LSB Upbeat on Improved Production Rates
LSB Industries Inc. reported a second-quarter net loss of $7 million on net sales of $122.9 million compared to the year-ago loss of $7.7 million and $110 million, respectively.
“Our second quarter adjusted EBITDA nearly doubled from the same period of 2016 and also increased relative to the 2017 first quarter, reflecting the enhancements we’ve made across our business over the past 18 months,” stated Daniel Greenwell, LSB’s president and CEO. “Our financial performance benefitted from the incremental output of our El Dorado ammonia plant, which has been ramping up since entering service in May of 2016, along with strong sales volume growth for our high-density ammonium nitrate (HDAN) resulting from our expanded distribution strategy. Partially offsetting these positive factors were headwinds caused by significant weakening in agricultural product pricing that began in June, as well as some downtime at two of our facilities.”
“Our Cherokee facility performed at a 100 percent on-stream rate during the period, which represents a best in class operating rate. We were, however, disappointed to have had unplanned downtime at Pryor and El Dorado. With that said, these downtime events in no way change our view about the operating performance potential of the facilities. Pryor’s second-quarter ammonia plant on-stream rate was approximately 78 percent, impacted by an unplanned outage. In early July, the site experienced an electrical outage which shut off power to the facility and given that Pryor was already down and considering the low agricultural selling price environment, and other maintenance that needed to be completed, we elected to pull forward the turnaround we had previously scheduled for October. We successfully completed the turnaround on July 21st for a total downtime of 17 days, in line with previously issued guidance.”
“El Dorado had an on-stream rate of approximately 87 percent at its ammonia plant in the second quarter. Although the plant continues to run at approximately 1,350 tons per day, which is above its nameplate capacity of 1,150 tons per day, we were down for 12 days during the quarter primarily to perform proactive adjustments and heat exchanger cleaning and repairs to enable the plant to operate closer to the higher end of its operating envelope on a sustained basis.”
“The second half of 2017 looks more challenging than we anticipated earlier this year due to the current ammonia pricing environment, which is lower than pricing levels seen at this time in 2016,” he added. “We do, however, remain highly confident in our ability to operate all our plants at on-stream rates of approximately 95 percent or higher. Additionally, recent sales of non-core assets have strengthened our balance sheet and provided us with greater financial flexibility, which we plan to further enhance in the coming quarters.”