LSB Industries Inc. reported first-quarter net income of $5.6 million on net sales of $138.2 million, down from the year-ago $15.9 million and $181 million, respectively, citing higher sales volumes and much lower prices. Adjusted EBITDA was $32.6 million, down from $51 million.
“Our first quarter results were consistent with our expectations for a significant improvement relative to our fourth quarter of 2023,” said Mark Behrman, President and CEO. “Selling prices remained lower relative to the prior year quarter as the spike in nitrogen prices experienced in 2022 kept prices elevated during the first quarter of 2023.”
Behrman said the lower selling prices were partially offset by a “solid increase” in sales volumes driven by strong demand for fertilizers, enhanced by LSB’s strategic commercial efforts. He said the company also benefited from a “healthy increase” in downstream production volumes.
“We generated solid cash flow in the first quarter, contributing to our ability to return value to shareholders through stock repurchases, while further de-risking our balance sheet by repurchasing bonds at a discount to market,” Behrman said. “We continue to make investments in the reliability and safety of our facilities that we expect to lead to greater production volumes.”
LSB said it plans to complete turnarounds at its Pryor, Okla., and Cherokee, Ala., production facilities in the second half of the year. Behrman added the company also plans to complete “multiple smaller projects that we believe will collectively lead to incremental EBITDA and improved shareholder value.”
Behrman said LSB is excited about its clean ammonia initiatives and the company is “committed to becoming a leader in the global energy transition through the production of low carbon ammonia and downstream products over the next several years.” He added that indications from the EPA remain “favorable” regarding the anticipated timeline for LSB’s Partner, Lapis Energy, to begin capturing and sequestering CO2 at LSB’s El Dorado, Ark., facility.
“Additionally, we are pleased with the interest we are seeing in offtake for low-carbon nitrogen products out of El Dorado when our project comes online,” he added. “With respect to our Houston Ship Channel project, we have signed an agreement with Samsung Engineering to perform the Pre-FEED on our ammonia loop adding another large, blue-chip partner to the group of companies developing the project.”
LSB said the market outlook for nitrogen fertilizer is favorable as current prices for ammonia and other products should prove attractive to retailers and farmers, with corn futures prices providing support for fertilizer demand for the 2024 application season.
LSB said strong ammonia demand and pricing has been stable due to robust agricultural demand in fourth-quarter 2023 and in first-quarter 2024, with ammonia imports into Europe from the Middle East constrained due to the disruption in shipping though the Suez Canal. It also noted that some new production capacity has been delayed.
LSB expects UAN demand and pricing to remain strong through much of second-quarter 2024, citing tight inventories in the US and lower import levels due to unplanned production issues. LSB said the industrial and mining business is robust, with steady demand for industrial products supported by a resilient US economy and demand for ammonium nitrate for mining steady due to attractive market fundamentals for quarry/aggregate production and US metals.
| Product Sales ($000) | 1Q-24 | 1Q-23 | % Change |
| AN & Nitric Acid | 48,435 | 58,272 | (17) |
| UAN | 41,192 | 46,590 | (12) |
| Ammonia | 39,530 | 63,415 | (38) |
| Other | 9,047 | 12,687 | (29) |
| Total | 138,204 | 180,964 |
| Sales Volumes st | 1Q-24 | 1Q-23 | % Change |
| AN & Nitric Acid | 128,801 | 122,745 | 5 |
| UAN | 134,933 | 113,026 | 19 |
| Ammonia | 94,831 | 88,997 | 7 |
| Total | 358,565 | 324,768 | 10 |
| Avg Selling Price $/st | 1Q-24 | 1Q-23 | % Change |
| AN & Nitric Acid | 319 | 417 | (23) |
| UAN | 265 | 379 | (30) |
| Ammonia | 403 | 703 | (43) |
| Other Factors | 1Q-24 | 1Q-23 | % Change |
| Avg Nat Gas ($/mmBtu) | 2.33 | 5.66 | (59) |
| Tampa NH3 $/mt | 466 | 728 | (36) |
| NOLA UAN $/st | 251 | 318 | (21) |