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, injury-free turnaround at the Pryor facility, which also enabled an incremental 75,000 tons/year of UAN production.

• 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 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.

• Major capital projects and low-carbon ammonia initiatives advanced, including El Dorado CCS (targeting 2026) and Houston Ship Channel blue ammonia (FEED to begin 2025).

• Successful nitric acid storage expansion at El Dorado and marine fuel collaborations with Amogy and EXMAR.

Financial highlights

• Q3 2024 net sales: $109.2M (down 4% year-over-year); adjusted EBITDA: $17.5M (up from $9.2M); net loss: $25.4M; diluted EPS: $(0.35).

• Gross loss for Q3 2024 was $7.9M versus $3.4M in Q3 2023; adjusted gross profit margin improved to 22.9% from 12.1%.

• Cash and short-term investments at September 30, 2024: $199.4M; total debt: $487.0M.

• Over the past year, repurchased $97M in senior secured notes and 2.7M shares of stock.

• 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; Q4 adjusted EBITDA projected to exceed Q4 2023.

• Planned turnarounds at Cherokee (Q4 2024) and El Dorado (Q3 2025) to drive higher volumes and EBITDA.

• Low carbon product strategy and El Dorado CCS project targeting 2026 start, pending EPA permit.

• Houston Ship Channel blue ammonia FEED study to begin in 2025, with FID expected by mid-2026.

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