LSB (LXU) shares ended the last trading session 12.4% higher at $8.99. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.4% loss over the past four weeks.Gains from strong selling prices and favorable demand have increased the company’s prospects, contributing to the price rally. Steady exports paired with lower imports have led to tight supply fundamentals. The ammonia market is benefiting as distribution channel ...

PART I – Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed financial statements for LSB Industries, Inc. as of June 30, 2025, show decreased assets and cash flow, with net sales up but net income significantly down year-over-year [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$1.128 billion** by June 30, 2025, from **$1.187 billion** at year-end 2024, driven by reduced cash and investments, while liabilities also fell and equity slightly rose | Balance Sheet Items | June 30, 2025 (Thousands of USD) | December 31, 2024 (Thousands of USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $5,614 | $20,230 | | Short-term investments | $119,278 | $163,971 | | Total current assets | $255,212 | $309,714 | | Total assets | $1,128,083 | $1,187,188 | | **Liabilities & Equity** | | | | Total current liabilities | $96,511 | $135,634 | | Long-term debt, net | $446,370 | $476,163 | | Total liabilities | $632,283 | $695,548 | | Total stockholders' equity | $495,800 | $491,640 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net sales increased to **$151.3 million**, but net income sharply declined to **$3.0 million** from **$9.6 million** year-over-year, a trend also seen in the six-month period due to higher cost of sales | Metric (Thousands of USD, Except Per Share) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $151,296 | $140,073 | $294,728 | $278,277 | | Gross profit | $23,173 | $27,415 | $37,557 | $49,693 | | Operating income | $10,493 | $14,403 | $14,961 | $25,663 | | Net income | $3,006 | $9,555 | $1,366 | $15,178 | | Diluted EPS | $0.04 | $0.13 | $0.02 | $0.21 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations for the six months ended June 30, 2025, significantly decreased to **$25.0 million** from **$65.5 million** year-over-year, with investing cash also down and financing cash used for debt repurchases | Cash Flow Activity (Thousands of USD) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,001 | $65,489 | | Net cash provided by investing activities | $4,826 | $168,786 | | Net cash used by financing activities | $(44,443) | $(118,973) | | Net (decrease) increase in cash | $(14,616) | $115,302 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, business nature, long-term debt, debt repurchases, disaggregated net sales by product, and environmental commitments, with the company operating as a single chemical manufacturing segment - The company manufactures and sells chemical products including ammonia, ammonium nitrate (HDAN/LDAN), urea ammonia nitrate (UAN), and various acids from four facilities[21](index=21&type=chunk) Product Net Sales | Product Net Sales (Thousands of USD) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | AN & Nitric Acid | $61,707 | $58,442 | $119,325 | $106,877 | | Urea ammonium nitrate (UAN) | $52,262 | $42,808 | $96,127 | $84,000 | | Ammonia | $26,830 | $28,448 | $60,102 | $67,978 | | Other | $10,497 | $10,375 | $19,174 | $19,422 | | **Total net sales** | **$151,296** | **$140,073** | **$294,728** | **$278,277** | - During Q2 2025, the company repurchased **$32.4 million** in principal of its Senior Secured Notes for **$32.1 million**, resulting in a small loss on extinguishment of debt of **$0.1 million**, compared to a **$1.9 million** gain on debt extinguishment in Q2 2024[54](index=54&type=chunk)[55](index=55&type=chunk) - As of June 30, 2025, the company had remaining performance obligations of approximately **$126.6 million**, with **56%** expected to be recognized as revenue from 2025 through 2027[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2025 initiatives, including safety, product optimization, and low carbon ammonia, noting Q2 results were impacted by higher natural gas costs despite increased sales, with sufficient liquidity and projected capital expenditures [Overview and Key Initiatives](index=23&type=section&id=Overview%20and%20Key%20Initiatives) LSB focuses on chemical manufacturing for agricultural and industrial markets, with 2025 initiatives centered on EHS, product optimization, and developing low carbon ammonia, including a CO2 capture project at El Dorado - Key 2025 initiatives include: - Investing in EHS and reliability to improve plant performance - Optimizing product mix and distribution to enhance profitability and stability - Developing low carbon ammonia to capitalize on growing demand for hydrogen-based energy sources[101](index=101&type=chunk) - The company is pursuing a low carbon ammonia project at its El Dorado Facility with Lapis Carbon Solutions, aiming to be operational by the end of 2026, expected to capture **400,000 to 500,000 metric tons of CO2 annually** and qualify for Section 45Q tax credits[103](index=103&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q2 2025 net sales increased **8%** to **$151.3 million** due to higher UAN pricing and volumes, but gross profit fell **15%** to **$23.2 million** and operating income decreased **27%** to **$10.5 million** due to higher natural gas costs Key Financial Metrics | Metric (Millions of USD) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Net Sales | $151.3M | $140.1M | +8% | | Gross Profit | $23.2M | $27.4M | -15% | | Operating Income | $10.5M | $14.4M | -27% | | Net Income | $3.0M | $9.6M | -68% | Product Sales Volumes | Product Sales Volumes (Tons) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | AN & Nitric Acid | 161,509 | 147,619 | +9% | | Urea ammonium nitrate (UAN) | 151,807 | 137,499 | +10% | | Ammonia | 66,069 | 72,294 | -9% | Average Selling Prices | Average Selling Prices (USD per Ton) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | AN & Nitric Acid | $382 | $396 | -4% | | Urea ammonium nitrate (UAN) | $344 | $311 | +11% | | Ammonia | $406 | $394 | +3% | - The average cost of natural gas, a primary feedstock, increased significantly to **$3.37 per MMBtu** in Q2 2025 from **$1.92 per MMBtu** in Q2 2024, negatively impacting gross profit[123](index=123&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, liquidity included **$124.9 million** in cash and investments, with net cash from operations at **$25.0 million** for six months, and projected 2025 capital expenditures of **$80-$90 million**, deemed sufficient for future needs Capitalization | Capitalization (Millions of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents & short-term investments | $124.9 | $184.2 | | Total long-term debt, net | $452.6 | $485.2 | | Total stockholders' equity | $495.8 | $491.6 | - Projected capital expenditures for the full year 2025 are estimated to be between **$80 million and $90 million**, with **$60 million to $65 million** allocated to sustaining production[168](index=168&type=chunk) - During the first six months of 2025, the company repurchased **$32.4 million** in principal of its Senior Secured Notes for approximately **$32.1 million** to deleverage the balance sheet[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks primarily from commodity price fluctuations, especially natural gas, and interest rate changes on its Revolving Credit Facility, which had no outstanding borrowings as of June 30, 2025 - The company's primary market risks are related to commodity price fluctuations for its products and raw materials, especially natural gas[193](index=193&type=chunk) - Interest rate risk is associated with the variable-rate Revolving Credit Facility, which had no outstanding borrowings as of June 30, 2025[194](index=194&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[195](index=195&type=chunk) PART II – Other Information [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings and claims in the ordinary course of business, with further details in Note 5 of the financial statements - The company is involved in various legal actions in the ordinary course of business, with further details provided in Note 5 of the financial statements[204](index=204&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) The company's business is sensitive to adverse economic cycles, inflation, and global market conditions, with trade policies and tariffs potentially impacting product prices, input costs, and customer demand - The company's business is sensitive to adverse economic cycles, and a prolonged deterioration of global market conditions could have a material adverse effect on its financial results[206](index=206&type=chunk) - Trade policies and tariffs from the U.S. and other countries could negatively impact the selling prices of products, increase costs, and reduce demand for agricultural and consumer goods[209](index=209&type=chunk)[210](index=210&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On May 15, 2025, **83,800 restricted stock units** were issued to non-employee directors as compensation under the 2025 Long-Term Incentive Plan, exempt from registration - On May 15, 2025, an aggregate of **83,800 restricted stock units** were issued to non-employee directors as compensation for their board service[211](index=211&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) On June 11, 2025, Executive Vice President and General Counsel Michael J. Foster adopted a Rule 10b5-1 trading plan to sell up to **30,000 shares** of common stock between September 2025 and September 2026 - An executive officer, Michael J. Foster, adopted a Rule 10b5-1 trading plan on June 11, 2025, to sell up to **30,000 shares** of common stock[213](index=213&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, incentive plan agreements, and CEO/CFO certifications

Financial Data and Key Metrics Changes - Sales volumes increased by 6% year over year, driven by improvements in sales volumes of AN and UAN due to higher ammonia production and better performance by upgrading plants [4] - Adjusted EBITDA for Q2 2025 was $38 million, down from $42 million in Q2 2024, impacted by higher natural gas costs despite higher pricing for UAN and increased sales volumes [10][11] - The cash balance remains strong, with $32 million of senior secured notes repurchased during the quarter [11] Business Line Data and Key Metrics Changes - The company ramped up ammonium nitrate solution volumes as part of its industrial business expansion, with strong demand from copper and gold mining activities [6] - UAN prices increased significantly, with current NOLA UAN price at $350 per tonne, over 70% higher than the previous year [9] - The company expects to see meaningful increases in both UAN and AN sales volumes compared to the prior year, while forgoing ammonia sales in favor of higher-margin products [13] Market Data and Key Metrics Changes - The spring 2025 planting season resulted in strong demand and pricing for nitrogen fertilizers, with USDA estimating an increase in planted corn acres to 95.2 million from 90.6 million [8] - The Tampa ammonia price for August is $487 per ton, reflecting reduced supply from the Middle East, North Africa, and Russia [12] - Demand for nitric acid remains strong, supported by the resilience of the U.S. economy [7] Company Strategy and Development Direction - The company is focusing on improving the reliability and efficiency of its facilities while investing in storage and logistics capabilities to support its growing industrial business [11][15] - A strategic shift is underway to increase the percentage of contractual industrial sales, which allows the company to pass through natural gas costs and provides a more stable earnings base [15] - The company is also progressing on a low carbon project at El Dorado, with expectations to begin CO2 injections by the end of next year [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the prospects for the remainder of the year, highlighting the successful shift in sales mix and continued focus on capital allocation [15] - The company anticipates that third-quarter gas prices will be less of a headwind compared to the previous year, with expectations for a healthy year-over-year increase in adjusted EBITDA [12][13] - Management noted that while there are still operational improvements to be made, they expect costs to reach an inflection point in 2025 and start trending down thereafter [29] Other Important Information - The company will participate in the Jefferies Industrial Conference and the UBS Global Materials Conference in September [16] - The company has a lawsuit with Leidos scheduled to go to trial in late October [50] Q&A Session Summary Question: Outlook for UAN volumes in the second half - Management expects higher UAN production and sales in the second half due to operational improvements at the Pryor facility, despite seasonal sales dynamics [20][21] Question: Cost trends as operational rates stabilize - Management indicated that costs are expected to reach an inflection point in 2025, with ongoing initiatives aimed at reducing costs and improving efficiencies [29][30] Question: Impact of tariffs on U.S. nitrogen prices - Management noted that while it is difficult to discern the impact of tariffs due to current market dynamics, they are closely monitoring the situation, especially regarding Russia [34][35] Question: Signs of demand destruction from farmers due to fertilizer prices - Management reported no significant demand destruction observed during the spring season, but noted some hesitancy from retailers as prices remain elevated [38] Question: Changes in permitting and regulatory environment - Management observed more user-friendly dialogue with federal and state agencies, which has positively impacted environmental conversations and project discussions [41]

Q2'25 Performance Highlights - Increased total sales volumes by 6% compared with Q2'24, driven by UAN and AN sales[10] - Net sales increased to $151 million in Q2'25 from $140 million in Q2'24[17] - Adjusted EBITDA was $38 million in Q2'25, compared to $42 million in Q2'24[17] - Adjusted EBITDA margin decreased to 25% in Q2'25 from 30% in Q2'24[17] - Diluted EPS was $004 in Q2'25, compared to $013 in Q2'24[17] Balance Sheet and Capital Allocation - Reduced debt by $32 million[10] - Cash and short-term investments were $125 million as of June 30, 2025, compared to $216 million as of June 30, 2024[23] - Total debt was $453 million as of June 30, 2025, compared to $486 million as of June 30, 2024[23] - Net debt to TTM Adjusted EBITDA was 27x[23] El Dorado CCS Project - The El Dorado low carbon ammonia project is progressing towards a 2H'26 startup[10]

[Second Quarter 2025 Results and Recent Highlights](index=1&type=section&id=Second%20Quarter%202025%20Results%20and%20Recent%20Highlights) LSB Industries reported its second quarter 2025 financial performance and highlighted recent operational and strategic developments [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mark Behrman reported a **6% sales volume increase** from enhanced ammonia production and high-margin products, with rising natural gas costs offsetting UAN price gains - Sales volume increased by **6% year-over-year**, primarily due to higher ammonia production and increased sales of high-margin upgraded products[3](index=3&type=chunk) - Stronger UAN sales prices were offset by a significant year-over-year increase in natural gas prices, negating gains from operational improvements and higher sales prices[3](index=3&type=chunk) - Robust end-market demand for industrial businesses, especially nitric acid and ammonium nitrate, benefited from a surge in US copper mining activity[3](index=3&type=chunk) - The El Dorado low-carbon project remains on track for operation by **late 2026**, with EPA approval for the Class VI permit application being the primary hurdle[3](index=3&type=chunk) - The company further reduced balance sheet risk and future interest expenses by repurchasing debt, while continuing investments in plant reliability projects[3](index=3&type=chunk) [Key Financial and Operational Highlights](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights) Q2 2025 saw net sales rise to **$151.3 million**, but net income and diluted EPS declined, with adjusted EBITDA also slightly decreasing, alongside debt repurchases and zero recordable injuries Q2 2025 Key Financial Data | Metric | Q2 2025 (million USD) | Q2 2024 (million USD) | YoY Change (%) | | :------------------- | :-------------------- | :-------------------- | :------------- | | Net Sales | 151.3 | 140.1 | 8.0% | | Net Income | 3.0 | 9.6 | -68.8% | | Diluted EPS | 0.04 | 0.13 | -69.2% | | Adjusted EBITDA | 38.3 | 41.9 | -8.6% | - Repurchased **$32.4 million** in principal amount of senior secured notes during Q2 2025[4](index=4&type=chunk) Financial Position as of June 30, 2025 | Metric | Amount (million USD) | | :--------------------- | :------------------- | | Cash, Cash Equivalents, and Short-Term Investments | 124.9 | | Total Debt | 452.6 | - Achieved **zero recordable injuries** for both Q2 2025 and the first half of the year[4](index=4&type=chunk) [Market Outlook and Strategic Initiatives](index=3&type=section&id=Market%20Outlook%20%26%20Strategic%20Initiatives) This section provides an overview of market conditions for industrial, ammonia, UAN, and corn, alongside updates on the El Dorado low-carbon ammonia project [Market Outlook](index=3&type=section&id=Market%20Outlook) The company maintains a positive outlook for industrial, ammonia, UAN, and corn markets, driven by stable demand, attractive pricing, and supportive agricultural dynamics - Industrial business remains stable with strong nitric acid demand and ammonium nitrate benefiting from commercial mining (especially copper and gold) and infrastructure upgrades[8](index=8&type=chunk) - The ammonia market is healthy with attractive pricing, driven by balanced distribution channel inventories, Middle East supply disruptions, rising European production costs, and delayed US new capacity startups[8](index=8&type=chunk) - UAN pricing is strengthening due to stable exports, reduced imports, strong demand leading to tight US supply, and a robust global urea market[8](index=8&type=chunk) - Corn market dynamics support strong fertilizer demand, with USDA projecting increased US corn exports, lower ending stocks, and above-average corn acreage for spring 2025[8](index=8&type=chunk) [Low Carbon Ammonia Project Summary](index=3&type=section&id=Low%20Carbon%20Ammonia%20Project%20Summary) The El Dorado CCS project aims to capture **400,000-500,000 metric tons of CO2 annually**, reducing Scope 1 emissions by **25%** and producing **305,000-380,000 metric tons of low-carbon ammonia** by late 2026, pending EPA approval - The El Dorado Carbon Capture and Sequestration (CCS) project is projected to capture and sequester **400,000 to 500,000 metric tons of CO2 annually**, reducing Scope 1 emissions by **25%**[8](index=8&type=chunk) - The project is expected to produce **305,000 to 380,000 metric tons of low-carbon ammonia** annually[8](index=8&type=chunk) - The project awaits EPA approval for its Class VI permit application and is anticipated to begin operations by **late 2026**[8](index=8&type=chunk)[11](index=11&type=chunk) - Partner Lapis Low Carbon Solutions completed drilling of the stratigraphic injection well in June to provide data supporting EPA's technical review[3](index=3&type=chunk)[11](index=11&type=chunk) [Detailed Second Quarter Financial Performance](index=4&type=section&id=Detailed%20Second%20Quarter%20Financial%20Performance) This section provides a detailed breakdown of LSB Industries' financial results for Q2 2025, focusing on product sales, volumes, pricing, and input costs [Product Sales Overview](index=4&type=section&id=Product%20Sales%20Overview) Q2 2025 net sales grew **8% to $151.3 million**, driven by increased UAN and AN volumes and UAN price hikes, though operating income and adjusted EBITDA declined due to higher natural gas costs Q2 2025 Product Net Sales | Product Category | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | YoY Change (%) | | :--------------- | :--------------------- | :--------------------- | :------------- | | AN & Nitric Acid | 61,707 | 58,442 | 6% | | UAN | 52,262 | 42,808 | 22% | | Ammonia | 26,830 | 28,448 | (6)% | | Other | 10,497 | 10,375 | 1% | | **Total Net Sales** | **151,296** | **140,073** | **8%** | - Net sales growth was primarily attributed to increased UAN and AN sales volumes and higher UAN pricing[9](index=9&type=chunk) - Operating income and adjusted EBITDA declined, mainly due to rising natural gas costs[9](index=9&type=chunk) [Key Product Volumes and Pricing](index=4&type=section&id=Key%20Product%20Volumes%20and%20Pricing) Q2 2025 saw AN & Nitric Acid and UAN volumes grow **9% and 10%**, respectively, while ammonia volume decreased **9%**, with UAN average selling price up **14%** to **$308/short ton** Q2 2025 Key Product Volumes (short tons) | Product Category | Q2 2025 | Q2 2024 | YoY Change (%) | | :--------------- | :------ | :------ | :------------- | | AN & Nitric Acid | 161,509 | 147,619 | 9% | | UAN | 151,807 | 137,499 | 10% | | Ammonia | 66,069 | 72,294 | (9)% | | **Total** | **379,385** | **357,412** | **6%** | Q2 2025 Average Selling Prices (USD/short ton) | Product Category | Q2 2025 | Q2 2024 | YoY Change (%) | | :--------------- | :------ | :------ | :------------- | | AN & Nitric Acid | 328 | 337 | (3)% | | UAN | 308 | 271 | 14% | | Ammonia | 369 | 368 | 0% | Q2 2025 Average Benchmark Prices (USD/ton) | Benchmark Price | Q2 2025 | Q2 2024 | YoY Change (%) | | :-------------- | :------ | :------ | :------------- | | Tampa Ammonia | 416 | 440 | (5)% | | NOLA UAN | 344 | 246 | 40% | [Input Costs](index=5&type=section&id=Input%20Costs) Q2 2025 saw significant year-over-year increases in natural gas costs, with average costs for materials and production rising **106%** and **76%**, respectively Q2 2025 Average Natural Gas Costs/MMBtu | Input Cost Category | Q2 2025 (USD) | Q2 2024 (USD) | YoY Change (%) | | :------------------ | :------------ | :------------ | :------------- | | Average Natural Gas Cost/MMBtu in Materials and Other Costs | 3.50 | 1.70 | 106% | | Average Natural Gas Cost/MMBtu Used in Production | 3.37 | 1.92 | 76% | [Consolidated Financial Statements](index=9&type=section&id=Consolidated%20Financial%20Statements) This section presents LSB Industries' consolidated statements of operations and balance sheets for the second quarter of 2025 and year-to-date [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 net sales increased to **$151.3 million**, but gross profit and operating income declined due to rising costs, leading to a decrease in net income and diluted EPS Q2 2025 Consolidated Statements of Operations Summary (thousand USD, except per share amounts) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------- | :------ | :------ | :------ | :------ | | Net Sales | 151,296 | 140,073 | 294,728 | 278,277 | | Cost of Sales | 128,123 | 112,658 | 257,171 | 228,584 | | Gross Profit | 23,173 | 27,415 | 37,557 | 49,693 | | Operating Income | 10,493 | 14,403 | 14,961 | 25,663 | | Net Income | 3,006 | 9,555 | 1,366 | 15,178 | | Diluted Net Income Per Share | 0.04 | 0.13 | 0.02 | 0.21 | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$1.128 billion**, a decrease from year-end 2024, with reduced cash and short-term investments, increased net receivables, and a decrease in net long-term debt to **$446 million** Consolidated Balance Sheets Summary (thousand USD) | Metric | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :------------------- | :--------------------------- | :------------------------------- | | Cash and Cash Equivalents | 5,614 | 20,230 | | Short-Term Investments | 119,278 | 163,971 | | Accounts Receivable, Net | 51,289 | 38,760 | | Total Current Assets | 255,212 | 309,714 | | Property, Plant and Equipment, Net | 838,035 | 847,570 | | **Total Assets** | **1,128,083** | **1,187,188** | | Total Current Liabilities | 96,511 | 135,634 | | Long-Term Debt, Net | 446,370 | 476,163 | | **Total Liabilities and Stockholders' Equity** | **1,128,083** | **1,187,188** | | Total Stockholders' Equity | 495,800 | 491,640 | [Non-GAAP Financial Measures](index=12&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations for non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and netback sales prices for key products [EBITDA and Adjusted EBITDA Reconciliation](index=12&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) LSB Industries uses EBITDA and Adjusted EBITDA to assess core operations, with Q2 2025 Adjusted EBITDA at **$38.276 million**, a decrease from **$41.896 million** in the prior year - EBITDA is defined as net income (loss) plus net interest expense and interest income, less gain on extinguishment of debt, plus depreciation and amortization, plus provision (benefit) for income taxes[28](index=28&type=chunk) - Adjusted EBITDA further adjusts for non-cash equity compensation, one-time/non-cash or non-operating items such as legal fees, asset impairment losses, turnaround costs, and growth initiatives[28](index=28&type=chunk) Q2 2025 EBITDA and Adjusted EBITDA Reconciliation (thousand USD) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | | :----------------------- | :--------------------- | :--------------------- | | Net (Loss) Income | 3,006 | 9,555 | | Add: Net Interest Expense and Interest Income | 6,307 | 5,445 | | Gain (Loss) on Extinguishment of Debt | 59 | (1,879) | | Depreciation and Amortization | 20,682 | 18,784 | | Provision for Income Taxes | 1,084 | 1,250 | | **EBITDA** | **31,138** | **33,155** | | Equity Compensation | 2,088 | 2,099 | | Legal Fees and Specific Matter Settlements | (207) | 1,229 | | Asset Impairment Losses | 2,528 | 1,489 | | Turnaround Costs | 2,639 | 3,439 | | Growth Initiatives | 90 | 485 | | **Adjusted EBITDA** | **38,276** | **41,896** | [Ammonia, AN, Nitric Acid, UAN Sales Price Reconciliation](index=13&type=section&id=Ammonia%2C%20AN%2C%20Nitric%20Acid%2C%20UAN%20Sales%20Price%20Reconciliation) The company provides a reconciliation of net sales to netback sales for ammonia, AN, nitric acid, and UAN, with Q2 2025 netback sales at **$123.958 million**, up from **$113.624 million** year-over-year Q2 2025 Ammonia, AN, Nitric Acid, UAN Sales Price Reconciliation (thousand USD) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | | :------------------------- | :--------------------- | :--------------------- | | Ammonia, AN, Nitric Acid, UAN Net Sales | 140,799 | 129,698 | | Less: Freight and Other | 16,841 | 16,074 | | **Ammonia, AN, Nitric Acid, UAN Netback Sales** | **123,958** | **113,624** | [Company Information and Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on LSB Industries' upcoming conference call, company overview, and important forward-looking statements [Conference Call and Investor Relations](index=5&type=section&id=Conference%20Call%20%26%20Investor%20Relations) LSB management will host a conference call on **July 30, 2025**, to discuss Q2 2025 results and recent developments, with details available on the company's investor relations website - LSB management will host a conference call on **July 30, 2025**, at 10:00 AM ET / 9:00 AM CT to discuss Q2 2025 results[13](index=13&type=chunk) - Participants include Chairman and CEO Mark Behrman, Executive Vice President and CFO Cheryl Maguire, and Executive Vice President and CCO Damien Renwick[13](index=13&type=chunk) - A webcast and presentation for the conference call are available in the Investor section of LSB's website (www.lsbindustries.com)[14](index=14&type=chunk) [About LSB Industries, Inc.](index=6&type=section&id=About%20LSB%20Industries%2C%20Inc.) Headquartered in Oklahoma City, LSB Industries, Inc. aims to lead in low-carbon and zero-carbon product manufacturing for agricultural, industrial, mining, and future energy markets - LSB Industries, Inc., headquartered in Oklahoma City, is committed to leadership in producing low-carbon and zero-carbon products[15](index=15&type=chunk) - The company currently provides essential products for agricultural, industrial, and mining end markets, with future expansion into energy markets[15](index=15&type=chunk) - The company operates ammonia and related product manufacturing facilities in Cherokee, Alabama; El Dorado, Arkansas; and Pryor, Oklahoma[15](index=15&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements subject to known and unknown risks, uncertainties, and assumptions, with no obligation for the company to update or revise them - Forward-looking statements involve business strategies, anticipated future operating results, cash flows, capital resources and liquidity, industry trends, low-carbon product production capabilities, and capital project costs and timing[16](index=16&type=chunk) - Significant risks and uncertainties include business and market disruptions, product and raw material price volatility, global and regional economic downturns, production facility interruptions, increased competitive pressures, financing capabilities, personnel recruitment and retention, raw material access, permit acquisition, and other financial, economic, competitive, environmental, political, legal, and regulatory factors[16](index=16&type=chunk) - The company does not guarantee future results, activity levels, performance, or achievements and undertakes no obligation to update or revise any forward-looking statements[17](index=17&type=chunk)

Financial Performance - Net sales for Q1 2025 were $143,432,000, an increase of 3.3% compared to $138,204,000 in Q1 2024[12]. - Gross profit decreased to $14,384,000 in Q1 2025, down 35.5% from $22,278,000 in Q1 2024[12]. - Operating income fell to $4,468,000 in Q1 2025, a decline of 60.3% from $11,260,000 in Q1 2024[12]. - The company reported a net loss of $1,640,000 in Q1 2025, compared to a net income of $5,623,000 in Q1 2024[12]. - Consolidated net sales for Q1 2025 were $143.4 million, a 1% increase from $138.2 million in Q1 2024, while operating income decreased to $4.5 million from $11.3 million[125]. - The net sales of AN & Nitric Acid increased to $57.6 million in Q1 2025 from $48.4 million in Q1 2024, representing a growth of 18.5%[84]. - Total tons sold increased by 4% to 372,499 in Q1 2025, with AN & Nitric Acid sales up 17% and UAN sales up 10%, while ammonia sales dropped by 23%[131]. - Adjusted gross profit for the first quarter of 2025 was $36.442 million, compared to $40.287 million in the first quarter of 2024[169]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $15,030,000 as of March 31, 2025, down from $20,230,000 at the end of 2024[10]. - Cash provided by operating activities was $6,836,000 in Q1 2025, a decrease of 71.6% from $24,107,000 in Q1 2024[17]. - Net cash flows from operating activities fell to $6.8 million in Q1 2025, a decrease of $17.3 million from $24.1 million in Q1 2024, primarily due to higher cost of sales[140]. - As of March 31, 2025, total cash, cash equivalents, and short-term investments amounted to $163.5 million, down from $184.2 million at the end of 2024[146]. - The company expects to fund its anticipated liquidity needs for the next twelve months through cash, short-term investments, and cash flow from operations[149]. - As of March 31, 2025, the company had approximately $40 million available under its undrawn Revolving Credit Facility[154]. Debt and Liabilities - Total liabilities decreased to $685,375,000 as of March 31, 2025, down from $688,253,000 at December 31, 2024[10]. - The company’s long-term debt increased slightly to $478,174,000 as of March 31, 2025, compared to $476,163,000 at December 31, 2024[10]. - The company has $478.4 million in Senior Secured Notes due 2028, with interest paid semiannually[151]. - The Senior Secured Notes due 2028 amount to $478.4 million, with an interest rate of 6.25%[4]. - The company incurred interest expense of $8,064,000 in Q1 2025, down from $9,729,000 in Q1 2024[12]. - The company is contingently liable for payments up to $10.3 million related to performance bonds as of March 31, 2025[160]. Environmental and Regulatory Compliance - The company incurred $0.9 million in expenses related to environmental regulatory compliance in the first quarter of 2025, with expected additional expenses ranging from $3.2 million to $3.4 million for the remainder of the year[158]. - The company is subject to various environmental laws and may incur significant compliance expenses and liabilities in the future[6]. - As of March 31, 2025, accrued liabilities for environmental matters totaled approximately $0.6 million[6]. Future Projects and Investments - The company plans to invest in low carbon ammonia production, with a project at the El Dorado Facility expected to be operational by the end of 2026[99]. - An agreement was announced to supply up to 150,000 short tons per year of low carbon ammonium nitrate solution to Freeport Minerals Corporation starting January 1, 2025[100]. - The company is pursuing a project to capture and sequester CO2 at the El Dorado Facility, expected to capture approximately 400,000 to 500,000 metric tons of CO2 per year once operational[102]. - The facility's ammonia production is expected to sequester approximately 400,000 to 500,000 metric tons of CO2 annually, reducing overall scope 1 GHG emissions by about 25%[104]. - The El Dorado Facility expansion projects are on hold for 2024, with plans to reevaluate in 2025 due to high costs and moderating selling prices[103]. Market Conditions and Risks - The company expects to face various risks including changes in commodity prices, interest rates, and competition in the market[171][180]. - The company is sensitive to adverse economic cycles, which could materially affect its business, financial condition, and cash flow[185]. - A prolonged deterioration of global market conditions may lead to increased bad debts and affect working capital due to customers' inability to fulfill purchase obligations[186]. - The international market for nitrogen fertilizer significantly influences the company's operating results, affected by U.S. currency value and foreign agricultural policies[187]. - Recent U.S. tariffs on agricultural products could impact selling prices and increase input costs for customers, potentially disrupting supply chains[188]. - The ultimate impact of changing trade policies on the company will depend on the magnitude and duration of tariffs, which may not be fully mitigated[189]. Stock and Shareholder Actions - The company has authorized a $150 million stock repurchase program aimed at maximizing stockholder value[156]. - No shares of common stock were repurchased during the three months ended March 31, 2025[157]. - The company has adopted Rule 10b5-1 trading plans for its executives, allowing the sale of up to 35,000 shares by the CFO and 21,641 shares by the Senior VP[191][192].

Financial Data and Key Metrics Changes - Overall sales volumes improved by 4% quarter over quarter, driven by solid improvement in sales volumes for ammonium nitrate and UAN [6][16] - Adjusted EBITDA for Q1 2025 was $29 million, down from $33 million in Q1 2024, primarily due to higher natural gas costs [16][18] - Cash balance remains strong, and leverage ratio is in line with target levels for a mid-cycle pricing environment [19] Business Line Data and Key Metrics Changes - Demand for industrial products remains robust, with strong pricing and demand for nitric acid and ammonium nitrate solutions [11][12] - UAN prices increased significantly, with current NOLA UAN price at $350 per ton, 73% higher than the low price of fall 2024 [13] - Urea prices strengthened considerably, now above $500 per ton, driven by seasonal demand and lack of imports [13] Market Data and Key Metrics Changes - The USDA reported a significant increase in planted corn acres, expected to reach 95.3 million acres in 2025 compared to 90.6 million in 2024, driving strong fertilizer demand [15] - US corn prices are solidly above $4 per bushel, supporting favorable farmer economics [16] - Domestic pricing for urea has seen a significant uplift due to tariffs and other factors, expected to persist through the current spring planting season [8][9] Company Strategy and Development Direction - The company is focusing on improving the reliability and efficiency of its facilities, with ongoing investments in plant reliability and logistics capabilities [19][25] - The El Dorado ammonia project achieved precertification status under the Fertilizer Institute's Verified Ammonia Carbon Intensity Program, which is expected to aid in securing sales agreements for low carbon ammonia [22][23] - The company has decided to pause the Houston Ship Channel project due to uncertainties in capital costs and demand for low carbon ammonia [24][26] Management's Comments on Operating Environment and Future Outlook - Management noted that US tariffs have created uncertainty for planned spending and potential capital projects, but do not anticipate a significant impact on business [5][8] - The company expects to capitalize on pricing strength for UAN and AN sales in the upcoming months, with meaningful increases in volumes compared to the prior year [20] - Management remains optimistic about the growth of the industrial business and the stability of earnings through cost-plus contracts [18][26] Other Important Information - The company plans to participate in upcoming industry conferences, including the UBS Energy Transition and Decarbonization Conference and the Deutsche Bank Industrials Materials and Building Products Conference [26] - The company is evaluating opportunities to increase production capacity in both nitric acid and ammonium nitrate [12] Q&A Session Summary Question: Thoughts on realized pricing setup for the second quarter - Management indicated good price increases for UAN products and is well positioned to take advantage of that [30] Question: Updated capital allocation priorities after pausing the Houston Ship Channel project - Management stated there are no new projects committed, focusing on improving existing facilities and considering stock buybacks and debt reduction [31][32] Question: Impact of deregulation on permitting - Management believes the impact will be minimal, with some positive developments in conversations with the EPA regarding low carbon ammonia projects [37][38] Question: Dynamics of pent-up demand for UAN - Management noted that higher corn acreage and insufficient imports are driving demand and impacting pricing [40] Question: Potential upgrade capacity projects - Management stated it is too early to discuss specific costs or margins related to potential expansion projects [44] Question: Disparity in ammonia pricing inland versus Tampa - Management indicated pricing is consistent with seasonal expectations and not significantly out of the ordinary [55] Question: Risks of delays in carbon projects at El Dorado - Management expressed confidence in meeting timelines for carbon projects, with equipment orders being placed soon [60][62]

Financial Data and Key Metrics Changes - The company reported a 4% improvement in overall sales volumes quarter over quarter, driven by higher ammonia production and better performance from upgrading plants [5][6] - Adjusted EBITDA decreased from $33 million in Q1 2024 to $29 million in Q1 2025, attributed to improved sales volumes and higher pricing for ammonia and ammonium nitrate, offset by significantly higher natural gas costs [16][18] - The cash balance remains strong, and the leverage ratio is in line with target levels for a mid-cycle pricing environment [18] Business Line Data and Key Metrics Changes - Sales volumes for ammonium nitrate and UAN improved significantly, with UAN prices increasing to $350 per ton, a 73% rise from the low price of fall 2024 [13][15] - The company continues to ramp up ammonium nitrate solution volumes, driven by strong demand in the copper mining sector [10][12] - The industrial contracts have grown from less than 20% in 2021 to approximately 30% by the end of Q1 2025, with expectations to reach 35% by year-end [17] Market Data and Key Metrics Changes - Domestic pricing for urea has seen a significant uplift due to U.S. tariffs, with expectations for this trend to persist through the spring planting season [7][8] - The USDA reported an increase in corn planting intentions to 95.3 million acres, up from 90.6 million acres last year, driving strong fertilizer demand [15][16] - Urea prices have strengthened considerably, now above $500 per ton, influenced by seasonal demand and a lack of imports [13] Company Strategy and Development Direction - The company is focusing on improving the reliability and efficiency of its facilities, with ongoing investments in plant reliability and logistics capabilities [18][24] - The El Dorado ammonia project achieved precertification status under the Fertilizer Institute's Verified Ammonia Carbon Intensity Program, which is expected to aid in securing sales agreements for low carbon ammonia [21][22] - The Houston Ship Channel project has been paused due to uncertainties in capital costs and demand for low carbon ammonia, but the company remains open to revisiting it in the future [23][45] Management's Comments on Operating Environment and Future Outlook - Management noted that U.S. tariffs have created uncertainty for planned spending and potential capital projects, but they do not anticipate a significant impact on business [4][6] - The company expects to benefit from lower natural gas costs moving into May, which will positively impact margins [19] - Management expressed confidence in achieving production and sales volume improvements while optimizing the industrial business for stability and predictability in earnings [24] Other Important Information - The company plans to participate in upcoming industry conferences, including the UBS Energy Transition and Decarbonization Conference and the Deutsche Bank Industrials Materials and Building Products Conference [25] - The turnaround for the El Dorado site has been pushed to the first half of 2026, increasing ammonia production outlook for 2025 by approximately 30,000 tons [20] Q&A Session Summary Question: Insights on UAN pricing and ammonia trends - Management indicated strong price increases for UAN products and is positioned to capitalize on this, while ammonia prices are expected to decline [28][29] Question: Capital allocation priorities post-Houston Ship Channel project pause - Management stated there are no new projects committed currently, focusing on improving existing facilities and considering stock buybacks and debt reduction [30][31] Question: Impact of deregulation on permitting - Management believes the impact will be minimal, with some positive developments in conversations with the EPA regarding low carbon ammonia projects [34][36] Question: Dynamics of pent-up demand for UAN - The increase in corn acreage and insufficient imports are driving demand and impacting pricing [38][39] Question: Potential upgrade capacity projects - Management is exploring expansion capabilities but has not committed to any projects yet, emphasizing the need for finalized engineering studies [42][43] Question: Risks associated with carbon projects at El Dorado - Management expressed confidence in meeting timelines for carbon projects, with no expected delays [56][57] Question: Disparity in ammonia pricing inland versus Tampa - Pricing remains consistent with seasonal expectations, with no significant disparities noted [53]

Financial Performance - Q4'24 net sales increased to $135 million from $133 million in Q4'23[19] - Adjusted EBITDA for Q4'24 was $38 million, a year-over-year improvement from $25 million in Q4'23[19, 6] - Adjusted EBITDA margin increased to 28% in Q4'24 from 19% in Q4'23[19] - The company repurchased approximately $222 million in principal amount of Senior Secured Notes and 4.6 million shares of common stock over the 24-months ended 12/31/24[28] Market and Pricing Trends - Tampa Ammonia price was $460 per metric ton as of February 26, 2025, compared to $445 per metric ton on February 26, 2024[14] - UAN (NOLA) price was $290 per short ton as of February 26, 2025, compared to $245 per short ton on February 26, 2024[14] - Natural gas price (NYMEX Spot Price) was $3.86 per MMBtu as of February 26, 2025, compared to $1.66 per MMBtu on February 26, 2024[14] 2025 Outlook - Ammonia production is projected to be between 790,000 and 820,000 tons in 2025, compared to 757,000 tons in 2024[29] - AN and Nitric Acid sales volume is expected to be between 590,000 and 620,000 short tons in 2025, compared to 554,000 short tons in 2024[29] - UAN sales volume is projected to be between 620,000 and 650,000 short tons in 2025, compared to 483,000 short tons in 2024[29] - Ammonia sales volume is expected to be between 250,000 and 280,000 short tons in 2025, compared to 321,000 short tons in 2024[29]

Company Performance - LSB reported a quarterly loss of $0.02 per share, matching the Zacks Consensus Estimate, compared to earnings of $0.12 per share a year ago, representing an earnings surprise of -200% [1] - The company posted revenues of $143.43 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 7.04%, and an increase from year-ago revenues of $138.2 million [2] - Over the last four quarters, LSB has surpassed consensus EPS estimates just once, but has topped consensus revenue estimates three times [2] Stock Performance - LSB shares have declined approximately 22.4% since the beginning of the year, while the S&P 500 has decreased by 6% [3] - The current consensus EPS estimate for the upcoming quarter is $0.23 on $154 million in revenues, and $0.27 on $551.05 million in revenues for the current fiscal year [7] Industry Outlook - The Zacks Industry Rank for Chemical - Diversified is currently in the bottom 15% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact LSB's stock performance [5]