LSB Industries, Inc. Reports Operating Results for the 2024 Third Quarter
Third Quarter 2024 Results and Recent Highlights
-
Net sales of
$109.2 million compared to$114.3 million in the third quarter of 2023 -
Net loss of
$25.4 million compared to a net loss of$7.7 million in the third quarter of 2023; the third quarter 2024 net loss included approximately$16.3 million of turnaround costs and approximately$5.6 million of one-time non-cash charges related to the write-down of assets taken out of service -
Diluted EPS of
$(0.35) compared to$(0.10) for the third quarter of 2023; the third quarter 2024 diluted EPS included approximately$(0.24) per share of turnaround costs and one-time non-cash charges -
Adjusted EBITDA(1) of
$17.5 million compared to$9.2 million in the third quarter of 2023 -
Cash Flow from Operations of
$17.1 million -
Capital Expenditures of
$31.0 million reflect investments in reliability and expanded UAN capacity at Pryor Facility -
Total cash and debt of approximately
$199.4 million and approximately$487.0 million , respectively, as ofSeptember 30, 2024
_____________________________ | |
(1) |
This is a Non-GAAP measure. Refer to the Non-GAAP Reconciliation section. |
“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
“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
“We continue to make progress with our two energy transition projects. We expect to begin producing low carbon products at our
“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
-
Industrial business remains consistent reflecting:
-
Stable demand for nitric acid supported by the strength of the
U.S. economy and resilient consumer spending -
Demand for ammonium nitrate (AN) bolstered by
U.S. production and supportive pricing of metals including gold, as well as copper for data centers and electric vehicles - Demand for AN is also benefiting from quarrying/aggregate production for infrastructure upgrade and expansion
- Metals commodity prices are very supportive of maximizing production
- Declining interest rates could potentially strengthen demand for industrial products
-
Stable demand for nitric acid supported by the strength of the
-
Ammonia market is healthy and pricing has been strong driven by:
-
Tight
U.S. and West-of-Suez supply-demand dynamics driven by global supply disruptions -
Geopolitical concerns over conflict in the
Middle East , leading to higher natural gas feedstock costs for European ammonia producers -
Extended turnarounds, outages and limited spot availability across the
Middle East ,North Africa andTrinidad reducing global inventories -
Ongoing disruptions in the
Suez Canal from theMiddle East conflict limiting ammonia imports intoEurope from theMiddle East -
Delayed startup of new production capacity in the
U.S. Gulf and export terminal inRussia -
Economic stimulus measures in
China could increase demand for industrial ammonia for use in polyurethane, caprolactam and acrylonitrile production to pre-COVID levels
-
Tight
-
UAN pricing remains solid due to:
- Low inventories in the distribution channel following the Spring application season and Summer fill program coupled with historically low imports and strong exports
- Updraft from strong ammonia and urea markets resulting from global supply constraints
- Potential pent-up demand at retailer and producer level could lead to favorable order volumes and pricing in the first half of 2025
-
Corn futures prices modestly above August lows:
USDA's recent outlook forU.S. corn is for smaller supplies and a slight decline in ending stocks-
Increases in
U.S. exports and production challenges in international growing regions potentially supportive of corn prices
Low Carbon Ammonia Projects Summary
-
Houston Ship Channel Blue Ammonia project with INPEX, Air Liquide and Vopak Exolum Houston
- 1.1 million metric ton per year blue ammonia plant utilizing blue hydrogen provided by Air Liquide/INPEX (JV)
- Pre-FEED study recently completed
- FEED study expected during 2025; final investment decision by mid-2026
-
El Dorado Carbon Capture and Sequestration (CCS) Project with Lapis Energy- Capture and sequester between 400,000 and 500,000 metric tons of CO2 per year, which would reduce our Scope 1 emissions by 25%, yielding between 305,000 and 380,000 metric tons per year of low carbon ammonia
-
Awaiting approval of Class VI permit to construct application by the
EPA - Focused on beginning operations in 2026
-
MOU with Amogy to Develop Ammonia as a Marine Fuel
- Collaborating on the evaluation and development of pilot program that would combine LSB's low-carbon ammonia and Amogy's ammonia-to-power engine solution
- Amogy successfully completed test of tugboat retrofitted with power unit using ammonia as a fuel during Q3'24
Third Quarter Results Overview
|
|
Three Months Ended |
|
|||||||||
|
|
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:
-
Net sales decreased during the quarter due to lower sales volumes of ammonia and UAN as a result of the turnaround at the
Pryor facility, partially offset by higher pricing for both products. Operating loss and net loss were greater than the operating income and net loss in the third quarter of 2023 due toPryor facility turnaround expenses along with non-cash charges for older assets taken out of service or disposed of during the third quarter of 2024. Adjusted EBITDA increased during the quarter driven predominantly by higher ammonia selling prices and lower natural gas costs.
The following tables provide key sales metrics for our products:
|
|
Three Months Ended |
|
|||||||||
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.
|
|
Three Months Ended |
|
|||||||||
|
|
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
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.
Forward-Looking Statements
Statements in this release that are not historical are forward-looking statements within the meaning of the
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
|
||||||||||||
Consolidated Statements of Operations |
||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
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 |
|
||||||
Consolidated Balance Sheets |
||||||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
(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 |
|
|||||||
Consolidated Balance Sheets (continued) |
|||||||
|
|
|
|
|
|
||
|
|
(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, |
|
|
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 |
|
|
229,939 |
|
|
|
218,827 |
Total stockholders' equity |
|
|
498,961 |
|
|
|
518,331 |
|
|
$ |
1,182,933 |
|
|
$ |
1,298,184 |
Non-GAAP Reconciliations
This news release includes certain “non-GAAP financial measures” under the rules of the
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.
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 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241029195060/en/
(405) 510-3524
(405) 510-3550
fbuonocore@lsbindustries.com
Source: