Exhibit 99.1
LSB INDUSTRIES, INC. REPORTS OPERATING RESULTS FOR THE 2024 THIRD QUARTER
OKLAHOMA CITY, Oklahoma…October 29, 2024…LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today announced results for the third quarter ended September 30, 2024.
Third Quarter 2024 Results and Recent Highlights
“I want to first thank my entire team for another injury free quarter. Our commitment to safety continues to ensure that everyone goes home safe. We delivered a strong increase in adjusted EBITDA relative to the third quarter of last year," stated Mark Behrman, LSB Industries' Chairman, President and CEO. "The year-over-year improvement was driven by higher ammonia prices coupled with lower natural gas prices compared to a year ago and an increase in industrial product production and sales. These favorable dynamics more than offset the impact of the planned maintenance activities we conducted during the quarter.”
“Our balance sheet remains strong, providing us with ample financial flexibility to invest in the growth of our business. During the third quarter, we completed an injury free and successful turnaround of our Pryor facility. The investments we made at Pryor were focused not only on improving its reliability and daily ammonia production volume, but also included the debottlenecking of the facility's urea plant. We expect this to lead to an incremental 75,000 tons per year of UAN production which we are ramping up over the fourth quarter. We also completed the construction of an additional 5,000 tons of nitric acid storage at our El Dorado facility providing us with the ability to capitalize on incremental sales opportunities not previously available to us. This should also enable us to further optimize our sales mix to maximize margins. We continue to deploy capital to improve the reliability and safety of our facilities with a
1
turnaround at our Cherokee facility this November and a turnaround of our El Dorado facility scheduled for the third quarter of 2025. These planned maintenance and upgrade activities should lead to increased production volumes and incremental EBITDA and cash flow.”
“We continue to make progress with our two energy transition projects. We expect to begin producing low carbon products at our El Dorado facility beginning in 2026 pending the approval by the EPA of the Class VI permit submitted by our partner, Lapis Energy. We are working with Lapis and the EPA towards the issuance of our permit to construct, that will allow us to begin drilling two injection wells on our site in El Dorado. The permit is the critical path item for us. Supporting the economics of this project, earlier this year, we were pleased to announce our first off-take customer for low carbon ammonium nitrate solution to be produced at El Dorado.”
“With respect to our Houston Ship Channel project, we have completed our Pre-FEED study and are working through the results, engaging with potential customers and preparing to select an engineering contractor for the FEED study. We expect to start a full FEED study during the first half of 2025 that should be completed by mid-2026, after which we anticipate moving on to FID.”
“We view our low carbon product strategy as a potential multi-year earnings growth engine that complements our near-term opportunities to increase our production and sales volumes from our core manufacturing assets.”
Market Outlook
2
Low Carbon Ammonia Projects Summary
3
Third Quarter Results Overview
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||
Product Sales ($ in Thousands) |
|
(In Thousands) |
|
|
|
|
||||||
AN & Nitric Acid |
|
$ |
47,981 |
|
|
$ |
46,026 |
|
|
|
4 |
% |
Urea ammonium nitrate (UAN) |
|
|
25,303 |
|
|
|
30,090 |
|
|
|
(16 |
)% |
Ammonia |
|
|
28,490 |
|
|
|
26,823 |
|
|
|
6 |
% |
Other |
|
|
7,443 |
|
|
|
11,348 |
|
|
|
(34 |
)% |
Total net sales |
|
$ |
109,217 |
|
|
$ |
114,287 |
|
|
|
|
|
Comparison of 2024 to 2023 quarterly periods:
The following tables provide key sales metrics for our products:
|
|
Three Months Ended September 30, |
|
|||||||||
Key Product Volumes (short tons sold) |
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||
AN & Nitric Acid |
|
|
127,139 |
|
|
|
119,468 |
|
|
|
6 |
% |
Urea ammonium nitrate (UAN) |
|
|
95,468 |
|
|
|
118,135 |
|
|
|
(19 |
)% |
Ammonia |
|
|
68,497 |
|
|
|
88,986 |
|
|
|
(23 |
)% |
|
|
|
291,104 |
|
|
|
326,589 |
|
|
|
(11 |
)% |
Average Selling Prices (price per short ton) (A) |
|
|
|
|
|
|
|
|
|
|||
AN & Nitric Acid |
|
$ |
308 |
|
|
$ |
327 |
|
|
|
(6 |
)% |
Urea ammonium nitrate (UAN) |
|
$ |
222 |
|
|
$ |
217 |
|
|
|
2 |
% |
Ammonia |
|
$ |
387 |
|
|
$ |
269 |
|
|
|
44 |
% |
(A) Average selling prices represent “net back” prices which are calculated as sales less freight expenses divided by product sales volume in tons.
4
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
|||
Average Benchmark Prices (price per ton) |
|
|
|
|
|
|
|
|
|
|||
Tampa Ammonia (MT) Benchmark |
|
$ |
485 |
|
|
$ |
343 |
|
|
|
41 |
% |
NOLA UAN |
|
$ |
204 |
|
|
$ |
228 |
|
|
|
(11 |
)% |
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Input Costs |
|
|
|
|
|
|
|
|
|
|||
Average natural gas cost/MMBtu in cost of materials and other |
|
$ |
2.40 |
|
|
$ |
3.57 |
|
|
|
(33 |
)% |
Average natural gas cost/MMBtu used in production |
|
$ |
2.17 |
|
|
$ |
3.61 |
|
|
|
(40 |
)% |
Conference Call
LSB’s management will host a conference call covering the third quarter results on Wednesday, October 30, 2024 at 10:00 am ET / 9:00 am CT to discuss these results and recent corporate developments. Participating in the call will be Chairman, President & Chief Executive Officer, Mark Behrman, Executive Vice President & Chief Financial Officer, Cheryl Maguire and Executive Vice President & Chief Commercial Officer, Damien Renwick. Interested parties may participate in the call by dialing (877) 407-6176 / (201) 689-8451. Please call in 10 minutes before the conference is scheduled to begin and ask for the LSB conference call.
A webcast of the call, along with a slide presentation that coincides with management’s prepared remarks, will be available in the Investors section of LSB’s website, at www.lsbindustries.com. The webcast can be found under Events & Presentations. If you are unable to listen to the live call, the conference call webcast will be archived on LSB’s website.
LSB Industries, Inc.
LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma, is committed to playing a leadership role in the energy transition through the production of low and no carbon products that build, feed and power the world. The LSB team is dedicated to building a culture of excellence in customer experiences as we currently deliver essential products across the agricultural, industrial, and mining end markets and, in the future, the energy markets. The company manufactures ammonia and ammonia-related products at facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma and operates a facility for a global chemical company in Baytown, Texas. Additional information about LSB can be found on our website at www.lsbindustries.com.
Forward-Looking Statements
Statements in this release that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance and anticipated performance based on our growth and other strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or actual achievements to differ materially from the results, level of activity, performance or anticipated achievements expressed or implied by the forward-looking statements. Significant risks and uncertainties may relate to, but are not limited to, business and market disruptions, market conditions and price volatility for our products and feedstocks, as well as global and regional economic downturns that adversely affect the demand for our end-use products; disruptions in
5
production at our manufacturing facilities and other financial, economic, competitive, environmental, political, legal and regulatory factors. These and other risk factors are discussed in the Company’s filings with the Securities and Exchange Commission.
Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether because of new information or future developments.
See Accompanying Tables
Company Contact: Cheryl Maguire, Executive Vice President & CFO (405) 510-3524
Fred Buonocore, CFA, Vice President of Investor Relations (405) 510-3550 fbuonocore@lsbindustries.com
|
|
6
LSB Industries, Inc.
Consolidated Statements of Operations
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(In Thousands, Except Per Share Amounts) |
|
|||||||||||||
Net sales |
|
$ |
109,217 |
|
|
$ |
114,287 |
|
|
$ |
387,494 |
|
|
$ |
461,096 |
|
Cost of sales |
|
|
117,162 |
|
|
|
117,673 |
|
|
|
345,746 |
|
|
|
386,845 |
|
Gross (loss) profit |
|
|
(7,945 |
) |
|
|
(3,386 |
) |
|
|
41,748 |
|
|
|
74,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expense |
|
|
10,042 |
|
|
|
8,512 |
|
|
|
31,883 |
|
|
|
27,815 |
|
Other expense (income), net |
|
|
6,436 |
|
|
|
(2,399 |
) |
|
|
8,625 |
|
|
|
(2,096 |
) |
Operating (loss) income |
|
|
(24,423 |
) |
|
|
(9,499 |
) |
|
|
1,240 |
|
|
|
48,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
8,115 |
|
|
|
7,165 |
|
|
|
26,229 |
|
|
|
31,213 |
|
Gain on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(3,013 |
) |
|
|
(8,644 |
) |
Non-operating other income, net |
|
|
(2,674 |
) |
|
|
(3,689 |
) |
|
|
(9,143 |
) |
|
|
(10,929 |
) |
(Loss) income before provision for income taxes |
|
|
(29,864 |
) |
|
|
(12,975 |
) |
|
|
(12,833 |
) |
|
|
36,892 |
|
(Benefit) provision for income taxes |
|
|
(4,482 |
) |
|
|
(5,249 |
) |
|
|
(2,629 |
) |
|
|
3,622 |
|
Net (loss) income |
|
$ |
(25,382 |
) |
|
$ |
(7,726 |
) |
|
$ |
(10,204 |
) |
|
$ |
33,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
(0.35 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
(0.35 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.44 |
|
7
LSB Industries, Inc.
Consolidated Balance Sheets
|
|
|
|
|
|
|
||
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(In Thousands) |
|
|||||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
42,283 |
|
|
$ |
98,500 |
|
Restricted cash |
|
|
— |
|
|
|
2,532 |
|
Short-term investments |
|
|
157,060 |
|
|
|
207,434 |
|
Accounts receivable |
|
|
44,601 |
|
|
|
40,749 |
|
Allowance for doubtful accounts |
|
|
(326 |
) |
|
|
(364 |
) |
Accounts receivable, net |
|
|
44,275 |
|
|
|
40,385 |
|
Inventories: |
|
|
|
|
|
|
||
Finished goods |
|
|
19,259 |
|
|
|
26,329 |
|
Raw materials |
|
|
2,127 |
|
|
|
1,799 |
|
Total inventories |
|
|
21,386 |
|
|
|
28,128 |
|
Supplies, prepaid items and other: |
|
|
|
|
|
|
||
Prepaid insurance |
|
|
2,014 |
|
|
|
14,846 |
|
Precious metals |
|
|
11,675 |
|
|
|
12,094 |
|
Supplies |
|
|
31,421 |
|
|
|
30,486 |
|
Other |
|
|
4,123 |
|
|
|
2,337 |
|
Total supplies, prepaid items and other |
|
|
49,233 |
|
|
|
59,763 |
|
Total current assets |
|
|
314,237 |
|
|
|
436,742 |
|
|
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
842,863 |
|
|
|
835,298 |
|
|
|
|
|
|
|
|
||
Other assets: |
|
|
|
|
|
|
||
Operating lease assets |
|
|
24,377 |
|
|
|
24,852 |
|
Intangible and other assets, net |
|
|
1,456 |
|
|
|
1,292 |
|
|
|
|
25,833 |
|
|
|
26,144 |
|
|
|
|
|
|
|
|
||
|
|
$ |
1,182,933 |
|
|
$ |
1,298,184 |
|
8
LSB Industries, Inc.
Consolidated Balance Sheets (continued)
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(In Thousands) |
|
|||||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
75,734 |
|
|
$ |
68,323 |
|
Short-term financing |
|
|
1,528 |
|
|
|
13,398 |
|
Accrued and other liabilities |
|
|
36,107 |
|
|
|
30,961 |
|
Current portion of long-term debt |
|
|
10,979 |
|
|
|
5,847 |
|
Total current liabilities |
|
|
124,348 |
|
|
|
118,529 |
|
|
|
|
|
|
|
|
||
Long-term debt, net |
|
|
475,991 |
|
|
|
575,874 |
|
|
|
|
|
|
|
|
||
Noncurrent operating lease liabilities |
|
|
17,137 |
|
|
|
16,074 |
|
|
|
|
|
|
|
|
||
Other noncurrent accrued and other liabilities |
|
|
523 |
|
|
|
523 |
|
|
|
|
|
|
|
|
||
Deferred income taxes |
|
|
65,973 |
|
|
|
68,853 |
|
|
|
|
|
|
|
|
||
Commitments and contingencies |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
|
||
Common stock, $.10 par value; 150 million shares authorized, 91.2 million |
|
|
9,117 |
|
|
|
9,117 |
|
Capital in excess of par value |
|
|
502,972 |
|
|
|
501,026 |
|
Retained earnings |
|
|
216,811 |
|
|
|
227,015 |
|
|
|
|
728,900 |
|
|
|
737,158 |
|
Less treasury stock, at cost: |
|
|
|
|
|
|
||
Common stock, 19.5 million shares (18.1 million shares at December 31, 2023) |
|
|
229,939 |
|
|
|
218,827 |
|
Total stockholders' equity |
|
|
498,961 |
|
|
|
518,331 |
|
|
|
$ |
1,182,933 |
|
|
$ |
1,298,184 |
|
9
Non-GAAP Reconciliations
This news release includes certain “non-GAAP financial measures” under the rules of the Securities and Exchange Commission, including Regulation G. These non-GAAP measures are calculated using GAAP amounts in our consolidated financial statements.
EBITDA and Adjusted EBITDA Reconciliation
EBITDA is defined as net income (loss) plus interest expense and interest income, net, less gain on extinguishment of debt, plus depreciation and amortization (D&A) (which includes D&A of property, plant and equipment and amortization of intangible and other assets), plus provision (benefit) for income taxes. Adjusted EBITDA is reported to show the impact of non-cash stock-based compensation, one time/non-cash or non-operating items-such as, one-time income or fees, loss (gain) on sale of a business and/or other property and equipment, certain fair market value (FMV) adjustments, and consulting costs associated with reliability and purchasing initiatives (Initiatives). We historically have performed turnaround activities on an annual basis; however, we have moved towards extending turnarounds to a two or three-year cycle. Rather than being capitalized and amortized over the period of benefit, our accounting policy is to recognize the costs as incurred. Given these turnarounds are essentially investments that provide benefits over multiple years, they are not reflective of our operating performance in a given year.
We believe that certain investors consider EBITDA a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. In addition, we believe that certain investors consider adjusted EBITDA as more meaningful to further assess our performance. We believe that the inclusion of supplementary adjustments to EBITDA is appropriate to provide additional information to investors about certain items.
EBITDA and adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to EBITDA and adjusted EBITDA for the periods indicated.
10
Non-GAAP Reconciliations (continued)
LSB Consolidated ($ In Thousands) |
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net loss |
|
$ |
(25,382 |
) |
|
$ |
(7,726 |
) |
Plus: |
|
|
|
|
|
|
||
Interest expense and interest income, net |
|
|
5,401 |
|
|
|
3,467 |
|
Depreciation and amortization |
|
|
16,693 |
|
|
|
15,548 |
|
Benefit for income taxes |
|
|
(4,482 |
) |
|
|
(5,249 |
) |
EBITDA |
|
$ |
(7,770 |
) |
|
$ |
6,040 |
|
|
|
|
|
|
|
|
||
Stock-based compensation |
|
|
1,550 |
|
|
|
1,318 |
|
Legal Fees & Settlements - Specific Matters |
|
|
1,385 |
|
|
|
111 |
|
Loss (gain) on disposal and impairment of assets |
|
|
5,639 |
|
|
|
(11 |
) |
Turnaround costs |
|
|
16,284 |
|
|
|
1,741 |
|
Growth Initiatives |
|
|
376 |
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
17,464 |
|
|
$ |
9,199 |
|
Ammonia, AN, Nitric Acid, UAN Sales Price Reconciliation
The following table provides a reconciliation of total identified net sales as reported under GAAP in our consolidated financial statements reconciled to netback sales which is calculated as net sales less freight and other non-netback costs. We believe this provides a relevant industry comparison among our peer group.
|
|
Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In Thousands) |
|
|||||
Ammonia, AN, Nitric Acid, UAN net sales |
|
$ |
101,774 |
|
|
$ |
102,938 |
|
|
|
|
|
|
|
|
||
Less freight and other |
|
|
14,943 |
|
|
|
14,236 |
|
|
|
|
|
|
|
|
||
Ammonia, AN, Nitric Acid, UAN netback sales |
|
$ |
86,831 |
|
|
$ |
88,702 |
|
11