Oklahoma City’s LSB Industries Inc. reported a net loss of more nearly $31 million in third quarter 2019 earnings compared to a year ago.
Net sales for the quarter were $75.5 million compared to $79.8 million for the third quarter of 2018 for the firm that manufactures and sells chemical products for the agricultural, mining and industrial markets. The company’s net loss for the most recent quarter was $30.8 million compared to $26.1 million lost in the third quarter of 2018.
But adjusted EBITDA was $11.1 million compared to $10.6 million a year ago for the chemical company.
“We delivered results in line with our expectations in our seasonally weakest third quarter,” stated Mark Behrman, LSB’s President and CEO. “Despite continued pressure on ammonia prices, our adjusted EBITDA increased as a result of lower natural gas prices, higher production and lower overall costs. ”
The Company owns and operates facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates a facility for a global chemical company in Baytown, Texas.
Behrman said the company completed a turnaround at its three-year old plant in El Dorado, Arkansas and is in the process of restarting the ammonia plant in Pryor.
“We expect this planned maintenance to yield overall improved production efficiency and reliability at both facilities, and we anticipate that the new urea reactor we installed, plus other urea upgrades, at our Pryor facility will increase our production of downstream products. Notably, with the maintenance work at El Dorado and Pryor behind us, we have no turnarounds scheduled at any of our facilities in 2020,” said Behrman.
As for the future, Behrman said the company anticipates heavy pre-planning ammonia application in the coming weeks due to depletion of nutrients from the soil after months of heavy rains in the Midwest.
“Looking ahead to the fourth quarter of 2019 and into 2020, we expect to generate improved financial performance driven by higher operating rates, increased ammonia demand, and rising prices,” he said.
The said its net sales of ag products were down slightly in 2019. Net sales of industrial products dropped too while mining sales increased modestly.
The company’s adjusted EBITDA was higher in 2019 as a result of lower natural gas feedstock costs, higher production and lower fixed costs.
LSB is revising its adjusted EBITDA for the rest of the year, adding legal fees “related to our pursuit of recovery of damages caused by Leidos in our El Dorado plant expansion project.” LSB was also named a defendant in a lawsuit brought by a subcontractor involved with the expansion who is seeking damages from Leidos on the project.
Because of expected continued legal costs, the company adjusted EBITDA from $8.7 million to $10.6 million for the third quarter 2018 including $1.9 million in legal fees. It also added $3.3 million in legal fees for the third quarter 2019, increasing the EBITDA to $11.1 million.