2026 05 07 Earnings CF Q1 Fy2026

Summary

CF Industries Q1 2026: adj EBITDA $983M, net earnings $615M ($3.98/diluted share), TTM FCF $1.65B, CapEx guidance $1.3B consolidated. Load-bearing chains: (1) CEO Bohn explicitly frames the geopolitical disruption thesis — Iran conflict + Strait of Hormuz closure removed "meaningful portion of low-cost supply during peak nitrogen season"; North American producers (CF) are "low cost AND low risk" vs ~50% of first-quartile global capacity that is "fragile and exposed"; this is management's own stated re-rating thesis. (2) India import demand potentially 10-12M metric tons in 2026 (10-30% higher than 2025, ~2x 2024 imports) — structural demand surge. (3) Blue Point ammonia plant (Medicine Hat, Canada): construction starts 2026, +1.5M tons gross ammonia capacity, operational late 2029 — long-dated capacity lock-in. (4) Russia export restrictions + Egypt $90/mt export duty + China domestic-only posture all simultaneously tightening global supply. Market expected tight through 2026 and into 2027. Directly confirms the cbam-elnino-nitrogen-price-spike-cf-ntr hypothesis with primary-source management evidence.

Transcript

Christopher D. Bohn (President and CEO): Thanks, Martin. Good morning, everyone. Yesterday afternoon, we posted results for 2026 in which we generated adjusted EBITDA of $983 million. These results reflect a continued focus on safety, operational excellence, and disciplined execution by our team.

Operationally, we had another strong quarter, running available ammonia capacity at nearly 100%, and our commercial, logistics, and distribution teams ensured we met customers' requirements leading into the North American spring application season.

Our performance in the quarter also reflected the tight global nitrogen supply-demand balance that carried into 2026. Late in the quarter, the conflict with Iran severely tightened the global nitrogen market, a dynamic we expect to continue for some time. Lost production cannot be recovered. Damaged nitrogen and upstream feedstock capacity must be restored, and global trade flows will require time to recalibrate. In addition, the Russia-Ukraine war continues to disrupt nitrogen production at Russian facilities.

From a macro perspective, we believe recent geopolitical disruptions are driving a fundamental shift in our global industry's risk-return framework. First quartile producers have historically been defined by low natural gas costs alone. Recent supply disruptions from the Middle East and Russia show that low-cost feedstock is no longer enough. As a result, we see a clear divide within the first quartile. North America, where we have intentionally invested billions of dollars over decades to build the leading nitrogen manufacturing and distribution network, is low cost and low risk, representing premium-grade assets. This is in stark contrast to approximately 50% of first quartile capacity that is fragile and exposed, with low natural gas costs that are offset by extreme geopolitical exposure.

We believe the geopolitical risk premium that fragile and exposed producers face will be an enduring structural headwind, increasing the cost of capital and adding costs and uncertainties for moving product to customers. In our view, this has strengthened mid-cycle economics across the nitrogen industry, with a higher urea price now required to incentivize investment in new capacity in the Middle East to offset geopolitical risk or to build in higher-capital-cost, low-risk regions.

Bert A. Frost (SVP Sales, Procurement & Distribution): Thanks, Chris. As we have discussed in our last several earnings calls, the global nitrogen supply-demand balance has been structurally tight for more than a year. Global nitrogen demand has been robust. At the same time, supply has been constrained by geopolitical conflicts, elevated natural gas prices in Europe, export restrictions, and declining natural gas availability in several key producing regions.

The conflict with Iran and the closure of the Strait of Hormuz introduced a significant supply shock into this already tight market. Exports of urea and ammonia from the region have been severely limited, removing a meaningful portion of low-cost supply during peak nitrogen season. Additionally, producers that use imported LNG for production have curtailed or shut down facilities due to fuel availability issues. These dynamics have substantially raised the global clearing price to meet nitrogen demand.

During this period, our focus has been on our long-standing North American customer base, which includes retailers, wholesalers, and cooperatives. We have been moving product to our customers for the spring 2026 planting season since July 2025. Based on what we see today, inventory for both pre-plant and post-plant applications appears well covered. We continue to work with our customers to meet the last layers of demand for this season. This includes leveraging our manufacturing, logistics, and distribution capabilities to increase nitrogen availability this spring.

For example, we temporarily delayed a turnaround at Donaldsonville, allowing us to produce about 100 thousand additional tons of urea for the season. We also repurposed Yazoo City rail assets to move urea from Donaldsonville into the Corn Belt and to ship ammonia from Medicine Hat, Canada, into our U.S. distribution network.

While CF Industries has flexibility to support our customers, globally there are not many options to overcome a supply disruption of this magnitude. Indeed, we are seeing several nations restrict exports, further removing supply from global trade flows. China remains focused on ensuring its domestic agricultural industry is well supplied, with exports of nitrogen largely restricted. While we expect controlled and limited urea exports to begin later in the second quarter, volumes are unlikely to fully offset lost Middle Eastern supply. Russia has also implemented export restrictions to prioritize domestic agriculture, and this week, Egypt moved to apply a $90 per metric ton duty on nitrogen fertilizer exports.

With global nitrogen supply constraints, there will be intense competition for available supply. We expect India, which entered 2026 with low inventories, to lead the way. Given urea volumes not delivered under a previous tender and lower-than-expected domestic urea production, we believe India's urea import requirements will be substantial in 2026, potentially rising to 10 million to 12 million metric tons. This would be approximately 10% to 30% higher than 2025 and nearly double its 2024 imports.

In this environment, we expect to see unmet demand in certain parts of the world. We believe Latin America, Africa, and Southeast Asia are areas where we will see lower fertilizer consumption. As application volume per acre decreases globally, yields will decline, which we expect to result in higher prices for corn, wheat, rice, cotton, and sugar.

Looking ahead, even with some incremental supply later in the year, we expect global nitrogen markets to remain tight through 2026 and into 2027. We also expect further structural tightening through the end of the decade as new nitrogen capacity under construction today falls short of the traditional nitrogen demand growth rate.

Richard Hoker (SVP and CFO): Thanks, Bert, and good morning, everyone. For 2026, the company reported net earnings attributable to common stockholders of approximately $615 million, or $3.98 per diluted share. EBITDA was approximately $1 billion and adjusted EBITDA was $983 million. These results reflect a gain of approximately $170 million from a previously disclosed litigation settlement with Orica and Nelson Brothers. We recorded the gain in the first quarter and received the proceeds in April. As a result, it will be reflected in our cash flow statement next quarter.

On a trailing twelve-month basis, net cash from operations was approximately $2.7 billion and free cash flow was approximately $1.65 billion. We continue to efficiently convert EBITDA to free cash flow at industry-leading margins, positioning the company well to continue to invest in accretive growth and return capital to shareholders.

Our capital expenditure projection for 2026 remains approximately $1.3 billion on a consolidated basis. CF Industries' portion of this is approximately $950 million, which includes $550 million for sustaining CapEx for our existing network plus approximately $400 million relating to both the Blue Point joint venture and the Blue Point common infrastructure we are building at the site.

Construction on the Blue Point ammonia plant is expected to commence this year once applicable permits have been received. We continue to be pleased by the progress that has been made on this high-return project that will add over 1.5 million tons of gross ammonia capacity in the United States when it begins operation late in 2029. Finally, we repurchased approximately 150 thousand shares of our common stock for $15 million in the first quarter.

Christopher D. Bohn (closing): CF Industries is well positioned for the near, medium, and long term. Our North American footprint, operational excellence, and consistent industry-leading free cash flow conversion set us apart. The geopolitical landscape has shifted the risk-return calculus in global nitrogen. CF's network is the clearest beneficiary of that shift.