Today, LSB Industries, Inc. announced its results for the second quarter ending June 30, 2024.
Second Quarter 2024 Results and Recent Highlights:
- Net sales were $140 million, compared to $166 million in Q2 2023.
- Net income was $10 million, compared to $25 million in Q2 2023.
- Diluted EPS was $0.13, down from $0.33 in Q2 2023.
- Adjusted EBITDA(1) was $41 million, compared to $47 million in Q2 2023.
- Cash flow from operations was $41 million, with capital expenditures of $15 million.
- Approximately 0.8 million shares of common stock were repurchased during Q2 2024, totaling 1.5 million shares year-to-date.
- $64 million in principal amount of Senior Secured Notes were repurchased in Q2 2024, with $97 million repurchased year-to-date, bringing total debt to approximately $486 million as of June 30, 2024.
- Total cash was approximately $216 million as of June 30, 2024.
- Signed a five-year agreement to supply low-carbon ammonium nitrate solution (ANS) to Freeport Minerals Corporation.
CEO Statement: Mark Behrman, LSB Industries’ President and CEO, highlighted the landmark agreement with Freeport Minerals to supply low-carbon ANS for their copper mining operations, emphasizing the growing importance of low-carbon nitrogen products in industrial decarbonization efforts.
Behrman noted that the company’s sequential profitability improvement was driven by better pricing compared to the first quarter, despite a year-over-year decline. He sees this as a sign of market stabilization after previous price volatility.
The company generated solid cash flow, enabling stock repurchases and debt reduction. Investments in facility reliability and safety are expected to increase production volumes. Turnarounds at the Pryor facility and the upcoming one at the Cherokee facility, along with other projects, are anticipated to boost reliability and incremental EBITDA and cash flow.
Clean Ammonia Projects: LSB Industries is progressing on two clean ammonia projects. The EPA is expected to make a final decision on the Class VI permit application for the El Dorado carbon capture and sequestration project by next spring, positioning LSB to produce low-carbon ammonia by early 2026. The agreement with Freeport highlights the demand for low-carbon ammonia. The Houston Ship Channel project is nearing the completion of its Pre-FEED study, with a full FEED study anticipated to begin soon. Discussions with potential off-take partners are ongoing.
Market Outlook: The industrial business remains stable due to steady demand for nitric acid and ammonium nitrate, driven by U.S. economic strength, metal production, and infrastructure projects. Ammonia market conditions are healthy, supported by supply constraints and strong pricing. UAN pricing remains solid due to low inventories and strong ammonia and urea markets. Corn futures prices have weakened due to increased stocks-to-use ratios and higher projected U.S. corn acreage, though wet weather could impact yields.
Low-Carbon Ammonia Projects Summary:
- Houston Ship Channel Blue Ammonia Project: In collaboration with INPEX, Air Liquide, and Vopak Exolum Houston, the project aims to build a 1.1 million metric ton per year blue ammonia plant using blue hydrogen. Pre-FEED completion is expected in Q4 2024, with a FEED study beginning in Q1 2025 and final investment decision in Q1 2026.
- El Dorado Carbon Capture and Sequestration Project: This project with Lapis Energy aims to capture and sequester 400,000 to 500,000 metric tons of CO2 per year, reducing Scope 1 emissions by 25%. Operations are expected to begin in Q1 2026, pending EPA permit approval.
- MOU with Amogy: LSB and Amogy are collaborating to develop ammonia as a marine fuel, with plans to test a tugboat retrofitted with an ammonia-to-power engine during Q3 2024.
