LSB Industries Inc., Oklahoma City, Okla., reported first-quarter net sales of $199 million and adjusted EBITDA of $101.1 million, compared with $98.1 million and $17.3 million, respectively, in last year’s first quarter. The company posted its highest quarterly EBITDA ever, driven by an adjusted EBITDA margin of 50.8 percent, compared with 17.6 million in the first quarter of 2021.
LCB said the year-over-year income and EBITDA improvements resulted primarily from higher selling prices, partially offset by higher natural gas feedstock prices and lower sales volumes, due in part to wet spring weather and delayed fertilizer purchases. Adjusted earnings per share (EPS) for the quarter was $0.69, compared with an EPS loss of $0.32 in last year’s first quarter.
“We delivered another quarter of record results and substantial growth in net sales and adjusted EBITDA and EPS,” said Mark Behrman, LSB President and CEO. “Our strong performance once again reflects increases in product selling prices coupled with the benefits of our successful commercial initiatives over the past several years, along with solid operations at our facilities.”
Behrman said conditions supporting the strong pricing environment are likely to continue for the balance of 2022 and 2023 due to robust nitrogen market dynamics, driven by limited global supply stemming from high natural gas prices in Europe, and higher demand due to low global grain stocks.
“Demand for fertilizers is expected to remain robust for the balance of 2022,” LSB said. “Corn prices are currently near record-high levels, and corn futures point to corn prices remaining at elevated levels throughout 2022 and through the first half of 2023. These trends should translate into strong farmer income and promote significant demand for fertilizers as farmers seek to maximize yield in order to capitalize on the anticipated strong pricing environment for corn.”
LSB said domestic natural gas prices are at their highest levels since 2008, with the Henry Hub spot gas price at approximately $8 per MMBtu. “Despite this increase in our feedstock cost, selling prices for our products have increased by a significant multiple of the increase in gas cost,” the company said. “We expect this to translate into continued strong margins over the course of the 2022.”
Behrman said the company is evaluating debottlenecking projects that can “significantly increase the production capacities at our facilities,” and is planning to move forward on one or more of these projects in the coming quarters. Behrman also highlighted LSB’s commitment to decarbonization activities, noting the company’s recent agreement with Lapis Energy to develop a CO2 capture and sequestration project at the El Dorado, Ark., facility (GM April 29, p. 1).
Regarding its industrial business, LSB said sales volumes of its nitric acid continue to increase driven by homebuilding and power generation. “The strength in the Tampa ammonia price also has positive implications for our industrial business, as a number of industrial chemical contracts are indexed to the Tampa ammonia price,” the company said.
LSB said it entered the first quarter with a lower level of high density ammonium nitrate (HDAN) inventory than in previous years as a result of increased nitric acid production and sales in the second half of 2021 in connection with a new nitric acid offtake agreement, reducing first-quarter sales volumes of HDAN relative to the 2021 first quarter.
LSB said its total liquidity as of March 31, 2022, was more than $400 million, including $343.6 million in cash and short-term investments and approximately $63 million of borrowing availability under its Working Capital Revolver. Total long-term debt was $716.5 million on March 31, compared to $527.6 million on Dec. 31, 2021.
“Our strong profitability led to another quarter of significant cash flow, further enhancing our balance sheet,” Behrman said. “Additionally, in March we completed a $200 million senior notes offering, taking advantage of the low interest rate environment in anticipation of a rising rates, bolstering our liquidity position and giving us greater financial flexibility to capitalize on organic growth opportunities and to pursue accretive acquisitions.”
Capital expenditures were approximately $8.3 million for the first quarter. LSB said full-year capital expenditures related to environmental, health, and safety, and plant investments are expected to be approximately $50 million, with another $15 million earmarked for identified growth initiatives.
| Avg Selling Price $/st | 1Q-22 | 1Q-21 | Percentage Change |
| UAN | 553 | 150 | 269 |
| AN & Nitric Acid | 438 | 221 | 98 |
| Ammonia | 961 | 312 | 208 |
| Other Factors | 1Q-22 | 1Q-21 | Percentage Change |
| Avg Nat Gas ($/mmBtu) | 4.74 | 3.15 | 50 |
| Tampa NH3 $/mt | 1,206 | 348 | 247 |