Plant problems and market conditions conspired to put LSB Industries Inc.’s Chemical segment’s operating income in the loss column for the fourth-quarter and full-year ending Dec. 31, 2015. The unit had a fourth-quarter loss of $10.3 million on net sales of $87.4 million, compared to year-ago income of $4.5 million and $115.1 million, respectively. The full-year loss was $41.8 million on sales of $428.1 million, compared to 2014 income of $51.3 million and $483.6 million.
“Our fourth quarter fell short of our expectations,” said Dan Greenwell, LSB president and CEO. “Results for our Chemical business were weaker than the fourth quarter of 2014 due to unplanned downtime at our Pryor facility, lower sales of ammonium nitrate to the mining sector and lower selling prices for agricultural chemicals, which were down approximately 16 percent compared to the prior year period. Looking at the current year, fertilizer prices appear to have stabilized, and we believe that, due to the contracted fall fertilizer application season, demand for fertilizers will be stronger this spring and pricing will firm up from current levels.”
“Additionally, we were disappointed with the unplanned outage at our Cherokee facility,” he added. “Cherokee operated efficiently and consistently during 2015, with the exception of two weeks in December, and its ammonia plant operated at an on-stream rate of 94 percent for the full year of 2015. We are continuing to take positive steps with equipment replacement and upgrades at both the Pryor and Cherokee plants to increase on-stream rates in 2016.”
“On the subject of our El Dorado facility, as we’ve previously announced, we began operating our new nitric acid plant and concentrator in the second and fourth quarters of 2015, respectively, and attained a significant milestone by achieving mechanical completion of a new 375,000 ton per year ammonia plant within the last several weeks. The ammonia plant is currently in its commissioning phase, and we plan to begin producing ammonia early in the second quarter of 2016. We expect the total cost of the El Dorado Expansion Project remain within the previously announced range of $831 million to $855 million. We continue to expect that this expansion will have a transformative impact on the profitability of our Chemical business and LSB overall in the coming quarters and years.”
LSB was also in the loss column on a company-wide basis, posting a fourth-quarter loss applicable to common shareholders of $11 million ($0.48 per diluted share) on sales of $157 million compared to the year-ago income of $657,000 ($0.03 per share) and $187.2 million, respectively. The full-year loss was $38 million ($1.67 per share) on sales of $711.8 million, compared to 2014’s net income of $19.3 million ($0.83 per share) and $761.2 million.