• Adjusted EBITDA: $38 million for Q4 2024, up from $25 million in Q4 2023.
• Impact of Turnaround: Estimated $7 million impact from the planned turnaround at Cherokee facilities.
• Estimated Adjusted EBITDA without Turnaround Impact: Approximately $45 million for Q4 2024.
• CapEx for 2024: $92 million, with $25 million for growth and the remainder for sustaining operations.
• Senior Secured Notes Repurchase: Approximately $222 million in principal amount repurchased over two years.
• Stock Repurchase: Approximately 4.6 million shares repurchased over two years.
• 2025 CapEx Expectation: $80 million to $90 million, with $60 million to $65 million for EH&S and reliability, and $20 million to $25 million for growth investments.
• Natural Gas Cost: Average of $3.85 per MMBTU for the first two months of 2025.
• Effective Tax Rate for 2025: Approximately 25%, with no material cash taxes expected due to NOLs.
• Incremental Annual EBITDA from CCS Project: Expected $15 million to $20 million once completed.

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

Release Date: February 27, 2025

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 increase in adjusted EBITDA, despite a planned turnaround at the Cherokee facility.
• The company achieved record-high daily production rates for urea and UAN, with the Cherokee site finishing 2024 with zero recordable injuries.
• LSB Industries Inc (NYSE:LXU) successfully increased production volumes to meet healthy demand from primary industrial end markets.
• The company completed two margin enhancement projects in 2024, expected to yield full-year incremental EBITDA benefits in 2025.
• LSB Industries Inc (NYSE:LXU) has a strong cash flow balance and a year-end leverage ratio below the target level for a mid-cycle pricing environment.

Negative Points

• The planned turnaround at the Cherokee facility had an estimated $7 million negative impact on the fourth quarter adjusted EBITDA.
• LSB Industries Inc (NYSE:LXU) faces potential impacts from tariffs on US nitrogen imports from Canada, which could affect pricing in ag and industrial markets.
• The company expects higher natural gas prices in 2025, which could impact production costs.
• Ammonia sales volumes are expected to decline in 2025 as more production is upgraded to higher margin downstream products.
• The timeline for the El Dorado CCS project is dependent on the EPA's approval of the Class 6 permit application, which remains uncertain.

Q & A Highlights

Q: Why is the $600 price point significant for low carbon ammonia customers? A: Mark Behrman, CEO, explained that while the $600 price point is not necessarily the right price for customers, it is a level derived from market conversations indicating that transactions would likely occur below this price. This price point is crucial for making the project economically viable and attractive to customers.

Q: What impact could Canadian tariffs have on US-based producers? A: Mark Behrman, CEO, noted that Canadian tariffs could create opportunities for US producers as Canada is a net exporter of ammonia to the US. This could lead to increased prices in the US market as Canada seeks alternative markets for its products.

Q: How does LSB Industries plan to manage ammonia production rates and capacity expansions? A: Mark Behrman, CEO, stated that the company aims to increase ammonia production rates to 95% by the end of 2026, with current rates between 90% and 92% excluding planned turnarounds. The focus is on improving reliability and optimizing production.

Q: What is the outlook for the Houston Ship Channel project given current market conditions? A: Mark Behrman, CEO, emphasized that the project will only proceed with long-term contracts at a price below $600 per ton. The company is exploring ways to reduce capital costs to make the project viable, and further updates are expected in the first quarter conference call.

Q: How is the EPA's capacity affecting the timeline for the El Dorado CCS project? A: Mark Behrman, CEO, mentioned ongoing discussions with the EPA and expressed optimism about recent administrative changes that could streamline the permitting process. The company is hopeful for progress following initial delays.

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