Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 CF Industries Holdings Earnings Conference Call. My name is Victor, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the presentation. I'd now like to turn the presentation over to the host for today, Mr. Martin Jarosick with CF Investor Relations. Sir, please proceed.

Good morning and thanks for joining the CF Industries third quarter earnings conference call. I'm Martin Jarosick, Vice President, Investor Relations for CF. With me today are Tony Will, CEO; Dennis Kelleher, CFO; Bert Frost, Senior Vice President of Sales, Market Development and Supply Chain; and Chris Bohn, Senior Vice President of Manufacturing and Distribution. CF Industries reported its third quarter 2018 results yesterday afternoon. On this call, we'll review the CF Industries results in detail, 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 will find reconciliations between GAAP and non-GAAP measures in the press release and presentation posted on our website. Now, let me introduce Tony Will, our President and CEO.

Thanks, Martin, and good morning, everyone. Last night, we posted our financial results for the third quarter and for the first nine months of 2018, in which we generated adjusted EBITDA of $300 million and approximately $1.1 billion, respectively. This compares to adjusted EBITDA of $134 million and $709 million for the same periods in 2017, a 50% increase year-to-date over 2017 results. We added $294 million of cash to the balance sheet during the quarter, while at the same time repurchasing 1.8 million shares for $90 million. Including activities after the quarter end, through October 31, we have repurchased a cumulative total of 3 million shares for approximately $150 million, which leaves $350 million still remaining under the current share repurchase authorization. Cash on the balance sheet stands at approximately $1.1 billion as of this call. These results reflect continued strong execution by the CF team against the backdrop of an improving market environment. We are operating well, and most importantly we're doing it safely. Our rolling 12-month recordable incident rate at the end of the quarter was 0.67 incidents per 200,000 work hours, considerably better than industry averages. And as Bert will discuss, we are very well-positioned for the fourth quarter and the upcoming spring application season. Longer term, we believe global market fundamentals will continue to enable CF Industries to generate significant cash through the foreseeable future. First, we expect the global nitrogen supply and demand balance to continue to tighten. Global demand for nitrogen has grown at a long-term annual rate of approximately 2% per year. At the same time, net global urea supply additions are expected to fall short of this rate as you can see on slide 10 in our materials. All the new nitrogen capacity in North America has been running for some…

Thanks, Tony. Our performance during the third quarter has positioned CF well, as we work through our fall ammonia book and continue preparations for the spring application season. First and foremost we had solid shipments in the quarter. This included a successful UAN fill program, along with 780,000 tons of UAN and urea exports combined. These efforts kept our plants running at full rates and allowed us to capture international sales when domestic customers were unwilling to take a position. We also built a strong book of business into the fourth quarter as customers accepted that significantly lower nitrogen prices were unlikely. This includes shipments from our UAN fill program, which will continue well into the fourth quarter. As a result, we are very happy with our position across our network, and have the flexibility to capitalize on market conditions in the spring. Looking ahead, we believe there is substantial support for the current price environment. During the third quarter, higher LNG and natural gas prices in Asia and Europe caused marginal producers in those regions to curtail production significantly. In fact, reported global urea outages, not including China, affected approximately 5 million metric tons of nameplate capacity, the highest for any quarter that we have on record. We believe the winter heating season will likely keep natural gas and LNG costs high for producers in Asia and Europe. China's declining role in global urea trade also contributed to higher global prices. Through August 2018, China exported less than 1 million metric tons of urea, a 72% decrease from the same period last year due to the high cost of feedstock and rigorous enforcement of environmental regulations. Additionally, the market is still absorbing the impact of U.S. sanctions on Iran. In the short-term, it appears that Iran will have fewer destinations for its exports, which could limit their participation in the global market and further reduce supply. The global nitrogen supply may be lower than many expected, demand in the short to mid-term maybe stronger. We project 93 million acres of corn to be planted in the United States, which is about 4 million more acres than 2018. This should support a good fall ammonia season. Ammonia represents a solid value to growers, and with a favorable corn to bean ratio, we expect growers to apply ammonia if weather conditions allow. Otherwise, we expect greater demand for upgraded products in the spring as farmers try to maximize yield. Additionally, industry observers think that India will tender 1 to 2 times before March and large nitrogen consuming regions such as Brazil and Europe still have to catch up on purchases. Overall, we believe this leaves CF in a very strong position through the first half of 2019, and we are looking forward to the opportunities ahead. With that, I'll turn the call over to Dennis.

Thanks, Bert. In the third quarter of 2018, the company reported net earnings per diluted share of $0.13, EBITDA of $308 million and adjusted EBITDA of $300 million. During the quarter, we added $294 million of cash to the balance sheet. Our cash and cash equivalents balance was $1 billion as of September 30. At the end of October, our cash and cash equivalents balance was around $1.1 billion even after having invested approximately $150 million to repurchase about 3 million shares of common stock. Capital expenditures in the third quarter were approximately $130 million, as turnaround and maintenance activity increased. Looking ahead at the balance of 2018, we still have significant turnaround and maintenance activity ongoing. As a result, we expect our capital expenditures to total approximately $425 million for activities this year. Given the favorable trading conditions in the global nitrogen market, we expect that fourth quarter results will significantly exceed those of the same period last year. Longer term, as the cyclical nitrogen recovery continues, we expect to generate substantial amounts of cash available for deployment. All of this has been enabled by excellent operational performance and an improving world marketplace. As Tony indicated earlier, we expect North American natural gas to remain plentiful and low cost compared to the rest of the world. Our view is reinforced by the multi-year decline we have seen in overall oil and gas upstream investment globally. From 2016 to the current year, overall upstream investment on an annual basis is down roughly 40% compared to 2014 according to the International Energy Agency. Although global oil production of around 100 million barrels per day has kept up with growth in demand, it has done so by cutting into spare capacity, which is down to only 2% of daily global production and…

Thanks, Dennis. Before we move on to your questions, I want to recognize our employees for their outstanding work. They continue to execute our business exceptionally well. In the past 12 months, a highly volatile period that included very low prices, our employees remained focused on operational excellence, and as a result, we're able to generate nearly $900 million in free cash flow over that time. Our focus on disciplined capital stewardship enabled us to deploy that cash generation along with cash from our balance sheet to create value for our shareholders by accomplishing all of the following. We retired $1.1 billion in high interest debt, paid $280 million in dividends to our stockholders, invested in additional North American production by repurchasing the publicly traded common units of Terra Nitrogen Company for $388 million, repurchased $90 million worth of our shares, and still ended this quarter with more than $1 billion of cash on the balance sheet. As we look ahead, we are even more excited about the future, because we expect the following factors will only further enhance our business results. The continued tightening of the global nitrogen supply and demand balance, higher energy costs in Europe and Asia with continued low natural gas cost in North America, and because higher energy costs and environmental enforcement actions have effectively removed China from global urea export participation. Our focus, capabilities and asset base positions us exceptionally well for the years ahead. With that, operator, we will now open the call to your questions.

Our first question comes the line of Adam Samuelson from Goldman Sachs. You may begin. Adam Samuelson - Goldman Sachs & Co. LLC: Yes. Thanks. Good morning, everyone. Maybe a question or two of unrelated pieces, please. The first one just, could you talk about the outlook for the UK business given the gas outlook? I mean, is there opportunities potentially to start redirecting ammonia from the U.S. Gulf to the UK, improve your cost position in Europe? And then second, balance sheet wise, you ended the quarter with about $1 billion of cash. You've got the $500 million bonds left to repay, and you've targeted $300 million to $500 million of targeted cash on hand for the balance sheet. Should we think of any excess cash moving forward really going to share repurchase in the absence of any strategic opportunities that emerge?

Yeah. Good morning, Adam. I'll handle the UK bit, and then hand it over to Dennis for the cash piece. On the U.S., we have purchased some spot ammonia cargos. Economically, it's a little bit better for us just to export straight out of D'ville (00:15:06) as opposed to try to move it over into the UK operation and then buy into the UK, just from standard global trading positions of ammonia as opposed to move diesel production over there. But we have moved some ammonia into the UK operations periodically, and been able to benefit based on where the spikiness in gas was in the UK this year. I will say that there's a fair bit of our industrial business over there. It's actually indexed back to gas. So when gas price goes up, we pass a lot of that through. That's not as true on the AN side for the Ag marketplace. But AN pricing has been kind of keeping up reasonably well, and been tied pretty closely to what's going on with European gas cost. So, it's a weird – a little bit of a weird situation. We're making okay money over there. But in fact, when the gas cost in Europe is real high, and we're only making okay money over there, it creates a huge opportunity for our U.S. asset base. So in some ways, it's a little bit of a natural hedge. And on the cash on the balance sheet, capital deployment, I'll hand it over Dennis.

Yeah, I mean, our capital deployment strategy is unchanged which is, first and foremost what we like to do is invest excess cash in our business, and our strategic fairway is to see if we can generate returns in excess of our cost of capital, and do something that is incremental on our cash flow per share basis accretive if you will to our base business plan. So that's how it's going to be our preference. Having said that though, there're not an infinite number of opportunities to do that. In the current environment, we certainly don't want to be investing in building new plants, because assets trade on Wall Street at a significant discount replacement costs. Now, if you look at the inorganic side, there has to be something for sale to buy that we want to buy that's actually going to be accretive, and there's not an infinite number of those opportunities out there. So, I'd say is, in keeping with our share – at our capital allocation strategy, we want to return excess cash that we don't need for the business to the shareholders. We have been biased in the past and currently towards share repurchases, because we believe that the share price today greatly undervalues the business. And I think that that's something – that philosophy is unchanged as we go forward into the future. What I would point out is that just with the 3 million shares that we bought leading up to October 31, that we've already created over 1% accretion to our shareholders, and as time goes by those – that gets bigger. And so when you think about accretion to our base business plan, it has to be something really, really attractive.

For us to do something different.

Do something else.

Yeah.

Thank you. And our next question comes from the line of Ben Isaacson from Scotiabank. You may begin.

Thank you very much. Just two quick ones. You talked about not wanting to invest in new plants, because assets traded at discount to replacement cost, but what environment do you need to see in the U.S. for investment to start building for new capacity? We've seen Methanex start to talk about a new methanol plant, and of course the commodities are different. But in some sense, the economics are somewhat similar. And then my second question is on your cash conversion cycle. I've noticed over the last couple of years it's been changing quite a bit in terms of your accounts payable being due a lot more quicker than in the past. Can you just talk about both of those?

On the kind of what you'd need to see to add new capacity over here? We've done a fair bit of analysis on kind of the return profile required at least for us to think about adding new capacity. And basically the problem over here is that for the most part it's difficult to get fixed price labor contracts or LSTK kind of bids that are anywhere close to being reasonable. And so you're facing a real uncertain construction costs profile out there, and every single project that has been executed in North America has run over, particularly in the area of labor cost, because productivity has been particularly poor. And when you are increasing the cost profile of a project by about $250 million of capital, that's sort of equivalent to $2 of MMBtu benefits you have to gain in order to pay for it over the life of a project. So, if you can do a fixed price contract in other places in the world that have $5 or $6 gas, generally speaking, you're going to do better from an economics return standpoint than you are by building projects in North America. So, I have a hard time believing that it would make sense for anybody to build over here just given how difficult the labor market is. And in particular, if you look at the amount of both ethylene and methanol or ethylene cracker and methanol projects that have been announced, the war for skilled labor is getting increasingly more challenging, which just drives up construction costs even farther. And based on the tariff regimes that are in place right now, certain of the exotic steels that you have to bring in from offshore are also fairly expensive. So, when we look at building in in North America, we think it's a little bit of a fool's game to try to do that. There's other parts of the world where it makes a lot more sense. And then, on the working cap piece, I mean, I think we're running at negative.

Yeah. I think we've – I mean, the way I look at it is, I don't think that we're selling our products under different terms to people from the accounts receivable perspective. We had – back when we were doing the expansion projects, we had higher accounts payable obviously, because you had a lot of money going out the door to pay for the expansion. But in addition to that, what I would note is, you probably have seen that on cash flow statement. The delta in customer advances is very significant this quarter compared to what it was last year. And what that reflects really is, we think a growing confidence on the buyer side in the price deck for nitrogen going forward. And so that's a very healthy development for us. There was a point in time in this cycle where we weren't sure that customer advances would ever come back, and they've actually come back quite significantly. So we're basically a negative working capital type company. And I think, that will be with us at least for some time given where we are in the cycle.

Thank you. And our next question comes from the line of Chris Parkinson from Credit Suisse. You may begin. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Great. Thank you. In terms of your just asset base, can you just walk us through some initial thoughts on 2019, including just your projected operates versus 2018? Any changes in product mix, as well as the preliminary acreage outlook. And when you think about North American nat gas, what are your current thoughts on the AECO and Mid-Con basis? Thank you.

Yeah, good morning, Chris. So we have more turnaround activity in 2018 than we had in 2017 or 2019. So I would expect, year-to-date, I think we're down a couple of percentage points versus last year. I'd expect that to return kind of back to normal, but that's sort of more on the margin, so a little bit more production. In terms of our product mix, Bert really makes that decision on the fly, and it has to do with, are we better off having incremental granular in hydrous or are we better off having the incremental UAN. And so he looks at kind of what the pricing realization is, what the inventory positions are, what the demand is. And at the end of the day, a netback margin decision on how to optimize kind of the – or maximize the company. So we have ranges of kind of what we produce. And I'd say somewhere between 7 million and 8.5 million tons of UAN is probably where we're producing, and the specific of where we land is highly determined by margin in any given period of time. But given that production profile or sales profile for the year, that means we're producing and shipping, call it, on average about 700,000 tons of UAN every month. And we only have about – from a working inventory standpoint, about a month, maybe six weeks of usable production during that period of time. So we really need to be consistent producers and sellers as we move along, because you don't have the option, given how big we are, just to step back from the market for extended period of time, at least with respect to the UAN.

With respect to the differentials, Mid-Con and also for Alberta, those closing up is going to be a function of how fast the evacuation capacity comes on versus how much production capacity they develop. So if you look at the forward curves at least in the Mid-Con, I think it's two years out or so, three years out, maybe you see a drop off in that – those differentials. With respect to Alberta, Shell has announced, I think, about a $31 billion LNG project in British Columbia. But that's going to take a very long time to build. $31 billion, it takes a long time to spend that on a single project. So I think the Alberta differentials are going to be with us for quite some time. I suspect that the Mid-Con differentials will stretch out just because even as you build out evacuation capacity, there are times when the prices are right, the development of additional production capacity exceeds that, so we'll have to see how that develops. But right now it's a good dynamic.

Thank you. And our next question comes from the line of Stephen Byrne from Bank of America. You may begin.

Yes. Thank you. Were any of the lower volumes that you had shipments in the third quarter actually intentional? Where you were holding back on perhaps selling some refill product? And then had a question about the slide 11 that shows actually declining demand in China. To what do you attribute that to?

Good morning, Steve. So, relative to third quarter, I think our ammonia production was darn close to where we were last year, it was basically flat. And if you look at our inventory from the standpoint of where we said we're $50 million lighter in terms of our inventory from a balance sheet perspective, than where we ended Q3 of last year. And given that gas cost is lower and we're putting inventory in it, with the cost of production, that's quite a bit lower from a tonnage standpoint. So, we have kind of been able to maintain our volumes for the year, despite being a little bit lower on production, because of turnarounds by squeezing inventory. So, I wouldn't say that we did a lot of holding back, and in fact, that's kind of what has positioned us so well for the go-forward, which is we have a lot of inventory space that enables Bert to kind of think about when we want to make sales, and when we want to go ahead and take the foot off the accelerator. And I don't remember what the second...

On the second question regarding Chinese consumption, we have seen some variability over the last five years ranging from let's say 53 million tons of consumption up to 57 million tons of consumption, some of that's economically driven in terms of industries, because it's a very large percentage of their consumption is used in industrial applications, as well as we believe just declining end base a little I'd say steady end-based consumption for the crops. So, on an overall basis it's like a – when you look at over last year, it's actually up 2%. And so I don't see that much of a decline.

But I think part of it, Steve, is the central government has come out with this strong position saying kind of net flat urea consumption through 2020. And what you're seeing here is, I think in response to some of those initiatives actually taking root. So, we don't think that there's some big drop off coming. We think that a lot of that has already been socialized and implemented in China. And so from here going forward, we think there's a fair bit of industrial demand growth still remaining there, and that's what gives us a fair bit of confidence about what the demand side looks like going forward.

Thank you. And our next question comes from the line of Don Carson from Susquehanna Financial. You may begin.

Yes. Thank you. Bert, what percentage of your third quarter volume was at summer fill prices? Just trying to get a sense of the price momentum as we go into Q4 and next year? And how much of this September-October run-up in nitrogen prices that you'll realize in the fourth quarter. And I noticed you had about $313 million of customer advances. What – were these at the old summer fill prices or this is at the new higher prices?

So, when you look at the summer program I'd say Q3, you're rolling out of Q2 heavy demand into Q3 very low or non-existent demand. So you are incenting customers to purchase products that they will store for a period of time, and could be until spring. And so, we launched the UAN fill program the second week of July. And as that rolled out, and then shipments began rolling out in later July. So, a majority, all of Q3 UAN volume was a part of the fill program, and as I mentioned, some of that will also well into Q4 we'll be shipping – continue to ship on. For urea, when you look at, we were rolling out of a weak pricing period in the low 200s, and then we booked several exports early in let's say July and some in late June for Q3 as well as some programs for moving Midwestern product, and those tons shipped through the quarter, and we look at urea being more market based in Q4. And then for ammonia, a lot of the fall demand that's being shipped today, some of that was booked in Q3, and some of that will be booked in spot. And then when you look to Q1, we're wide open for 2019.

Thank you. And our next question comes from the line of Joel Jackson from BMO Capital Markets. You may begin.

Hi. Thanks. I had two questions. Actually, I want to follow-up on that last question. Bert, we've obviously seen some of your competitors look at doing less fill in the past. Is that something as you've looked at this summer's fill program, you could – CF could also look at doing maybe not really doing fill doing more of a month-by-month or does your storage not allow you to do that?

Morning, Joel. I'll jump in first, and I'll turn it over to Bert. I think going back to what I said earlier, we're producing about and meeting the ship about 700,000 tons of UAN a month, and I think if you're a bit of a smaller niche player, you probably have some opportunities to not be in the market every day, and to pick and choose timing. So, I would expect those people should be able to get on average better price realization over the course of the year, because you can pick and choose your timing a little better. Because of just the scale of this business, it's pretty hard to take a month off and say, no, we're not going to be there. And what we found when Bert launched fill is that there was pretty strong appetite. And so we were able to kind of build a bit of a book, and then that's what helped us take prices off was the fact that there was such a demand increase. So, I think it's – part of the recent demand rises in this kind of environment is because of the actions that Bert and his team have taken. So we don't really have the option of not being out there just given our size and our scale. But Bert, do you want to...

I look at it in terms of the optionality available to the company, and what is going on. There are several factors that drive our decisions being global demand, domestic demand, this is new international market. And we're constantly monitoring what's going on globally on the Ns, UAN, urea, ammonia. And so we're taking decisions that obviously are driven by profitability. So if we believe in terms of the gas costs and the structure available to us, it's a profitable decision, we will do a fill program. However, if we believe that it's not attractive to us, we won't do a program to the same degree, which you saw in 2016. And so when you look at the options available to the company exports, distribution, product mix, making more urea and ammonia and less UAN or vice versa, mode of shipment, vessel, barge, a truck or rail, we're weighing all of those. And then the pricing – laying the pricing over top, and we work together as a team to make that decision and discuss with the management team and then we execute, and we feel very positive about our position today and especially our position going into 2019.

Thank you. And our next question comes from the line of Michael Piken from Cleveland Research. You may begin.

Yeah. Hi, good morning. I just wanted to get a sense for some of the proposed European anti-dumping duties on UAN, and how that might impact global trade flows, and if they put restrictions on Trinidad, Russia and North America. Do you see a change in European nitrogen consumption habits? Thanks.

Yeah. Good morning, Mike. So the big issue around the EU Commission is, this is largely I would say an effort that was brought forward by the Eastern European producers. So you've got the Poles and Romanians and Lithuanians. And the challenge for them is they're paying near $10 per MMBtu gas, and then they're not even producing in the region of consumption. So they've got a fair bit of logistics cost to get much of that product over to France and Belgium, and so forth. And frankly they're losing money like crazy, and they can't run and so they turn to the EU Commission to looking for support. And for us, I think, we sell less of our product over there than a couple of percent in aggregate. And I think it's less than 1% of our profits. So it's not really material for us if we end up having to shift where we ship that product. The bigger issue is this is really bad news for EU farmers, because what it's going to do is, it's going to jack-up pricing on what they view as their most effective form of nitrogen. And as a result, the other products are going to fall in line, you're going to see increases, not only in UAN, but also in in AN, CAN and urea, that are going to be going into Europe. And so, European farmers are the ones that ultimately are going to feel the real sting of where this all shakes out at the end of the day. And one of the things the Bert and his team have done a tremendous job of is developing relationships in outlets and demand for us in Latin America. And so, it's just as easy for us to send our UAN into Latin America as it is to send over to France and Belgium. And so I would just expect there to be some subtle movements in terms of where kind of the product flows. But at the end of the day, it's pretty non-material for us, the people that are really going to lose here are the EU farmers.

Thank you. And our next question comes from the line of Vincent Andrews from Morgan Stanley. You may begin. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Thanks, and good morning everyone. Tony, you talked about sort of the greenfield opportunity and the labor issues. I'm just wondering what maybe the brownfield opportunities are within the company, and I'm thinking in particular to the two new facilities you constructed typically, new facilities have some capability to expand, is that not attractive, and just as an aside to that, I did read something about some expansion in Medicine Hat, just a headline, so if you could maybe fill it in as well. Thanks.

Yes, good morning, Vincent. The new plants are running extraordinarily well. Chris and his team have them running at about 20% over original nameplate which is absolutely astounding. It's kind of we built two plants and ended up with three almost. And – so they're already kind of really firing on all cylinders. There may be some incremental opportunities to enhance them a little bit, but those are relatively smaller. And as we look at kind of the cost and challenges of moving anhydrous around, that was really what was making us think about Medicine Hat from the standpoint of incremental investment. We've got two ammonia plants out there, only one urea plant were very long ammonia and the rail rates are challenging up there. And so, we've been looking at, do – is there an upgrade plant or something else that can be done up there, because you're dealing with AECO gas that's some of the cheapest gas in the world, and that was part of why Bert and his team signed the deal with J. R. Simplot Company that be able to export through their Portland Terminal, so we get good margin realization out of that production. As we've looked at Canada, the Trudeau government and some of their carbon backstop legislation makes it really challenging for us to want to put any kind of new capital up there right now, because I think they're doing things that are really anti-business and make it very difficult for us to want to spend money in that particular area. So I think we've looked at it a bunch of times. It's difficult because of labor costs up there and some of the governmental actions, and creativity of Bert and his team in terms of finding alternative outlets means that we've got really good solutions. So it's something we continue to think about, but we're not thinking about it actively, if that makes sense.

And our next question comes from the line of Andrew Wong from RBC Capital Markets. You may begin.

Hey. Good morning. So just regarding the cost curve that you guys put out, I like how you show that the demand has this monthly volatility. I was just curious on the cost curve, and I understand it's a little bit complex to show the volatility, seasonality on a single slide. But could you maybe just talk about your view on the seasonal changes in the cost curve that you could see coming out?

When you look at the cost curve and what's going on, how we follow it is we're constantly engaged in different growing regions of the world, South America, Australia, India or Asia, Europe, North America, not much is happening in Africa, although we would like to see that to take place over the next couple of years. But when you look at the seasonal variability, it really is a North/South, except when you extrapolate out crop changes, whether that's corn and what's going on in South America today with the tariffs, and extreme probably growth possibility of soybeans in Argentina and Brazil, you could see some changes there on demand mix. But that drives kind of how that cost curve in shipment rates and demand and pull rates and application rates then drive that seasonability.

Yeah, Andrew, I'd like to make two other points, which is if you look at the cost curve, what you see is that – in that yellow band, that's kind of our estimate, what you see that, I'm going to call it volatility it's a variability seasonally. And if you look to the left of that, what you see is that there's a very flat shelf from where it sits. So even if it moves to the left significantly, you don't really get a significant downshift in price. The other point that I would make is with respect to the width of the bars themselves, we make rather conservative assumption that installed nameplates capacity runs at about 95% of capacity. And so if that were to contract significantly, really anywhere in the middle of the cost curve, what that would do is, to the degree we had seasonal variability above the cost curve or even below, what you're going to have to do is be bidding in the higher cost tons, more of the higher cost tons to the right on the cost curve. So there's fairly conservative view of sort of what price outcomes would likely be in a supply driven, cost curve driven marketplace.

The other thing Andrew that I'd just add on that is, this is a static view of 2019 based on where things from an input standpoint sit as of today, right. So if you see a dramatic change in Brent crude or China coal or even exchange rates, all of those things start having an impact in terms of the shape of that curve, and those things evolve over time. But as we sit here today and as we look forward, and as we've kind of taking a look at what the forward energy curves look like, and the freight markets and so forth. This is sort of our best estimate of what the year will look like, although there's a lot of volatility out there, so things do shift. We don't tend to update this on a regular basis just because it moves all over the place. So this is meant to be directional what we expect to happen with a fair bit of volatility around it.

Thank you. And our next question comes from the line of Mark Connelly from Stephens, Inc. You may begin.

Thanks. Two questions. We've clearly seen fall ammonia application rates in the U.S. dropped sort of on a secular basis. So when you say that you're expecting a pick-up in fall application, do you see that as a shift from that long-term trend, or is that just a response to the increased acres? And then second question let me start on now, notwithstanding your earlier comments on buybacks. So I was a little surprised to see your capital allocation slide referenced your dividend growth rate. With the dividend flat for three years, is that slide suggesting that raising the dividend is something you think is important?

I'll take the first question. Regarding fall ammonia applications, there are two drivers for fall application. Number one is weather. And so when you – and we've had some constrained seasons in the last couple of years in the fall, where either snow came early or wet and cold weather came early. Last year, we had a very good window that was opened into December. And so, there's that issue. The other is price and value to the farmer. And so, what we've learned, I think, over the last, I'd say, five or so or maybe even longer years is you needs to be in an attractive value for the farmer to put down in the spring or in the fall, and we want to incent that. We want fall application of ammonia to continue, it's a good agronomic opportunity for the farmer. It leaves in the position to be able to quickly get into his field with his basic nitrogen needs fulfilled, and then can continue as they move with precision farming to variable applications in the spring, maybe some urea, some UAN to complement the fall application of ammonia. We, at CF, we value that that pool on our system. Because, as Tony has mentioned, we produce 24/7, 365, and we have our terminals throughout the Midwest to serve that business that were developed 40 or 50 years ago. We maintain them. We spend a lot of money, and we want those assets to be utilized and that product to go out a certain percentage of it in the fall. And so, I don't see a shift – actually I see a shift in trend probably returning to a higher level of fall application relative to today at $4 a corn for fall of 2019, that's attractive. The pricing that came out in Q3 and Q4 for a fall application is attractive, and we're seeing that product move to the ground today.

And Mark on the dividend growth rate, I don't think this slide has changed much in the last couple of years. So it's the same sort of slide with the same arrow on it that we've had, maybe with just an additional year tacked on. And really let me talk a little bit about kind of our philosophy on the dividend, which is that there are a number of our shareholders, large institutions that value having the dividend and want to see that grow and need to have that in there for us to be in the portfolio. And as you look back through kind of 2012, 2013 into 2014 and 2015, we started increasing the dividend in order to try to maintain what I would call a more average yield from the standpoint of the S&P 500, so that we were not an outlier one way or another. Now the unhappy consequence of the share price drop in 2015 and in through 2016 and 2017 is that the dividend yield look like it really blew out, although the dividend itself stayed the same amount. And now it's kind of coming back into a more normal range. And I would be delighted if we're in a place where our dividend looks meager by virtue of yield from the rest of the S&P 500, because it means our share price is back up where it belongs, and then we'll think about whether a more even handed approach between increasing dividend versus share repurchases make sense. But I think in the near-term back to Dennis' comments earlier, we view our shares as being a tremendous value right now, and that's kind of where our focus is.

Thank you. And next question comes from the line of P.J. Juvekar from Citi. You may begin.

Yes. Hi. Good morning. Your pricing outlook for 2019 is $260 to $310 which is flat to down from where we are today. That doesn't match up with your bullish outlook, and the cost curve that you mentioned. Can you just slice that out for us? And then secondly – sorry, go ahead and I'll ask my question later.

I mean, I was going to say look, a full year of $260 to $310 is above where this year has been so far. So, I think that is actually up year-on-year, and that's also sort of the floor cost. I think there's always back to Dennis' point, if you see demand developing, there's a point of view that there's a fair bit of catch-up demand that's got to show up in the Northern Hemisphere, both in terms of in Europe and North America. And so, inventories are kind of light in the channel, and with India tendering another one or two times, you could see the demand-vertical bar on the supply curve move farther to the right, and all of a sudden, you could be well above that number and entering into a demand-driven marketplace. So, what we're not doing is projecting what the year is going to be. What we're saying is, this is what the economics tell us as of today. But you end up with a lot of variabilities that can drive different outcomes. And then extrapolating that urea value to the other end values paints a pretty nice picture for 2019.

And then P.J., and I will just remind you what I said earlier which is that we assumed in these bars that the nameplate capacity for all of them runs at 95%, and obviously, you're well aware that that generally doesn't happen. The other point I would add is, Iran is likely going to be out of the marketplace. So, this is really a cost of input situations, and not just sort of saying the price will therefore be within this range. It may well be, I'm not saying it won't. But I wouldn't say it necessarily ends up in that way.

But the last point, so year-to-date, our average urea selling price is, call it, $260, $259. So, the midpoint of that range ends up being at like $285, that's $25 ahead of where we are today. That's another $350 million of EBITDA. So, we're not unhappy about that forward view of the world.

Good. You answered my question. I was going to ask you if you're being conservative. But let me ask you this, you mentioned that you're unlikely to build a new plant. So, do you think – given your comment on buy versus build, do you think M&A is attractive and is that something you would consider and in which geographic regions? Thank you.

Yeah. I mean, I think, as Dennis pointed out earlier from a philosophy standpoint, spare or excess capital we'd like to be able to deploy back into the business and grow. And the benefit of buying versus building is, it's – you get immediate cash flow, you maintain the S&D you're not subject to all the risks of cost overrun and everything else that go along with it. And so, I think from that standpoint, buying particularly when assets are trading below replacement cost makes a lot of sense. For us who want to do it, though, back to Dennis' point, it's got to be clearly accretive versus our other alternatives. And our other alternatives are buying our shares back, at we believe a very attractive value. So, we're – in some ways, there's more synergies if the plants would be North American based, because they would just tuck directly into our network and our system, and there's logistics and other efficiencies that come along with that. But we'd be open to facilities outside the U.S. if the value proposition was such that we believe we could make a risk-adjusted return that was in excess of alternative uses of that cash. So, it's certainly something we're interested in, we're thinking about, but there's a relatively high hurdle that it's got to beat which is what else can we do with the capital, and right now, we can buy shares back at what we believe are pretty attractive prices.

And our next question comes from the line of Jonas Oxgaard from Bernstein. You may begin. Jonas I. Oxgaard - Sanford C. Bernstein & Co. LLC: Good morning, guys. If we can stay on that cost curve a little bit, you have Eastern Europe, Lithuania, Ukraine there on the right hand side. But in the history of urea, price has not once corresponded to the cost of these guys, right? So, they don't operate on price. They operate based on gas availability. That to me suggests that they're running flat out anyway. And so if we run into a shortage, shouldn't we blow right past them and into either the very high end of China intrasite or even into East Asia gas which is not on your cost curve, since it's a marginal producer?

Yeah, Jonas, when you look at the cost curve and some of those countries that are in the far right side, and your point on they have operated, they have. They have domestic demand that is difficult to reach with some of the seaborne traded tons. When you look at this whole graph, what we're trying to present is where we think that price will trade of the seaborne traded ton and specifically to NOLA. But you're right, the Gazprom priced gas that goes to some of these Eastern European producers in Croatia or Hungary or Romania, yes, they have some of their own gas, Poland, does place them as high cost producers. And by the way, some of those plants are the ones that took extended downtime that we identified in this 5 million tons so they do take downtime. There is times when they can't compete, they were $9 gas this summer with pricing at the $250 level, and so they took one, two and three months or even more down or we're buying spot ammonia as did the Poles this past quarter. And so this is a fluid situation. Those were also older assets that we don't believe have been maintained as well. And so when you get into a difficult environment, it's difficult to make reinvestment or investment decisions for the future. And that's why I think as part of harking back to a previous question on the EU dumping case, there was an issue that some of those producers that were part of the EU dumping case did not invest to make other products that are more demanded in Europe like calcium ammonium nitrate or other products that have a higher value. And so there are several issues with that that drive specific to your question in those producers, but the cost curve is real, and we've seen it drive, you may get extraneous movements up and out or below like we saw on 2016 and 2017 in the summer, but then like this summer, we saw that move above and now that cost curve reflects $310, and we think there's a possibility that in 2019, it could go higher than that.

And Jonas, let me just tag on to the Bert's last comment there which is the last couple of years have been very difficult for the marginal producers globally. And so a lot of those plants have not been well maintained or the ones that have been offline for some period of time will have a very difficult time coming online with any sort of reasonable reliability. And so, I think that's kind of embedded back into your question as if you see some seasonal volatility just to the high side in terms of demand, you could easily bust through the top end of that curve and kind of be in a runaway demand driven part of the cycle in the near term. And honestly, that – there's a reasonable chance of that happening this year with the extra 4 million tons of corn acres increased with acres and so forth in the U.S. and the fact that there just is not a lot of excess material out there. So that doesn't suggest what could happen to the upside, it's just – that's what we think sort of the four conditions are.

Thank you. And our next question comes from the line of John Roberts from UBS. You may begin.

Thank you. Could you give us a sense of your geographic mix of sales for 2018 U.S. versus international? And then maybe break international into export versus your UK operations?

When we look at the mix that we have, we're about a 20 million ton producer of all – including Trinidad in the UK and movement of those product ton basis. In 2018, we will probably export around 1.4 million tons of UAN and about 400,000 tons of urea, and on ammonia probably 200,000 tons, maybe a little above that. And so, that does not include Trinidad ammonia. And so, when you look at what we do, you can just run that on an average, but we're not looking to the market – in terms of market-driven, we're price-driven and value-driven and profit-driven, we're not market share-driven. And so those numbers you can see as we see attractive places or attractive opportunities in North America, those tons could stay home or those tons can move abroad. And so, we liked what the export package brings to us in terms of the flexibility and optionality to the plants and to our mode options. And so we plan to continue to grow that if profitability is there.

Okay. And then back on your global demand outlook on slide 11, do you think that India demand could stall out in the next year or so or even decline with the higher prices, and therefore greater subsidies they need? And their need to import from further away from Iran – than Iran?

I mean, most of the Indian demand is basically for sub-susistance farming, a big piece of it is. And so, a reduction in major gen availability will lead directly to reduction in yields. And I think the one thing that the government does not want to have is a food crisis on (00:58:20). So, we do not see a reduction in the Indian consumption going forward.

We see growth. India is a huge planter and consumer of sugar, of wheat and end consuming crops, and they have grown in terms of their overall demand over the last several years has been positive, and those are the years when you go back to 2008, when urea was $500 to $900 a ton, their subsidy bill was $15 billion, if I remember correctly. So they have participated as the market has rolled up, they have continued to buy. There has been some announcements of new rebuilds of plants, but those were high cost plants that were shut down, because they were not competitive in previous years, so we don't know why they would be competitive today buying LNG at $10. So we still see them as a good export destination market. Their imports have averaged between let's say, 6 million to 8 million tons over the last five years and production holding fairly steady at 24 million tons. So, there are 30 million to 32 million ton consumer of urea and that's the end that they do consume, they're not an ammonia or UAN market, and we see that steadily growing on that 1% to 2% growth rate that we've projected for the world.

Thank you. And our next question comes from the line of Jason Miner from Bloomberg Intelligence. You may begin

Thank you. There's been a little buzz here about implementing E15 possibly. I wonder if you could talk about what you see as a possible impacts to nitrogen demand from that, and how you think those might unfold over time?

Yeah, we're positive, any movement of ethanol, I've told the team I would put it on my lawn if I could. But E15, the implement – probably, we're not going to see the impact of that until the summer months, and then as it rolls out and is available, but it is a positive, and it's a positive incremental gain on the consumption of ethanol. That as well as the exports when petroleum is above that $60 to $70 level and corn is around that $4 level, the ability to produce ethanol and export it to different countries even though China has cut that off, we're still seeing good growth and good demand externally. So the combination of E15 and exports is a nice boost for the ethanol business and that's about 50% of the grind today where you've got corn on feed, corn going to ethanol and then the remaining being exports, great sustainability for the demand for that product. And that's why we're seeing – when you're looking the corn to be in ratio, being positive, the extra juice has the ability to move that products. So if you're a farmer you're probably going to choose the insecurity with soybeans, you'll move more towards corn and that's why we're projecting at 93 million and possibly even 94 million acres of corn which is that incremental demand for nitrogen that as we're seeing is a positive movement for 2019.

Thank you. And our next question comes from the line of Duffy Fischer from Barclays. You may begin.

Hi. This is actually Sean Gilmartin in on for Duffy this morning. Thanks for taking the question. Real quickly, I was hoping you could just walk through kind of your longer term view on Chinese urea exports and kind of the main factors that are underpinning that view. Obviously, I'm assuming that the environmental regulations are holding. Is there anything else that we should be thinking about there? And if that longer term view doesn't hold, what's gone wrong? Thank you.

Well, I mean, I think if you look at what's going on with the reduction in coal production and really clamping down on some of the zombie industries and excess capacity, it's been fairly consistent in terms of the central government's approach. And urea is not a big employer of people, and it is a big environmental footprint from the standpoint of both particulate matter emissions as well as fresh water usage. And so, I think with the emphasis on trying to improve environmental quality, urea has got a big target on its back in terms of one of the worst industries One of the worst industries that allow access capacity to exist in. Our belief that was counterbalancing that food security and access to self-sufficiency from a nutrient perspective is important. And so, we believe that they want to maintain a self-sufficient industry. But you can do that pretty readily at existing levels which is why we've said that our view going forward is there're probably about 1 million or maybe 2 million ton exporter a year, probably pretty consistent with what happened this year in 2018 which effectively reduces their impact on the global trade coming off of when they were almost 14 million. So, this has been a tremendous benefit globally. And I think from our perspective, we don't see it coming back. Once these plants get turned off and are down for an extended period of time, and it's extraordinarily difficult to rebuild them. The one thing that is kind of concerning to us is, when you end up with like the Trudeau Government in Canada with the greenhouse gas regulations that they've put in, it's entirely possible that you'll shut down very low cost, low emitting plants in the rest of the world, which will keep Chinese plants operating because the world needs that kind of production. And really what Canada thinks is being like think globally, act locally is absolutely backwards. They're doing something that's harming the global environment instead of helping it. But our hope is that the Chinese regulators will continue to focus on improving local environmental quality and that will take care of itself over time.

Thank you. And our next question comes from the line of Alexandre Falcao from HSBC. You may begin.

Good morning. Thanks for the question. India has announced that they should become self-sufficient in five years in urea, no imports. How feasible you think that is? And I saw that in one of your slides you actually anticipate one of the plants in India to 2019, so is there any risk that this plan is probably delayed? That's the first question. Thank you.

We've been watching this in some of these plants are moving forward that were mothballed and when we went and visited as well as looked at pictures of what mothballed means in India it's abandoned and it's trees growing up in the plant. So it's a complete rebuild. Now obviously labor is cheaper in India and probably some costs are cheaper in India. But the net effect is you've got to operate these plants because it's the same technology worldwide and it's so many MMBtu of gas and then your operating costs. And so when you're importing LNG at $10, you're starting effectively with the urea cost just for gas of $240, and let's say their cash costs are less. But it is difficult in an environment that we just demonstrated with our cost curve to stay profitable. And so this was the issue with these plants 10 years ago when they were shut down, they weren't – or even longer, they weren't profitable, and they still have to build the pipe – the gas pipelines and the infrastructure to receive the gas. And there are plants that were built the Methanex plant that was built in India probably six or seven years ago that still really hasn't operated full speed. And so countries can do what – and governments can do what they want, and subsidize what they want, and those conditions can occur or go on for a period. But it's difficult to fight the gravity of economics.

The plant that's projected currently to be coming on line in 2019 is Chambal. And Bert and I met with them. We were in India last. And my sense is that their own internal projection, I'd take the over probably on that one, but we are betting in. But the government's initial desire was to try to get all of these plants built by private funds and the amount of uptake on that has been close to zero I think the Chambal plant was that was the only one so far. So as Bert said, it's always a risk. But if they're running them on $10 imported LNG, we're pretty happy if they actually run, because that means that with $2.80 gas in the U.S., we've got a pretty good spread there.

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

Thanks everyone for joining us. We look forward to seeing you at the various conferences this fall and winter.