LSB Industries Inc., Oklahoma City, reported second-quarter net income of $6.6 million on revenues of $121.5 million, up from a year-ago loss of $27.5 million and revenues of $103.2 million. Operating income was $11.3 million, up from a year-ago loss of $5.9 million.
Despite the uptick, LSB still had a loss attributable to common stockholders of $1.5 million ($0.05 per share), compared to the year-ago loss of $35 million ($1.27 per share). However, adjusted EBITDA was up at $30.5 million from $17.8 million.
“We significantly improved results relative to the second quarter of 2018, despite the continued impact of bad weather in the Midwest on demand from our agricultural markets,” said LSB President and CEO Mark Behrman. “Net sales and adjusted EBITDA increased as a result of higher production volumes at all of our facilities for both agricultural and industrial products and, to a lesser extent, higher pricing for agricultural products relative to last year.
“Product pricing was mixed in the second quarter,” Behrman said. “Net pricing per ton of UAN continued to increase, rising 11 percent compared to the second quarter of 2018.” However, he noted that the company favored ammonia production in the Southern Plains during the quarter due to inland demand and weaker demand for UAN. Ag ammonia prices were up 13 percent. He said HDAN prices were down 2 percent, citing higher imports.
Pricing for Industrial Products was lower due to the continued weak Tampa ammonia benchmark price. The company believes this will improve as ammonia inventories are consumed over the next several months. In the Mining segment, the company noted that it has successfully been shifting sales away from coal to quarry and construction.
“We had another strong quarter of plant operations. Our ammonia plants averaged a collective 94 percent onstream rate across all three facilities for the period, a level we’ve now achieved for four consecutive quarters, consistent with our stated target for 2019,” he added. “This operating performance is unprecedented in LSB’s history and reflects the capital investments we’ve made to ensure greater reliability.”
Behrman noted that LSB recently completed a $35 million offering, with some $20 million to be used for capital projects aimed at enhancing and diversifying revenue streams. Projects include loading and unloading improvements, tank storage, and capital to facilitate gas plant opportunities. It expects those investments to return incremental EBITDA of $7-$10 million when fully completed, which should be in the next 18 months.
LSB is planning a fourteen-day turnaround for the El Dorado facility in August, and a thirty-day turnaround at their Pryor facility beginning in mid-September. Once this planned maintenance is completed, LSB said it is positioned to run all plants at high operating rates for an extended period of time, with no turnarounds scheduled at any of their facilities in 2020.
The company said near-term El Dorado ammonia sales will be impacted by an eight-week maintenance shutdown on the NuStar ammonia pipeline, which began in mid-July.
Despite the forthcoming turnarounds and the pipeline outage, LSB remains upbeat for the second-half. “Subject to weather, we believe that this year’s fall ammonia application season will be heavier than normal as corn prices have risen to the highest levels since 2014, reflecting lower expected harvested acres and weak yields for this season’s corn crop,” noted Behrman.
“These factors are likely to lead to a lower stock-to-use ratio and result in a significant increase in expected planted acres for the fall planting season. We expect these dynamics to continue into 2020 which, combined with the absence of any planned turnarounds at our plants and the greater level of reliability at our facilities, should have positive implications for LSB’s financial results in the year to come.”
| Sector Net Sales $/M | 2Q-19 | 2Q-18 | Percentage Change |
| Agricultural | 72.5 | 58 | 25 |
| Industrial | 37.2 | 32.8 | 13 |
| Mining | 11.9 | 12.4 | (4) |
| Total | 121.5 | 103.2 | 18 |
| Ag Product Sold st | 2Q-19 | 2Q-18 | Percentage Change |
| UAN | 95,183 | 110,336 | (14) |
| HDAN | 127,124 | 93,126 | 37 |
| Ammonia | 28,228 | 12,956 | 118 |
| Other | 10,377 | 12,822 | (19) |
| Total | 260,912 | 229,240 | 14 |
| Avg Selling Price $/st | 2Q-19 | 2Q-18 | Percentage Change |
| UAN | 198 | 178 | 11 |
| HDAN | 248 | 254 | (2) |
| Ammonia | 357 | 316 | 13 |
| Industrial Sold st | 2Q-19 | 2Q-18 | Percentage Change |
| Ammonia | 78,697 | 41,194 | 91 |
| Nitric Acid* | 22,271 | 33,504 | (34) |
| Other | 8,948 | 9,224 | (3) |
| Total | 109,916 | 83,922 | 31 |
| Mining Sold st | 2Q-19 | 2Q-18 | Percentage Change |
| LDAN/HDAN/AN Sol. | 47,000 | 48,001 | (2) |
| Input Costs | 2Q-19 | 2Q-18 | Percentage Change |
| Avg Nat Gas Cost mmBtu | 2.422 | 2.598 | (7) |
*Excludes Baytown
LSB reported a net loss for the first six months at $4.9 million on net sales of $215.7 million, compared to the year-ago loss of $33.1 million and $203.6 million, respectively. Operating income was $11.4 million, up from a year-ago loss of $4 million. The company reported a net loss attributable to common stockholders of $20.9 million ($0.75 per share), compared to the year-ago loss of $48.6 million ($1.77 per share). Adjusted EBITDA was up, at $48.6 million from $40.9 million.