CF Industries (CF) Goldman Sachs Industrials and Materials Conference summary

Market and industry outlook

• Farmer profitability is currently challenged due to low crop prices and high input costs, especially for corn, soybeans, and wheat.

• Demand for nitrogen fertilizer continues to grow globally at 1%-2% annually, driven by new acreage and yield improvements, particularly in South America.

• Supply of nitrogen is expected to tighten over the next three years, with limited new capacity coming online outside of select regions.

• Precision agriculture and digital tools are improving nitrogen efficiency, but overall demand remains robust due to global food and industrial needs.

• Trade dynamics and currency shifts, especially in Brazil, have shifted export patterns, but alternative markets have been found.

Clean energy and low-carbon initiatives

• Significant investment is being made in low-carbon ammonia production, with a new plant coming online next year offering a 60% reduction in carbon content.

• The market for blue and green ammonia is developing slowly, with economics and incentives being key drivers for adoption.

• Initial low-carbon ammonia sales are expected in Q3, targeting ethanol production, CPGs, co-op retailers, and European markets under new carbon regulations.

• Industrial customers are increasingly interested in low-carbon ammonia to meet carbon reduction commitments.

• Shipping and heavy industry are seen as long-term growth areas for ammonia demand, but infrastructure build-out will take a decade.

Capital allocation and investment strategy

• Focus remains on investing in existing assets, debottlenecking, and opportunistic M&A, as seen with the Waggaman acquisition.

• A $3 billion share buyback program is underway, with completion targeted by December 2025, alongside ongoing dividends.

• Conservative capital structure is maintained, with $1 billion net debt and strong cash reserves.

• New plant construction is expensive and slow, with only a few projects advancing to FEED studies; most new capacity is expected post-2030.

• Investment returns are modeled conservatively, targeting low double-digit returns above the cost of capital for new projects.