LSB Industries (LXU) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 were $109.2 million, down from $114.3 million in Q3 2023, primarily due to lower ammonia and UAN volumes from a major turnaround at the Pryor facility, which was completed injury-free and included plant upgrades expected to boost reliability and production volume.

• Net loss widened to $25.4 million from $7.7 million in Q3 2023, impacted by $16.3 million in turnaround costs and $5.6 million in one-time non-cash asset write-downs.

• Adjusted EBITDA rose to $17.5 million from $9.2 million year-over-year, driven by higher ammonia prices and lower natural gas costs.

• Expanded Pryor's urea plant, enabling an incremental 75,000 tons per year of UAN production, and completed additional nitric acid storage at El Dorado to optimize sales mix and margins.

• Continued progress on low-carbon ammonia projects at El Dorado and Houston Ship Channel, with offtake agreements, FEED study milestones, and CCS project awaiting EPA permit.

Financial highlights

• Adjusted EBITDA for Q3 2024 was $17.5 million, up from $9.2 million in Q3 2023, with margin improving to 16% from 8% year-over-year.

• Net sales were $109.2 million, down 4% year-over-year; Q3 net loss was $25.4 million, with diluted EPS of $(0.35) including turnaround and non-cash charges.

• Cash and short-term investments at September 30, 2024, totaled $199.4 million; total debt was $487.0 million.

• Sales volumes decreased year-over-year due to the Pryor turnaround but were partially offset by higher AN volumes from El Dorado.

• Average natural gas cost in production fell 40% year-over-year to $2.17/MMBtu.

Outlook and guidance

• Expecting incremental 75,000 tons/year of UAN production at Pryor ramping up in Q4 2024, with solid year-over-year increase in UAN, AN, and nitric acid sales.

• Q4 2024 EBITDA, adjusted for turnaround expenses, projected to be significantly above Q4 2023.

• Planned turnarounds at Cherokee in November 2024 and El Dorado in Q3 2025 to drive higher volumes and EBITDA.

• Low carbon product strategy and El Dorado CCS project seen as multi-year earnings growth engines, with Houston Ship Channel blue ammonia FEED study to begin in 2025.

• Ammonia pricing expected to moderate in Q4 2024 and into 2025 due to new capacity and increased exports.