CF Industries Holdings Inc at UBS Global Materials Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joshua Spector - UBS Equities - Analyst : It sounds good. And I think to stick on the financial side of things, cash deployment has been a big part of CF for most of its history. I think over the last five years, pretty consistent amount of free cash flow kind of deployed a lot of that going towards the buybacks? I think as you think about REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 2:30PM, CF.N - CF Industries Holdings Inc at UBS Global Materials Conference investments and maybe what's next for CF, particularly when it comes around clean energy, how do you think about the priorities here between investing for growth in new markets versus cash deployment into buybacks? And if anything, different in your approach or how you characterize?

Question: Joshua Spector - UBS Equities - Analyst : Is there a limiting factor in terms of you have to have additional available capital for option. So as you think about two, three years down the line, you want to maintain that regardless what nitrogen is doing that you have flexibility or how do you manage that risk.

Question: Joshua Spector - UBS Equities - Analyst : Okay. It sounds good. I want to come back to the projects in a little bit, but I want to take this time to go to Bert to talk about some of the near-term dynamics within nitrogen. I mean, on your earnings call talked about a favorable setup for the fall I guess or the recent India tender, the headlines seem more mixed. So maybe a recent update on kind of what you're seeing overall in terms of the nitrogen markets. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 2:30PM, CF.N - CF Industries Holdings Inc at UBS Global Materials Conference

Question: Joshua Spector - UBS Equities - Analyst : Yeah maybe building off that and that's clearly a concern from investors around what happens in terms of lower crop prices and what that does to acreage. How much can see us mitigate some of that? How much leverage is there to move to another market or exporter do something if you lose a certain amount of acres next year, farmers are maybe more particular about how much fertilizers they apply in the spring.

Question: Joshua Spector - UBS Equities - Analyst : How was the role of China change and I guess I mean, obviously, exports out of China have come down. Is there anything that reverses that trend in your view? Or is this now a new structural regime?

Question: Joshua Spector - UBS Equities - Analyst : Okay, that makes sense. So I do want to shift back to talk about some of the projects and also think about low-carbon ammonia. So maybe to give an overview, whether Gregor, what are you walk through that what CSX is doing with us today? And then maybe I'll turn it over to Stuart to kind of ask some questions around CCUS at a high level before I dig in deeper.

Question: Joshua Spector - UBS Equities - Analyst : No, somebody that's going to hit on some of that anyway. So I think we've covered Europe to some extent I wanted to kind of come back to North America a little bit and just think about one of the pieces which changed a little bit. I feel like over the last three to six months is maybe some of the conversation around ag and ag specifically for low carbon. So I don't know if Bert, maybe you could talk a little bit more around kind of some of the interest there. So the coordination or cooperation you're doing with [POET] around into ethanol, maybe some of the food companies, how do you get paid or how do you what's the structure that can maybe evolve here for there to be value paid to CF for lower carbon inputs into?

Question: Joshua Spector - UBS Equities - Analyst : I think a challenge I face when looking at this is it's a lot more complicated to see what the value is in that versus the CBAM is kind of easy. We can guess what Europe's carbon is and you can think about how you are that it's probably too early to answer this precisely, but I mean, how would you approach or how would a buyer for approach what premium, they would say in that scenario, how does it trickle down to CF?

Question: Joshua Spector - UBS Equities - Analyst : Sure. And you want to follow up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 2:30PM, CF.N - CF Industries Holdings Inc at UBS Global Materials Conference

Question: Joshua Spector - UBS Equities - Analyst : Yeah. Going back to the project side of things and thinking about greenfield. I mean, one other thing I feel like change a little bit in the most recent earnings call has been maybe the approach of what the contract structure would look like or really what CF needs to do an FID on a project. And I think I would have said six to nine months ago, like very secure contract for half of it with a partner and maybe a big chunk of that's a long-term contract for CF. I think it seems to be maybe a more of a acceptance or willingness to have see us having more of a market approach on their share of that project, if I'm wrong, correct me, but I think at a high level, it's your approach to long-term contracts on clean energy when you invest in a new project versus taking the CF ability to our different markets but with a more spot approach.

Question: Joshua Spector - UBS Equities - Analyst : Just how do you as a management team think about you're selling into something like the coal fired ammonia coal fired with coal, which maybe has a 20-year contract life or something like that. And the inherently probably lower return because of that stability versus dealing with more of a market focus, I guess is there a drive to want to have that more stable mix of earnings for CF? Or is that not really a driver of decision making?

Question: Joshua Spector - UBS Equities - Analyst : Okay, I guess one thing I want to be clear on from my perspective is I would have said before that there's probably a linkage of whenever Japan or whatever country says, Here's what credits are that drives maybe your decision to say we're comfortable with that. It seems like how it's framed now you're more comfortable with there's enough demand or we're going to place that somewhere and therefore is there a scenario where in six months you don't FID.

Question: Joshua Spector - UBS Equities - Analyst : Okay. Maybe thinking about all this put together, so to what you're doing at Donaldsonville, depending on how you characterize that ammonia, it's 1 million to 2 million tonnes of reduced carbon, something like that for 2 million tonnes if you're not saying it's fully decarbonized, right? So but anyway, it's going to give you more flexibility. I guess does that shift your mix over time? So I talked about ag earlier, talked about some interest in the industrial markets. Is that something where, again, in the context of either long-term contracts or industrial versus ag, do you see anything looking different in terms of the CF mix? If you look three, four years from now versus what you're selling today?

Question: Joshua Spector - UBS Equities - Analyst : So as the CBAM mechanisms go in and the cost of carbon becomes higher in Europe, I mean is there a risk that you lose enough demand where you actually don't get some benefits? I guess, how do you think about that balance of what's going to still exist in Europe when they're paying $100 a ton full-out for carbon pricing versus now where it's still mostly subsidized now.

Question: Joshua Spector - UBS Equities - Analyst : Okay. So I guess maybe I didn't stray -- I tell you different ways. Do you think more tons come out of the Europe markets or how much imports do you think there are available? So you guys are talking about C-band more and in the former OCI project. Now which side is probably targeting that. Is there going to be enough demand for that in your scenario? It seems like yes, but is that a risk.

Question: Joshua Spector - UBS Equities - Analyst : Right. [Your advantaged]. Yeah, I think with that, we could probably go on for a lot longer, but we'll stop it there. I want to thank CF for joining us today and hope everyone has a good rest of their day.