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LSB INDUSTRIES, INC. (LXU)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue rose 3.8% year over year to $143.4M on stronger UAN and AN volumes and improved ammonia pricing; GAAP diluted EPS was $(0.02) vs $0.08 last year as materially higher natural gas costs compressed margins .
  • Adjusted EBITDA was $29.1M vs $32.6M a year ago, with the improvement in volumes and pricing offset by higher gas input costs; EBITDA (GAAP) was $24.6M .
  • Management paused the Houston Ship Channel blue ammonia project amid tariff-driven cost uncertainty and slower-than-expected low-carbon ammonia demand; El Dorado low-carbon ANS production remains targeted by end of 2026 with pre-certification achieved, one of only four North American plants so designated .
  • Outlook positives: robust Spring fertilizer demand (UAN/urea pricing strength), tight U.S. supply, and industrial demand for nitric acid/AN; near-term tailwinds include moderating U.S. gas prices heading into Q2 and upgraded mix toward higher-margin products .

What Went Well and What Went Wrong

What Went Well

  • Operational reliability and safety improved: overall sales volumes +4% YoY; zero recordable injuries in Q1 .
  • Product mix/market strength: higher UAN and AN volumes; stronger ammonia selling prices; healthy ammonia market with inland premiums over Tampa on strong ag demand .
  • Low-carbon progress: El Dorado ammonia earned Verified Ammonia Carbon Intensity pre-certification; CCS project advancing with EPA Class VI review; target to begin CO2 injections by end of 2026. “Our El Dorado facility is one of only four North American plants to be granted this status…” .

What Went Wrong

  • Input costs: materially higher natural gas prices drove lower operating income and reduced adjusted EBITDA YoY; average NG cost used in production was $3.77/MMBtu vs $2.33 (+62%) .
  • Ammonia sales volumes fell 23% YoY as more ammonia was upgraded (positive strategically but pressured ammonia category sales); ASP for UAN declined 5% YoY despite tight supply .
  • Tariff uncertainty: management highlighted cost-side risks to parts/components from Europe and broader economic uncertainty, prompting pause of Houston Ship Channel project .

Financial Results

P&L vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$109.217 $134.906 $143.432
Gross Profit ($USD Millions)$(7.945) $6.049 $14.384
Operating Income ($USD Millions)$(24.423) $(6.745) $4.468
Net Income ($USD Millions)$(25.382) $(9.149) $(1.640)
Diluted EPS ($USD)$(0.35) $(0.13) $(0.02)

Segment/Product Sales Mix

Product Sales ($USD Thousands)Q3 2024Q4 2024Q1 2025
AN & Nitric Acid$47,981 $57,620 $57,618
Urea Ammonium Nitrate (UAN)$25,303 $30,132 $43,865
Ammonia$28,490 $40,194 $33,272
Other$7,443 $6,960 $8,677
Total Net Sales$109,217 $134,906 $143,432

Key KPIs (Q1 2025 vs Q1 2024)

KPIQ1 2024Q1 2025YoY Change
AN & Nitric Acid Volume (short tons)128,801 150,531 +17%
UAN Volume (short tons)134,933 148,565 +10%
Ammonia Volume (short tons)94,831 73,403 −23%
AN & Nitric Acid ASP ($/short ton, netback)$319 $324 +2%
UAN ASP ($/short ton, netback)$265 $253 −5%
Ammonia ASP ($/short ton, netback)$403 $432 +7%
Tampa Ammonia Benchmark ($/ton)$466 $491 +5%
NOLA UAN ($/ton)$251 $276 +10%
Avg NG Cost in COM/O ($/MMBtu)$2.82 $3.73 +32%
Avg NG Cost used in Production ($/MMBtu)$2.33 $3.77 +62%

Non-GAAP

Non-GAAPQ1 2024Q1 2025
EBITDA ($USD Millions)$28.375 $24.560
Adjusted EBITDA ($USD Millions)$32.595 $29.083

Actual vs Wall Street Consensus (S&P Global) – Q1 2025

MetricConsensus*ActualResult
Revenue ($USD Millions)$138.128*$143.432 Beat
EPS (Primary) ($USD)$0.057*GAAP Diluted $(0.02) Miss
EBITDA ($USD Millions)$28.229*24.560 Miss

Values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Ammonia Production (tons)FY 2025790,000–820,000 Increase by ~30,000 tons Raised
Turnaround ExpenseFY 2025N/ALower by approximately $15M Lowered
Houston Ship Channel Blue Ammonia ProjectMulti-yearFEED expected during 2025; FID 2026 Paused due to tariff/cost uncertainty and demand ramp Paused
El Dorado CCS/Low-Carbon ANSBy end-2026Operations in H2 2026 Operations by end of 2026; pre-certification achieved Maintained (timing refined)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroTight ammonia/UAN markets; global disruptions; FEED planning for blue ammonia Tariff uncertainty elevating costs; pause Houston project; limited export exposure (<10%) More cautious; capital discipline
Natural Gas CostsTailwind in Q3/Q4 from lower NG vs prior year Q1 NG costs materially higher; expect moderation in Q2 closer to ~$3/MMBtu Near-term headwind easing
Product Performance (UAN/Ammonia)UAN pricing solid; ammonia strong; industrial demand robust UAN/urea prices up significantly; ammonia pricing attractive; tight inventories/logistics Strengthening into Spring
Industrial Contracts/Cost-PlusContinued expansion; stability focus Cost-plus now ~30% of volumes, targeting ~35% by year-end; medium-term optimal ~50% Mix shift to stability
Regulatory (EPA Class VI)Awaiting approval; planning for wells Active EPA dialogue; CO2 injections targeted by end 2026 Progressing
Low-Carbon StrategyPre-FEED completed; off-take for low-carbon ANS El Dorado pre-certification; pause Houston; ~250k tons low-carbon ammonia by end of next year Focused on El Dorado; cautious on new build

Management Commentary

  • “We achieved higher UAN and AN volumes… we saw stronger ammonia selling prices. However… materially higher natural gas prices… offset the higher selling prices and the operating improvements we made.” — Mark Behrman, CEO .
  • “Our exposure to direct tariff impacts is limited… less than 10% of our sales are made to customers outside the U.S… we are seeking opportunities to source domestically wherever possible…” — Mark Behrman, CEO .
  • “We expect production of low carbon ammonium nitrate solution to begin by the end of 2026… El Dorado… one of only four North American plants to be granted [pre-certification] status…” — Management .
  • “We have decided to put a pause on [the Houston Ship Channel] project.” — Management .
  • “Cost-plus arrangements… allow us to contract out the volatility of natural gas prices… we expect this to grow to 35% by the end of the year.” — Cheryl Maguire, CFO .

Q&A Highlights

  • Realized pricing setup: Company deliberately not sold out to capture Q2 UAN pricing strength; ammonia weaker, but mix optimization supports margins .
  • Capital allocation after project pause: Maintain ~$60–$65M reliability capex; consider projects, buybacks, and debt reduction; no new FIDs yet .
  • Deregulation impact: Minimal broadly; increased engagement with EPA aiding El Dorado Class VI progress .
  • Demand/logistics: Pent-up UAN demand tied to higher corn acres and insufficient imports straining river/rail logistics, supporting pricing .
  • Capacity options: Exploring expansion of Pryor urea and El Dorado ammonia/AN solution; engineering studies pending before sizing returns .
  • Cost-plus strategy: Target ~35% in 2025, medium-term optimal ~50% of volumes; trades upside in spikes for earnings stability .
  • Tariff cost sizing: ~$1M opex impact and ~$2M capex impact estimated for 2025 due to tariffs on inputs/equipment .

Estimates Context

  • Q1 2025 revenue beat consensus; EPS missed consensus; EBITDA missed consensus. Given moderating U.S. gas prices, stronger UAN/urea pricing, and higher upgraded product mix into AN/UAN, near-term estimate revisions likely tilt toward higher revenue and adjusted EBITDA in Q2, with EPS sensitivity to gas and realized pricing timing. Values marked with * were retrieved from S&P Global .

Key Takeaways for Investors

  • Near-term setup constructive: robust Spring demand, tight U.S. nitrogen supply, and UAN/urea pricing strength should support Q2 volumes/pricing; company positioned to capture late-quarter pricing on unsold UAN .
  • Margin sensitivity to gas: Q1 showed gas headwind; management expects moderation toward ~$3/MMBtu into May, improving conversion economics; industrial cost-plus mix buffers volatility .
  • Strategic focus shift: Pause on Houston signals capital discipline under tariff/cost uncertainty; emphasis on El Dorado low-carbon ramp and reliability-driven volume gains .
  • Product mix optimization: Continued upgrading of ammonia into higher-margin AN/UAN and storage/logistics investments to support industrial growth should enhance margin quality .
  • Guidance pivots: 2025 ammonia production outlook increased by ~30k tons; turnaround expense lowered by ~$15M—supports higher utilization and reduced cost drag in 2025 .
  • Watch catalysts: EPA Class VI progress at El Dorado; Q2 pricing realization for UAN/urea; execution on cost-plus expansion toward ~35% in 2025; corn acreage and import flows as demand signals .
  • Risk checks: Tariff-driven input/equipment costs (~$3M combined est. for 2025) and logistics constraints could pressure timing of realizations; monitor Tampa/NOLA benchmarks and gas trajectory .