. How would you break out the bigger KPIs on what leads to either increases or decreases in demand for you guys?

So for me, it's an interesting structure on specific to demand because supply drives price as much as demand. But demand is consistently growing at 1% to 2%, so let's say, 1% to 1.5%. Why is that happening? New acres are being opened in South America, double cropping in South America, increased corn yields in South America on that double cropping. The actual consumption of fertilizer and is fairly consistent in the Northern Hemisphere, that being Europe, North America. And so you're seeing actual improvements in nitrogen efficiency. So not a need for increased production. But you do see moves between the upgraded products, ammonia, UAN or urea. And so today, I would say we're still seeing continued demand growth and then you fill in industrial, and Greg can talk a little bit about the clean energy growth that we're seeing for the future, we have a very positive trajectory going forward.

Okay, okay. And then a bunch of stuff I want to jump on to. Looking at things like digital ag, do you think that there will be meaningful improvements in and utilization that theoretically could cut the demand for your product relative to acres planted or bushels produced, will that be meaningful anytime in the next several years?

You have to take that then step back and go from a global perspective, where N being demanded and consumed and at what level. Where precision ag and some of these digital ag products that are taking place, and I think should include biologicals, microbials, different products that are coming into the market. If you look at -- this is an amazing statistic, and we can send this to you -- the growth in yield over time, if you go back to 1980, when I was in high school to today, we've gone from about 110 APH to 183 this year and the nitrogen efficiency has only improved. And the nitrogen consumption is steadily but not to the same corresponding reference of the yield improvement. That's North America. But in South America and in different countries, I think you're seeing improvement. But again, you're seeing overall demand because we need the products that our products produce. So I don't see that necessarily -- I see it getting better with less loss, more efficiency, higher yield, more seed population. And it's a construct of everything, not just of the fertilizer aspect but the whole farming structure.

Okay. Again, I'm going to come back to a few things here. But I do want to get out just we've kind of asked each company, obviously, new administration coming in. And you've got Trump 1.0 that we can look back stuff that was physically done. So we know that we've got a little bit different rhetoric on some areas this time trying to change to a greater degree, some of the trade patterns globally. When you look at your business and your customers, where do you see, I guess, the most opportunity? And where do you see the most risk around some of the stuff that you [indiscernible].

So let me start, and then I'll bring it off the first, right? So at the end of the day, we're in a commodity business, both for our feedstock coming in as well as where we sell our product. And the prices of those are determined by global supply chain, supply demand imbalances, et cetera. We are also a U.S. manufacturer and majority of our product stays here within the U.S. So as we look at going forward, each administration comes in with a kind of a different view, always a nuance really and how they approach a freer trade and as a U.S. manufacturer, we're always in support of a freer trade. But as we look out into the market, I think it's going to be much more around where the global economy is, where the global supply and demands are that are going to be the larger impacts to our business. Now it drives some interesting conversations always, especially around dinner tables and other things. But as we look at the broader impacts on it, those are things that are going to determine how healthy our customers are and how healthy we are.

And for us as a company, we have focused over time on how we can position ourselves as a company of the future. So Greg is on the governmental impacts or what they can and can't be. But structurally, we're low cost, we're highly efficient. We invest in our plants, and we are diverse in terms of our customer base of ag, industry and exports. And we think about this all the time, and we're constantly traveling all over the world, meeting with customers and thinking about that future.

Okay. Then because I think one of the benefits for you, if you go back to Trump 1.0 and look at what we shipped on soybeans to China versus what Brazil shipped soybeans to China, you've had a big shift from us to them on soybeans, which I think you've kind of backfilled in with crops that end up using more N, obviously, soybeans doesn't use N, right? So is that been a structural benefit from you? And if that goes even farther, could that be another bonus for you guys? Or you don't see it that way?

Not necessarily that way or not. When -- I lived in Brazil for 8 years, in Argentina for 2.5, for a total period of over 10 years and saw the explosive growth. So whether we do or whether we don't, Brazil has grown. When I got there in 2000, 16 million tons of fertilizer were consumed. When I left in 2008, 26 million tons of fertilizer consumed. Today, it's 45 million tons. What does that represent? A growth in the production of oilseed and corn. And what have they had to do with it because the population is fairly stable. They have done a very good job of increased feed and then exporting of protein and increase in ethanol -- corn ethanol production along with sugar ethanol production. But they haven't -- they're an exporting powerhouse, and they in Argentina are bigger now than we are in terms of total production. And with the devaluation of the currency, the real today is close to 6, that has made them more competitive on the international platform. And the Chinese have wanted to move product there, whether they're buying iron ore or soybeans. And so however, we have found other export markets. And when you look at corn of the 60 million tons that we export, only 5 to 8 of it goes to China. Mexico is our key market as well as Egypt and other places. So like Greg said, it's a commodity. We'll move with it.

Okay. And then obviously, in the commodity demand matters, supply matters as well. What's your view kind of N supply over the next 3 years kind of across the 3 major products?

It gets tighter. There aren't a lot of investments and where they are in Iran, India and Russia are not -- Russia is an exporter, Iran is an exporter. India is not. So with that 1% to 2% growth of whether that be ammonia, urea or whatever, you need these plants to come on, right? And we don't have many in the pipeline. And that's absent new demand for new products such as clean energy, clean ammonia that we believe will come in later in the decade.

Okay. And if Trump is right that he can end the Ukraine Russia war, right, we'll see where it goes. But I mean, let's assume that he gets that done. Does that bring kind of a onetime meaningful bump in what kind of you can export either more efficiently or produce more from Russia to get to the world or you don't see that as being kind of incrementally a bump?

The Russian product currently is making it out. So whether piece is declared then they're still going to export what they export, but they will be -- and that is if the world embraces that piece and then the tariffs come off in Canada, Australia, Europe or the restrictions. But again, it's a commodity. So whether it's Iran or Russia, those tons have been on the open market and whether they're called Omani terms or Iranian terms, they're still..

So you don't think there's any curtailment in what they could export today, but you would say that there's a friction cost that may go away that they have today, so they probably won't... Yes. Okay.

Different moves they're making to maybe going to markets and maybe not as economically attractive as other markets.

Okay. And then what we're just talking about there on supply, obviously, is mostly around kind of the ag angle. We just had Air Products up here, the conversation before. There are some people coming at this from kind of the green hydrogen, the blue hydrogen side that at least are looking at ammonia as a caring mechanism. But now even you've got Air Products talking about selling green ammonia if the customer will buy that and they don't have to associate it back. How do you see that moving forward, do you see meaningful tons of ammonia going to the market that ostensibly were there for energy but may or may not actually find a home there?

So we look at it constantly. And we look at the number of projects that have been announced, and then we've got a pretty good handicap process to figure out what we think actually makes it to market in those 2 numbers are close. So when you do forecast and think about the supply and demand and you think about how that will play out, for sure, more, there will be an addition of tons probably in the blue space. And going forward, we have an annual amount coming online next year in our Donaldson for almost 1 million tons that Bert will have the opportunity to go sell, with 60% reduction in the carbon content of the ammonia. But when we look out at the market and say there will be a need for more ammonia, whether it's blue, green, gray and the world as a commodity market will buy it. So when we think about whether or not we make an investment decision here around building another plant, the level we'll hold ourselves to is okay, where would those tons go? Would they be a new source of demand like in Japan or Korea or some other places? And I've been pretty public with our discussions with potential Japanese partners. But when we sit back and I prepare analysis for the SLT and Tony and the Board, we think about it as how would we sell those tons and what would be the conventional price on that and then making sure that as we go to justify our investments, if that sells and trades like conventional, then we would still get an adequate return for our investors. And that's not consistent with how everybody looks at it in the market. But we tend to take a pretty conservative view and look at the long-term supply and demand and really great if the new source came on. If it doesn't, and we have to sell those tons and those tons trade like traditional conventional tons, probably and most likely the lower carbon tons will trade first. So you're buying some liquidity on those tons.

Okay. Okay. And maybe if you could just share with us your view of how you see that either blue ammonia or blue hydrogen economy kind of developing, where do you see customers, when will we start to see if we will, a premium. Will it be a discovered market? Or will it be a lot of kind of just unilateral deals that people will do that you won't see pricing? Just how do you see, I guess, the hydrogen consumption economy developing?

Yes, it usually more slowly than we think, right? I mean in my former life, I was selling electrolyzers into the space. And by 2024, in our forecast 5, 10 years ago, we were going to have a significant amount of green ammonia coming or green hydrogen coming online. But there are some constraints to that from everything from having excess renewable power in finding a home where you can make an economic trade because at the end of the day, it all comes back to an economic trade, right? Incentives can definitely help, whether they're the carrots in the U.S. market or the sticks that may be in Canada and Europe to encourage market. But at the end of the day, it all comes back to economics and does the marginal dollar of investment give you a marginal return as you go forward. So I think it will continue to play out. I am interested on Bert's comments because he spends a lot of time in our traditional applications and how making sure that the farmers get paid in this whole relation to the extent they use a lower carbon fertilizer for either SAF or consumer products.

Yes, this goes back to your previous question about farmer structure and what they're pursuing, and it has to be an economic return for us, and that's to be an economic return for the farmer. But we are actively already marketing these tons because we will have our first low-carbon products coming out, and we expect Q3. And so whether that is for ethanol production, so you've seen our announcement with POET, low-carbon products with CPGs, we have some agreements we're working on as well as with the co-op retail space, the CHSs, GROWMARKs and WinFields of the world. And then the product we export to Europe with the CBAM coming in place, we expect positive receiving of our products there.

Okay. And I kind of think of those 2 different ways because with the ag, at least as a farmer I am skeptical, right? That chain feels so long for everybody to get a little slice and for the accounting of trying to figure out, is it really true all the way who's going to prove it, who's going to be on the hook if somebody cheated and gave me something that wasn't blue. It kind of reminds me like the old days when we had biotech crops coming in, right? So Monsanto had a great proposition. You come with Roundup Ready. I can see if there's not a damn lead in my field. It's awesome. DuPont was coming out with stuff that would give a nutritional value, let's say, FIA corn flakes 2 years from now. And so for Kellogg's to pay Cargill, Cargill to pay the farmer, the step just too many for everybody to figure out the right way to divvy it up. At least my view from a farmer is kind of that's how I feel about right now the blue and the green on using fertilizer. But you tell me, do you think there will be a system in the next couple of years, put together that people have trust in that I can get paid? Or is it more of a moonshot several years from now, do you think?

Well, let's start with what we're responsible for. That's the end production, the low carbon nature of that. You either have the investment or you don't. You can either make this product or you can't. And we will, and we can track it. And we can track it to our system, we can pipeline it. We can go to our terminals, we can barge it. And so whether it's a molecule or a book and claim, that is not that difficult. We make 1 million tons. We segment 1 million tons. Not everybody can do that. Yes, there's been some funny business out there. And by the way, welcome to the world, it probably will still be. But it's not that hard to say there's no capable way because you haven't made those investments and whether it's an ATR that takes away 95% of the carbon or an SMR with carbon capture that takes away 60%, 60% to 70% of the carbon. So -- and there aren't the investments taking place today, there have been announcements, the steel in the ground has not yet happened. So -- but the simple chain is we know what we got, we are going to charge for low-carbon product. And then how that makes its way through the retail and it's really the processor that has to -- the person receiving the grain from the farmer has to pay that farmer an additional upcharge. Today, that's $0.04 a bushel on some of the offerings. It's going to have to be higher than that. It's not that interesting for farmer, that turns out to be about $8 an acre. So but low-carbon fuels and this is where the ethanol is one of the keys. It's important because if we can make a low carbon, we improve the carbon score 10% with our low-carbon fertilizer and then if the ethanol plant is decarbonizing what they're today emitting you have a very attractive construct for not only SAF, what Greg mentioned but just fuel for it.

We do sell into the industrial space, 15% of our volume or so is into that industrial space. And as folks are trying to help themselves make their commitments around carbon reduction, and we think that's a very logical place that they could buy our Donaldsonville ammonia 50% reduction and bring it into their supply chain [indiscernible]

Okay. And so that's -- so to me, maybe for Greg, what market do you think comes around first? Obviously, you can -- greater Europe, trying to do different things, whether it's mobility, decarbonizing some steel meals, that kind of stuff. Korea, Japan, both seem to be markets that are looking at that pragmatic. I would say where it's like, okay, hydrogen might be our backbone. I don't really care if it's gray or blue or green today. Over time, we'll figure out how to green the hydrogen molecule, but let's just build an infrastructure. And then the last one is shipping. Again, we're trying to go from bunker fuel. So where do you see the biggest potential demand for ammonia between those 4 buckets, let's say, over the next 3 years?

In the near term, as I think about it from clean energy, right, and I look at the investment, we invested $200 million into our Donaldson plant, to get the 60% reduction in carbon by taking the process CO2 and we've partnered with ExxonMobil, and we've been pretty public on that. The benefit of that is $100 million a year for 12 years. We spent $200 million. I get a significant return on that investment very quickly. I know is I go to sell that or Bert goes to sell that next year, he'll sell it to where it makes the most economic sense. As we think about making additional investments going forward and we think about where that would go, definitely having a new sources of demand is very interesting, which is the Japan, Korea opportunities or bringing it into Europe and displacing current production there today and taking advantage of CBAM and how that plays out. Those are very interesting markets to us. But in a way, I'm not dependent upon a particular market. Those are all opportunities that we look at it. And knowing at the end of the day, we expect the S&D to be tight going forward that there's a fundamental reason to go forward. And if it moves more quickly into those markets, as low carbon, and we get a premium for that, all the better. And we expect to. When I say I model it without it, it's not like I'm not going to -- we're not going to demand it, but it's to be the conservative nature that CF Industries operate under and that safety culture, we take it right through our capital allocation investments.

And then maybe just to dive on the one. So in shipping, in particular, to me, it's kind of always been -- it could be ammonia, it could be methanol or maybe it's straight hydrogen that wins. When you analyze all those, how do you think ammonia stacks up? And is it the likely winner in your view? Or methanol might have a little bit of a lead where I think they've got a few more ships to kind of prove it. Which of those 3 ends up kind of giving away from bunker fuel?

So when you look -- methanol is going to be the early winner. And -- but it's -- the reduction in carbon is not that great. And so longer term, that's a transition and we talk about these transitional fuels and the current operating environment, methanol works. You have 60,000 vessels plying the world, whether that's Cape, Panamax, Handy, Handymax, Cape or Coaster. The average life of the vessel is 20 to 30 years. And so they are out there and they're long dated. You can -- the world makes about 1,000 to 1,500 new vessels per year. So when you extrapolate vessels obsolescence, new builds. It's going to take a while. There have been ammonia vessels ordered, there'll be dual-fuel and that will be the test. And so there are bunkering opportunities in Europe, in the United States. We own terminals as well as Singapore is putting 1 in place, but the world has to build those terminals. So it's going to be longer dated, not the next 3 years, but over the next 10 years, that system needs to be built for the next decade.

Okay. And then I want to go back and ask a question just on the production of ammonia. Historically, if you look at like refining, they've outsourced their hydrogen, the ammonia industry has not. You've kind of had your own SMR. One, what is the difference? Why has that happened? Is there kind of more cross benefit from, let's say, steam between an SMR and your ammonia process? Is it the CO2 that you could capture and kind of use for other products in the end chain? That would be question one, I guess, is just why has other industries outsourced hydrogen production to an industrial gas company and the fertilizer guys haven't.

So when we look at our production and we look at what quartile we sit in, right, we obviously have the advantage of being a North American producer. And taking that feedstock in gas at that values is a core part of our problem. So when we look at the integrated process, the way I'd answer your question is yes to all of those. Having the integrated process to create the ammonia to use the CO2 as part of our urea production on an integrated plant is core. When we sit back and look at ways of maybe outsourcing different types of industrial gases, it always comes back to where would that move us on the cost curve. And having so far, having an integrated SMR plan has made a lot of sense to do that all together in 1 integrated plant, and that's driven us to where we are cost.

And do you think that holds as we move from the SMR to the ATR, obviously, we've seen OCI at that point, decided to outsource it? Is that -- does that become as a little bit trickier plant to run? Is it more that now you're having to deal with CO2? And -- so that has some more value or?

There's always a trade, right, between your capital investment versus your OpEx. And where do you want to trade. So when we look at an investment and maybe partnering with someone, it's really what does it do to our end economics. And there is always -- there's a capital trade that can be made there and maybe do it at a little less. To date, we look to choose partners and sell the plant as a whole. But there may come a day from whether it just makes sense to have somebody do some of the industrial gases for us on site and just give some resiliency and some other things to. It's truly a benefit there.

And especially if you're on a pipeline, I mean -- what I always kind of theorize is your plant isn't quite as expensive as a refinery. So if you're down 2 extra days, it's not as painful as if a refinery is down 2 extra days. And so maybe there was more value with industrial gas productions kind of supporting refinery versus you guys. But is there's always been kind of interesting why 1 industry outsourced it and the other didn't. Yes. Okay. When you think about your cash position today, I guess, how should we, as investors think, again, where do we take that cash flow, where do we take the cash? What does the investment opportunity look like for you guys over the next couple of years?

Yes. When we think about capital allocation, we always look at how do we make investments in our current portfolio. And we've done a really good job. The company has -- I've only been here for 5.5 months. And I look at it, the company has done a really good job of converting its capital over time and different CapEx opportunities at different plans to debottleneck and do other things. And I think we've played our hand out there. We will look at inorganic opportunities. We did the Waggaman acquisition this time last year, it closed. We brought that into the portfolio. We're getting a lot more yield out of that based on where asset is trading today and what we bought that asset in. That's an extremely great opportunity. But maybe when you look around the U.S. and you look at some of the constraints that exist today, maybe they go away, maybe they don't, maybe there's markets we play in. But there's nothing -- we look at everything, but we're there, and we would do it if it gave us an adequate return and helped us build out. We'd always look for cost rule of, normal things that you look at for return on investment. And then we look at where we can do returning cash to the shareholders. And a year ago, we announced a $3 billion buyback at the end of the third quarter. We're about halfway through that. We tend to be fairly opportunistic on when we buy back our shares. But we expect to be done and completed with that, and we've very committed to the December 2025 date. And if you do that from end of third quarter to then, that's about a 10% reduction in share price -- or in shares given where the price is today. We'll continue to do that, and we've got the dividend as well. So it's a fairly simple capital allocation model. I like having $1 billion in net debt, you take $3 billion of gross and $2 billion in cash on the balance sheet. I like buying back $0.5 billion of stock and paying a dividend last quarter and coming into the quarter with $2 billion and leaving with $2 billion. It's a nice job to have as a CFO.

Okay. And why do you think -- one of the things that has been surprising to me about N is we haven't built more in the U.S. kind of post shale gas. When you look at the ethylene chain, some of the other chemical chains, when you got that very low-cost feedstock, not just incumbent U.S. companies, but foreign companies actually came in, started building with the express intent to export because you'd end up with a lot lower cost landed than if you built in your own country. But we've seen relatively few ammonia plants or N. Why do you think that is? Why haven't more people tried to take advantage of the low-cost natural gas to build in?

Well, when you look at the nitrogen and there have been people that have bought land that have priced out and have done FEED studies, it's expensive. And if you're not building on the Gulf Coast, you have to have a winterized package, which makes it more expensive. We're a net importer, but the actual demand for our products is about 4 months of the year. And so if you're not able to export or move up the river like we are in Donaldsonville, you have a constrained plant. And so there have been -- there were 26 announcements in 2012, 2013 of new plants to be built. And I think 4 were built, 2 are ours. One was Nutrien, one was [indiscernible] -- oh, no, 5 and OCI. And so that consumed more, and then we went through a difficult period in 2016, 2017, 2018, which probably retarded investment and the view of new capacity. Now with clean energy and some of the other -- the advent over and the continued growth of shale gas against high-cost European gas, people probably looking at it now again, but that takes FEED study construction 5 years. So we're -- probably won't see a new plant come on outside of Gulf Coast and the OCI plant that was sold the Woodside that will come in operation until 2030, a new plant.

But what do you think the likelihood is, let's say, between now and the end of next year that you get some announcements. So people come out FID, saying boom, we're going forward? Is that likely to happen?

I would say we're -- just like we were all in the process. We're on the FEED study today and that will come out in 2025.

Okay. I think we got 2 minutes left or so if there's anybody in the audience, I can certainly keep going here. But yes, in the back left over there? Yes. Yes.

With the projects that you are looking at FID early next year, just kind of thinking about that in the context of your $3 billion debt target, is that project something that you can do within the confines of that target while continuing with the repo program and continue to look at M&A? Or would that project potentially cause you to increase your debt target?

Yes. So I wouldn't call the $3 billion of debt target where we are today. We relook at our capital structure continuously, whether it is on the term debt we have out or the revolver. And we think about if we were to proceed with FID how, if at all, would that change? We'd obviously look to make some -- we'd have to make some different decisions around our next share repurchase plan, and it would be dependent upon that. So I would say, as we go in, it's going to depend on a couple of things. One, do we choose to proceed? Two, how much of it do we own when we announce it, and how much do we expect to own when it comes online 4.5 years later, meaning how much of the capital structure are we going to fund? And then where are nitrogen pricing and natural gas pricing over that build period and what is the amount of cash flow that can come off the core business? We would obviously look at it from a conservative basis and think about making sure that the company is in a safe and secure place. Really happy with the balance sheet that I inherited when I got here, and I think that's core to the business, and we would continue to operate the business that way. But there's a number of variables we'd work our way through and make some decisions around that.

Can you talk about the complexities, the constraints associated with the construction of an ammonia plant and issues that other companies where ammonia production isn't necessarily core might run into? And then similarly, if you were to partner with a similar company, what sort of return thresholds would you be targeting, what enticed you to partner on?

Let me start. As you think about the construction of the plant, we obviously have a history of doing that. It would likely be a different technology, and we would partner with those technical companies that can help us bring it together, preferably in a modular way and assemble our plant. But we got a lot of engineering benefit, and I would point to the Waggaman acquisition where we can bring that engineering to bear. It's something that is core to the business. Even if we partnered with somebody, we would look to make sure that we had operational control with that partner that is we built the plant and we operated the plant moving forward. I missed the other part of your question.

Listen, we -- the cost of capital in a company of this size is at 8.5% to 9% range. When you look at a 40-50 year asset, I think you're looking at something that obviously exceeds that, but low double digits is where we would be. And that would -- based on the way we model, that's the right place to be, meaning, we take a very conservative view on how we model things out. So if we can get in that above the cost of capital in that low double digits, that's a nice investment for us.

Terrific. Listen, Greg, Bert, thank you guys so much for coming to spend a little time with us. Thank you.

Great.

Thanks, everybody.