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

All right. We're going to go on to our next session here. It's a fireside chat with CF Industries, one of the world's largest North America -- one of the world's largest nitrogen producers. So we're joined by Greg Cameron, CFO; and Amanda Pascavage, who's the VP of Product Management for Ammonia.

So maybe we could kick off and talk a little bit about -- why don't you give a little state of the union. So what's going on with CF right now? You've had some big announcements to the market, some of your longer-term plans.

Yes. So things are good right now at CF. I've been with the company just over 10 months and joined as the CFO. And since that time, we have been doing very well. The market has been very constructive for the nitrogen market. Pricing is very healthy for us. Our plants are operating safely and productively, and we're making a lot of product that's moving very quickly into the market. We made a big announcement just last month that we are going to create a joint venture with Mitsui and JERA and build a new plant in Louisiana, which we refer to as Blue Point that is going to use a technology, autothermal reforming and make over 1.4 million metric tons of blue ammonia. Part of that will move east into Asia, Western Asia, and then we'll keep 40% of the economics and the product can move it there. So very excited to be part of the team, very exciting time for CF.

And maybe talk about the market a little bit, what we're seeing in the spring. It's been a very surgy market in urea, UAN, even ammonia. But maybe talk about the market, what we're seeing in the U.S. right now?

Sure. I think maybe starting with global S&D. So particularly for urea, there were curtailments that were happening for gas disruptions in Q1 that started to create a bit of a short position. I think when you look at how the timing is in terms of when that product moves, I think a bit of that was under the radar. And then as we get closer to application seasons, you start to see this price appreciation that we've been experiencing now with urea. I think translating that into the domestic U.S. market, during that same period when things were a bit tight, prices in the U.S. were lower than other export opportunities in the globe. So that product didn't necessarily come into the U.S. Again, that continues to support price appreciation once you don't have that product and the import in place when it's necessary. I think contrasting that with ammonia. So ammonia had a bit more balanced to maybe slightly long position globally, similar to translating that into the U.S., we started to see degradation of those import values for ammonia through the first quarter, and that's continuing now into Q2. I think but on the other side, North America is an import demand region for nitrogen. And so having that capacity to bring product in limited, particularly by tariff uncertainties as well as other factors, coupled with demand coming from potentially 95-plus million acres of corn really creates that short position overall for nitrogen. I think that sets us up very well as we continue through application.

Do you think USDA has its acre expectations right, 95 million?

We do. We're seeing, again, that really strong demand pull. Looking across the 4- to 5-year average, generally, the U.S. is experiencing around 91 million acres of planted corn. So we're higher by 4 million acres. That creates additional demand pull for nitrogen. And that's, again, what you're seeing, particularly with Midwest pricing, really showing an appreciation above what those import values are.

Yes. I think Bert mentioned it on our call, based on what we're seeing being pulled out of our terminals, he thinks it's at least 95 million.

At least, yes.

At least 95 million.

But you can -- maybe you can submit questions on the app throughout the day, including this session, if you want, and then we'll reiterate them. You talked about some of the like tariffs. Can we talk about like some of the -- a lot of global things going on, macro things going on that are affecting nitrogen markets, tariffs, changing energy spreads, India seemed like they were behind on their urea demand, Chinese exports basically 0, now may be coming back. Like what do you think are the biggest drivers now affecting the market?

I think all of the above have impacts. When you talk specifically for China, the recent announcements that they will continue with export controls but are targeting potentially 2 million tons of material leaving the country. I think that's going to really take some time for that to come into the market. When that volume is coming in, there will be export restrictions. I think what's different about this year than in prior years, in prior years, that product was moved to the port and then held for inspection. In this case, it's actually being held before it reaches the port. And so I think that gives another measure of control over that product movement. They're also going to be very closely watching what that price is and making sure they protect their domestic producers. I think beyond that, tariffs, certainly, we have that conversation coming here into the U.S. Some import opportunities, particularly coming from Trinidad, have a 10% import tariff on them. Other regions like Russia are at 0%. So we would expect to see more Russian product potentially coming into the U.S.

It's interesting, Joel, you know this well. You've covered our company for a while. Amanda lives this. But for somebody who's new to the space like I am, what's interesting is being a U.S. producer in a U.S. market, you would think that you would be insulated for some of these global trade flows. But what happens around the world impacts the trade flows, impacts pricing to us and may not ultimately impact where we sell our product, but it will definitely have an impact on the price of that product.

So what do you think like imports into the U.S. were lagging into Christmas into early '25. Like why? Was it just Trump's coming in? What's it going to do? Or what do you think it was?

I think it was more about the margin opportunity. So if you have an import region that's going to be willing to pay more than what that landed price in the U.S. is, it's simply going to pull that product away. And particularly, Brazil continues to be a driver of those import needs. And so Brazil trading at an opportunity cost that's going to be higher than what they might have received from a U.S. import, I think to me, that's a natural decision for them to make. And so that shortage doesn't necessarily show up through those first few months until we really start to look at product movement and then people feel that short and you really start to see particularly Midwest prices increasing.

The feel that we have for the market in Amanda and the guys who run urea, UAN, DEF, they saw that movement not happening very early in the year. And as we thought about how we were going to market our product, where we were going to take our product, they had a lot of intelligence on where to move it based on where they thought the best margin opportunities were going to be and the flexibility that CF has given that we have our terminal system. And at the same time, we've been exporting more. So when we see opportunities to do that, we can do it. So we're not dependent solely on the U.S. market. But that team saw months ahead of time, what we're seeing now today. Had conversations with customers around, hey, this is coming. You may want to secure your volumes today for what you're going to need in the spring application season. For a while, there wasn't a lot of conversations being returned back saying, given the price, I'll wait, I'll hold. And now we get to the point as you get into the season, a lot of that product is short, and there's a lot of urgency for us to move it, which is a great place to be.

So ammonia obviously has underperformed. Talk about like where are we close to floors, get long, what should we...?

Well, I might debate that.

Yes.

I think for a Midwest value versus a Tampa value, there really is a difference. And so the landed Tampa value at $415 per met this last settlement really is contrasted with what we're seeing in the Midwest with strong values in the $600 to $650 per short ton range.

But I mean -- so what's the premium, Midwest premium $200-and-something do. I mean that can't -- that's not sustainable. Somebody got to get -- somebody is getting pulled up or pulled down, right?

Well, I think eventually, we come to the summer season, and there's going to be a natural reset. I think that reset period, given the strength of application, we talked about the corn acres, that you are going to start to pull those inventories lower. And when you have that low inventory position, plus you're going to likely get an application tail going through the summer period simply because that product needs time to be in place because of the low volume availability, that's going to take us through maybe a deeper period into June. You'll see fill coming out likely later. And then those values rather than a fairly low reset, you're probably going to see, particularly on urea and some upgrade products higher than what you may expect.

And less volumes.

And less volumes.

Where do you think is the floor right now on a Tampa ammonia basis when you think about it?

Well, I hate to conjecture a value, but I would say the floor price is going to be set by the global S&D. And so we're coming into a summer period where there will be turnarounds. There's going to be maintenance activity. That's going to continue to tighten certain regions. I think we always have to consider what the impact of Trinidad's tariffs are going to be. There's about 1 million tons per year of Trinidadian ammonia that's imported into the U.S. And right now, that's subject to a 10% tariff. And so you start to move that product into Tampa, you may then think about what that penalty is on tariffs, and that may start to affect how we think about the U.S. domestic pricing.

Pretty much as the Mosaic has been talking about maybe we'd sell our ammonia plant in Louisiana, which is a weird time to think about that if some of the other supply, the marginal tons are coming in from Trinidad, right? And sort of -- it would be a tough time to do all those decisions.

I think there's always a lot of considerations when you try to think about selling assets and how you position yourself in the market. But ultimately, nitrogen is needed in the U.S. We're import dependent. I think there's going to be demand for that product. It's just a question of when and how it moves.

Have you looked at if we get a settlement of a war between Russia and Ukraine and the Togliatti or TOAZ pipeline comes back online, we got more ammonia coming to the Black Sea, what that could mean on global markets?

I think Russia was a high participant in exports previously. They have been able for the urea and UAN products, they've generally returned to those pre-war levels. For ammonia, that hasn't happened. Like you said, there's an impact from pipeline and other logistical constraints allowing them to move the product out. I think for the prior exports, call it, a 4 million to 4.5 million ton range, they're participating now at about 1.5 million tons, maybe 2 million. And so that will continue to come on, but I don't think it gets back to those prewar levels for a long period of time. I think they are making adjustments to their own logistical opportunities. They're also looking for upgrade plants for more urea. So that's going to potentially consume that net ammonia. And I said in the last consideration you talk about tariffs is the consideration for Europe. Is Europe going to implement tariffs on Russian product? And how might that affect trade flows? And again, maybe you'll see a shifting in a balancing.

Okay, we're going to talk to you, don't worry about that.

No, no I believe me. I'm...

I really appreciate that you guys are here, right?

Exactly.

And so we're going to keep going here. No, no, I got more. We got more. Just a question I have for you is, I think with the higher TTF, the higher European gas prices we've seen, we've seen a lot of ammonia come offline in Europe, and there are some views that if CBAM comes on the Carbon Border Adjustment Mechanism, which has maybe been delayed, maybe not, we may even see more curtailments in Europe. How do you think about that in your ammonia midterm view?

Yes. And I think -- so we've done -- would you like to...

No, let me just give the global view because we've done this as we thought about investments and then you can -- Amanda will talk much more intelligently about the details of the market. But as we look at it, right, over the next 5 years, we continue to see the world market continue to grow and need more nitrogen, need more ammonia. And then we look at what has been announced and likely to come online and that list of plants has decreased significantly over the last few years. But particularly with Europe, we spent some time last year with a third party and they went out and looked at over 47 plants around Europe and said, where is this plant positioned economically? Where is the state support? Where is it logistically? Where is it on its production output relative to others? And then it looked at when would it likely need a major turnaround. And the team came up with a list where they thought there was a high probability of closure, mostly driven by the same decision that we made from our U.K. facilities, which is it's fine to make a small marginal amount of dollars until the point that somebody asked you to put $50 million to $60 million into a plant. And then you got to -- you really have to question your ability to get a return on that. So we think that over the next 5 years, there's likely another 3 million to 4 million tons of capacity to come offline as those plants meet their need for a larger investment. So on a macro basis, that's how we see it in the market.

And I think Greg covered that well. When we look at curtailments as well as just production being taken offline, Europe continues to be a nice import market, particularly for ammonia as well as other upgrade products. I think for the long term, you talk about CBAM and the opportunity that, that may present for those outside of Europe. I think it's a really nice opportunity for us to move low-carbon products into that region. Whether or not CBAM is delayed, I think at some point, something is likely to be done. I think Europe is, I think, a bit more mature in their understanding of the impacts of carbon. And so that may support another $100 a ton or more of an uplift in an ammonia import value just on that potential penalty. And as it's phased in over time by 2030, the time when our potential build is coming online, then we're going to have incremental opportunity to hit those European markets.

You were in Europe earlier this week. In the Donaldsonville tons are going to be available later this year. What was the discussion you had in relation to the market in relation to CBAM? Sorry, but I can't see. I didn't have my glasses on, I can't see.

It's a great question, Greg. For...

Maybe in the middle chart.

For -- so we did just come back from the International Fertilizer Association Conference. And one of the key questions as we engage with our potential customers is how do you view the difference between a Donaldsonville reduced carbon project versus Blue Point, which is on ATR technology. And I think the really good feedback that I received is it's sort of good for all seasons and all occasions where this isn't going to be necessarily that the Donaldsonville CCS is undervalued once these new plants come on stream. It's actually that they view this as a good balance where you're going to take that reduced carbon ammonia and you're going to also potentially bring product like from a Blue Point, which is even a lower CI score and be able to aggregate and average that to something that's, again, good participation against the CBAM penalty, for example.

Okay. Let's talk about that. So I mean I think we're expecting first low carbon blue ammonia tons out of D'Ville imminently, at least in Q3. Is that fair sometime in Q3?

I think our main focus right now is getting through the commissioning process and hard to predict when all the valves and the compressors and the phone calls all happen. But once we get that online and we begin to sequester that CO2, we then will build up inventory of product that Amanda would go sell. She's already marketing it today, but won't sign contracts until we have the product.

So like I'm modeling first tons in August. How do we feel about that?

I actually feel good. I mean once the product is there, as Greg indicated, we've had really constructive conversations with customers. There's a variety of people that are interested in that product. In some cases, we are literally at the point of once it's there, we have that opportunity ready to engage and move forward. It's just going to be a matter of how much volume we build in what time. But again, those tons are really pointed toward Europe at this point as a first mover. But I would say that the growing interest is now occurring in the ag space. And so for domestic production, 80% or so of our production overall is servicing the ag market in the U.S.

So the first tons you expect would be in Europe industrial applications, not ag. Is that what you're saying?

Industrial applications or even those who are potentially upgrading that into other fertilizer products.

Yes, so some ag. And I mean, you would have had over the last few years some view of what the blue premium may be, may not be. I know the math that the 45Q credit justifies the return blah, blah, blah, no premium. Okay. You had some view about the premium. How is that -- those views of the premium versus now when you're getting to the ninth inning of first sales?

We've been very fortunate that these conversations and customers are willing to recognize that it is a premium product and that we will be able to execute these contracts that we indicated with those premium values attached. I think for the U.S. system, there is a little bit more of a lag and more conversation that needs to occur. Ultimately, we need to do really good market development and educational opportunities so that, that understanding increases and then we can create that pull of value that's going to have to happen through the ag chain.

The latitude that we've given Amanda and the team is we're not looking to make all our money on the first trade, right? It's how do you see the market? How do you get people interested? You need to charge a premium so that they know it's a premium product, but I don't need my first ton to be at the highest possible premium that is out there in the market. Let's get people comfortable with the product. Let's get it moving. And over time, the S&D will set the price.

So it's like $10 premium?

No.

Okay. Some of these early -- in some of the -- so you proved -- you did the FID on Blue Point with your partners about a month ago, 6 weeks ago. Did some of these discussions give you confidence at the end, yes, FID, we should do the larger greenfield. Does that make sense what I'm asking? Like in start having discussions with customers or you get first products from D'Ville, did that embolden you that doing FID on Blue Point makes sense?

I mean, this is a project. This is a strategy we've been on for over 5 years.

It's your mission.

It's a part of our mission.

Bert would say it's...

It's our mission. So as we look to market signals to tell us that, yes, this is the right investment. It's very helpful that demand is coming back globally saying in different places, there's a lot of interest for this product. Remember, when we underwrote the Blue Point project, and this is an argument I'm going to be much more vocal on is the underwriting case versus the expected case. Our underwriting case for Blue Point was all about a significant contingency in there given how products have overrun before. It gives us running it at nameplate even though we run our fleet at 10% above nameplate. And it said we're going to use a price here that gets supported for traditional applications. And we ran that all through the model and came back to management and the Board and said, this project hurdles. But as we think about our expectations around that, we fully expect Amanda to get a healthy price premium on this product as it moves forward.

Okay. Why don't we talk about that, a bit more about Blue Point. Talk about the final strokes here. You talked about 2 partners, you're able to lock them down to the ranges you wanted. Maybe just give a -- start the conversation about how that was going on the signing to finish off the FID?

Yes. So we had a journey here with 2 partners as we were working with them. We weren't sure if we'd have one or both through the process. We were committed to make sure we had at least one partner to speak for the equity and for their share of the offtake. But lo and behold, the 2 partners we're talking to with both came into the transaction, and that's where we ended up with 40% of the equity ownership at formation as well as signing up for an offtake in line with our ownership. So very happy to have the partners with JERA and Mitsui. They'll make investments all along as we go through the CapEx process here. And then as we operate the plant, they'll take their tons back to -- likely to Japan when we get it up and operating in the second half of 2029.

So it's a bit of a sensitive topic, but JERA is in 35%. There isn't a potential they could lower that stake to 20%. It seems contingent on some external factors. I have my view what those factors are. You're not good probably. But can you maybe give what you can on that?

Yes. Listen, it's a condition precedent. It's not a free option to them, right? If something happens that they expect, that doesn't happen that they expect, they have the opportunity to sell down their position, and we would step in and fund that additional 15%. Listen, I think it's unlikely that, that condition precedent would happen. And two is I would love the economics and the times of being at 55%. So it's -- we don't look at it as a risk to the deal or the transaction or something else that we would work through. We honored our commitments to everybody as they came to what we told them that they could invest. And when it all came together, we were -- we stood at 40%. So I would be happy at 55%.

And I mean a big opportunity in low carbon only is what's happening in Japan. Is that fair? Maybe talk about some of that market developing over time that takes some of these tons?

Yes. I mean I think that what you've seen with the co-firing in Hekinan last year, #2, JERA and Mitsui working together on that and the benefit that they've seen, it's going to take incentives to do that. I don't think it's just Japan. I think Korea as well with a clean hydrogen portfolio standard. I think they will work a process here. But as we think about those tons going there, that is a source of new demand. So we don't -- we see that as an opportunity for growth for ourselves even going forward.

So it's your mission, and this is your mission and -- sorry. And I think a lot of investors -- this is weighing on investors, okay, so you can just buy back stock, buy back stock, buy back stock. You can invest in this. It's going to be about $1 billion a year -- your total capital will be about $1 billion a year for the next few years, if we factor maintenance and stuff. This question came up a lot on the call the other week. Talk about that trade-off of just buyback, buyback, buyback versus having a longer-term view.

So our view on capital allocation starts with for the capital that we have available from the operations. So remember, we convert 63% of our EBITDA to free cash flow. So there is an opportunity for investment of dollars. The first thing we look at is where can we get an outsized acceptable return on our existing business. Where can we invest in bottleneck, debottleneck projects, where can we invest in logistics, where can we invest in things like our carbon capture in Donaldsonville that gives us a nice return. And we'll go through a list of those, and we'll have a strategic plan on those. The next place we look is inorganically, what assets are available that we would be willing to buy and be able to buy. And you saw it with the Waggaman transaction that we did at the end of 2023, we bought an asset that was an orphaned asset as part of a larger business. We brought it into the CF portfolio and took something that was getting anywhere from 500,000 to 600,000 tons a year. We've now got it operating at 800,000, 880,000 tons per year. And that's part of the CF system network and ability to bring engineers, spare parts to that process as well. And then lastly, we look at it and say, how do we return excess capital to shareholders in the form of buybacks and dividends. So we've been very fortunate over the last 12 months, we've been investing. And at the same time, we've returned $1.6 billion of capital to shareholders. As I think going forward in the discussion we had with the management team and ultimately with the Board is it's not an either/or, right? This is all about doing things on balance. If you're not investing in your business, your portfolio, looking for growth opportunities, businesses don't stand still. They either go forward or they go back. And I would much rather be investing with forward inertia, forward progress, moving the business forward and creating real enterprise value for the company. But at the same time, with the amount of free cash flow we have, we have the opportunity to return additional capital. And that's one of the reasons that we were able to announce a $2 billion share repurchase on the last earnings call. So I think it's really about balance and very fortunate given the financial strength of CF to be able to do a lot of different things at the same time to create value for the company.

On that new $2 billion authorization, it's $2 billion over 4 years through '29, you have another $600 million or $700 million to...

$30 million to do, yes.

Round number says if you were to exactly do that, you would do about $0.5 billion of buybacks a year, give or take, for 5 years.

We don't look at it that way, but yes. I mean we -- the way we look at it, and it's fortunate given our cash balances and our free cash flow, we tend to be very opportunistic. Listen, I wake up every day and think my stock is undervalued and we'd be happy to own it. But when we go into a buying period in a quarter and set a grid, we will think about let's be opportunistic and take the advantages of volatility, which we've experienced a lot lately. And we want to make sure we have enough dry powder when those periods of volatility happen that we can step in and look to buy the stock at a greater discount than it's trading at today.

So I know you weren't at CF during the Port Neal and the D'Ville expansions early last decade. Tony was. And so I've asked Tony a lot about the last couple of weeks, but I mean -- and so many U.S. Gulf chemical plant projects had decent size inflation 12, 3, 14 years ago. How does CF mitigate capital inflation?

Yes, so one is through the course of our FEED studies, we saw and realized that there was capital inflation that was happening. It was one of the reasons that as we looked at it and said, why wait to build the plant 1, 2, 3 years from now, it will be more expensive. But as we structured the contract, I didn't live through it, but I think they made me sit in a room and read everything that happened with those expansions.

Yes, that's good. That's good. That's good.

It's part of the onboarding for the CFO.

Yes, that's good. That's good.

And -- but what we learned from that, though, was there were some things that we're doing differently on this build. One is we're doing a modular design. So what does that mean is different than what we did at Port Neal and Donaldsonville, the majority of the product is going to be made off-site and then shipped here. It takes a little bit longer time, but it creates a lot more predictability around cost. The second thing is a lot of what we have is at a fixed price today. So if there is risk around capital cost increase and other things, those aren't borne by us. So we've structured it that way. So it's a modular design with a fixed price on that. We have put in a significant amount of contingencies that we didn't have before and make sure that we can incorporate things that happen like tariffs and other things that may happen down the road. But as we look at how we manage this going forward, we think that it create -- we've done a lot of things that allow us to move it. The other thing we've done is gone out and gotten partners for 60% of this as well. So I think we've balanced this on a well risk management side.

Okay. We've talked about some of the downside of capital, but let's get the good stuff here. So let's talk about also what are the upsides on demand? Like what application ammonia could surprise the upside? What will be more challenging? What do you think about longer term?

I think we've talked about the opportunity for European imports given our projection that more demand is likely to come. I think you talked about Japan as well. So that's a region that certainly our partners are participating in. Korea is coming with a tender very shortly for a similar approach to what Japan has followed. We haven't mentioned the opportunity for marine upside for low carbon as well. So I think you start to see these ships being developed. The engines are now being delivered. And in the next couple of years, those will now have a potential outlook for ammonia for marine fuel. So I think there's really good opportunity there. We've seen bids coming in for various opportunities looking for bunkering fuel and replacements. Certainly, Singapore is an area that has had interest in the last couple of years. We're starting now to see more movement for demonstrations of ship-to-ship transfers. So now this is demonstrating and pilot testing the ability for bunkering to occur. I think the most recent was Rotterdam, doing this within the Port of Rotterdam, showing again that this can be done safely and reliably going forward. So I think all of those represent good opportunities outside the U.S. I'd say inside the U.S., we've talked about the ag value chain as well. 40% of U.S. corn goes into the ethanol markets. That 40% can also be low carbon product. And so there's an opportunity to decarbonize through an ethanol value chain. We're engaging with CPG companies, starting to see how can their sustainability goals be met by using lower carbon fertilizer, not just ammonia, but also our upgrade products. So I think there's a really exciting future for many of these opportunities. And at this point, we're really targeting all of them. There's no reason to down select. And so we're staying engaged in each and every one of those value channels to make sure that we're informed and can make the best decision about where to place what we will have to be the largest decarbonized ammonia opportunity that's yet to come.

On the marine fuel, so my team and I, for months and months, we've been starting to look at this a lot more, looking at every ship that comes to the market with Maersk or whoever. It seems -- and we were following from a methanol ammonia front because it feels like methanol might be a transition marine fuel with ammonia a bit later, maybe it's because ammonia engine technology is a bit behind on versus methane. Do you have any views on that?

Yes, I think there's been a lot of development. So certainly, it is the next step past methanol. But what we've at least been hearing and engaging, methanol still contains carbon. And so that's not a zero carbon opportunity. And so...

With flyers, so I think that's...

So that zero carbon opportunity is really what makes the case for ammonia. So yes, there may be transition fuels, just like you have a fuel transition with LNG. These things are going to be moving forward, and there won't necessarily be the supply of ammonia immediately in place. So I think this will take time. But as it comes to maturity, really the upside is significant for ammonia.

Yes, it's carbon-free. It's more hazard, say, methanol. It takes a little more to figure how to get around, but it's carbon-free in the end, right?

But I would say all fuels have hazards. Methanol is a flammable material. Yes, there's an inhalation hazard for ammonia to consider, but significant volumes of ammonia are moved safely today. And I think these demonstration and pilot projects that we've been talking about make the case for that. This can be done and handled just like you have to take care with any fuel.

Yes. Because you and [ Mary Carl ], the International Fertilizer International Fertilizer Association Annual Power this week. What are some of your biggest takeaways you heard just randomly, like what did you get, yes anything, anything missed out?

A lot of conversation on tariffs. So I think not just our kind of view on the U.S., but more broadly, what's Europe going to do and how is that going to impact Russia. I think people have the understanding that urea is going to continue to be tight. And I think that tightness is going to carry us through summer and into the second half of the year. But overall, I would say, even on ammonia, it's sort of stable at this point. The demand is still continuing to move forward. So I think it was a really positive conference. I think it's always engaging to get in front of these customers and our partners and really just try to align to make sure that we have a clear understanding of what's on their mind. And I would be remiss if I didn't mention that many of those conversations were on low carbon opportunities.

I was going to ask, yes.

And it's not just ammonia. We talk about UAN as well as urea and other value channels that people are stepping up to say, when we have it ready, how do we start to engage? And there are several customers that will continue those conversations and hopefully be in a position to announce some of that.

Look, I or BMO, we've been an IFA member for 20 years, more than that actually. And I think that -- and a lot of the IFA forecasts will get used by a lot of fertilizer producers as base cases. But I think they've struggled as an organization to figure out how does the low-carbon ammonia and nitrogen future fit into like the fertilizer future, like I don't know -- so there was more discussion this year, you're saying it's going to maybe force the industry to start thinking about the forecast more. Does that make sense what I'm saying?

I think it does. You always have to think about the forecast, but to me, this is -- it's about balance and timing. The conversations that are happening are really saying we've just made an announcement. I think that really kicked up interest. And so people who are maybe having early conversations with us now faced with the reality not just of a plant being built in 4 or 5 years, but our CCS project coming on stream imminently. That moves them to a point of saying, you know what, it's really time now to think about getting real and making sure that we have the opportunity at these tons if they have interest in them.

Okay. Let's talk a little bit more about maybe I want to ask about gas strategy. So this year, this past year, you decided -- CF decided not to put the strip on and hedge Q4, Q1 gas over time. Do you think you'd go back to that original strategy? Are you happy with this year?

Worked out really well. So we were happy. I think as we look forward, one of the things I got to join is the gas committee when I got there. And a few of us will sit down every month and look not only at the current market, but the forward market and think about where do we want to put the business. And what we've seen so far, and it's continued to be the case is that the cash market today is much lower than the forward market. And that contango has continued to move. It's a Bert word, so I'm happy to repeat it, move forward each month, and we've played there. We won't necessarily have the same strategy for the winter months in '25, '26 that we had this year. But I would say the dynamics that we see today are similar to what they were last year but that could change as we go forward. So I think it's nice to have the opportunity and the ability when we see -- if we saw something that was attractive and would lock it in, we would do it. But what we've seen in the past is where we have done that, sometimes you win, sometimes you lose.

Yes. I guess where it's worked out is when we have those like, I don't know, Texas winter freezes or things like that, where like it prevents you against the like horrible.

Yes, but those tend to be days, right? Those aren't full months. Those shock events...

And even then you guys, I think, sold gas. I think you sold gas.

We had bought some...

Yes, it's totally in line, yes.

Yes. So we tend to buy, even when we're in the cash market, a large part of that is purchased at the beginning of the month. So you've locked that in for the month. And if that was an event to happen over those couple of day periods, yes, it would be -- in that case, it was an opportunity to make some money. But for those few days, it averages out over time.

Greg, so a relatively new CFO at CF, what are sort of your impressions of the company? Like what has surprised you the upside and downside? What's been like the biggest surprise, good and bad?

The depth of the team, right? I mean I'm a 26-year GE veteran before my last company, and there was a lot of deep domain knowledge in that company. But being a finance person, you tended to move around a little bit. It was a big company, you get segment level. As you get into the industry knowledge that the leadership team has broadly, just not the few people on the SLT, but just the people who participate in the entire business, they've dedicated their lives to this. And they understand in great detail how the economics and commercial flows happen in ways that I haven't seen in the business in a long time. I like -- so it's great coming into a business and feeling like every meeting you go into, I keep one pad on the back and just write down a bunch of stuff that I still don't understand after a year and walk around and try to learn. So every day is a learning around that. Real big clarity around thoughtful decision-making. The amount of thought the company puts into an analysis in time. If I just looked at when I got there in the Blue Point decision, right, that was 2 years that we were talking externally around here is something that we're doing, here are the milestones that are coming. We'll check in with you as we go. The transparency around that decision-making was -- it was real. We were having those meetings internally and then sharing with you all how we were thinking about it and gathering more information based on feedback and really moving it through, but there was a very thoughtful, clear decision-making process. And then just the financial strength of the company, especially coming from a Silicon Valley company, where I spent a lot of time on cash flow. This is a company that has -- not only does it have a really strong EBITDA, but really the value of the company is around what's the cash that it generates and its ability to transfer that EBITDA into free cash flow is incredibly important. And as the CFO, it's an incredible opportunity, and I'm incredibly grateful to be able to sit there and help make decisions between trade-offs where it's not, you either do this or you do this, but here is how you optimize across the value stream, making investments in different ways. It's an envious place to be as a CFO.

I mean since's been a good stock. It's performed relatively well. I know the last year has been a little up and down, but relatively a very good name to own in crop input space. What -- when you talk to investors and you think about it, what do you think investors, what's the biggest misconception investors have about CF?

So we're going to spend some time on June 24. We're going to have an Investor Day.

In New York?

In New York, we'll have it here. And Investor Days, I think, are not about making news, right? They're all about how do you have the leadership team come and give context and details around the strategy. So I think our ability of what we've traditionally known over time is focus on the things that we're really good at and partner with others where we need opportunities to grow, I think you'll see a lot of that. I think you'll see a lot of the value of this terminal system we had. I underappreciated it when I went through the underwrite for CF. Our ability to move our product either by creating it in places where it's valued or moving it friction -- with low friction to where it's needed is an incredibly valuable asset, and we'll talk about that. And we'll spend a lot of time talking about how we are monetizing our decarbonization efforts. We're not -- it's not a company that's going to wait 5, 10, 15 years in order to see value from that. We're going to add to our EBITDA annually $100 million when Donaldsonville carbon capture project comes on. That's an investment of $200 million that has a 2-year payback and 10 years beyond that to earn on that. So I think you'll hear a lot about those different things on June 24.

Thanks, sir.

Thank you.

Thanks, Amanda.

Thank you.