LSB Industries Inc. reports that plant outages during the second quarter as well as a delayed spring fertilizer season impacted second quarter results. Actual results for the quarter ending June 30, 2013, will be released around Aug. 6.
While the Pryor, Okla., ammonia plant resumed production in late April, LSB said in May and June, it was again taken offline to replace a bearing, and later to replace a coupling that failed. While it was not in operation, additional planned maintenance that had been scheduled for later in the year was performed. These events resulted in 30 days of cumulative unplanned downtime. Pryor is now in production.
Due to the lost production at the Pryor, as well as lost production at Cherokee during April, along with the related high maintenance and repair costs, LSB estimates the cumulative negative effect to 2013 second quarter operating income to be approximately $22-$24 million.
LSB said operating income was impacted by the late start of the agricultural fertilizer season caused by inordinately cool, wet weather conditions, lower sales prices for nitrogen fertilizer and higher natural gas costs as compared to second quarter 2012.
LSB expects second quarter 2013 operating income to be in the range of $9-$12 million, as compared to $42.3 million in the second quarter of 2012, with diluted earnings per share to be in a range from $0.20-$0.30, as compared to $1.11 in the second quarter of 2012.
As a result of the extensive maintenance performed on our various chemical facilities during the past three quarters, LSB expects that planned maintenance events that are usually scheduled during the third quarter of each year will not be as extensive during the remainder of 2013. Additionally it expects to recognize significant business interruption and property insurance recoveries in the second half of the year.
“Despite the issues that depressed our second quarter profitability, we have made significant advances with the repair and upgrade of our facilities and are confident that, due to the efforts made by our dedicated operating management team, the mechanical reliability of our Chemical business will be much improved in future quarters and years,” Jack Golsen, LSB board chairman. “As discussed in our first quarter conference call, we expect our Chemical business results for the second half of 2013 to improve substantially.”
“We are encouraged by the improved results of our Climate Control business and its prospects as a recovery in new construction continues,” he added.