LSB Industries Inc., Oklahoma City, Okla., on July 31 reported net income of $10 million on net sales of $140 million for the second quarter ended June 30, 2024, down from $25 million and $166 million, respectively, in last year’s second quarter.
Second quarter adjusted EBITDA was reported at $41 million, down from $47 million last year, while diluted earnings per share came in at $0.13, compared with $0.33 in second-quarter 2023.
“Our second quarter profitability improved sequentially due largely to improved pricing relative to the first quarter of this year,” said LSB President and CEO Mark Behrman. “While selling prices were down compared to the second quarter of last year, the year-over-year pricing decline was much less significant than the declines experienced over the previous several quarters. We view this as indicative of a stabilization of our markets after a period of downward volatility following the spike in nitrogen prices experienced in 2022.”
LSB described the ammonia market as healthy, with strong pricing driven by a brisk summer fill program, natural gas curtailments in Trinidad and Egypt, extended turnarounds and delayed startup of new capacity, and constrained imports into Europe and the Middle East due to shipping disruptions in the Suez Canal.
The company also noted “solid” UAN pricing following the spring application season, and said its industrial business is seeing steady demand for nitric acid and ammonium nitrate, bolstered by US metals production and infrastructure upgrades and expansion.
Behrman said the company recently started a turnaround at its Pryor, Okla., facility and plans to conduct a turnaround at the Cherokee, Ala., plant in the fourth quarter. “When combined with the multiple smaller projects we have underway, we expect these turnarounds to lead to increased reliability and incremental EBITDA and cash flow,” he said.
LSB noted its five-year agreement with Freeport Minerals Corp., Phoenix, Ariz., to supply up to 150,000 st/y of low carbon ammonium nitrate solution (ANS) from LSB’s El Dorado, Ark., facility, starting in 2025 (GM May 24, p. 1).
“Our second quarter was highlighted by our landmark agreement to supply Freeport Minerals with low carbon ANS for use in their copper mining operations,” Behrman said. “This agreement validates our belief that industrial customers will identify low carbon nitrogen products as a critical pathway toward achieving their decarbonization initiatives.”
Behrman also noted LSB’s progress on two clean ammonia projects at El Dorado and the Houston Ship Channel. The El Dorado project would capture and sequester 400,000-500,000 mt/y of CO2, reducing Scope 1 emissions by 25% and yielding 305,000-380,000 mt/y of low carbon ammonia.
“The EPA is currently indicating a final decision next spring on the Class VI permit application submitted by our partner, Lapis Energy, for our El Dorado carbon capture and sequestration project,” Behrman said. “This timeline would position us to begin producing low carbon ammonia by early 2026.”
LSB’s Houston Ship Channel project with INPEX, Air Liquide, and Vopak Exolum envisions a 1.1 million mt/y blue ammonia plant utilizing blue hydrogen provide by Air Liquide/INPEX (GM Oct. 6, 2023). LSB said the Pre-FEED is underway and expected to be completed in the fourth quarter, with the FEED beginning in the first quarter of 2025. A final investment decision is expected in the first quarter of 2026.
“Concurrently, we continue to have productive conversations with potential off-take parties for the low carbon product from this facility,” Behrman said. “We are encouraged by the positive developments with both of our projects and remain committed to our vision of becoming a leader in the global energy transition through the production of low carbon ammonia and downstream products over the next several years.”
LSB repurchased $64 million in principal amount of Senior Secured Notes and approximately 0.8 million shares of common stock during the second quarter, with year-to-date figures reported at $97 million and 1.5 million, respectively. The company reported total debt of approximately $486 million as of June 30, while cash flow from operations was reported at $41 million and capital expenditures at $15 million.