CF Industries Holdings, Inc. (NYSE:CF) Q1 2024 Earnings Call Transcript

So, I think we’re just on the first few innings of where that demand side goes. But I would say that we’re very encouraged that we have a large portion of it already taken. Additionally, as Bert mentioned, you’re just seeing more and more activity come along, whether it’s through the power gen, the marine or the sustainable aviation fuel or even just on the legacy agricultural business, where decarbonized product is going to have a home from a supply standpoint. So, we’re pretty encouraged by what we have and what we’re seeing going forward.

Operator: Thank you. The next question comes from Aron Ceccarelli with Berenberg. Please go ahead.

Aron Ceccarelli: Hello, good morning. Thanks for taking my question. I wanted to ask you, in the scenario where you go ahead with both the Mitsui plant and the JERA 1 or, say, a combined one, how should we be thinking about your capital expenditure phasing for the next three to five years? Thank you.

Tony Will: Yes. So, I think as Chris mentioned in our last earnings call, the FEED study for an ASMR steam methane reformer, kind of a copy of ammonia 6 at Donaldsonville was about $2.5 billion, and then there would be roughly another $500 million for scalable infrastructure that could be leveraged against additional plants on site. So, all in for the first one, it would be circa $3 billion. Now that does not include if it was required, flue gas capture. And we are still in the middle of a FEED study to evaluate what it would look like to do an autothermal reformer or an ATR. And so more to come in terms of what the cost of a different approach or different technologies are. But if we had both, let’s say, JERA and Mitsui and CF kind of all aligned on one particular project, and it was a third, a third, a third.

That would be kind of $1 billion per company to do the SMR spent over, call it, 4-ish type of years. Now if it’s 50% for us and 50% for somebody else, then that increases to $1.5 billion. It just kind of scales appropriately. But it’s in that order of magnitude, and it’s spread over 4 to 5 years of cash outflow. So, while it’s a meaningful amount of cash compared to the amount of free cash that we’re generating, We still have plenty of free cash available to be able to return cash to shareholders in the form of dividend and share repurchases. So, it’s not going to impede us from being able to execute our return of capital program and other incremental growth opportunities that we have.

Aron Ceccarelli: Thank you very much.

Operator: Thank you. Ladies and gentlemen, that is all the time we have for questions for today. I would like to turn the call back to Martin Jarosick for closing remarks.

Martin Jarosick: Thanks everyone for joining us today. We look forward to seeing you at upcoming conferences.

Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.