Great, thanks. And then, I guess, just on Yazoo City, I mean, the repairs have sort of been pushed back a little bit into the first half of 2017, 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 sort of 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? Thanks.

Okay. I'll take this, Chris. I'll take some of the first parts of that question and then turn the insurance discussion over to Andrew here. I thought it would be late 2026. That was preliminary information on what needed to be done with the 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's 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 probably increased flexibility both from an operational and a logistics standpoint where we'll have a broader customer base that we can start to throughout the years here 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.

Yeah. Hi, Lucas. So I'll give a little bit of color on kind of three 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 a $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. You know, when you look at it to date, it's been about a two to one ratio. Longer term, it'll probably play out more like a three to one 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 including in our capital guidance an assumption for Yazoo City, and there's kind of two fundamental reasons. One, we expect the insurance recovery to offset that, and two, the timing is dynamic. When you look at the timing of the capital between the back half of this year and the 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 specific.

Ready for the next question? Yes, the next question comes from Benjamin Therer of Barclays. Go ahead, please.

This is Rahi on for Ben. Maybe on S&D, are you seeing any impacts on 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 impacts from around, you know, settle down? Thank you.

Yeah, when you look at the Texas plants, there has been a long leap, 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 is won. On the demand side, there's also been some negative impacts with, as you've heard from the phosphate, limited phosphate for more ammonia. So the market has come off the highs of Q2, and it's not depending on destinations. But we see these two plants, the Gulf Coast plant and the, you know, be absorbed into them.

The global S&D is tightening, you know, independent of what was happening in the Gulf during this particular time frame. If you look at 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, and you're going to have other demand pieces that will grow because you can have sulfur, some more tightening that continues to go on between now and the end of the decade in the nitrogen market here.

Got it, and thanks for the color. And just a quick follow-up for Yazoo. Can you just walk us through the thought process that you were going to make, AN, UIN, 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.

Yeah, 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, you know, BERT's commercial team has put together, both from an ANS, a UAN, and DEF, that it wouldn't really make sense to put in that type of configured and structured distribution of those assets.

Thank you. The next question comes from Kristen Owen of Oppenheimer. Go ahead, please.

Thank you for the question. 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 raise 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.

Yeah, so I'll let Bert start on the market and what we see that's interesting us in the market and the different areas where it is. And then I'll speak a little bit more specific to the project itself.

Yeah, DEF has been an interesting product at 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 2 million tons of – and this is urea equivalent tons. So, in effect, two 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, as new power units come into service and the dosing rate is increased from a very low level 15 years ago, well, zero before that. And as these power units get replaced, 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, that's miles per gallon, as well as emissions control, we see this market by the early part of the next decade. And, again, where we're positioned, in a lot of sense, the heavy demand market.

Growth to DF, and essentially we've 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, you know, 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, 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. out of the engineering and design study. I 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 is additionally something that's going to be well above our cost.

My follow-up question is based 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.

Yeah, I would say we're looking at a normal slate in terms of the economics as we look against normal slate for the Q2. I think that was one of the issues on UAN, but Q2. And any inventory we have, we expect.

Thank you for the time.

The next question comes from Christopher Parkinson of Wolf. Go ahead, please.

Thanks so much for taking my question. I totally understand the second half outlook in terms of, you know, steady demand, a lot of lost tonnage out of, you know, Costco as well as, you know, some of the Iranian tonnage to see the market, you know, 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. Now, it seems like the international opportunities, especially in the third quarter, you know, should have been a little bit better, should be at least improving in terms of that prospective market tightness. So I'd love to hear your perspective across both ammonia and downstream in terms of how you see those dynamics playing out just in terms of, like, the ripple effects from lack of production in the first, you know, quarter or two. Thank you so much.

Yes, when you look at what the countries or companies, how do you backfill? And some of it is through, I think, the Chinese tons that everybody's expecting, just solid operating, looking into what markets we would. You mentioned that we're trading at a discount, and so you've seen us build higher than normal. And so when I look at where these benchmarks go, I think you're going to see.

And just as a quick follow-up to that, I'd love to hear your perspective. You know, in the U.S. alone, and I apologize if I'm missing one, you've seen basically seven cancellations in terms of low carbon or blue ammonia over the last several quarters and perhaps a project or two 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's been a little bit more quiet versus some, you know, positive events, you know, 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. Thank you so much.

Yeah, and I think to start with, Chris, the ones that have given up were not necessarily 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 four in construction today, of which ours is one of them. About what clean energy was going to be, our analysis never showed more than we were thinking maybe seven of that 107 would be built. So I think we've been more pragmatic in the clean energy market. It's really similar to the DEF market that Bert mentioned. The million tons that will be going both to Jera and Mitsui, our partners, is a million tons of incremental demand that didn't exist just a few years ago. And we're continuing to see, you know, some opportunities in Japan and other pieces of Asia, but it's going to be, you know, at a slower pace than what I think the original hype was on that. carbon ton or a conventional ton. We produce it the same way. We still efficiencies that we have as an organization to lower our costs 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 too, is because of those assets and really that ability we have.

The next question comes from Vincent Andrews of Morgan Stanley. Go ahead, please.

Thank you and good morning. Chris, I wanted to ask you on the dividend and maybe separately on another part of capital allocation, you know, just sort of what your thought process is. Obviously, as the share account comes down, you can pay a higher dividend without spending more money. So is that just the plan going forward? 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, you know, 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 two?

Yes, maybe the Gulf Coast number two yards 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 given is that assets in our hands, 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, or just looking recently at Wagaman where we've increased That, I think, is a key to allowing us to continue to do particular. Now, as we look at those asset acquisitions, you know, we want to be someplace that isn't in the third. Someplace out standpoint could be constrained as time goes on. We like our low-cost position. We like the low-cost from the geopolitical generation. Seeing that free cash flow conversion and generation goes up just makes us more confident in increasing it as time goes on there.

Yeah, and this is Andrew. You know, the piece that I would share is, you know, our overall strategy on capital hierarchy of driving strategic growth, share repurchases, and dividend. When you think about the dividend, I think of it as two fundamental principles. One, we want to be competitive with the marketplace. So, you know, 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 are kind of the principles that we apply as we look through it.

Also be noted, 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 number one outlay of our capital allocation torch.

The next question comes from Andrew Wong of RBC Capital Markets. Go ahead, please.

Hey, good morning. Thanks for taking my questions. 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. You just talked about why you think that that's the case, what's driving that disconnect, and then what can you do as CF to kind of close that gap?

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 six years on average, it's significantly higher than what we're suggesting the new mid-cycle is. So this isn't just a one-year, two-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, you know, return profiles well above our cost of capital. You know, 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, you know, 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 conversion. That hasn't happened by accident. It'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, you know, ignoring of that just to say, well, they're a fertilizer company and we're going to place them against these three or four 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 I also think there's a misunderstanding of our assets our plants are located to ship and then the terminals were a farmland in the world and so when you

put all these you look at me as you can see we're 500 million into a 2 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 suggest that great I appreciate all that and then maybe just one on costs.

When I look at costs and I think so, like gas and DNA, it does look like it's trended up a little bit in the past couple quarters. Can you just speak to that? Is it mostly just the Azure City or anything like maybe some extra turnarounds or anything like that? Thanks.

Yeah, 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 of that was distribution and logistics, and that was probably the smaller piece of the puzzle where you saw some mode mix going from barge into rail, and then the rate on rail itself has gone up a bit. The other 60 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 three pieces that are coming through there from a COG standpoint.

The ammonia, obviously, we have benefits of that that flow through the revenue line, and it is providing a margin, but it does provide, you know, one of the turnarounds of ammonia six, which we do ammonia six already.

Next question comes from Matthew Doit of BOA. Go ahead, please.

Morning, everyone. I just wanted to reconfirm, for CapEx on Bluepoint, Like, what's your mix on fixed versus non-fixed EPC work?

Yeah, go on.

No, no, no, go for it.

Essentially, when we, like, the one thing we tried to do was mitigate our old data. We did that a couple different ways. One was through our partnerships where we partnered with Lindy and even Oxy's 1.5 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 what we have 50% related to that. And that is in a couple different areas. One is in the engineering and the module yards. The other is in 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, 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 in place even pre-FID on the project.

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?

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. 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 a third thing, one that allows you to probably get more skilled labor in there because you have a smaller headcount set you're trying to do there, but also just limits the high-cost labor that would be in the Gulf Coast.

All right, I appreciate it. And if I could, I was just wondering about the underlying assumptions for 9 to 10 million tons in India this year because, I mean, 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 out of 10 assumes maybe shipments from last year into this year or that's really like a back half loaded bid period.

If you do it on their fertilizer year, which is April through March, they have a tender for 2.5 and a tender for 1.77, 4.27 tons. They just announced the tender last week for an additional 1.7. And so you can do that math. That's roughly 6 million. We expect another tender by the end of this year. But they also tendered twice last year in the calendar year, once in January and once 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 to 10 million tons expected. And you have to remember, they are an LNG importer, and they were running it suboptimally on their domestic operations. We estimate they lost 1.5 to 2 million tons of domestic production. So rolling all that up, and we're still not sure what can come out of the straight on the forward market, I would say 9 to 10 is a pretty good estimate.

Thank you.

The next question comes from Mazair Mamadli of Rothschild and Company Redburn. Go ahead, please.

Thank you for taking my questions.

I just wanted to ask a follow-up on the 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 Eurya, 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?

One is I think if you look at the overall supply growth over the next four to five years, India does have a few projects, 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, 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 five 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 to come on before 20 and previous coming in

and old.

Thank you. 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 divided 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 is around 500,000 tons CO2 per quarter. Is that calculation missing something, or is Donaldsonville CO2 still ramping up?

Well, I think there's two 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 two ammonia plants with its production, went through a turnaround. It's completed that turnaround now, but that 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 timeframe. But I think the numbers themselves would show through in the operating income line million. And the one thing I would mention is that we're not taking it to a Class 6 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 6 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 zero cost with Exxon, and it will move up to the contractual rate.

That's very helpful. Thank you.

The next question comes from Adlane Rodriguez of Mizuho. Go ahead, please.

Thank you. Good morning, everyone. Chris, in terms of the valuation, should we then expect to be more aggressive on the buyback 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 UER prices decline. But what was most surprising to me was that in the U.S., prices not only declined, but they were below last year's level. And that was despite all the supply disruption we had globally. How do we explain that?

So from the share repurchase, I'll start with that, and then I'll let Bert touch on the urea price. 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. What happens on a tweet or basically what's something coming out of Oman or whatever, we're trading in the last six 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 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.

Yeah, regarding the Q2 price correction, you basically were Q1 and 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. But then we've since corrected $15 level where we are today.

The next question comes from David Simmons of PNB Paribas. Go ahead, please.

Yeah, thank you. Just another one on longer-term outlook. So China is still adding capacity for the rest of this decade. Is your view that they can start to export more than the 4 to 6 million tons you expect this year in the next few years? Or do you think they add capacity to replace older plants at this stage? Thanks.

I think yes and yes. Build new plants. But the amazing thing to me about China is the growth. We put 3% operating, or 99%. We do have some older plants. But the growth is 63, 4 million tons. The ability to export is through these exports. There they will be longer term or ammonium sulfate.

That is all the time we have for questions today. I would like to turn the call back to Martin Jerosek for closing remarks.

Thanks, everyone, for joining us this morning and look forward to seeing you at upcoming conferences.

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