• Adjusted EBITDA: $17 million, a significant improvement over the previous year.
• GAAP Loss Per Share: $0.35, including $16 million in turnaround expenses and $6 million in noncash charges.
• Natural Gas Costs: Averaged approximately $2.60 per MMBTU quarter to date.
• Cash Position: Approximately $200 million.
• Net Leverage: Approximately 2.5 times.
• Ammonia Pricing: Tampa ammonia averaged $560 per metric ton quarter to date.
• UAN Pricing: Nola UAN around $230 per ton.
• Turnaround Expenses: Estimated $15 million for the Cherokee facility in Q4 2024.

• Warning! GuruFocus has detected 3 Warning Signs with LXU.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• LSB Industries Inc (NYSE:LXU) reported a significant year-over-year improvement in adjusted EBITDA despite undergoing a major turnaround at their Pryor facility.
• The company completed a major turnaround at the Pryor facility, which is expected to lead to greater reliability and increased production volume.
• LSB Industries Inc (NYSE:LXU) expanded its Urea plant at Pryor, which is expected to produce an additional 75,000 tons per year of UAN, marking a 20% annual increase.
• The company completed the construction of additional nitric acid storage at the El Dorado facility, optimizing sales mix and improving margins.
• LSB Industries Inc (NYSE:LXU) continues to make progress on two energy transition projects, with plans to commence production of low carbon ammonia by 2026.

Negative Points

• The company reported a GAAP loss per share of 35 cents for the third quarter, impacted by turnaround expenses and noncash charges.
• Sales volumes decreased in the third quarter of 2024 compared to the same quarter in 2023 due to the turnaround at the Pryor facility.
• The company faces ongoing geopolitical and supply chain challenges that could impact ammonia pricing and availability.
• There are concerns about the timing and execution of the Houston Ship Channel project, with potential delays in production start dates.
• The agricultural market faces challenges with ammonia application due to favorable weather conditions delaying soil temperature drops.

Q & A Highlights

Q: Can you provide an update on the industrial side of your business and any potential improvements in demand? A: Damien Renwick, Executive Vice President, Chief Commercial Officer: We are seeing stable industrial demand and are optimistic about potential improvements due to economic activities like infrastructure and housing developments. We manage our customer contracts to avoid clustering expirations, ensuring a balanced portfolio over time.

Q: How much low carbon ammonia is available for future contracts after the current agreements? A: Mark Behrman, President, CEO, Director: We have about 300,000 tons of low carbon ammonia available for future contracts, after accounting for current agreements.

Q: With operational improvements completed this year, what is the outlook for 2025 production volumes? A: Mark Behrman, President, CEO, Director: We expect improved production year over year due to higher operating rates and the de-bottlenecking of our Urea plant. However, we have two turnarounds planned for next year, which will impact production.

Q: How do you plan to finance the Houston Ship Channel project? A: Mark Behrman, President, CEO, Director: We plan to finance 60% of the project through project financing, with the remaining equity split between us and our partner. We are also exploring government loan programs as an option.

Q: What are your thoughts on the market's willingness to pay a premium for low carbon ammonia? A: Mark Behrman, President, CEO, Director: While there is interest in Europe for low carbon ammonia, particularly with the EU's carbon border adjustment mechanism, the U.S. market is still developing. We see potential in selling low carbon upgraded products, which face less competition.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.