LSB Industries Inc. reported a fourth-quarter loss of $5.3 million on net sales of $132.6 million, down from the year-ago net income of $65.9 million and $233.7 million, respectively. Adjusted EBITDA was down at $25.1 million from the year-ago $105.5 million.
“Our fourth-quarter results were consistent with our expectations,” said Mark Behrman, LSB President and CEO. “While we continued to experience a weaker pricing environment relative to 2022, pricing rebounded off of third quarter lows enabling us to generate a significant sequential top and bottom improvement. Our fourth-quarter results benefited from increased production and sales volumes of downstream products, reflecting improved manufacturing operations.”
LSB posted full-year net income of $27.9 million on net sales of $593.7 million, down from 2022’s $230.3 million and $901.7 million, respectively. Adjusted EBITDA was $132.7 million, down from $414.7 million.
“We generated solid cash flow in 2023 in spite of the headwinds encountered throughout the year,” he said. “As a result, we were able to further strengthen our balance sheet, positioning us to continue to invest in the reliability and safety of our facilities and return value to shareholders.”
In addition to the turnarounds planned for LSB’s Pryor, Okla., and Cherokee, Ala, facilities during this year’s third quarter, Behrman said LSB also expects to complete “multiple projects that we believe will deliver incremental EBITDA beginning in the second half of the year.” LSB expects the two 30-day turnarounds to result in approximately 34,000 st of lower ammonia production and related downstream production.
“Despite the turnarounds, however, we expect sales volumes for our downstream products to be up year-over-year as a result of operational improvements and the completion of margin enhancement projects that we have underway at our Pryor and El Dorado facilities,” Behrman said in an earnings call.
LSB expects that a third-quarter Pryor urea expansion will increase UAN sales volumes by 75,000 st/y. It also highlighted a nitric acid project at El Dorado, which will add 5,000 st of nitric acid storage, which LSB said will better allow it to optimize its product mix, ultimately translating into incremental profits.
LSB is expecting lower natural gas prices in 2024 than in 2023 and anticipates increased sales volumes of higher margin downstream products. LSB said urea and UAN prices have been on the rise recently due to a favorable US import/export balance and expectations for strong demand. The company said the higher urea prices were due in part to China’s export limitations.
“We are now in a position where inventories are really tight for most fertilizers,” Behrman told analysts, citing a lack of imports and US production outages earlier this year due to winter storms. He shared that LSB lost some production at its El Dorado plant due to a power outage.
“We are starting to see UAN pricing move to be more in a traditional relationship with urea, and we are encouraged by the buying patterns,” he added.
LSB expects fertilizer prices to be at levels attractive to farmers for the spring planting season, with corn prices remaining resilient despite rising stock-to-use ratios. LSB said industrial demand in the US remains stable due to the strong domestic economy, with robust demand for mining products due to attractive market fundamentals. LSB said demand also remains stable for quarrying and aggregate production and US metals demand.
The company anticipates lower 2024 ammonia prices due to heavy fall application by US farmers. It said lower natural gas prices in Europe will likely result in greater nitrogen production and increased supply from European producers.
LSB CFO Cheryl Maguire told analysts that LSB expects first-quarter 2024 adjusted EBITDA to be lower than the year-ago $51 million, but up from fourth-quarter 2023’s $25.1 million, representing a solid start to the year highlighted by strong ammonia demand, improved downstream production, and lower natural gas costs.
| Product (Gross Sales $) | 4Q-23 | 4Q-22 | % Change |
| AN & Nitric Acid | 47,959 | 81,576 | (41) |
| UAN | 36,621 | 55,449 | (34) |
| Ammonia | 36,731 | 83,144 | (56) |
| Other | 11,302 | 13,485 | (16) |
| Total | 132,613 | 233,654 | (43) |
| Sales Volumes st | 4Q-23 | 4Q-22 | % Change |
| AN & Nitric Acid | 124,697 | 157,104 | (21) |
| UAN | 125,966 | 102,912 | 22 |
| Ammonia | 95,447 | 84,100 | 13 |
| Total | 346,110 | 344,116 | 1 |
| Avg Selling Price $/st | 4Q-23 | 4Q-22 | % Change |
| AN & Nitric Acid | 322 | 464 | (31) |
| UAN | 253 | 522 | (52) |
| Ammonia | 368 | 978 | (62) |
| Other Factors | 4Q-23 | 4Q-22 | % Change |
| Avg Nat Gas ($/mmBtu) | 3.99 | 6.95 | (43) |
| Tampa NH3 $/mt | 599 | 1,116 | (46) |
| NOLA UAN | 256 | 533 | (52) |
| Recent Spot Prices | 3/1/24 | 3/1/23 |
| Tampa NH3 $/mt | 445 | 590 |
| NOLA UAN | 243 | 270 |
| Natural Gas ($mmBtu) (NYMEX Spot) | 1.84 | 2.81 |
| Volume Outlook | 2024E | 2023A |
| Ammonia Production (st) | 780,000-800,000 | 816,000 |
| Sales Volume (st) | ||
| AN & Nitric Acid | 560,000-580,000 | 529,000 |
| UAN | 560,000-580,000 | 483,000 |
| Ammonia | 280,000-300,000 | 375,000 |