CF Industries Holdings Inc Q4 2024 Earnings Call Summary

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

Question: Joel Jackson - BMO Capital Markets - Analyst : I wanted to ask you about your hedging. You talked about in the past couple of quarters that maybe you weren't layering on as many strips or hedging as you had the (inaudible) looks like you quite well in Q4 to get ahead of the higher gas prices. We've now seen, of course, US gas prices surge. Talk about how open you are what your GAAP or like for Q1, Q2 for the rest of the year? And what we're seeing, the more volatility, Tony and team, is this making you rethink your DAS hedging strategy going forward?

Question: Joel Jackson - BMO Capital Markets - Analyst : And then if I can ask a second question. An observation I had last night, and I'd like you to maybe comment on it is you gave -- and I appreciated a new sensitivity table you do every year around now based on 2024 numbers, where you show what your EBITDA level is in a grid for different gas price realizations and different urea price realization. It looks like when you look at the '24 table versus '23 table on a similar volume around [90 million tons] at any given cell in that grid to any combination of urea and gas prices, you're pointing to EBITDA being maybe $200 million or $300 million lower. Can you talk about what that means, if it means anything?

Question: Richard Garchitorena - Wells Fargo Securities - Analyst : Great. Just to follow-up on the Blue Point. Obviously, FEED study sudy completed negotiating with the partners, still nothing determined yet. But I mean 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. I don't 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%. And then in terms of just all the final decisions with the partners getting ratified?

Question: Lucas Beaumont - UBS Investment Bank - Analyst : So I just want to continue on the Blue Point project. So depending on what you guys kind of come in there on that equity range, if you guy ahead it could be quite -- it's a pretty wide range from sort of $2 billion up to maybe $3.5 billion or so. I think what we previously sort of discussed the outlook there, it was assumed it would probably get built over the four years in the capital commitments more sort of back half weighted. So just given the kind of the range you're putting out there now, I was 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 market prices are, you could do it out of 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 (inaudible)

Question: Andrew Wong - RBC Capital Markets - Analyst : 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, like how would you compare the project versus potentially using that cash for more of buybacks in terms of raising that nitrogen per share metric? And how does that factor into your decision on BluePoint.

Question: Andrew Wong - RBC Capital Markets - Analyst : Okay. Great. And maybe just one more on Blue Point. The commentary in the past would highlight how the project can make a good. Even now (inaudible) can make a good risk-adjusted return even without an offtake 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 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's still the case. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 4:00PM, CF.N - Q4 2024 CF Industries Holdings Inc Earnings Call

Question: Kristen Owen - Oppenheimer - Analyst : 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 US and Ukraine on the table? And then I have a follow-up question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 4:00PM, CF.N - Q4 2024 CF Industries Holdings Inc Earnings Call

Question: Kristen Owen - Oppenheimer - Analyst : 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. Just anything we should be thinking about here in the first quarter in some of the earlier ice storms across the Southeast and how that will compare or influence your [ton-ton] to outlook? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 4:00PM, CF.N - Q4 2024 CF Industries Holdings Inc Earnings Call Christopher Bohn - CF Industries Holdings Inc - Chief Financial Officer, Chief Operating Officer, Executive Vice President, Director Yeah. So as I mentioned in the prepared remarks, through Q1, so far, the manufacturing operations have been operating 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 team is 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.

Question: Steve Byrne - BofA Securities - Analyst : Yes. Bert, I'd like to hear your view on your order book through the rest of the first quarter and 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 for being -- the US being behind on imports?

Question: Steve Byrne - BofA Securities - Analyst : Very good. And I just wanted to follow up a little bit on the brownfield project, a diesel 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 some time 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 4:00PM, CF.N - Q4 2024 CF Industries Holdings Inc Earnings Call

Question: Vincent Andrews - Morgan Stanley - Analyst : Just on Blue Point, if I could ask you, Tony, the $4 billion and the $500 million, I assume that's the standard midpoint of -- there's 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, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 4:00PM, CF.N - Q4 2024 CF Industries Holdings Inc Earnings Call whether it's labor, equipment, what have you to really sort of ring-fence the risk around that estimate moving too far in the wrong direction?

Question: Vincent Andrews - Morgan Stanley - Analyst : Okay. And just as a follow-up on the 40% versus 75%. I mean it sounds like you're very confident in terms of the demand outlook and so forth. So I'm just curious why -- what's going to drive the delta for you between the 40% and 75%? I mean, in one case, you have complete control over the project. In the other case, you don't. So what makes it in your best interest to bring it down to 40% versus just going out. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 4:00PM, CF.N - Q4 2024 CF Industries Holdings Inc Earnings Call

Question: Edlain Rodrigue - Mizuho Securities USA - Analyst : Quick one for me. I think earlier, Bert, you talked about the positive drivers for the nitrogen market. Like do you see any risk at all that could have an impact on supply demand and prices? Like any concerns whatsoever that we should be thinking of?

Question: Jeffrey Zekauskas - JPMorgan Chase & Co - Analyst : Still a little puzzled about the sequestration of carbon dioxide from Donaldsonville I don't think any bundy has been granted a classic permit to sequester carbon dioxide. And even if you are granted a Class VI 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. Christopher Bohn - CF Industries Holdings Inc - Chief Financial Officer, Chief Operating Officer, Executive Vice President, Director Jeff, this is Chris. I think in both instances, it's not as if they're things that are not moving in parallel. You are correct, there would take some time for the well piece to be implemented. However, most of 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 VI permitted wells. So one of the reasons we went with Exxon is our confidence in the work that they've done not only at this frustration 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 the Donaldsonville project.

Question: Aaron Cattarelli - Joh. Berenberg, Gossler & Co. KG - Analyst : I have one on Blue Point 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 was a valuation for another plant of at least 1 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? 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?