CF

CF Industries (NYSE:CF) just posted a first half of 2026 that most fertilizer companies would frame around one thing: the conflict with Iran. Instead, management spent the earnings call on August 6 arguing that something bigger is happening underneath the headlines. Adjusted EBITDA hit $2.2 billion for the first half, ammonia plants ran at nearly 98% of available capacity, and the company raised its own estimate of what it can earn in a normal year. Investors chasing the geopolitical story may be missing the real one. Management's central argument is that global nitrogen capacity has gotten permanently more expensive to build, which raises the price required to justify new plants and therefore lifts what CF Industries can earn even in ordinary years. That case leans on Blue Point, where the company has now received every permit needed to start construction, ordered nearly all its long lead items, and expects module fabrication to begin later this year. Combined with the planned return of the Yazoo City Complex in the first half of 2027, those projects support management's target of roughly $3.3 billion in mid-cycle EBITDA by 2030, up from a new $2.9 billion baseline, and neither figure includes any bump from the current conflict. The quarter's numbers back up the operational side of that story. Second quarter net earnings reached $727 million, or $4.73 per diluted share, while trailing 12-month free cash flow came in around $1.8 billion. CF Industries has funneled much of that into buybacks, repurchasing 10.6 million shares for $958 million over the past year, and the board raised the quarterly dividend 20% to $0.60 per share in July. Shares outstanding have fallen 29% since the start of 2021 while the dividend has doubled, a combination management says has lifted investor ownership of the underlying business by more than 40% since 2020. Management spent real time on the call pushing back on the idea that CF Industries' growth is mostly a geopolitical trade, which suggests that's exactly how a lot of investors are currently pricing the stock. Demand data from the quarter gives that read some support. Customers in regions with second-half application seasons deferred purchases as prices rose, and North American buyers slowed down enough in June that channel inventories fell to a very low point. That weakness only reversed once thin inventories forced a rush into July's UAN and ammonia fill programs. Meanwhile, capital spending is about to climb as Blue Point construction ramps up, with CF Industries' share of 2026 capex projected at $950 million out of a company total of $1.3 billion, a bill that has to be paid before any of the 2030 targets show up in earnings. Hedge fund ownership climbed from 48 funds to 60 funds over the past two quarters, which points to accumulating institutional conviction. Short interest sits at 6.32% of the float, a level that reflects a genuine bear camp rather than routine hedging. At the same time, CF Industries trades at just 7.42 times forward earnings as of August 13, a multiple that assumes little of management's mid-cycle growth story actually plays out. The gap between CF Industries' raised mid-cycle targets and its single-digit forward multiple is the whole debate in one number. For the structural case to hold, the $2.9 billion baseline and Blue Point's 2030 targets need to survive without help from Iran, high LNG costs, or a tight fill season. While we acknowledge the potential of CF as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

CF Industries Holdings, Inc. reported its second-quarter 2026 results, with sales rising to US$2,222 million and net income reaching US$727 million, alongside buybacks of 1,754,485 shares for US$206.08 million that completed a US$500 million repurchase program begun in 2025. Despite earnings falling short of analyst forecasts, the company combined strong operational performance, higher mid-cycle EBITDA expectations, and progression of its Blue Point One low-carbon ammonia project to support a more confident long-term business outlook. Next, we’ll examine how the earnings miss, alongside heavier capital spending for Blue Point One, may reshape CF Industries’ investment narrative. Outshine the giants: these 16 early-stage AI stocks could fund your retirement. To own CF Industries today, you have to believe in sustained demand for nitrogen fertilizers and the company’s push into low carbon ammonia as a meaningful long term opportunity. In the near term, the key catalyst is how consistently CF can convert strong operations into cash, while the biggest risk is execution and cost control on the capital intensive Blue Point One project. The latest results and capex plans do not materially change that balance, despite the earnings miss. The most relevant recent announcement here is CF’s plan for about US$1.3 billion in 2026 capital expenditures as Blue Point One construction ramps up. That spending tightens the link between CF’s investment case and successful delivery of its low carbon ammonia ambitions, even as the market reacts to short term earnings vs. expectations. For shareholders, the story is increasingly about whether these large outlays ultimately support the mid cycle cash flow profile management is targeting. Yet even with these strengths, investors should be aware of the execution and cost overrun risks around Blue Point One and how they could... Read the full narrative on CF Industries Holdings (it's free!) CF Industries Holdings’ narrative projects $6.7 billion revenue and $1.2 billion earnings by 2029. Uncover how CF Industries Holdings' forecasts yield a $126.11 fair value, a 5% upside to its current price. Some of the lowest analysts were already assuming revenue could fall toward about US$6.1 billion and earnings near US$756 million, which contrasts sharply with CF’s current Blue Point spending plans and highlights how views on future pricing and project execution can differ widely, so it is worth weighing this more pessimistic narrative against the latest results and your own expectations. Explore 7 other fair value estimates on CF Industries Holdings - why the stock might be worth as much as 43% more than the current price! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your CF Industries Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision. Our free CF Industries Holdings research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate CF Industries Holdings' overall financial health at a glance. Our top stock finds are flying under the radar-for now. Get in early: The latest GPUs need a type of rare earth metal called Dysprosium and there are only 28 companies in the world exploring or producing it. Find the list for free. Explore 25 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research. Uncover the next big thing with 19 elite penny stocks that balance risk and reward. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CF. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 11 a.m. ET Investor Relations - Martin Jarosick President and Chief Executive Officer - Christopher Bohn Executive Vice President and Chief Commercial Officer - Bert Frost Executive Vice President and Chief Financial Officer - Andrew Scribner Operator: Good day, ladies and gentlemen, and welcome to CF Industries First Half and Second Quarter of 2026. [Operator Instructions] I would now like to turn the presentation over to the host for today, Mr. Martin Jarosick, with CF Investor Relations. Sir, please proceed. Martin Jarosick: Good morning, and thanks for joining the CF Industries' Earnings Conference Call. With me today are Chris Bohn, President and CEO; Bert Frost, Executive Vice President and Chief Commercial Officer; and Andrew Scribner, Executive Vice President and Chief Financial Officer. CF Industries reported its results for the first half and second quarter of 2026 yesterday afternoon. On this call, we'll review the results, discuss our outlook, and then host a question-and-answer session. Statements made on this call and in the presentation on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available on our website. Also, you'll find reconciliations between GAAP and non-GAAP measures in the press release and presentation posted on our website. Now let me introduce Chris Bohn. Christopher Bohn: Thanks, Martin, and good morning, everyone. Yesterday afternoon, we posted results for the first half of 2026, in which we generated adjusted EBITDA of $2.2 billion. These results reflect the CF Industries team's strong operational performance and a tight global nitrogen supply-demand balance, which was further strained by the conflict with Iran. Most importantly, our teams continue to embrace our Do It Right culture to deliver outstanding safety performance. We closed the quarter with a trailing 12-month incident rate of 0.16 incidents per 200,000 hours worked, well below industry averages. That focus on safety directly supported high asset utilization in the first half. We operated our available ammonia capacity at nearly 98%, enabling us to meet demand from our domestic retail, wholesale, and cooperative customers, who supply North American farmers. In addition to our strong operating performance, we are making steady progress on our strategic initiatives. At Blue Point, we have received all necessary permits to begin construction. Nearly all long-lead items are ordered, and module fabrication is set to begin later this year. Within our existing network, we expect our Yazoo City Complex to resume operations in the first half of 2027 after completing work to improve the site's long-term sustainability and operational flexibility. We also continue to be disciplined as we evaluate high-return projects across our network to unlock further value. As you saw in our presentation, we have raised our mid-cycle EBITDA and free cash flow expectations. In a moment, Andrew will address more of this, but I want to address the broader market context first. Right now, we believe the market views a disproportionate amount of our EBITDA and free cash flow growth primarily through the lens of short-term geopolitical friction in the Middle East. That view misses a fundamental structural shift in our industry that has been occurring over the years and exposed to the recent global nitrogen supply chain dislocation. Higher global capital costs have structurally raised the incentive price required for new global nitrogen capacity, lifting CF Industries' baseline mid-cycle earnings power while reinforcing the value of our existing manufacturing and distribution network. This is before we factor in any geopolitical premium. To be clear, our low-cost, low-risk North American asset base, and not geopolitical risk, is the foundation of our profitability. Our ability to operate at high utilization rates during disruptions enhances our stable mid-cycle return profile above and beyond the strong free cash flow generation already embedded in our outlook. This, in turn, augments our ability to invest in high-return projects and return capital to shareholders. With that, I'll turn it over to Bert to discuss the global nitrogen market. Bert? Bert Frost: Thanks, Chris. The first half of 2026 saw a rapidly changing global nitrogen market dynamics. Global prices rose significantly as an already tight supply-demand balance was further constrained by supply disruptions from the conflict with Iran. In regions where application seasons occur in the second half of the year, many customers deferred purchases. In North America, agricultural demand remained strong through most of the first half of 2026, led by ammonia and urea. Our team created significant value by leveraging our operational flexibility to prioritize urea production over UAN. It also enabled us to deliver our second-highest DEF volumes in the first half, our highest-margin product. In June, however, our customers slowed purchases of the nitrogen channel drew inventories down to a very low level. Those low inventory levels and positions ultimately drove strong participation in our UAN and ammonia fill programs in July. As a result, we built a substantial UAN order book that extends into November and expect a strong fall ammonia season. Looking at the broader market, global nitrogen fundamentals remain tight even before factoring in geopolitical conflicts. Rising capital costs, permanent closures, and the limited pace of new capacity additions have kept supply growth constrained relative to demand. Additionally, a meaningful portion of global nitrogen capacity remains exposed to geopolitical uncertainty. And this exposure has further tightened the global nitrogen supply-demand balance. We believe this will continue to affect supply availability, delivery confidence, and pricing due to higher logistics and insurance costs. Additionally, high LNG prices continue to pressure production economics for marginal nitrogen producers and are likely to limit operating rates. We do expect China to export urea volumes similar to last year. Those exports are necessary to meet global demand, but they are not enough to materially loosen market fundamentals. On the demand side, we expect purchasing activity to recover in deferred regions such as Brazil and India. We also expect North American demand to remain firm through the upcoming application seasons. Taken together, we expect the global nitrogen market to remain tight into 2027. Looking further ahead, we see continued structural tightening through the end of the decade as nitrogen capacity currently under construction falls short of historical demand growth. Finally, our low-carbon sales program continues to gain momentum. Approximately 10% of our ammonia sales volumes in the first half were low-carbon that earned an average premium of more than $20 per ton. With that, I'll turn it over to Andrew. Andrew Scribner: Thanks, Bert, and good morning, everyone. For the first half of 2026, the company reported net earnings attributable to common stockholders of $1.3 billion, or $8.71 per diluted share. EBITDA and adjusted EBITDA were both $2.2 billion. For the second quarter of 2026, the company reported net earnings attributable to common stockholders of $727 million, or $4.73 per diluted share. EBITDA and adjusted EBITDA were both $1.2 billion. We continue to efficiently convert EBITDA into free cash flow. Our trailing 12-month net cash from operations was approximately $3 billion, and free cash flow was approximately $1.8 billion. As you can see on Slide 10, our EBITDA to free cash flow conversion is consistently high, producing predictable and stable free cash flow. Over the last 12 months, we've returned nearly $1.3 billion of free cash flow to shareholders. This includes repurchasing 10.6 million shares for $958 million and $314 million in dividend payments. In July, the Board increased our quarterly dividend by 20% to $0.60 per share. As we have reduced the number of shares outstanding over time, we are able to reward the remaining shareholders with a higher dividend. For context, since the start of 2021, shares outstanding have decreased 29%. And over that time, our dividend has doubled. Looking ahead, we continue to project approximately $1.3 billion of capital expenditures in 2026, of which CF Industries' portion is approximately $950 million. With the construction of Blue Point expected to begin in August, the pace of capital expenditures will accelerate. We continue to focus on mitigating our cost exposure through fixed-fee contracts. As we have advanced Blue Point activities and evaluated additional projects, it has become clear that the cost of building new nitrogen capacity in regions with low-cost natural gas has increased, narrowing the construction cost advantage those regions have historically enjoyed. As you can see on Slide 9, these higher costs mean that the urea price required to bring new capacity online has gone up as well. Based on our analysis, this supports a baseline mid-cycle EBITDA for CF Industries of approximately $2.9 billion and free cash flow of $1.7 billion. You can also see that decarbonization, Blue Point, and other margin-enhancing projects provide upside to our baseline. By 2030, we expect these strategic initiatives that are in flight to raise our mid-cycle EBITDA to approximately $3.3 billion. And as Chris noted, this is before any geopolitical premium for higher freight and insurance costs and constrained global supply. These near-term dynamics provide fuel for growth and a greater ability to return capital to shareholders. With that, I will hand it back to Chris before we open the Q&A. Christopher Bohn: Thanks, Andrew. I want to thank CF Industries employees for their commitment and dedication during the first half of 2026. The team continues to deliver safety and operational excellence while skillfully navigating our ever-changing global marketplace. As you can see on Slide 12, CF Industries has a long track record of driving value for long-term shareholders by increasing production capacity and decreasing the number of shares outstanding. This has increased investor participation in our underlying assets by more than 40% since 2020. We expect to build on this track record in the near and long term. We have a premium-grade asset base, proven operational capabilities, financial strength, and substantial high-return strategic opportunities. The global nitrogen fertilizer supply-demand balance remains tight, and rising capital costs across the globe have structurally elevated our baseline mid-cycle earnings. Against that backdrop, we believe CF Industries stands apart. As our mid-cycle EBITDA expectations continue to strengthen and our free cash flow generation remains highly predictable and durable, we are well positioned to continue to create value for long-term shareholders. With that, operator, we'll open the call to questions. Operator: [Operator Instructions] The first question comes from Ben Isaacson of Scotiabank. Ben Isaacson: My question is on your new mid-cycle price of $410 a short ton for CF. Can you talk about how much of that change is related to capital cost inflation versus how much is related to any structural or sticky changes that you see as a result of the conflict in the Middle East? Christopher Bohn: Yes. Thanks, Ben. Maybe for starters, I'd just take a step back and just say, as I look back at our performance since the beginning of 2020, we've averaged over and above that $1.7 billion free cash flow that we have as the mid-cycle by quite some amount. So it's not as if the empirical data and how we've performed and really how we've set up the company by increasing our production capacity and also lowering our fixed charges to get our free cash flow conversion where it is hasn't been successful, and sometimes we don't always feel like that's being recognized, but we have been performing at that. What I would say is construction costs, the gap between the U.S. and the rest of the world has closed. You're seeing labor, procurement timing, different things with being able to use module yards where that difference between a U.S. project and a global project has changed drastically, I think. And then, to your point, there are certain costs associated with the geopolitical events that are going to remain structural. So if you look at freight, for instance, freight, we have basically from the Middle East to the Gulf now is about $70, where a year ago, it was $35. Do we expect that to snap back to $35 and not have any type of structural piece to that? Probably not. But is that $5 to $10 there? Is there few dollars in insurance costs, different vessel configurations, and a risk premium based on where those assets and really the supply offtake is happening. So I think as we look at it really from a NOLA price, we're saying we've moved from $355 NOLA urea on a short ton to $385. Of that $30, there's probably $10 that may be associated with structural changes that don't go away as a result of these geopolitical events. And then the remaining amount probably exists due to higher capital costs and really a closing of that gap between U.S. construction and outside of the U.S. Andrew Scribner: Yes. And maybe let me add a little color -- Ben, this is Andrew as well. As you look at that price going from $355 to $385, the underlying assumptions that we have is this is for, call it, 1.3 million to 1.4 million-ton capacity sites with a CapEx estimate of about $2.6 billion to $2.8 billion. If we assume $3.50 natural gas with a 10% to 12% financial return, that's how you get to the $385 price. You then use our economics and it gets to our EBITDA of $2.9 billion. One piece that I want to call out of what's in there and what's not in there is we also gave some color context around $400 million over time by 2030 that will get you to $3.3 billion. Out of that $400 million, $300 million of that is Blue Point and $100 million is additional carbon capture benefits, we'll get out of Donaldsonville and Yazoo City. The way to think about that, what's not in there, I will do this illustratively, you likely saw that we're pursuing a FEED study for DEF. Because that has not been officially green-lit yet, that is not in that $400 million. If we get to that point through an investment decision, it will go in there. Likewise, in that $2.9 billion, as we're starting to realize the benefits of Donaldsonville on carbon capture, that's actually shifted left into that $2.9 billion. So it's really a function of the capital cost. And as Chris mentioned, there's probably some context around a little bit of geopolitical premium there, but it's really the capital costs and sort of realizing the benefits on carbon capture. So hopefully that helps. Operator: The next question comes from Joel Jackson of BMO Capital Markets. Joel Jackson: It seems like looking at yourself and your peers' results, ignoring some of the lower volumes in Yazoo City, there's a bit of a buyer's holiday in nitrogen in Q2, and we all know what happened with commodity prices and nitrogen prices across the quarter, urea, as the war started and prices came down. But I wonder if you could talk about that, what does that set up for the second half of the year coming out of the last, I don't know, 5, 6 months of volatility? Bert Frost: Yes, interesting view, Joel. And I think that did happen in different places around the world. As prices escalated, especially in April and May, you definitely had a pullback in South America -- Central and South America, where the necessity to purchase, it's really to put into inventory because applications are further later in the year specific to the big applications in Brazil. But you also had pullbacks from Australia, from Southeast Asia. And the Northern Hemisphere was completing the application season. We did see some movement in North America, as I mentioned in my comments, with movements amongst products with additional urea. So we pivoted and produced more urea as well as DEF and that limited a little bit to what our UAN availability was. But I think overall, prices did impact some places where you could defer demand, and we saw that happen. And we see a little bit, I would say, as the data is coming in with a possible small cut in consumption in North America, but not as big as relative to the other nutrients. And in the second half, we're bullish on the second half. When you look at what we've put together with our UAN fill program, the team did a great job of working with our customers, organizing that and getting it executed well. And the average price on that is probably close to $300 and where our program extends into Q4. And so good solid demand, good movement. We're already seeing that. And as I mentioned in my prepared remarks about the fall ammonia season with a very good uptake for that. And we're just now positioning product at our terminals to serve that demand in November. And so when we look at where we are in the ag cycle, where we are with pricing and the customer uptake on the retail wholesale side for us, which we know has been pushed down into the farmer, we see good positive traction through 2027. Operator: The next question comes from Lucas Beaumont of UBS. Lucas Beaumont: Yes, I kind of just wanted to sort follow up on the outlook there. I mean, I guess, just given kind of the soft demand here in the second quarter like a more compressed kind of time frame for deliveries in the second half. We've got the still impacted global supply issues and like now increasing cost curve support as well from European gas. So I guess just how do you kind of see the setup there for pricing as we move into the fall and the spring? Is there a point here where the market's going to kind of rapidly tighten and expose low inventory levels as demand picks -- backs up? And I guess when do you think that would sort of be timing-wise? And is that setting us up for like much higher in-season U.S. premiums again coming up? Bert Frost: Yes. Good morning, Lucas, and I think -- this is Bert. Regarding the soft Q2 demand and the deferrals that I mentioned in the Southern Hemisphere, we do believe that's going to catch up, and you're seeing that in India with the most recent tender. We anticipate India to be an import demand of 9 million to 10 million tons, which is over what they were last year. We're seeing positive movement in South America. And some -- I expect to see some grain movements, some grain pricing movements, which will incentivize additional consumption. But you're right, the compressed deliveries is just -- it's going to be a poor lineup for some of these folks. But the values have come back down to attractive levels. And as I think lower pricing will incent demand. And so -- but you're right, the EU gas structure is at a disadvantage with $18 to $20 gas at a differential to the world makes European operations constrained that we believe. And so probably a higher level of imports there. And so with where we are in the ag cycle with pricing for the feed grains and the consumption of nitrogen, we're constructive for the back half of this year as well as 2027. And I do think there will be some tight pricing to come. When you look at -- we still lost 5 million tons from the Middle East or from those countries that were unable to get LNG. We're seeing a little bit of movement out of China for exports to replace some of that, but that's probably in the 5 million to 6 million-ton range, so kind of a net zero. And then with those places that are constrained with LNG or cannot afford, you'll see probably some production cut backs. So balance on balance, we see a tight market through next year. Christopher Bohn: And I think, Bert talked about just what's happening in Europe, as we see those prices come down, but not the feedstock cost of that come down, you'll probably see more constraints on that as we've seen over the years where we're seeing curtailments and shutdowns occur. But on top of that, it's probably the one area we don't know is really what happens in the Gulf area. As Bert mentioned, that's a significant amount of volume that still needs to supply the world here. And if you're seeing curtailments in Europe and still some on and off again stuff in the Gulf area, that's really what's going to determine pricing from that. Volume-wise, as you mentioned, I think we feel very strong about what we're seeing. Lucas Beaumont: Great. And then I guess just on Yazoo City. So I mean the repairs have sort of been pushed back a little bit into the first half of '27, so I was just wondering kind of what the sort of swing factors there are in terms of sort of hitting the timeline. Anything to share sort of on the business interruption insurance that are there in terms of like the income and cost coverage? And just will you -- are you looking to do anything different at the site sort of with the rebuild that could sort of deliver benefits to you after it's finished? Christopher Bohn: Okay. I'll take -- this is Chris. I'll take some of the first parts of that question and then turn the insurance discussion over to Andrew here. But I think the biggest part is, we've gotten more information when we put out that we thought it would be late 2026, that was preliminary information on what needed to be done with a particular site and what the procurement timelines would be. As we've seen with a lot of projects globally here, you are seeing procurement timelines extend some and that was primarily for electrical gear. And that's why we've moved it into the first half of next year from a timing standpoint, just as we've gained more information and better insight into that. Related to the site itself, we are changing how that site is going to be configured. We will no longer be prilling ammonium nitrate down there. We'll be doing ammonium nitrate solution along with ammonia and DEF down there. And really, what we're building out in that particular location is probably increased flexibility, both from an operational and a logistics standpoint, where we'll have a broader customer base that we can start to supply throughout the years here. So I think we're excited about what the opportunities and what we're changing at that particular site to make it a more sustainable site long term. So I'll turn it over to Andrew now to talk through some of the insurance side of it. Andrew Scribner: Lucas, so I'll give a little bit of color on kind of 3 buckets, accounting, I would say the insurance piece and a little bit of how to think about capital. From an accounting standpoint, in Q4 of last year, we recorded $25 million impairment on machinery and equipment. And then you'll see or have seen in Q2, we took another further impairment of $23 million for equipment we will no longer be able to use. And so total, that's just shy of $50 million of impairments that we've taken. On the insurance recovery to date, it's been about $75 million. We had $25 million of property damage that we recorded in Q1 and received in Q2, then we've had $50 million of business interruption insurance. When you look at it to date, it's been about a 2:1 ratio. Longer term, it will probably play out more like a 3:1 ratio. That business interruption insurance covers us for about 18 months as you look at that. Now you will note, I just want to make sure this is clear, we are not included in our capital guidance and assumption for Yazoo City, and there's kind of 2 fundamental reasons. One, we expect the insurance recovery to offset that capital build cost; and two, the timing is dynamic. When you look at the timing of the capital between the back half of this year and first half of next year, it will be dynamic and the insurance recovery is going to be dynamic. So when you look at that over a longer time frame, they will offset each other, but that's why we're not specifically guiding that right now. Operator: The next question comes from Benjamin Theurer of Barclays. Rahi Parikh: This is Rahi on for Ben. Maybe on S&D, are you seeing any impact from the extra Texas capacity this year, like Gulf Coast ammonia, Woodside? Or is this just largely offsetting Trinidad volumes? And maybe long -- or medium or long term, how do you expect this to affect supply and demand once the impact from Iran settled down? Bert Frost: When you look at the Texas plants, there has been a long lead to their full production. And I don't think they're still at full production. And so those tons have been absorbed. They've been moving around the world. They've had some contracts. And now with Yara purchasing the Gulf Coast plant, I assume a lot of that product will go to Europe, offsetting production cutbacks. But you're correct. There have been offsets throughout the world. Trinidad is one that has taken tonnage off market. There has also -- on the demand side, there's also been some negative impacts with, as you've heard from the phosphate producers with their cutbacks due to limited supply of sulfur and sulfuric acid that has limited phosphate production, which therefore has limited their ability to consume more ammonia. So the market has come off the highs of Q2 and is today balanced in the $600 to $700 range, depending on destinations. But we see these 2 plants, the Gulf Coast plant and the Woodside plant, both coming up to full production, and it will be absorbed into the market. Christopher Bohn: And I think longer term, we've talked about this that the global S&D is tightening, independent of what was happening in the Gulf during this particular time frame. And if you look at the slate of new projects that are projected to come online between now and 2029 or 2030, there's just not enough to meet demand. And if there were some sort of resolution in the Gulf, as Bert mentioned, you're going to have other demand pieces that will grow because you can have sulfur, some more phosphate there. So we still think that there is just very much a tightening that continues to go on between now and the end of the decade in the nitrogen market here. Rahi Parikh: Got it. And just a quick follow-up for Yazoo. Can you just walk us through the thought process of that you're going to make AN, UAN, et cetera there? Why not just do urea given the margin structure has been superior in the last 10 years? That should be it from us. Christopher Bohn: Yes. From a urea standpoint, you're right. Urea is really the catalyst as to why we're going to see the global nitrogen market get tighter. So there are upgrade projects that we're looking at, one of which is even for DEF, that's a urea project at Courtright. As you look at Yazoo City, the urea plant there would have to be a full-blown new urea plant, world-scale plant there. And we look at what we have opportunity-wise that Bert's commercial team has put together both from an ANS, UAN, and DEF that it wouldn't really make sense to put in that type of capital at that particular site. Bert Frost: I also think when you look at how we're configured and structured asset-wise and our distribution of those assets and the modes and how we move the product through rail, truck, barge, vessel, or whatever pipeline, Yazoo is a unique asset and that it's our main -- or only ANS plant. But as we work through this new structure, we're going to be improving the load-outs, improving capabilities, and having different access to different modes, and that will give even more flexibility to Yazoo City. Operator: The next question comes from Kristen Owen of Oppenheimer. Kristen Owen: So I wanted to follow up on capital allocation. This is clearly an and strategy, not an or just given the strong cash flow you've generated thus far. You raised the dividend, you're increasing the buybacks, and you're coming into peak CapEx period. But the one that I actually really wanted to ask about is this FEED study on DEF. So can you just give us a little bit of background here how you're thinking about the demand and economics for, say, industrial applications versus over-the-road applications? I know we've got some EPA changes coming up. So just a little bit of color on the DEF study. Christopher Bohn: Yes. So I'll let Bert start on the market and what we see that's interesting us in the market in the different areas where it is. And then I'll speak a little bit more specific to the project itself. Bert Frost: DEF has been an interesting product for us in that it's just about 15 years old in terms of how long DEF has been an active part of our portfolio, and we produce it at different plants, but the growth from basically 0 to today, 2.2 million tons of -- and this is a urea equivalent tons. So in effect, 2 world-scale plants of urea are now being consumed in North America, where that just didn't exist 15 years ago. And when you look at the growth of demand as new power units come into service and the dosing rate has increased from a very low level 15 years ago to all 0 before that, but -- and as these power units get replaced and an average power unit can last 9 to 11 years. And so the replacement rate is slow, but we see that taking place. And with the additional dosing rate continuing to increase for better efficiency on that miles per gallon as well as emissions control, we see this market by the early part of next decade, 2030, 2031, hitting 3 million tons or over. And so a lot of growth opportunity. And again, where we're positioned asset-wise, Courtright makes a lot of sense to serve the East Coast market, which is a heavy demand market. Christopher Bohn: The one thing I would add is this isn't really our thoughts on the growth of DEF and in isolation. Essentially, we worked with OEM engine manufacturers all the way down to the retail side to make certain that we're aligned as to the growth that we see going forward. And I think all parties are seeing the same thing there. As Bert mentioned, Courtright provides a unique opportunity for us. Today, Courtright has a net long position in ammonia that is a little bit logistically constrained both by what rail line it's on, and therefore, having a lower-margin ammonia that comes out of that particular plant. And because it's such a low-margin ammonia that comes out of that plant, it's providing a better opportunity to put in an upgrade unit there. And the rail line, it happens to be on, can feed the East Coast, the Mid-Atlantic area better than any of our other sites that are producing DEF today. So as we look at this, provided what comes out of the engineering and design study from a capital cost, but we feel that this is going to be a project that is not only going to grow into a market that is an industrial ratable market, very strong for us, but it's additionally something that's going to be well above our cost of capital just given the configuration of that site today. Kristen Owen: That super helpful. My follow-up is question on, your expectations for mix in the back half of the year, just given what you said about the fill programs, what fall application looks like? Obviously, the economics moved around quite a bit here in Q2, but just how you're thinking about mix of product in the back half of the year would be helpful. Bert Frost: Yes, I would say we're looking at a normal slate in terms of the economics. As we look product by product to where the economic advantage is against our order book, which is a very positive order book, I would anticipate a normal slate for the back half. We're going to work on our inventory levels, which built up during Q2. I think that was one of the issues on the write-up was that we had a limited volume on UAN, but what we did was move more of that to urea and DEF in Q2. And any inventory we have, we expect to disgorge in the back half of the year and run at normal rates. Operator: The next question comes from Christopher Parkinson of Wolfe. Christopher Parkinson: Totally understand the second half outlook in terms of steady demand, a lot of lost tonnage out of [indiscernible] as well as some of the Iranian tonnage to see the market tight for the foreseeable future. But at the same time, I'm curious on your interpretation of the U.S. and coastal benchmarks typically trading at a discount. It seems like the international opportunities, especially in the third quarter should have been a little bit better. It should be at least improving in terms of that prospective market tightness. So I'd love to get your perspective across both ammonia and downstream in terms of how you see the dynamics playing out just in terms of like the ripple effects from lack of production in the first quarter or 2? Bert Frost: Yes. So when you look at what -- the tonnage that was lost, urea and ammonia out of the Gulf as well as tonnage lost due to lack of LNG to those countries or companies that rely on LNG to produce, it's substantial. And so back to how do you backfill that supply. And some of it is through, I think, the Chinese tons that everybody is expecting to come out as well as just solid operating rates. And in terms of trading values and looking into what markets we would move our tons to, you mentioned that we're trading at a discount in NOLA, we are, and so you've seen us build an export book on urea that's probably higher than normal. And so when I look at where these benchmarks go and where we are in terms of pricing for the world, I think you're going to see a market that improves in terms is tight and will tighten as this demand has been deferred, comes back into -- has purchased and moved. Christopher Parkinson: Got it. And just as a quick follow-up to that, I'd love to hear your perspective that in the U.S. alone, and I apologize if I'm missing one, you've seen basically 7 cancellations in terms of low-carbon or blue ammonia over the last several quarters and perhaps a project or 2 are technically on lifelines. Chris, I'd love to hear your perspective on just kind of your intermediate longer-term outlook. It also seems like the demand side of it has been a little bit more quiet versus some positive events back in '25. I'd love to just hear your dynamics in terms of market development, your position, how you're thinking about the overall Blue Point complex, and any incremental opportunities you see fit based on the fact that a lot of others have given up? Christopher Bohn: Yes. And I think to start with, Chris, the ones that have given up are participants that were not necessarily in the market to begin with, okay? So if we go back a few years ago, I've said this before, there was like 107 green and blue plants announced, of which I think there's 4 in construction today, of which ours is 1 of them. So there is a lot of hype about what clean energy was going to be. Our analysis never showed more than we were thinking, maybe 7 of that 107 million would be built. So I think we've been more pragmatic in this. As you look at that clean energy market, it's really similar to the DEF market that Bert mentioned. The 1 million tons that will be going both to JERA and Mitsui, our partners, is 1 million tons of incremental demand that didn't exist just a few years ago. And we're continuing to see some growth opportunities in Japan and other pieces of Asia, but it's going to be at a slower pace than what I think the original hype was on that. What benefits us is whether we have a low-carbon ton or a conventional ton. We produce it the same way, we store it the same way, we transport it the same way. So all those operational efficiencies that we have as an organization to lower our cost per ton on new construction and also the distribution of it reside with us and accrue to us that others don't have. And I think that's why you're seeing us continue to be bullish on both Blue Point and maybe even a Blue Point 2 is because of those assets and really that ability we have to move that product and to produce that product. Bert Frost: Well, I would say low-carbon or not, or gray or conventional, however you want to define it, we are competitive globally. And even with the premium, we're competitive globally, and we're proving that by our contracts that are in place and what we're sending to different places today, and that will only grow. And I do believe that the low-carbon value, especially in Europe, is going to continue to be valued and grow, and that demand will grow as well. Operator: The next question comes from Vincent Andrews of Morgan Stanley. Vincent Andrews: Chris, I wanted to ask you on the dividend, maybe separately on another part of capital allocation. Just sort of what your thought process is? Obviously, as the share count comes down, you can pay a higher dividend without spending more money. So is that just the plan going forward? And should we be anticipating maybe getting to more annual dividend increases versus I think the last one was maybe '23. And then separately, from an M&A perspective, in the U.S., obviously, there's a limited number of assets, but one just traded. Do you still have scope from a regulatory perspective where you think if other things became available you would still look at that? Or should we be thinking about volume growth from here being more along the DEF or as you just mentioned, Blue Point 2? Christopher Bohn: Yes. So I'll just start with the dividend part and then maybe -- actually, let me start with the second question first, and then I'll go to the dividend and pass it over to Andrew as well. But on the M&A scope, so we did see the Gulf Coast Ammonia plant transfer to Yara is in the process of that. We do believe that we still have some room from an M&A scope. I mean, I think if anything, what CF has demonstrated just based on the prior answer I had given is that assets in our hands produce more production volume. Whether we go back to what we did when we acquired Terra back in the day with the investments we made, our best practice teams, we're just looking recently at Waggaman, where we've increased that, consistent production there, but by over 30%. So our ability to increase volume within a market, I think, is a key to allowing us to continue to do particular assets acquisition. Now as we look at those acquisitions, we want to be someplace that isn't in the third quartile or some place out that, from an operations standpoint, could be constrained as time goes on. We like our low-cost position. We like the low-cost, low-risk that North America from a geopolitical standpoint brings. So that's primarily where we're going to focus going forward, both organic and inorganic there. From the dividend before I turn it over to Andrew to get into some of the specifics. I think one of the underlying reasons is just our faith in where we see our mid-cycle and our free cash flow generation, not just this current year or next year, but over the entire cycle. We did see a stronger that we've been very focused on reducing fixed charges, of which dividends are one of them. But I think as we're seeing that free cash flow conversion and generation goes up, just makes us more confident in increasing it as time goes on there. Andrew Scribner: Yes. This is Andrew. The piece that I would share is our overall strategy on capital allocation has not changed. The hierarchy of driving strategic growth, share repurchases, and dividend, when you think about the dividend, I think of it as 2 fundamental principles. One, we want to be competitive with the marketplace. So the increase that we did took it from a 1.8% yield to 2.1% compared to the S&P of 1.1%. The second principle what I would share is, we're conscious of what we spend in absolute. And you can look and you can probably see there's a range that we tend to target. It's not a hard and fast rule, but it's a range, and that range allows us to fuel growth into the top of our pyramid on strategic growth. So those kind of principles that we apply as we look through it. Christopher Bohn: But it should also be noted, as we've said in the past, we believe our shares are still incredibly undervalued. And this whole geopolitical swings that we trade off of rather than the underlying fundamentals that we see going forward, we're going to continue to be aggressive in share repurchases as our #1 outlay of our capital allocation towards shareholders. Operator: The next question comes from Andrew Wong of RBC Capital Markets. Andrew Wong: So just kind of following up on that last thought there, Chris. And in the presentation, too, there's a couple of slides where you highlight the valuation disconnect that you see versus some of your peers, can you just talk about why you think that's the case? What's driving that disconnect? And then what can you do at CF to kind of close that gap? Christopher Bohn: Well, what I would say that we can do to close that gap is continuing just to perform as we do at the highest level. Like I said, if you look at our free cash flow over the last 6 years on average is significantly higher than what we're suggesting the new mid-cycle is. So this isn't just a 1-year, 2-year type of thing. So for us, it's to continue to move forward and perform as we do from an operational looking for margin enhancement, whether that be a DEF project, other utilization or debottlenecks, or whether that's organic and inorganic growth that has return profiles well above our cost of capital. One of the reasons why I personally believe we trade in this is, I think people are still trading 10 years ago on CF. We've increased our production volume by almost 40%. We've reduced our share count by almost 60%. And yet people are still thinking we're this over-levered company that is doing expansion projects. We're a significantly different company today based on what our capital structure is, our free cash flow conversion, that hasn't happened by accident. That's come through very methodical. Our SG&A and our working capital are the lowest in the industry and by the industry, I mean basic materials, I mean, chemicals, everything. And there's almost this ignoring of that just to say, well, they're a fertilizer company, and we're going to place them against these 3 or 4 other peers, which I think is a complete mistake. And as long as our shares are undervalued, we'll continue to buy our shares back. Bert Frost: I also think there's a misunderstanding of our assets and the leverage points that we have in terms of where our plants are located, the diversity of the products that we make, the modes that we're able to ship, and then the terminals, where we're able to distribute as well as export to any country in the world. So we have all this flexibility on top of some of the lowest gas costs in the world, we are going to be a low-cost producer in a high-valued market with the best farmland in the world. And so when you put all those together, it's a unique mix that only we can satisfy and the rest of the world can't. None of our operating competitors can do that. That's why we think we should be valued differently. Andrew Scribner: Yes. I mean as you look out -- I mean, as you can see, we're $500 million into a $2.0 billion program. And as we try to look at our intrinsic value and what it should be, I mean, we're looking at DCF analysis, comps, replacement value, every calculation that we do suggests that there's an opportunity there, and so we'll continue to be opportunistic as we go. Andrew Wong: And then maybe just one on costs. When I look at COGS and I ex out gas and [indiscernible], it does look like it's trended up a little bit in the past couple of quarters. Can you just speak to that? Is it mostly just the Yazoo City or anything like maybe some extra turnarounds or anything like that? Andrew Scribner: Yes. Let me give some color on costs in Q2. If you strip out the impact of volume and gas, our fixed costs were up about $75 million. And I'll do this kind of simply and illustratively, but it'll give you the context. So let's call that $70 million for the context that I'll share. About $10 million of that was distribution and logistics, and that was probably the smaller piece of the puzzle where you saw some load mix going from barge into rail, and the rate on rail itself has gone up a bit. The other $60 million is about a 50-50 split between higher purchased ammonia costs flowing through and the rest is fixed cost absorption tied to Yazoo City being down. So that kind of gives you the 3 pieces that are coming through there from a COGS standpoint. Christopher Bohn: And I would say that purchased ammonia, obviously, we have benefits of that, that flow through the revenue line and it is providing a margin, but it does provide higher COGS during that time frame. Additionally, one of the turnarounds we started during that time was ammonia 6. Ammonia 6, obviously, is our -- it's almost like comparable with 2 plants. So the costs associated with that in the years in which we do Ammonia 6 are always going to be slightly higher from a turnaround standpoint. Operator: The next question comes from Matthew DeYoe of BOA. Matthew DeYoe: I just wanted to reconfirm, for CapEx on Blue Point, like what -- what's your mix on fixed versus nonfixed EPC work? And... Christopher Bohn: Well, what I was going to say is essentially, when we looked at the Blue Point project, the one thing we tried to do was mitigate our overall costs related to that. And we did that in a couple of different ways. One was through our partnerships where we partnered with Linde and even Oxy's 1PointFive on the CCS unit. But additionally, even with Mitsui and JERA, where they're providing some insight and administrative benefits along with, as we go to the module yards in Asia. So I think that is one area where we look to lock down on some of those costs. What we have fixed is roughly probably about 50% of the CapEx related to that. And that is in a couple of different areas. One is in the engineering and the module yards, the other is in some of the lump sum turnkeys that we try to do on the infrastructure pieces, whether it be the tank or some of the dock and bridge work and things like that. So we feel pretty confident about how we're managing through this. As I mentioned earlier, we have our long-lead items for Blue Point purchase. So some of those things that we're seeing with extension of lead times or increases in costs related to those, we started those -- some of those critical items having contracts in place even pre-FID on the project itself. Matthew DeYoe: Just as a quick follow-up, I mean labor and assembly and build out, I assume that's just like impossible to fix now in the Gulf? Christopher Bohn: I mean the portion that will be labor in the Gulf is going to be significantly lower than what we saw when we did the expansion projects back from 2012 to 2016. And that's because a lot of the work from the modular piece is going to be done overseas. So as a result of that, you're probably going to have maybe 1/3 of what the labor component was compared to what we saw last time. And that does a couple of things. One, that allows you to probably get more skilled labor in there because you have a smaller headcount that you're trying to do there, but also just limits the high-cost labor that would be in the Gulf Coast right now. Matthew DeYoe: And if I could, Bert, I was just wondering about the underlying assumptions for 9 million to 10 million tons in India this year because I mean they obviously ended last year with pretty good balances given all that buy. So I'm just kind of wondering if that 9 million to 10 million assumes maybe shipments from last year into this year or that's really like a back half-loaded period? Bert Frost: If you do it on their fertilizer year, which is April through March, they had the tender for 2.5 million tons and a tender for 1.77 million tons so total to date is 4.27 million tons. They just announced a tender last week for an additional 1.7 million tons. And so you can do that math. That's roughly 6 million tons. We expect another tender by the end of this year. But they also tendered twice last year -- or in the calendar year, once in January and 1 in February. And so if you go into their fertilizer year, that would extend into January through March. And they did almost 2.2 million tons. So when you add those all up, that gets you to 9 million to 10 million tons expected. And you have to remember, they were -- they are an LNG importer, and they were running it suboptimally on their domestic operations. We estimate they lost 1.5 million to 2 million tons of domestic production. So rolling all that up and we're still not sure what can come out of the Strait on the forward market, I would say 9 million to 10 million is a pretty good estimate today. Operator: The next question comes from Mazahir Mammadli of Rothschild & Co. Mazahir Mammadli: I just wanted to ask a follow-up on the midterm -- mid-cycle EBITDA targets. What is the sort of mid- to long-term market balance is assumed in that? I'm just going to give you an example. For example, India is striving to be more self-sufficient over the medium to long term in urea. You have a number of projects that are in development that should theoretically come online by the end of the decade, and that would theoretically remove demand from the global market. Is stuff like that factored in? How should we think about it? Christopher Bohn: One is, I think if you look at the overall supply growth over the next 4 to 5 years, India does have a few projects, some of which -- one of which is green that I think you have to start to put probabilities on what is the time frame in which that's going to go. But even with all the announced projects that are happening right now, you're going to have a deficit or an extreme tightness in the S&D balance as we see it going out through 2030. Now in saying that, just because India wants to become self-sufficient and other countries as well, doesn't mean that there's not a capital cost that's incurred in order to drive and build those particular plants themselves. And if you look at it from an economic standpoint, it may make more sense to continue the import or these particular projects can be delayed. So how we look at the mid-cycle is we do build in what we have in flight when we're working with engineering teams. And usually, you have a very good visibility, I would say, out 5 years because that's about the time it takes to build a plant. And then we start to manage that as time goes on and readdressing that. But today, really, as you look at the next few years, there's some plants -- there's a plant in Qatar, there's one in UAE, there's our plant and then one in Nigeria. But outside of that, I would say, the others are a little bit at risk, whether that be Russian plants or some of these Indian plants that are talked about to come on before 2030. Bert Frost: As well as there's constrained areas around the world we've identified in previous conferences or calls, but when you look at Europe and the gas spread and the age and the inefficiency of some of those plants and their long-term viability as well as what's coming out of in terms of LNG constrained areas like Bangladesh and some of the Southeast Asian plants that are also, I think, challenged. So on a going-forward basis, not every plant, which we saw the Brazilian shutdowns, they're talking about revamping, I don't think that's very viable long term with the gas -- the way gas flows there. And then there's Trinidad that's also limited on gas. So you have new capacity coming in and old capacity, which we believe won't be operable over the long term as well as demand increases over time. Mazahir Mammadli: And then I just wanted to sanity check something regarding 45Q. So when I look at Q1, there is $19 million of 45Q income, which, if I sort of divide it by the $85 a ton CO2 price, gives me a CO2 capture of slightly more than 200,000 tons. And as far as we know, Donaldsonville around 500,000 tons CO2 per quarter. Is that calculation missing something? Or is Donaldsonville CO2 still ramping up? Christopher Bohn: Well, I think there's 2 points there. One, the revenue through the first half of the year is about $45 million associated with the 45Q, not the number that you suggested. The second part is this year, we do expect the overall CO2 to be lower throughout the Donaldsonville facility, primarily because of the turnarounds that took place there. I mentioned earlier, Ammonia 6, which is effectively 2 ammonia plants with its production went through a turnaround. It's completed that turnaround now, but the turnaround began in June and went through July as well. So as a result of that, you're going to have lower CO2 that was available in order to sequester during that time frame. But I think the numbers themselves, where show through in the other operating income line are correct, that $45 million. And the one thing I would mention is that we are not taking it to a Class VI as of right now. And so as that is at $60 per ton, we do believe, just to maybe follow up on that, that the Class VI approval will be happening later this year, and then that will move to the $85 a ton. Economically, we're indifferent because our transfer today is at a 0 cost with Exxon, and it will move up to the contractual rate once the Class VI is in place. Operator: The next question comes from Edlain Rodriguez of Mizuho. Edlain Rodriguez: Chris, in terms of the valuation, should we then expect to be more aggressive on the buyback going -- in the second half of the year because the pace seems to be a little slower in the first half? And more importantly, as you noted, late into the second quarter, we saw global urea prices decline. But what was most surprising to me was that in the U.S., prices not only a decline, but they were below last year's level. And that was despite all the supply disruption we had globally. Like how do we explain that? Christopher Bohn: So from the share repurchase -- I'll start with that, and then I'll let Bert touch on the urea pace. On the share repurchase, we have a significant amount of cash on our balance sheet. We have a program, as Andrew mentioned, is still open with plenty of room there, and we believe that we are trading underneath our intrinsic. So checking all those boxes, we expect to be into the market. Now having said that, when I look at how we're trading off of what happens on a tweet or basically what Pakistan is saying or something coming out of Oman or whatever, we're trading in the last 6 weeks between $100 and $140. So we're going to be opportunistic and grab more shares as we see some of that volatility exists. But we are committed to repurchasing shares. We have the cash flow to do it over and above what we're seeing from our strategic initiatives, and we'll continue to do that. Bert Frost: Yes. Regarding the Q2 price correction, you basically refer it back to where we were in the lows of Q1 and went up due to the hostilities in the Gulf and then reverted back down. A lot of that, I think, was trading off of rumors of peace and openness to the Gulf, and then we were at the tail end of our season. So a lot of trader liquidation taking place. I don't think a lot of physical tons moved at that level, but then we've since corrected back up to the $400, $415 level where we are today. And I think that's where we'll play out. And then as we talked about in earlier calls, earlier questions, the tightness, I think, will be more pronounced as we get to the back half of the year. Operator: The next question comes from David Symonds of BNP Paribas. David Symonds: Just another one on longer-term outlook. So China is still adding capacity the rest of this decade. Is your view that they can start to export more than the 4 millions to 6 millions tons you expect this year in the next few years? Or do you think they add capacity to replace older plants at this stage? Bert Frost: I think yes and yes. I think they've proven their ability to build new plants, but the amazing thing to me about China is the growth in demand. Today, they're running at about -- we target them at an 82% to 83% operating rate where we run at 98% to 99%. So you have to take their factor in terms of their capacities. They do have some older plants. There have been, over time, a replacement of urban plants or inefficient plants and into newer, more world-scale plants. And so -- but the growth in demand over the years where there are over 60 million, [indiscernible] million tons of consumption internally, the capability to export is there, but I think what the Chinese government has learned is exporting energy in the form of urea, but you're importing energy and LNG and coal, it's not a value-creating game. And so what they have determined or what they, over the last several years, have communicated is the urea and the energy basis and the subsidies they've given it should be benefiting the Chinese farmer and the Chinese consumer, and that has happened. So the domestic price in China is significantly lower than the global price. And over the last, I'd say, year or 2, they've controlled it through these export quotas and allowing certain times, levels, values to be exported which the global economy needs. So where they will be longer term. I think that where they are today in that 4 million to 6 million tons probably for this year and the next and will be determined later in the future. But I don't think they have identified urea or ammonium sulfate or any of the fertilizer products as an area to focus the attention and again, keep that for the Chinese consumer and farmer. Operator: Ladies and gentlemen, that is all the time we have for questions today. I would like to turn the call back to Martin Jarosick for closing remarks. Martin Jarosick: Thanks, everyone, for joining us this morning, and we look forward to seeing you at upcoming conferences. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. CF Industries (CF) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in CF Industries Holdings, Inc.? Here are five stocks we like better. Strong financial performance: CF Industries reported $1.2 billion in second-quarter adjusted EBITDA and $727 million in net earnings, supported by tight nitrogen markets and nearly 98% ammonia-capacity utilization. Tight market outlook: Management expects global nitrogen conditions to remain constrained through 2027, citing capacity closures, limited new supply, geopolitical disruptions, higher logistics costs and elevated construction expenses. Growth and shareholder returns: CF raised its mid-cycle outlook to approximately $2.9 billion of EBITDA and $1.7 billion of free cash flow, advanced the Blue Point project, delayed Yazoo City’s restart to the first half of 2027, and increased its dividend 20% to $0.60 per share. Not Just Oil: 3 Fertilizer Stocks Boosted by Hormuz Closure CF Industries (NYSE:CF) reported first-half 2026 adjusted EBITDA of $2.2 billion and second-quarter adjusted EBITDA of $1.2 billion, as tight global nitrogen supply-demand conditions and strong operating performance supported results. Net earnings attributable to common stockholders totaled $1.3 billion, or $8.71 per diluted share, for the first half, including $727 million, or $4.73 per diluted share, in the second quarter, Chief Financial Officer Andrew Scribner said during the company’s earnings call. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Top 3 Bank Stocks to Watch as Fed Rate Cuts Loom President and CEO Chris Bohn said the company operated its available ammonia capacity at nearly 98% during the first half. He also highlighted a trailing 12-month incident rate of 0.16 incidents per 200,000 hours worked, which he said was below industry averages. Chief Commercial Officer Bert Frost said global nitrogen prices rose during the first half as an already-tight market was further constrained by supply disruptions associated with the conflict with Iran. While some customers in regions with later application seasons deferred purchases amid higher prices, North American agricultural demand remained strong through most of the period, particularly for ammonia and urea. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Regional Bank Buybacks: 5 Institutions Making Big Moves CF Industries shifted production toward urea from UAN during the first half, Frost said, while also delivering its second-highest first-half diesel exhaust fluid, or DEF, volumes. DEF was the company’s highest-margin product during the period. Purchasing slowed in North America during June as the nitrogen distribution channel reduced inventories to low levels. However, Frost said those inventory positions supported strong participation in the company’s UAN and ammonia fill programs in July. CF Industries built a UAN order book extending into November and expects a strong fall ammonia season, he said. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling The company expects the global nitrogen market to remain tight into 2027. Frost cited higher capital costs, permanent capacity closures, limited new capacity additions, geopolitical uncertainty, elevated logistics and insurance costs, and high liquefied natural gas prices affecting marginal producers. China is expected to export urea volumes similar to last year, according to Frost. While those exports are needed to meet global demand, he said they are not expected to materially loosen market conditions. CF Industries also expects purchasing activity to recover in deferred markets, including Brazil and India, while North American demand remains firm through upcoming application seasons. Management raised its baseline mid-cycle outlook, projecting approximately $2.9 billion in EBITDA and $1.7 billion in free cash flow. Scribner said the revised outlook reflects higher construction costs for new nitrogen capacity in regions with low-cost natural gas, which have narrowed the historic cost advantage those locations held over North American projects. During the question-and-answer session, Bohn said the company’s assumed NOLA urea price increased to $385 per short ton from $355 per short ton. Of the $30 increase, he estimated that roughly $10 could be linked to structural changes associated with geopolitical disruptions, including higher freight, insurance and risk-related costs. The remainder principally reflects higher capital costs, he said. Scribner said the company’s analysis assumes a 1.3 million- to 1.4 million-ton capacity site with capital spending of approximately $2.6 billion to $2.8 billion, natural gas costs of $3.50, and a 10% to 12% financial return. By 2030, CF Industries expects initiatives already underway to lift mid-cycle EBITDA to approximately $3.3 billion. Scribner said that expected $400 million increase includes about $300 million from the Blue Point project and $100 million from additional carbon-capture benefits at Donaldsonville and Yazoo City. Bohn said Blue Point has received all necessary construction permits, nearly all long-lead equipment has been ordered, and module fabrication is expected to begin later this year. Construction is expected to begin in August, accelerating the company’s capital-expenditure pace. CF Industries expects 2026 capital expenditures of approximately $1.3 billion, with the company’s share totaling about $950 million. Bohn said roughly 50% of Blue Point capital expenditures are fixed through engineering, module-yard work and certain lump-sum turnkey infrastructure contracts. At Yazoo City, the company now expects operations to resume during the first half of 2027, rather than late 2026. Bohn said the revised schedule primarily reflects longer procurement timelines for electrical equipment. The site will no longer produce prilled ammonium nitrate. Instead, it will produce ammonia, ammonium nitrate solution and DEF, changes management said are intended to improve the complex’s operational and logistics flexibility. Scribner said CF Industries has recorded nearly $50 million in equipment impairments connected with Yazoo City and has received about $75 million in insurance recoveries to date, including property damage and business interruption proceeds. Trailing 12-month net cash from operations was approximately $3 billion and free cash flow was approximately $1.8 billion, Scribner said. Over that period, CF Industries returned nearly $1.3 billion to shareholders, including $958 million used to repurchase 10.6 million shares and $314 million in dividend payments. In July, the board increased the quarterly dividend 20% to $0.60 per share. Since the start of 2021, shares outstanding have declined 29%, while the company’s dividend has doubled, Scribner said. Bohn said CF Industries remains committed to share repurchases and views its shares as undervalued. Management said its capital-allocation priorities remain strategic growth investments, share repurchases and dividends. The company also said its low-carbon ammonia sales program continued to gain momentum. About 10% of ammonia sales volume in the first half was low carbon and earned an average premium of more than $20 per ton, according to Frost. CF Industries Holdings, Inc is a leading global manufacturer of hydrogen and nitrogen products for agricultural and industrial customers. The company specializes in the production of ammonia, granular urea, urea ammonium nitrate (UAN), nitric acid and ammonium nitrate, which serve as key inputs for fertilizer blends, industrial chemicals and other downstream applications. Headquartered in Deerfield, Illinois, CF Industries operates production facilities and distribution terminals across North America and the United Kingdom. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "CF Industries Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

CF Industries Holdings, Inc. CF used its second-quarter 2026 earnings call to emphasize a higher structural earnings base as rising construction costs raise the price needed to justify new nitrogen capacity.Management also highlighted tight nitrogen fundamentals, stronger second-half order visibility and Blue Point progress. Executive vice president and CFO Andrew Scribner said baseline mid-cycle EBITDA is now approximately $2.9 billion, with free cash flow of $1.7 billion. By 2030, strategic projects are expected to lift mid-cycle EBITDA to approximately $3.3 billion. President and CEO Christopher Bohn said CF’s low-cost North American asset base, rather than short-term geopolitical disruption, underpins the higher earnings framework. A Scotiabank analyst asked how much of the higher urea assumption reflects geopolitics. Bohn said roughly $10 of the $30 increase reflects structural geopolitical costs, with the remainder mainly tied to capital costs. Executive vice president and chief commercial officer Bert Frost said global nitrogen fundamentals remain tight before geopolitical disruptions are considered. Management expects tight conditions into 2027. Frost expects China to export 4 million to 6 million metric tons of urea in 2026. He also expects deferred purchasing in India, Brazil and other regions to recover as prices support demand. A BofA Securities analyst asked about India’s import requirements. Frost said India could import 9 million to 10 million tons, reflecting announced tenders and reduced domestic production. CF reported second-quarter earnings of $4.73 per share, below the Zacks Consensus Estimate of $5.65. Revenues of $2.22 billion also missed the consensus estimate of $2.43 billion. CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. Quote The company said sales volumes were 15% lower year over year, primarily due to lower UAN, ammonium nitrate and ammonia sales. Excluding lost availability at Yazoo City, volumes were approximately 9% lower. Higher average selling prices across all segments supported results. Adjusted EBITDA rose to $1.19 billion from $761 million a year earlier. Chief commercial officer Bert Frost said customers slowed purchases in June, drawing channel inventories to very low levels and supporting strong participation in July UAN and ammonia fill programs. A BMO Capital Markets analyst asked about the second-half setup. Frost said CF’s UAN fill program carried an average price close to $300 and extended into the fourth quarter, while fall ammonia demand showed strong uptake. President and CEO Christopher Bohn said available ammonia capacity operated at nearly 98% in the first half. CF expects full-year 2026 gross ammonia production of approximately 9.5 million tons. President and CEO Christopher Bohn said Blue Point has the permits needed to begin construction, with nearly all long-lead items ordered. Capital spending is expected to accelerate as construction gets underway. A BofA Securities analyst asked about project cost exposure. Bohn said roughly 50% of Blue Point capital spending is fixed through engineering, module-yard and infrastructure contracts. Bohn also said electrical-equipment procurement pushed the Yazoo City restart into the first half of 2027. The site will emphasize ammonia, ammonium nitrate solution, UAN and DEF-related flexibility. Executive vice president and CFO Andrew Scribner said 2026 capital expenditures remain projected at approximately $1.3 billion, with CF’s portion around $950 million. The board also increased the quarterly dividend 20% to 60 cents per share. President and CEO Christopher Bohn maintained that share repurchases remain the primary shareholder capital-return outlay when management views the stock as undervalued. The call centered on converting CF’s asset position and industry economics into durable free cash flow. CF currently carries a Zacks Rank #3 (Hold), with a Value Score of A, Growth Score of B, Momentum Score of B and VGM Score of A. The A and B grades indicate favorable style characteristics, while the VGM Score combines value, growth and momentum factors. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Rank #3 provides a more neutral signal than a Zacks Rank #1 or Zacks Rank #2 (Buy). Zacks research emphasizes top ranks paired with A or B Style Scores, leaving CF with strong style grades but a Hold rank. The Zacks Rank can change as earnings estimates are revised after the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

CF Industries Holdings, Inc. CF reported second-quarter 2026 earnings of $4.73 per share, up 99.6% from $2.37 in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $5.65 by 16.3%. Net sales increased 17.6% year over year to $2.22 billion but missed the consensus estimate of $2.43 billion by 8.7%. Higher average selling prices across all segments supported growth, while total sales volume declined 15.3% to 4.25 million tons. CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. Quote Ammonia segment net sales rose 19.3% year over year to $586 million. Adjusted gross margin increased to $288 million from $188 million. An increase in the average selling price more than offset a decline in sales volume. Higher prices supported profitability, while lower supply availability and maintenance costs remained headwinds. Granular Urea segment net sales climbed 38.8% to $759 million. Adjusted gross margin advanced to $551 million from $351 million. Sales volume and the average selling price rose. Greater product availability and a production mix favoring granular urea supported volumes, while stronger pricing lifted margins despite higher natural gas costs. UAN segment net sales edged up 0.5% to $613 million. Adjusted gross margin rose to $403 million from $342 million. A rise in the average selling price offset a reduction in sales volume. Lower global demand and a production mix favoring granular urea pressured volumes, while higher freight, distribution and natural gas costs partly offset the pricing benefit. AN segment’s net sales decreased 39.3% to $71 million. The segment recorded an adjusted gross loss of $1 million compared with an adjusted gross margin of $35 million a year earlier. Sales volume plunged because of lost production at the Yazoo City Complex, outweighing an increase in the average selling price. Higher purchased ammonia costs and outage-related expenses also pressured results. As of June 30, 2026, CF Industries had cash and cash equivalents of $2.48 billion. Long-term debt was $3.22 billion. Net cash provided by operating activities totaled $878 million in the second quarter. CF repurchased 2 million shares for $230 million during the quarter. The company bought back 2.2 million shares for $245 million in the first half, leaving roughly $1.48 billion under its current authorization. CF expects full-year 2026 gross ammonia production of approximately 9.5 million tons, including the effect of the ongoing Yazoo City outage. Management expects ammonia, AN solution, nitric acid, UAN solution and urea liquor production at the complex to resume during the first half of 2027. The company projects 2026 capital expenditures of about $1.3 billion on a consolidated basis. Management expects nitrogen supply to remain constrained and demand to remain constructive through the end of 2026 and into 2027. Lower nitrogen prices entering the second half of 2026 are expected to support demand in India, Southeast Asia, Brazil and other import markets. North American nitrogen demand for the 2027 growing season is also expected to remain firm. CF shares have surged 40.8% in the past year against the 44.8% decline in the industry. Image Source: Zacks Investment Research CF currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the basic materials space are Neo Performance Materials Inc. NOPMF, Almonty Industries Inc. ALM and Skeena Resources Limited SKE. Neo Performance is slated to report second-quarter 2026 results on Aug. 11. The Zacks Consensus Estimate for earnings is pegged at 50 cents per share. NOPMF sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. Almonty is expected to report second-quarter 2026 results on Aug. 13. The Zacks Consensus Estimate for ALM’s second-quarter earnings per share is pegged at 10 cents, indicating a 300% year-over-year growth. ALM holds a Zacks Rank #2 (Buy) at present. Skeena is expected to report second-quarter 2026 results on Aug. 13. The consensus estimate for SKE’s loss per share is pegged at 11 cents. SKE presently carries a Zacks Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report Skeena Resources Limited (SKE) : Free Stock Analysis Report Almonty Industries Inc. (ALM) : Free Stock Analysis Report Neo Performance Materials Inc. (NOPMF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

CF Industries (CF) reported $2.22 billion in revenue for the quarter ended June 2026, representing a year-over-year increase of 17.6%. EPS of $4.73 for the same period compares to $2.37 a year ago. The reported revenue represents a surprise of -8.74% over the Zacks Consensus Estimate of $2.43 billion. With the consensus EPS estimate being $5.65, the EPS surprise was -16.28%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how CF performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Sales volume by product - Ammonia: 865.00 KTon versus the four-analyst average estimate of 1,080.57 KTon. Tons of product sold - Total: 4,252.00 KTon compared to the 4,937.51 KTon average estimate based on four analysts. Sales volume by product - Granular Urea: 1,280.00 KTon compared to the 1,279.76 KTon average estimate based on four analysts. Sales volume by product - UAN (urea ammonium nitrate): 1,391.00 KTon compared to the 1,810.71 KTon average estimate based on four analysts. Average selling price per product ton - Granular Urea: $593.00 compared to the $560.64 average estimate based on three analysts. Average selling price per product ton - Ammonia: $677.00 compared to the $614.28 average estimate based on three analysts. Sales volume by product - Other Sales volume: 587.00 KTon compared to the 510.52 KTon average estimate based on three analysts. Net Sales- Ammonia: $586 million compared to the $671.83 million average estimate based on four analysts. The reported number represents a change of +19.4% year over year. Net Sales- Granular Urea: $759 million versus $729.7 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +38.8% change. Net Sales- UAN (urea ammonium nitrate): $613 million versus $768.84 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +0.5% change. Net Sales- AN (ammonium nitrate): $71 million versus $104.26 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a -39.3% change. Net Sales- Other: $193 million versus the three-analyst average estimate of $159.58 million. The reported number represents a year-over-year change of +54.4%. View all Key Company Metrics for CF here>>> Shares of CF have returned +2.8% over the past month versus the Zacks S&P 500 composite's +3.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes strong first-half performance to high asset utilization, with ammonia capacity operating at nearly 98% despite global supply chain dislocations. A fundamental structural shift is occurring where higher global capital costs have raised the incentive price for new nitrogen capacity, lifting the company's baseline mid-cycle earnings power. Profitability is anchored by a low-cost, low-risk North American asset base rather than short-term geopolitical premiums, though disruptions enhance the company's stable return profile. The company is pivoting its Yazoo City complex to focus on ammonium nitrate solution, ammonia, and DEF to increase operational flexibility and long-term sustainability. Strategic value creation is being driven by a dual track of increasing production capacity while aggressively decreasing shares outstanding, which has increased investor participation in underlying assets by over 40% since 2020. Management notes that the gap between U.S. and global construction costs has narrowed due to labor, procurement timing, and the use of module yards, reinforcing the value of existing networks. The global nitrogen market is expected to remain tight through 2027 and potentially the end of the decade as new capacity under construction falls short of historical demand growth. Mid-cycle EBITDA expectations have been raised to $2.9 billion, supported by a urea price assumption of $385 per short ton at NOLA, which reflects higher capital costs and a 10% to 12% financial return. Strategic initiatives including BluePoint and carbon capture are projected to raise mid-cycle EBITDA to approximately $3.3 billion by 2030. Capital expenditures are expected to accelerate as construction at Blue Point is expected to begin in August, with a focus on mitigating cost exposure through fixed-fee contracts. The company anticipates a strong fall ammonia season and continued momentum in low-carbon ammonia sales, which earned a premium of more than $20 per ton in the first half. Geopolitical conflict in the Middle East has structurally increased freight costs from approximately $35 to $70 per ton, with management expecting a permanent $5 to $10 premium. Yazoo City repairs have been pushed into the first half of 2027 due to extended procurement timelines for electrical gear, though insurance is expected to offset capital build costs. High LNG prices continue to pressure production economics for marginal global producers, likely limiting operating rates in Europe and other gas-constrained regions. Total impairments related to Yazoo City equipment reached nearly $50 million, partially offset by $75 million in insurance recoveries to date. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management estimates that $10 of the increase is due to structural geopolitical changes like higher freight and insurance, while the remaining $20 stems from higher global capital costs. The $385 price target assumes $3.50 natural gas and the cost of building a new 1.3 to 1.4 million ton capacity site. The North American DEF market is projected to reach 3 million tons by 2030-2031 due to higher dosing rates in newer engines. Courtright is currently net-long on low-margin ammonia; upgrading this to DEF leverages a unique rail position that serves the East Coast better than other sites. Approximately 50% of capital expenditures are fixed through engineering, module yard, and lump-sum turnkey contracts. By using overseas module yards, the project will require only about one-third of the high-cost Gulf Coast labor compared to previous expansion cycles.

This article first appeared on GuruFocus. Adjusted EBITDA (First Half 2026): $2.2 billion. Net Earnings (First Half 2026): $1.3 billion, or $8.71 per diluted share. Second Quarter Net Earnings: $727 million, or $4.73 per diluted share. Second Quarter EBITDA: Approximately $1.2 billion. Trailing 12-Month Cash from Operations: Approximately $3 billion. Trailing 12-Month Free Cash Flow: Approximately $1.8 billion. Capital Expenditures (2026 Outlook): Approximately $1.3 billion, with CF Industries' portion around $950 million. Shareholder Returns (Last 12 Months): Returned nearly $1.3 billion, including $958 million for share repurchases (10.6 million shares) and $314 million in dividends. Dividend Increase: Quarterly dividend raised by 20% to $0.60 per share in July. Mid-Cycle EBITDA Expectation: Baseline of approximately $2.9 billion, with strategic initiatives expected to raise it to about $3.3 billion by 2030. Mid-Cycle Free Cash Flow Expectation: Approximately $1.7 billion. Low-Carbon Ammonia Sales: Approximately 10% of first-half ammonia sales volumes, earning an average premium of more than $20 per ton. Warning! GuruFocus has detected 1 Warning Sign with CF. Is CF fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. CF Industries Holdings Inc (NYSE:CF) delivered strong operational performance with nearly 98% utilization of available ammonia capacity in the first half of 2026, enabling it to meet robust North American demand. The company raised its mid-cycle EBITDA expectations to approximately $2.9 billion and free cash flow to $1.7 billion, reflecting higher global capital costs that have structurally lifted the incentive price for new nitrogen capacity. CF Industries Holdings Inc (NYSE:CF) generated $2.2 billion in adjusted EBITDA for the first half of 2026, with strong free cash flow conversion of approximately $1.8 billion over the trailing twelve months. The company returned nearly $1.3 billion to shareholders over the last 12 months, including a 20% increase in its quarterly dividend to $0.60 per share, while continuing aggressive share repurchases. CF Industries Holdings Inc (NYSE:CF) is making steady progress on strategic initiatives, including receiving all permits for the Blue Point project, with construction set to begin in August, and expects these projects to raise mid-cycle EBITDA to $3.3 billion by 2030. The company's low-carbon sales program is gaining momentum, with approximately 10% of ammonia sales volumes in the first half earning an average premium of more than $20 per ton. CF Industries Holdings Inc (NYSE:CF) expects the global nitrogen market to remain tight into 2027, supported by constrained supply growth, high LNG prices pressuring marginal producers, and deferred demand recovery in regions like Brazil and India. The company's strong safety performance, with a trailing 12-month incident rate of 0.16, supports high asset utilization and operational excellence. CF Industries Holdings Inc (NYSE:CF) experienced a slowdown in customer purchases in June, drawing down inventories to very low levels, which could impact near-term sales volumes. The company faces higher fixed costs, with Q2 fixed costs up about $75 million, driven by increased distribution and logistics costs, higher purchased ammonia costs, and fixed cost absorption tied to the Yazoo City outage. The Yazoo City complex restart has been pushed back to the first half of 2027 due to extended procurement timelines for electrical gear, delaying the site's contribution to operations. CF Industries Holdings Inc (NYSE:CF) noted that global nitrogen prices corrected in Q2, reverting to lower levels due to trader liquidation and end-of-season demand, which could pressure margins. The company's capital expenditures are expected to accelerate with Blue Point construction, with 2026 CapEx projected at approximately $1.3 billion, potentially impacting near-term free cash flow. CF Industries Holdings Inc (NYSE:CF) faces ongoing geopolitical uncertainties, particularly in the Middle East, which could disrupt supply chains and increase logistics and insurance costs. The company's mid-cycle EBITDA expectations exclude potential benefits from the DEF FEED study, which has not yet been greenlit, limiting near-term upside from this project. CF Industries Holdings Inc (NYSE:CF) acknowledged that a meaningful portion of global nitrogen capacity remains exposed to geopolitical uncertainty, which could affect supply availability and pricing stability. Q: Can you break down how much of the new mid-cycle price of $410 per short ton for CF is due to capital cost inflation versus structural changes from the Middle East conflict?A: Chris Bohn (CEO) explained that the NOLA urea price assumption moved from $355 to $385 per short ton. Of that $30 increase, roughly $10 is attributable to structural changes from geopolitical events (such as higher freight and insurance costs that won't fully snap back), while the remaining amount is due to higher capital costs and the closing gap between US and global construction costs. Andrew Scribner (CFO) added that the $385 price assumes 1.3-1.4 million ton capacity sites with CapEx of $2.6-2.8 billion, $350 natural gas, and a 10-12% financial return. Q: Given the soft demand in Q2 and compressed delivery timelines, how do you see pricing setup for fall and spring? Will the market rapidly tighten and expose low inventory levels?A: Bert Frost (Chief Commercial Officer) stated that deferred demand from the Southern Hemisphere will catch up, citing India's import demand of 9-10 million tonnes (above last year) and positive movement in South America. He noted that EU gas at $18-20 creates a structural disadvantage for European producers, likely leading to higher imports there. Chris Bohn added that with curtailments in Europe and ongoing Gulf supply issues, pricing will be determined by these supply constraints. The company remains constructive on the back half of 2026 and into 2027, expecting tight pricing. Q: Can you provide an update on Yazoo City - what are the swing factors for the timeline, business interruption insurance coverage, and any changes to the site configuration?A: Chris Bohn explained that procurement timelines, particularly for electrical gear, extended, pushing restart to the first half of 2027. The site will be reconfigured to produce ammonium nitrate solution, ammonia, and DEF (rather than ammonium nitrate), providing increased operational and logistics flexibility. Andrew Scribner detailed the insurance picture: $25 million property damage received in Q2, $50 million business interruption insurance received to date, with a longer-term ratio of about 3:1. The BI insurance covers approximately 18 months. Capital for Yazoo is not included in guidance because insurance recovery is expected to offset the rebuild cost. Q: Are you seeing any impact from extra Texas capacity this year (ExxonMobil ammonia, Woodside)? Is this offsetting Trinidad volumes?A: Bert Frost noted that the Texas plants have had a long lead to full production and their tonnes have been absorbed into the market. With Yara purchasing the Gulf Coast plant, much of that product will likely go to Europe, offsetting production cutbacks. Trinidad has taken tonnage off market, and phosphate producers have reduced consumption of ammonia due to limited sulfur supply. Chris Bohn added that the global supply/demand is tightening independent of Gulf events, with insufficient new projects coming online between now and 2029-2030 to meet demand growth. Q: Can you provide background on the FEED study for DEF - how are you thinking about demand and economics for industrial versus over-the-road applications?A: Bert Frost highlighted that DEF demand has grown from zero to 2.2 million tonnes (urea equivalent) over 15 years, representing two world-scale plants of urea consumption. With new power units entering service and increasing dosing rates, the market is expected to reach 3 million tonnes by 2030-2031. Chris Bohn added that Courtright provides a unique opportunity due to its net long ammonia position that is logistically constrained, and the rail line can feed the East Coast and Mid-Atlantic markets better than other sites. The project is expected to be well above the cost of capital given the site's configuration. Q: What is your thought process on the dividend increase, and do you still have regulatory scope for M&A in the US?A: Chris Bohn stated that CF still has room for M&A, noting the company's track record of increasing production volume at acquired assets (e.g., 30% increase at Waggaman). The focus remains on low-cost, low-risk North American assets. On dividends, the increase reflects confidence in mid-cycle free cash flow generation. Andrew Scribner added that the strategy follows two principles: being competitive with the marketplace (2.1% yield vs. S&P's 1.1%) and being conscious of absolute spend to fuel strategic growth. Chris Bohn emphasized that shares remain "incredibly undervalued" and share repurchases will continue to be the #1 capital allocation priority. Q: Why do you think there's a valuation disconnect versus peers, and what can CF do to close that gap?A: Chris Bohn attributed the disconnect to investors still trading CF based on its profile from 10 years ago, despite production volume increasing nearly 40% and share count decreasing almost 60%. He noted the company has the lowest SG&A and working capital in the industry. Bert Frost added that there's a misunderstanding of the company's asset leverage points - plant locations, product diversity, shipping modes, and distribution terminals combined with some of the lowest gas costs in the world. Andrew Scribner noted that DCF analysis, comps, and replacement value calculations all suggest the stock is undervalued. Q: Can you explain the cost increases in COGS and OpEx in recent quarters?A: Andrew Scribner explained that stripping out volume and gas impacts, fixed costs were up about $75 million in Q2. Approximately $10 million was from distribution and logistics (mode mix from barge to rail and higher rail rates). The remaining $60 million was split between higher purchased ammonia costs flowing through and fixed cost absorption tied to Yazoo City being down. Chris Bohn added that the ammonia 6 turnaround (which is like two plants) also contributed to higher costs during that period. Q: What is the mix of fixed versus non-fixed EPC work on BluePoint CapEx?A: Chris Bohn stated that roughly 50% of the CapEx is fixed, covering engineering, module yards, and lump sum turnkey work on infrastructure (tanks, dock, bridge work). The company has mitigated costs through partnerships with Linde, Oxy, Mitsui, and JERA, and has contracts in place for long-lead items even pre-FID. The labor component in the Gulf will be about one-third of what was seen during the 2012-2016 expansion projects because much of the modular work is done overseas, allowing for For the complete transcript of the earnings call, please refer to the full earnings call transcript.

CF Industries (CF) came out with quarterly earnings of $4.73 per share, missing the Zacks Consensus Estimate of $5.65 per share. This compares to earnings of $2.37 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -16.28%. A quarter ago, it was expected that this fertilizer maker would post earnings of $2.43 per share when it actually produced earnings of $2.89, delivering a surprise of +18.93%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. CF, which belongs to the Zacks Fertilizers industry, posted revenues of $2.22 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 8.74%. This compares to year-ago revenues of $1.89 billion. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. CF shares have added about 52.7% since the beginning of the year versus the S&P 500's gain of 13%. While CF has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for CF was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.71 on $1.98 billion in revenues for the coming quarter and $16.69 on $8.7 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Fertilizers is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Green Plains Renewable Energy (GPRE), another stock in the broader Zacks Basic Materials sector, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This ethanol production, marketing and commodities company is expected to post quarterly earnings of $0.65 per share in its upcoming report, which represents a year-over-year change of +258.5%. The consensus EPS estimate for the quarter has been revised 11.3% lower over the last 30 days to the current level. Green Plains Renewable Energy's revenues are expected to be $528.9 million, down 4.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report Green Plains, Inc. (GPRE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research