LSB Industries Inc., Oklahoma City, reported record results for net sales and adjusted EBITDA for both the quarter and year-ending Dec. 31, 2021.
Full-year net income pulled into the black at $43.5 million on net sales of $556.2 million, up from the year-ago loss of $61.9 million and $351.3 million, respectively. Gross profit was $139 million, up from $17 million, while operating income was $101 million, up from the year-ago loss of $15.5 million.
Adjusted EBITDA soared to $191 million from $65.5 million. However, net income attributable to common shareholders was a loss of $220 million ($4.40 per diluted share), versus the year-ago loss of $99.4 million ($2.71 per share).
Fourth-quarter net income was $42.1 million on net sales of $190.2 million, up from the year-ago loss of $21.7 million and $88.9 million, respectively. Gross profit was up at $78.5 million from a loss of $3.5 million, while operating income was $70 million versus the year-ago loss of $10.2 million.
Adjusted EBITDA was $90.1 million, up from $10.4 million. Net income attributable to common shareholders was $42 million ($0.47 per share), up from the year-ago loss of $31.6 million ($0.86 per share).
“We delivered record results and substantial growth in net sales and adjusted EBITDA in both the fourth quarter and full-year 2021,” stated Mark Behrman, LSB President and CEO. “Our strong performance reflects a confluence of positive factors, including favorable trends in product selling prices coupled with our ability to operate our facilities reliably, along with the benefits of our successful commercial initiatives over the past several years. We believe that given the current favorable grain prices, and the expectation that they will continue throughout 2022, combined with crop inventories at multi-year lows, farmer income will remain robust supporting strong pricing for the year.
“With the free cash flow generated in 2021, our significantly lower cost of capital, and greater liquidity following our October 2021 debt refinancing, we are extremely excited to have the financial flexibility to pursue a number of earnings and cash flow growth opportunities,” he added. “In addition, in 2022 we will intensify our focus on planning and implementing our decarbonization activities, including the production of low carbon/no carbon ammonia, and expect to have an announcement regarding our path forward on these initiatives in the coming months.”
LSB expects ag products to have a robust 2022, with the company citing high corn prices, positive ethanol demand, and dry conditions in South America and the Western U.S. that could restrict supplies. It also sees good demand for its industrial products. LSB believes the strong fall ammonia application season was an indication of 92-93 million acres of corn to be planted this year.
While natural gas prices were up in 2021, the company said they were a fraction of the increase in the selling prices of its products and were low compared to the significantly elevated prices in Europe that shuttered production in late 2021.
LSB expects overall sales volumes in 2022 to be higher than 2021, though it will have major third-quarter turnarounds at El Dorado (24 days) and Pryor (30 days). They are expected to reduce ammonia production by 50,000 st and cost $15-$20 million.
LSB’s forecast also reflects a shift in product mix toward the production of higher margin products. UAN, nitric acid, and sulfuric acid estimates are up over year-ago levels, while ammonium nitrate is down. Ammonia production is expected to be up, but sales down as the company utilizes more for downstream products.
The company said it is sold out of nitric acid at El Dorado for 2022 due to a major contract it inked last year.
The company is targeting approximately $15 million of capital investment for margin enhancement projects to optimize storage and distribution capabilities that could also enhance production. During the year, LSB said it will evaluate debottlenecking projects that could increase production by 20-40 percent.
LSB also plans announcements on blue/green ammonia initiatives later this year, with news expected out in late March on one or more feasibility studies.
LSB also said it would consider accretive acquisitions, with emphasis on geographic expansion, extending its existing product line, and leveraging its existing ammonia capacity.
| Sector Net Sales ($/M) | 4Q-21 | 4Q-20 | Percentage Change |
| Agricultural | 102 | 41.6 | 145 |
| Industrial | 69.7 | 35.9 | 94 |
| Mining | 18.5 | 11.4 | 63 |
| Total | 190.2 | 88.9 | 114 |
| Ag Products Sold (st) | 4Q-21 | 4Q-20 | Percentage Change |
| UAN | 126,476 | 131,665 | (4) |
| HDAN | 76,206 | 70,987 | 7 |
| Ammonia | 17,140 | 28,293 | (39) |
| Other | 1,733 | 2,997 | (42) |
| Total | 221,555 | 233,942 | (5) |
| Avg Selling Price $/st | 4Q-21 | 4Q-20 | Percentage Change |
| UAN | 382 | 132 | 189 |
| HDAN | 439 | 159 | 176 |
| Ammonia | 757 | 210 | 260 |
| Industrial/Mining (st) | 4Q-21 | 4Q-20 | Percentage Change |
| Ammonia | 57,661 | 68,483 | (16) |
| AN, Nitric Acid, Other | 140,567 | 124,238 | 13 |
| Total | 198,228 | 192,721 | 3 |
| Other Factors | 4Q-21 | 4Q-20 | Percentage Change |
| Avg Nat Gas ($/mmBtu) | 4.42 | 2.46 | 80 |
| Tampa NH3 $/mt | 851 | 239 | 256 |
| Volume Outlook (st) | FY22 | FY21 (Actual) |
| Ammonia Production | 770,000-790,000 | 765,000 |
| Turnarounds | ||
| El Dorado | 24 Days | — |
| Cherokee | — | 40 Days |
| Pryor | 30 Days | — |
| Ag Sales | ||
| UAN | 450,000-470,000 | 440,000 |
| HDAN | 220,000-240,000 | 266,000 |
| Ammonia | 50,000-70,000 | 70,000 |
| Industrial, Mining, and Other Sales | ||
| Ammonia | 230,000-250,000 | 234,000 |
| AN, Nitric, and Other | 430,000-450,000 | 442,000 |
| Sulfuric Acid | 135,000-155,000 | 136,000 |