The operator introduces the CF Industries' First Nine Months and Third Quarter of 2023 earnings conference call and hands it over to Martin Jarosick, who introduces the CEO, CFO, and Executive Vice President of Sales, Market Development and Supply Chain. Jarosick states that the statements made in the call and on the website are forward-looking and may differ from actual outcomes. He also introduces the President and CEO, Tony Will, who discusses the financial results for the first nine months of 2023 and highlights the company's adjusted EBITDA, net cash from operations, and free cash flow.

The second paragraph discusses the strong execution of CF Industries, positive global nitrogen supply-demand balance, and energy spreads favoring North American production. The company expects strong demand for the 2024 application season and plans to close the acquisition of the Waggaman ammonia plant. In the medium term, industry fundamentals point to a tightening global nitrogen supply-demand balance. In the longer term, the company's clean energy initiatives are expected to provide strong returns and growth opportunities. The company is optimistic about its ability to generate strong cash and create value through disciplined investments and returning capital to shareholders. The paragraph ends with Bert discussing the usual soft demand and prices in North America during the third quarter.

This paragraph discusses the strong demand for nitrogen in the third quarter, driven by attractive prices, positive farm economics, and low inventories. CF Industries has a good order book and expects demand to remain high in the coming months, particularly in India and Brazil. The company also anticipates continued supply constraints in certain regions, such as Trinidad and Europe. Overall, global demand for nitrogen is expected to remain resilient in the long term.

The paragraph discusses the decrease in ammonia production levels in Europe, as well as government actions that have affected production in other regions. It also mentions the company's financial results and plans for future production and capital expenditures.

The company is making progress in their efforts to reduce carbon emissions and increase production capacity. They are on track to meet their decarbonization goal and are also considering low carbon ammonia capacity growth. They have also been repurchasing shares and have a strong track record of creating long-term value and being the best operators in the industry. The CEO thanks the team for their hard work and emphasizes their safety culture.

The speaker expresses pride in the team's commitment to safety and innovation, highlighted by the annual Wilson Safety Awards. The company is well positioned for future growth opportunities and expects to generate strong free cash flow. The speaker then addresses a question about European production being the marginal cost, stating that it shifts depending on various factors such as geopolitical issues, gas prices, and weather patterns.

The speaker discusses the challenges faced by ammonia production in certain regions, such as Asia, due to factors like export controls and government-enforced gas curtailments. They also mention the advantage of the US being at the low end of the supply curve and having consistent access to gas. The other speaker adds that the age and efficiency of plants in Europe and Eastern Europe make them high-cost and inefficient, leading to a separation in gas costs. The speaker then briefly mentions a dispute with Oracle and Nelson Brothers regarding ammonium nitrate.

Tony Will discusses the company's expectations for plan year '19 volumes and margins. He mentions that they anticipate running their ammonium nitrate capacity at full capacity and are optimistic about margins due to the forward gas curve and their ability to bring in ammonia and upgrade it at their Billingham facility. He declines to comment on a topic that is currently under dispute. In response to a question about the potential impact of the Waggaman facility on their Donaldsonville operations, Will explains that their existing supply agreements for Waggaman are already in place and they are not looking to make any changes.

The company believes they can increase production at their plant and are excited about its potential. They tend to run their upgrades at full capacity and adjust their product mix based on market opportunities. In the third quarter, they had some production setbacks, which resulted in a longer ammonia position. However, they were able to manage inventory levels and are now back to full production. They also exported additional volumes from their Donaldsonville plant to balance the system in North America.

Tony Will discusses the outlook for blue ammonia and the partnership discussions with various players. He mentions the possibility of multiple plants and the potential for conflict due to different preferences for technology. The company is finishing up a FEED study on a conventional steam methane reforming plant, but is also considering autothermal reforming and flue gas capture for lower carbon intensity.

The speaker discusses the potential pathways for clean ammonia production and the increasing demand for it. They mention their company's expertise and favorable factors in North America, as well as their multiple sources of production. They also express excitement about future opportunities. The speaker is then asked about the upcoming Waggaman acquisition and their plans for ramping up production.

The speaker discusses the acquisition of a plant and the potential for increased production and synergies. They also mention the flexibility it provides for scheduling and minimizing transportation costs. The speaker also mentions that the CapEx guide for the year includes prep work for the plant and that all future plans are accounted for in the budget.

The company is focused on completing the green ammonia plant and dehydration compression project this year, as well as ongoing maintenance and improvement projects at their facilities. This is all included in the estimated CapEx for the year. The company has a history of consistently spending $400-500 million on maintenance and improvements, and the CEO credits this to the discipline brought by the new operations leader. The CFO adds that the CapEx range has been reduced for the rest of the year due to better visibility on spending and projects, and the Waggaman site will likely be included in the 2024 CapEx.

The speaker asks about the recent decline in urea prices and what can be expected in the coming months. Bert Frost responds by explaining that demand is still strong from India and Brazil, and supply is restricted due to gas issues in Trinidad and China. The speaker also asks about the timing of the JV with Mitsui.

The company is still waiting for the FEED study to be completed and for the Japanese government to make a decision on subsidy support. The timeline for investment is uncertain, but the company remains optimistic about the demand for their product. They plan to provide an update on their decision in February during their fourth quarter full-year call.

Adam Samuelson from Goldman Sachs asks Tony Will about the potential impact of blue ammonia projects on the merchant ammonia market in the next few years. Tony explains that there is currently a limited amount of new capacity being built, so there is not a concern about an oversupply of ammonia. He also mentions that it takes four years for new projects to come online, providing good visibility for future capacity.

The speaker is optimistic about the S&D balance in the global marketplace for the next four years. They have secured partnerships and end user demand for their decarbonized product, and believe that discipline and rationality will prevail in the industry. They also mention the lack of gas in Trinidad, difficulties in Europe, and other supply disruptions in the world.

The speaker discusses the potential impact of taking out millions of tons of ammonia from the market and the positive reception of low-carbon products. The company's balance sheet is strong, with a large cash balance and plans for future investments. They have also bought back a significant number of shares and invested in new capabilities.

The company has a $3 billion share repurchase authorization and is taking a disproportionately opportunistic approach to buying back shares. They aim to reward long-term shareholders by taking advantage of attractive valuations and are not concerned with fluctuations in their repurchase activity. The upcoming Waggaman transaction will use $1.25 billion of the authorization. The company was unable to buy back shares in the first quarter due to negotiations for the Waggaman acquisition.

The speaker explains that while there may be fluctuations in the market, their focus is on maintaining strong fundamentals and strategically adding capacity while also reducing their share count. They also address the question of Europe as a marginal cost producer, noting that while they primarily consume ammonia and nitrates, they still import a significant amount of urea. Ammonium nitrate is not widely used for agriculture outside of Europe, Russia, Ukraine, and Brazil.

The company considers various factors when looking at demand for urea, such as natural gas cost differentials. The North American production network has a significant economic advantage due to its location. The company is confident in the demand for imports in Brazil and India, which have seen substantial growth in agriculture and fertilizer demand over the last 20 years.

The speaker discusses the challenges of importing fertilizer to Brazil due to limited ports and congested lineups. Despite this, they have confidence in the demand for fertilizers due to the profitability of crops, particularly second crop corn. They expect Brazil to import around 7.5 million tons of urea annually, with India importing around 7 million tons. This makes Brazil the top importing country, followed by India and North America. The speaker also briefly mentions capital allocation.

The speaker discusses the company's plans for buybacks and dividends, stating that they will complete their $3 billion share repurchase authorization ahead of schedule. They also mention that they are evaluating potential growth opportunities and are pleased with the recent Waggaman acquisition. However, they do not actively seek out inorganic growth opportunities and will focus on completing their share repurchase program.

The speaker is asked about U.S. dealer inventories and customer behavior for the Fall season. They state that sentiment is positive and that there has been an increase in demand for fertilizer from countries like Turkey. They also believe that inventories will remain low and that there is still a lot of buying to be done. They mention that the November lineup for urea is weak and that demand and pricing will likely be positive in North America. The speaker ends by saying that behavior is back to normal and that they are constructurally positive about the future. The Q&A session concludes and the call is turned over to Martin Jarosick for closing remarks.

The speaker, Martin Jarosick, thanks the attendees for joining the conference and mentions future events. The operator then announces the end of the conference and instructs participants to disconnect their lines.

This summary was generated with AI and may contain some inaccuracies.