LSB Industries Inc. reported first-quarter net income of $15.9 million on net sales of $181 million, down from the year-ago $58.8 million and $199 million, respectively. Adjusted EBITDA was $51 million, down from $101.1 million. While the company reported higher UAN and ammonia sales volumes, prices were off 31% and 27%, respectively.
“We generated a healthy increase in sales volumes relative to the first quarter of last year,” said Mark Behrman, LSB President and CEO. “This improvement reflects the benefits of the reliability investments we made in our facilities in 2022 along with our successful commercial initiatives. However, the stronger volumes were more than offset by lower product selling prices resulting largely from a decline in natural gas prices in Europe, which reached all-time highs during 2022 and drove ammonia prices to record levels.
“After declining steadily for the past six months, we believe that prices for ammonia and related products are at or near a bottom, bolstered by the significant increase in fertilizer demand we’ve seen recently,” he continued. “We expect the pricing stabilization coupled with continued strong operating performance by our facilities to benefit our second quarter 2023 financial results.
“We expect corn prices will stay near current high levels through 2023,” Behrman told analysts. “This, coupled with lower input costs relative to last year, should make the economics of planting corn very attractive to farmers.
“With no turnaround scheduled at our facilities this year and the continued improvement in our operations, we are well positioned for a strong year-over-year increase in production and sales volumes,” he added. “As such, we continue to expect 2023 to be a year of healthy profitability and cash flow.”
Offsetting some of the nitrogen price declines, LSB said 90% of it natural gas feedstock costs (that are not passed on to customers) for the second quarter are locked in at approximately $3.40/mmBtu, which is materially lower than first-quarter 2023’s $5.66/mmBtu.
LSB is projecting second-quarter adjusted EBITDA of $50-$60 million, and Behrman said the company clearly expects to beat the first-quarter number of $51 million.
| Product (Gross Sales $) | 1Q-23 | 1Q-22 | % Change |
| AN & Nitric Acid | 58,272 | 71,800 | (19) |
| UAN | 46,590 | 56,569 | (18) |
| Ammonia | 63,415 | 59,342 | 7 |
| Other | 12,687 | 11,270 | 13 |
| Total | 180,964 | 198,981 | (9) |
| Sales Volumes st | 1Q-23 | 1Q-22 | % Change |
| AN & Nitric Acid | 122,745 | 144,517 | (15) |
| UAN | 113,026 | 100,153 | 13 |
| Ammonia | 88,997 | 60,725 | 47 |
| Total | 324,768 | 305,395 | 6 |
| Avg Selling Price $/st | 1Q-23 | 1Q-22 | % Change |
| AN & Nitric Acid | 417 | 438 | (5) |
| UAN | 379 | 553 | (31) |
| Ammonia | 703 | 961 | (27) |
| Other Factors | 1Q-23 | 1Q-22 | % Change |
| Avg Nat Gas ($/mmBtu) | 5.66 | 4.74 | 19 |
| Tampa NH3 $/mt | 728 | 1,206 | (40) |
| NOLA UAN $/st | 318 | 569 | (44) |