LSB Industries (LXU) Q2 2026 earnings summary

Executive summary

• Achieved strong financial and operational results in Q2 2026, with net sales up 11% year-over-year to $168.1 million, driven by higher selling prices and increased AN and nitric acid volumes, despite major turnarounds at El Dorado and Pryor facilities.

• Adjusted EBITDA increased to $53.1 million from $38.3 million year-over-year, reflecting approximately 40% growth, while net loss was $6.2 million due to $28.8 million in turnaround expenses and higher SG&A.

• Assumed full ownership of the El Dorado carbon capture and sequestration (CCS) project, aligning capital deployment with project milestones and enhancing long-term low-carbon product offerings.

• Major planned maintenance at El Dorado and Pryor facilities impacted production and earnings but is expected to enhance reliability and future performance.

• Settled litigation related to the El Dorado ammonia plant, receiving $20.9 million and reversing $2.9 million in payables.

Financial highlights

• Q2 2026 net sales: $168.1 million (+11% YoY); adjusted EBITDA: $53.1 million (+40% YoY); gross profit: $11.5 million (down from $23.2 million YoY); diluted EPS: $(0.09) vs. $0.04 prior year.

• Trailing 12-month adjusted EBITDA reached ~$200 million as of June 30, 2026.

• Free cash flow for the quarter was $32 million after $27 million sustaining capital and $13 million growth investments.

• Ended Q2 with $218–$220 million in cash and net leverage at 1.1x.

• Interest expense decreased 10% YoY to $7.1 million in Q2 2026.

Outlook and guidance

• Higher production rates and improved reliability expected at El Dorado and Pryor for the rest of 2026, with robust demand in industrial and agricultural markets.

• Pricing remains favorable, though moderated from first-half highs; on track to meet or exceed annual production targets.

• El Dorado CCS project expected to be operational in Q1 2027, generating $25–$30 million annual earnings and cash flow via tax credits.

• Capital expenditures for core nitrogen business expected to be ~$80 million in 2026, with an additional ~$95 million for the carbon capture project.

• Additional $35 million annual EBITDA targeted through production, efficiency, and cost initiatives by end of 2027.