LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today
announced results for the second quarter ended June 30, 2023.
Second Quarter 2023 Results Compared to Second Quarter
2022
- Net sales of $166 million compared to $285 million in the
second quarter of 2022
- Net income of $25 million compared to $103 million in the
second quarter of 2022; Adjusted net income of $19 million as
compared to $109 million in the second quarter of 2022
- EPS of $0.33 compared to $1.17 for the second quarter of 2022;
Adjusted EPS(1) of $0.25 compared to $1.22 in the second quarter of
2022
- Adjusted EBITDA(1) of $47 million compared to $158 million in
the second quarter of 2022
- Cash Flow from Operations of $44 million and Capital
Expenditures of $14 million
- Repurchased $125 million in principal amount of Senior Secured
Notes for approximately $114 million
- Repurchased approximately $17 million in common stock under our
$150 million buyback program
- Total cash and short-term investments of approximately $314
million as of June 30, 2023
“Our sales volumes were up relative to the second quarter of
last year," stated Mark Behrman, LSB’s President and CEO. "The
teams at our manufacturing facilities operated our plants well and
our commercial organization effectively moved product in the face
of a challenging demand and pricing environment. For the second
consecutive quarter we experienced a significant year-over-year
decline in selling prices reflecting the impact of lower natural
gas prices in Europe and weaker industrial activity in Asia.
Additionally, UAN demand was below expectations as farmers opted to
apply more urea due to what had been comparatively attractive
pricing early this year versus UAN. More recently, however, prices
for nitrogen products have begun to increase, a trend we expect to
continue at a measured pace through the second half of this year,
with further improvement likely building into the 2024 Spring
planting season."
Mr. Behrman continued, "Despite headwinds in the second quarter,
we continued to generate solid free cash flow, enabling us to
further enhance our financial flexibility. As a result, we not only
implemented and repurchased stock under our $150 million buyback
plan, but we also bought back $125 million of our bonds at a
discount to their issuance price. Even with this return of capital
to our shareholders, we maintained a substantial cash balance that
will support our growth initiatives in the coming years. We
continue to evaluate projects that can increase the production
capacity of our facilities, as well as expand our product mix. We
expect to have a sense for the costs and potential returns of these
projects in the coming weeks. At that point, we plan to commence
more detailed engineering including FEED on the projects that have
the most attractive return profiles. We would expect to move
forward with financial investment decisions on one or more of those
projects at some point in the second half of 2024, with project
returns potentially enhanced by a grant from the USDA via the
Fertilizer Production Expansion Program."
"Industry momentum of the development of clean ammonia and clean
hydrogen continues to build. We continue to pursue our previously
announced blue and green ammonia projects. Additionally, we
recently signed an MOU with Amogy for the development of ammonia as
a marine fuel for U.S. inland waterway activities. Through these
projects, and the other projects we are exploring, we are well
positioned to benefit from attractive government incentives that
are currently in place. Additionally, we believe these projects
will benefit from anticipated growth in end-market demand,
particularly for clean ammonia for power generation and marine
locomotion. Our vision is to be at the forefront of this energy
transition, reducing our CO2 emissions and contributing to the
expected reduction in global CO2 emissions. At the same time, we
believe these opportunities will allow us to generate additional
meaningful incremental profitability and shareholder value."
(1) This is a Non-GAAP measure. Refer to the Non-GAAP
Reconciliation section.
Second Quarter Results Overview
Three Months Ended June 30,
Product (Gross Sales
in $000's)
2023
2022
% Change
AN & Nitric Acid
$
69,561
$
96,142
(28
)%
Urea ammonium nitrate (UAN)
40,905
76,986
(47
)%
Ammonia
39,612
89,444
(56
)%
Other
15,767
22,231
(29
)%
Total Net Sales
$
165,845
$
284,803
(42
)%
Comparison of 2023 to 2022 quarterly periods:
- Net sales declined during the quarter driven by lower pricing
for all of our products. The headwind of lower pricing was
partially offset by higher sales volumes for ammonia.
- The year-over-year decline in operating income and adjusted
EBITDA primarily resulted from lower selling prices, partially
offset by higher sales volumes and lower natural gas prices.
The following tables provide key sales metrics for our
products:
Three Months Ended June 30,
Key Product Volumes
(short tons sold)
2023
2022
% Change
AN & Nitric Acid
161,987
162,014
(0
)%
Urea ammonium nitrate (UAN)
126,010
130,561
(3
)%
Ammonia
102,047
75,526
35
%
390,044
368,101
6
%
Average Selling
Prices (price per short ton) (A)
AN & Nitric Acid
$
381
$
525
(27
)%
Urea ammonium nitrate (UAN)
$
285
$
553
(48
)%
Ammonia
$
367
$
1,164
(68
)%
(A) Average selling prices represent “net back” prices which are
calculated as sales less freight expenses divided by product sales
volume in tons.
Three Months Ended June 30,
2023
2022
% Change
Average Benchmark
Prices (price per ton)
Tampa Ammonia (MT) Benchmark
$
370
$
1,257
(71
)%
NOLA UAN
$
251
$
584
(57
)%
Input
Costs
Average natural gas cost/MMBtu
$
3.39
$
7.15
(53
)%
Financial Position and Capital Expenditures
As of June 30, 2023, our total liquidity was approximately $369
million, including $314 million in cash and short-term investments
and approximately $55 million of availability under our Working
Capital Revolver. Total long-term debt, including the $5 million
current portion, was $584 million on June 30, 2023 compared to $712
million on December 31, 2022. The decrease in total long-term debt
is attributable to the second quarter repurchase of $125 million in
principal amount of our Senior Secured Notes for approximately $114
million.
Interest expense for the second quarter of 2023 was $12 million
compared to $12 million in the second quarter of 2022.
During the second quarter we repurchased approximately $17
million of the Company's stock at an average price of approximately
$9.59 per share under the share repurchase plan that our Board of
Directors authorized in May 2023.
Capital expenditures were approximately $14 million for the
second quarter of 2023. For the full year 2023, total capital
expenditures are expected to be between $60 million to $80 million
which includes maintenance and margin enhancement investments.
Market Outlook
Nitrogen fertilizer prices have declined significantly over the
course of 2023 reflecting reduced global demand for ammonia and a
decline in European production costs. The decline in European
production costs have been caused by lower natural gas prices in
Europe due to reduced demand primarily related to warmer than
expected temperatures throughout Europe this past winter, combined
with increased storage inventories resulting from imports of
liquefied natural gas (LNG) from the U.S. After curtailing
production for much of 2022, the vast majority of European ammonia
producers have resumed operations in recent months, resulting in an
increased global supply of nitrogen products. Still, natural gas
costs in Europe remain significantly higher than those in the U.S.
and U.S. ammonia producers continue to see a significant cost
advantage.
A slowdown in Asian industrial activity, particularly in China,
has also contributed to lower nitrogen prices as ammonia is a
feedstock for various downstream chemicals that are produced in
China, such as caprolactam and acrylonitrile. China’s manufacturing
activity has contracted for much of the past two years resulting in
a reduction of the country’s ammonia consumption and contributing
to greater global ammonia supply and weaker prices.
In addition, cold and wet weather across many corn growing
regions of the U.S. in the early Spring delayed the application of
fertilizers which, combined with lower demand for phosphate
products this planting season, further increased ammonia
inventories in the supply chain and leading to weaker prices.
Nitrogen pricing has stabilized over the last month and has
recently begun to strengthen. We believe that current pricing for
ammonia and other nitrogen products should prove attractive to
retailers and farmers such that, as the second half of 2023
progresses and as the 2024 planting season approaches, demand for
nitrogen fertilizers should increase to a degree that pricing will
continue to rise from current levels.
In addition to attractive pricing, we expect favorable U.S. corn
market dynamics to provide support for stronger fertilizer pricing
later this year and into next year. Corn prices remain above
10-year averages which should further incentivize farmers to
optimize fertilizer applications in the fourth quarter of 2023 and
the first half of 2024 in order to maximize yields.
Our industrial business remains robust and demand for our
products is steady. Nitric acid demand is stable as the demand
impacts of high inflation in the U.S. is offset by global producers
shifting production from international facilities to their U.S.
operations to take advantage of lower domestic input costs. Demand
for AN for use in mining applications is robust due to attractive
market fundamentals for quarrying and aggregate production and U.S.
metals. While economic concerns persist for 2023, we believe that
we have downside protection from the potential impacts of a
recession given our diverse customer base, the nature of our
contracts and our ability to shift our production mix to products
where demand and pricing are strongest.
Conference Call
LSB’s management will host a conference call covering the second
quarter results on Thursday, July 27, 2023 at 10:00 am ET / 9:00 am
CT to discuss these results and recent corporate developments.
Participating in the call will be President & Chief Executive
Officer, Mark Behrman and Executive Vice President & Chief
Financial Officer, Cheryl Maguire. Interested parties may
participate in the call by dialing (877) 407-6176 / (201) 689-8451.
Please call in 10 minutes before the conference is scheduled to
begin and ask for the LSB conference call. To coincide with the
conference call, LSB will post a slide presentation at
www.lsbindustries.com on the webcast section of the Investor tab of
our website.
To listen to a webcast of the call, please go to the Company’s
website at www.lsbindustries.com at least 15 minutes prior to the
conference call to download and install any necessary audio
software. If you are unable to listen live, the conference call
webcast will be archived on the Company’s website.
LSB Industries, Inc.
LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma,
manufactures and sells chemical products for the agricultural,
mining, and industrial markets. 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. LSB’s products are sold through distributors and
directly to end customers primarily throughout the United States.
Committed to improving the world by setting goals that will reduce
our environmental impact on the planet and improve the quality of
life for all of its people, the Company is well positioned to play
a key role in the reduction of global carbon emissions through its
planned carbon capture and sequestration, and zero carbon ammonia
strategies. Additional information about LSB can be found on its
website at www.lsbindustries.com.
Forward-Looking
Statements
Statements in this release that are not historical are
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking
statements, which are subject to known and unknown risks,
uncertainties and assumptions about us, may include projections of
our future financial performance and anticipated performance based
on our growth and other strategies and anticipated trends in our
business. These statements are only predictions based on our
current expectations and projections about future events. There are
important factors that could cause our actual results, level of
activity, performance or actual achievements to differ materially
from the results, level of activity, performance or anticipated
achievements expressed or implied by the forward-looking
statements. Significant risks and uncertainties may relate to, but
are not limited to, business and market disruptions, market
conditions and price volatility for our products and feedstocks, as
well as global and regional economic downturns that adversely
affect the demand for our end-use products; disruptions in
production at our manufacturing facilities and other financial,
economic, competitive, environmental, political, legal and
regulatory factors. These and other risk factors are discussed in
the Company’s filings with the Securities and Exchange Commission
(SEC).
Moreover, we operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time,
and it is not possible for our management to predict all risks and
uncertainties, nor can management assess the impact of all factors
on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Although we
believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
level of activity, performance or achievements. Neither we nor any
other person assumes responsibility for the accuracy or
completeness of any of these forward-looking statements. You should
not rely upon forward-looking statements as predictions of future
events. Unless otherwise required by applicable laws, we undertake
no obligation to update or revise any forward-looking statements,
whether because of new information or future developments.
See Accompanying Tables
LSB Industries, Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(In Thousands, Except Per Share
Amounts)
Net sales
$
165,845
$
284,803
$
346,809
$
483,784
Cost of sales
129,813
141,879
269,172
250,130
Gross profit
36,032
142,924
77,637
233,654
Selling, general and administrative
expense
9,436
9,638
19,303
20,573
Other expense (income), net
(900
)
628
303
452
Operating income
27,496
132,658
58,031
212,629
Interest expense, net
11,836
12,307
24,048
22,262
(Gain) loss on extinguishment of debt
(8,644
)
—
(8,644
)
113
Non-operating other income, net
(3,764
)
(3,430
)
(7,240
)
(3,408
)
Income before provision for income
taxes
28,068
123,781
49,867
193,662
Provision for income taxes
2,973
20,382
8,871
31,497
Net income
25,095
103,399
40,996
162,165
Income per common share:
Basic:
Net income
$
0.33
$
1.17
$
0.54
$
1.84
Diluted:
Net income
$
0.33
$
1.15
$
0.54
$
1.81
Adjusted Net Income and Adjusted
EPS(1)
Net income
$
25,095
$
103,399
$
40,996
$
162,165
Adjustments
(6,115
)
5,782
(3,239
)
9,526
Adjusted net income
$
18,980
$
109,181
$
37,757
$
171,691
Net income per common share, excluding
adjustments
$
0.25
$
1.22
$
0.50
$
1.91
(1) This is a Non-GAAP measure. Refer to the Non-GAAP
Reconciliation section.
LSB Industries, Inc.
Condensed Consolidated Balance
Sheets
(Information at June 30, 2023
is unaudited)
June 30,
December 31,
2023
2022
(In Thousands)
Assets
Current assets:
Cash and cash equivalents
$
45,072
$
63,769
Short-term investments
268,762
330,553
Accounts receivable
51,431
75,494
Allowance for doubtful accounts
(692
)
(699
)
Accounts receivable, net
50,739
74,795
Inventories:
Finished goods
21,281
28,893
Raw materials
1,420
1,990
Total inventories
22,701
30,883
Supplies, prepaid items and other:
Prepaid insurance
7,084
17,429
Precious metals
13,100
13,323
Supplies
29,730
27,501
Other
2,904
8,346
Total supplies, prepaid items and
other
52,818
66,599
Total current assets
440,092
566,599
Property, plant and equipment, net
835,423
848,661
Other assets:
Operating lease assets
25,050
22,682
Intangible and other assets, net
1,572
1,877
26,622
24,559
$
1,302,137
$
1,439,819
LSB Industries, Inc.
Condensed Consolidated Balance
Sheets (continued)
(Information at June 30, 2023
is unaudited)
June 30,
December 31,
2023
2022
(In Thousands)
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
54,524
$
78,182
Short-term financing
5,118
16,134
Accrued and other liabilities
31,210
38,470
Current portion of long-term debt
5,371
9,522
Total current liabilities
96,223
142,308
Long-term debt, net
578,214
702,733
Noncurrent operating lease liabilities
16,158
14,896
Other noncurrent accrued and other
liabilities
522
522
Deferred income taxes
71,223
63,487
Commitments and contingencies
Stockholders' equity:
Common stock, $.10 par value; 150 million
shares authorized, 91.2 million shares issued
9,117
9,117
Capital in excess of par value
498,517
497,179
Retained earnings
240,088
199,092
747,722
705,388
Less treasury stock, at cost:
Common stock, 16.8 million shares (14.9
million shares at December 31, 2022)
207,925
189,515
Total stockholders' equity
539,797
515,873
$
1,302,137
$
1,439,819
Non-GAAP Reconciliations
This news release includes certain “non-GAAP financial measures”
under the rules of the Securities and Exchange Commission,
including Regulation G. These non-GAAP measures are calculated
using GAAP amounts in our consolidated financial statements.
EBITDA and Adjusted EBITDA
Reconciliation
EBITDA is defined as net income (loss) plus interest expense and
interest income, net, less gain on extinguishment of debt, plus
depreciation and amortization (D&A) (which includes D&A of
property, plant and equipment and amortization of intangible and
other assets), plus provision (benefit) for income taxes. Adjusted
EBITDA is reported to show the impact of non-cash stock-based
compensation, one time/non-cash or non-operating items-such as,
one-time income or fees, loss (gain) on sale of a business and/or
other property and equipment, certain fair market value (FMV)
adjustments, and consulting costs associated with reliability and
purchasing initiatives (Initiatives). We historically have
performed turnaround activities on an annual basis; however, we
have moved towards extending turnarounds to a two or three-year
cycle. Rather than being capitalized and amortized over the period
of benefit, our accounting policy is to recognize the costs as
incurred. Given these turnarounds are essentially investments that
provide benefits over multiple years, they are not reflective of
our operating performance in a given year.
We believe that certain investors consider EBITDA a useful means
of measuring our ability to meet our debt service obligations and
evaluating our financial performance. In addition, we believe that
certain investors consider adjusted EBITDA as more meaningful to
further assess our performance. We believe that the inclusion of
supplementary adjustments to EBITDA is appropriate to provide
additional information to investors about certain items.
EBITDA and adjusted EBITDA have limitations and should not be
considered in isolation or as a substitute for net income,
operating income, cash flow from operations or other consolidated
income or cash flow data prepared in accordance with GAAP. Because
not all companies use identical calculations, this presentation of
EBITDA and adjusted EBITDA may not be comparable to a similarly
titled measure of other companies. The following table provides a
reconciliation of net income (loss) to EBITDA and adjusted EBITDA
for the periods indicated. Adjusted EBITDA margin is calculated by
taking adjusted EBITDA divided by Net Sales.
LSB Industries, Inc.
Non-GAAP Reconciliations
(continued)
LSB Consolidated
($ In Thousands)
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
2023
2022
Net income
$
25,095
$
103,399
$
40,996
$
162,165
Plus:
Interest expense and interest income,
net
8,065
11,584
16,796
21,539
Net (gain) loss on extinguishment of
debt
(8,644
)
—
(8,644
)
113
Depreciation and amortization
17,103
16,996
34,707
34,504
Provision for income taxes
2,973
20,382
8,871
31,497
EBITDA
$
44,592
$
152,361
$
92,726
$
249,818
Stock-based compensation
1,927
1,365
2,646
2,168
Legal fees (Leidos)
91
270
364
613
Loss on disposal of assets
550
852
2,440
806
Turnaround costs
(39
)
3,295
(45
)
5,826
Adjusted EBITDA
$
47,121
$
158,143
$
98,131
$
259,231
LSB Industries, Inc.
Non-GAAP Reconciliations
(continued)
(in thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Numerator:
Net income
$
25,095
$
103,399
$
40,996
$
162,165
Adjustments:
(Gain) loss on extinguishment of debt
(8,644
)
-
(8,644
)
113
Stock-based compensation
1,927
1,365
2,646
2,168
Legal fees (Leidos)
91
270
364
613
Loss on disposal of assets
550
852
2,440
806
Turnaround costs
(39
)
3,295
(45
)
5,826
Net income, excluding
adjustments
$
18,980
$
109,181
$
37,757
$
171,691
Denominator:
Adjusted weighted-average shares for
basic net income per share and for adjusted net income per
share(1)
75,170
88,181
75,488
88,301
Adjustment:
Unweighted shares, including unvested
restricted stock subject to forfeiture
409
1,224
409
1,458
Outstanding shares, net of treasury, at
period end for adjusted net income per share, excluding other
adjustments
75,579
89,405
75,897
89,759
Basic net income per common
share
$
0.33
$
1.17
$
0.54
$
1.84
Net income per common share, excluding
adjustments
$
0.25
$
1.22
$
0.50
$
1.91
(1) Excludes the weighted-average shares of unvested restricted
stock that are subject to forfeiture
Ammonia, AN, Nitric Acid, UAN Sales
Price Reconciliation
The following table provides a reconciliation of total
identified net sales as reported under GAAP in our consolidated
financial statements reconciled to netback sales which is
calculated as net sales less freight and other non-netback costs.
We believe this provides a relevant industry comparison among our
peer group.
Three Months Ended June 30,
2023
2022
(In Thousands)
Ammonia, AN, Nitric Acid, UAN net
sales
$
150,079
$
262,572
Less freight and other
14,881
17,424
Ammonia, AN, Nitric Acid, UAN netback
sales
$
135,198
$
245,148
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726818173/en/
Cheryl Maguire, Executive Vice President & CFO (405)
510-3524
Fred Buonocore, CFA, Vice President of Investor Relations (405)
510-3550 fbuonocore@lsbindustries.com
LSB Industries (NYSE:LXU)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
LSB Industries (NYSE:LXU)
Gráfica de Acción Histórica
De May 2023 a May 2024