LSB Industries(LXU) - 2025 Q1 - Quarterly Results

Q1 2025 Performance Summary The company reported higher sales volumes and net sales, but a net loss due to increased natural gas costs Financial and Operational Highlights Q1 2025 saw a 4% sales volume increase and higher net sales, but a net loss due to rising natural gas costs Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales | $143.4 million | $138.2 million | | Net (Loss) Income | $(1.6) million | $5.6 million | | Diluted EPS | $(0.02) | $0.08 | | Adjusted EBITDA | $29.1 million | $32.6 million | - Overall sales volumes improved by 4% year-over-year, with higher UAN and AN volumes driven by reliability and operational improvements[3] - The positive impact of higher sales volumes and stronger ammonia selling prices was offset by materially higher natural gas prices, the primary driver for the decline in net income and Adjusted EBITDA[3] - The company maintained a strong safety record with zero recordable injuries in the first quarter of 2025[4] Management Commentary and Strategy Management prioritizes business reliability and balance sheet strength, advancing the El Dorado project while pausing the Houston Ship Channel initiative - Capital allocation strategy focuses first on investments to improve business reliability, followed by balancing investments in profit-increasing projects while managing leverage[5] - The El Dorado low carbon ammonia project received pre-certification status and is expected to begin production of low carbon ammonium nitrate solution by the end of 2026[5] - The Houston Ship Channel project has been put on pause due to U.S. tariff-related price increases, global economic uncertainties, and a slower-than-anticipated ramp-up of low carbon ammonia demand[5] Market and Business Outlook The company maintains a positive outlook driven by stable industrial demand, healthy ammonia and UAN markets, and supportive corn market dynamics Market Outlook The market outlook is positive, supported by stable industrial business, healthy ammonia pricing, and strong UAN and agricultural demand - The industrial business remains consistent with stable domestic demand for nitric acid and robust demand for ammonium nitrate (AN) from mining and infrastructure sectors[6] - The ammonia market is healthy, with attractive pricing driven by balanced inventories, strong agricultural demand, and potential support from tariffs on imported volumes[6] - UAN pricing has strengthened due to a combination of steady exports, lower imports, strong demand, and the influence of a robust global urea market[6] - Corn market dynamics are supportive of strong fertilizer demand, with expectations for U.S. corn acres planted in Spring 2025 to be above historical average levels[9] Low Carbon Ammonia Projects The El Dorado CCS project aims to capture significant CO2 emissions, awaiting EPA permit approval for a late 2026 operational start - The El Dorado CCS project is expected to capture 400,000-500,000 metric tons of CO2 per year, reducing Scope 1 emissions by 25%[9] - The project is projected to yield between 305,000 and 380,000 metric tons of low carbon ammonia per year[9] - Commencement of construction is pending EPA approval of the Class VI permit, with operations anticipated to begin by the end of 2026[9] Detailed Financial Results This section provides a comprehensive breakdown of the company's financial performance, including product sales, costs, consolidated statements, and non-GAAP reconciliations First Quarter Results Overview Q1 2025 net sales rose due to higher volumes, but profitability declined significantly as a result of a 62% increase in natural gas costs Sales and Volume Analysis Net Sales by Product (In Thousands) | Product | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | AN & Nitric Acid | $57,618 | $48,435 | 19% | | UAN | $43,865 | $41,192 | 6% | | Ammonia | $33,272 | $39,530 | (16)% | | Other | $8,677 | $9,047 | (4)% | | Total Net Sales | $143,432 | $138,204 | 4% | Product Volumes (short tons sold) | Product | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | AN & Nitric Acid | 150,531 | 128,801 | 17% | | UAN | 148,565 | 134,933 | 10% | | Ammonia | 73,403 | 94,831 | (23)% | | Total | 372,499 | 358,565 | 4% | Pricing and Cost Analysis Average Selling Prices (per short ton) | Product | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | AN & Nitric Acid | $324 | $319 | 2% | | UAN | $253 | $265 | (5)% | | Ammonia | $432 | $403 | 7% | Input Costs (Natural Gas) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Avg. natural gas cost/MMBtu in cost of materials | $3.73 | $2.82 | 32% | | Avg. natural gas cost/MMBtu used in production | $3.77 | $2.33 | 62% | Consolidated Financial Statements The statements detail a quarterly net loss of $1.6 million and total assets of $1.176 billion as of March 31, 2025 Consolidated Statements of Operations Q1 2025 Statement of Operations (In Thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $143,432 | $138,204 | | Gross profit | $14,384 | $22,278 | | Operating income | $4,468 | $11,260 | | (Loss) income before income taxes | $(1,923) | $6,226 | | Net (loss) income | $(1,640) | $5,623 | | Diluted EPS | $(0.02) | $0.08 | Consolidated Balance Sheets Balance Sheet Highlights (In Thousands) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $15,030 | $20,230 | | Short-term investments | $148,516 | $163,971 | | Total current assets | $299,327 | $309,714 | | Total assets | $1,175,938 | $1,187,188 | | Total current liabilities | $119,472 | $135,634 | | Long-term debt, net | $478,174 | $476,163 | | Total stockholders' equity | $490,563 | $491,640 | | Total liabilities and stockholders' equity | $1,175,938 | $1,187,188 | Non-GAAP Reconciliations This section provides reconciliations for non-GAAP measures, including Adjusted EBITDA and netback sales, to their closest GAAP equivalents EBITDA and Adjusted EBITDA Reconciliation Reconciliation of Net (Loss) Income to Adjusted EBITDA (In Thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (loss) income | $(1,640) | $5,623 | | D&A | $20,151 | $17,148 | | Interest, Taxes, etc. | $6,049 | $5,604 | | EBITDA | $24,560 | $28,375 | | Stock-based compensation | $1,733 | $1,393 | | Turnaround costs | $1,995 | $915 | | Other adjustments | $795 | $1,912 | | Adjusted EBITDA | $29,083 | $32,595 | Sales Price Reconciliation Reconciliation to Netback Sales (In Thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Ammonia, AN, Nitric Acid, UAN net sales | $134,755 | $129,157 | | Less freight and other | $16,780 | $14,192 | | Netback sales | $117,975 | $114,965 |