Third quarter earnings dipped for Oklahoma City’s LSB Industries, Inc. as the firm had net sales of $109.2 million compared to $114.3 million in the third quarter of last year. But it also had increased earnings per share.
The firm recorded a net loss of $25.4 million compared to a net loss of $7.7 million a year earlier. LSB explained the third quarter net loss this year included nearly $16.3 million of turnaround costs and nearly $5.6 million of one-time non-cash charges related to the write-down of assets removed from service.
Earnings per share were stronger than a year ago—35 cents in this year’s third quarter compared to 10 cents a year ago. LSB’s adjusted EBITDA totaled $17.5 million, better than the $9.2 million a year earlier. It came with $17.1 million in cash flow from operations.
The company confirmed it had $199.4 million cash on hand at the end of September and debt of $487 million.
“We delivered a strong increase in adjusted EBITDA relative to the third quarter of last year,” stated Mark Behrman, LSB Industries’ Chairman, President and CEO.
“The year-over-year improvement was driven by higher ammonia prices coupled with lower natural gas prices compared to a year ago and an increase in industrial product production and sales. These favorable dynamics more than offset the impact of the planned maintenance activities we conducted during the quarter.”
He explained that investments made at the company’s Pryor facility were focused on improving its reliability and daily ammonia production volume. Behrman said it should lead to an incremental 75,000 tons per year of UAN production during the fourth quarter.
Construction was also completed at LSB’s El Dorado, Arkansas operation.
” We continue to deploy capital to improve the reliability and safety of our facilities with a turnaround at our Cherokee facility this November and a turnaround of our El Dorado facility scheduled for the third quarter of 2025. These planned maintenance and upgrade activities should lead to increased production volumes and incremental EBITDA and cash flow.”
He also updated progress on the company’s two energy transition project. Low carbon products are expected to be produced in 2026b at the El Dorado faility, pending the approval by the EPA of the Class VI permit submitted by partner, Lapis Energy. LSB is awaiting approval of a permit to construct which would allow the drilling of two injection wells on the site in El Dorado.
“With respect to our Houston Ship Channel project, we have completed our Pre-FEED study and are working through the results, engaging with potential customers and preparing to select an engineering contractor for the FEED study. We expect to start a full FEED study during the first half of 2025 that should be completed by mid-2026, after which we anticipate moving on to FID.”
Market Outlook
- Ammonia market is healthy and pricing has been strong driven by:
- Tight U.S. and West-of-Suez supply-demand dynamics driven by global supply disruptions
- Geopolitical concerns over conflict in the Middle East, leading to higher natural gas feedstock costs for European ammonia producers
- Extended turnarounds, outages and limited spot availability across the Middle East, North Africa and Trinidad reducing global inventories
- Ongoing disruptions in the Suez Canal from the Middle East conflict limiting ammonia imports into Europe from the Middle East
- Delayed startup of new production capacity in the U.S. Gulf and export terminal in Russia
- Economic stimulus measures in China could increase demand for industrial ammonia for use in polyurethane, caprolactam and acrylonitrile production to pre-COVID levels
- Corn futures prices modestly above August lows:
- USDA’s recent outlook for U.S. corn is for smaller supplies and a slight decline in ending stocks
- Increases in U.S. exports and production challenges in international growing regions potentially supportive of corn prices
Low Carbon Ammonia Projects Summary
- Houston Ship Channel Blue Ammonia project with INPEX, Air Liquide and Vopak Exolum Houston
- 1.1 million metric ton per year blue ammonia plant utilizing blue hydrogen provided by Air Liquide/INPEX (JV)
- Pre-FEED study recently completed
- FEED study expected during 2025; final investment decision by mid-2026
- El Dorado Carbon Capture and Sequestration (CCS) Project with Lapis Energy
- Capture and sequester between 400,000 and 500,000 metric tons of CO2 per year, which would reduce our Scope 1 emissions by 25%, yielding between 305,000 and 380,000 metric tons per year of low carbon ammonia
- Awaiting approval of Class VI permit to construct application by the EPA
- Focused on beginning operations in 2026
- MOU with Amogy to Develop Ammonia as a Marine Fuel
- Collaborating on the evaluation and development of pilot program that would combine LSB’s low-carbon ammonia and Amogy’s ammonia-to-power engine solution
- Amogy successfully completed test of tugboat retrofitted with power unit using ammonia as a fuel during Q3’24