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LSB INDUSTRIES, INC. (LXU)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue rose 8.0% year over year to $151.3M, but missed S&P Global consensus of $158.5M; diluted EPS was $0.04, below the $0.138 consensus, as materially higher natural gas costs offset stronger UAN pricing and higher upgraded-product volumes . Revenue consensus $158.5M*, EPS consensus $0.138*.
  • Sequentially, revenue (+5.5%), diluted EPS (from $(0.02) to $0.04), and Adjusted EBITDA (+32% to $38.3M) improved versus Q1 2025 on better volumes and pricing, despite elevated gas costs .
  • Management highlighted robust UAN pricing and strong industrial demand (nitric acid; ammonium nitrate for mining), and expects a healthy year-over-year increase in Q3 Adjusted EBITDA; Q3 setup includes Tampa ammonia ~$487/t and NOLA UAN ~$350/t, with gas ~ $3.25/MMBtu quarter-to-date .
  • Capital allocation: LSB repurchased $32.4M of Senior Secured Notes in Q2, further de-risking the balance sheet; cash plus short-term investments were $124.9M and total debt ~$452.6M at quarter-end .
  • Stock-relevant catalysts: sustained tight UAN fundamentals, volume mix shift toward contract-based industrial sales, and progress on the El Dorado low-carbon ammonia project (Class VI permit review ongoing; operations targeted by end of 2026) .

What Went Well and What Went Wrong

What Went Well

  • Higher-margin mix and volumes: Sales volumes rose 6% YoY, led by AN/nitric acid (+9%) and UAN (+10%); UAN pricing up 14% YoY ($308/t), supporting sequential EBITDA improvement . CEO: “We generated a 6% year-over-year increase in sales volumes… healthy year-over-year growth in both production and sales volumes of higher margin upgraded products” .
  • Industrial end-markets remained strong: Robust demand for nitric acid and ammonium nitrate tied to U.S. mining (copper, gold) and infrastructure aggregates, supporting sales stability . CCO: “Copper and gold mining activity remains strong… Nitric acid demand remains strong” .
  • Balance sheet actions: Repurchased $32.4M of notes; cash and ST investments $124.9M and total debt ~$452.6M, lowering future interest expense and increasing flexibility . CFO: “We repurchased approximately $32 million of our senior secured notes…will reduce debt by an additional $5 million in the third quarter” .

What Went Wrong

  • Natural gas headwind: Average gas in COGS rose to $3.50/MMBtu (106% YoY); production gas $3.37/MMBtu (+76% YoY), compressing margins and contributing to an EPS miss . CEO: “We experienced materially higher natural gas prices… offset the higher selling prices and the operating improvements we made” .
  • YoY profitability softer: Net income fell to $3.0M (from $9.6M); Adjusted EBITDA declined to $38.3M (from $41.9M) on gas costs despite price/volume gains .
  • Ammonia softness: Ammonia volumes down 9% YoY (upgrade prioritization), and AN/nitric acid ASP declined 3% YoY, partly offsetting UAN price strength . Analysts probed cost trajectory and tariff impacts; management sees cost reduction efforts of $15–20M underway, but benefits phase in over 2025–2027 .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$140.1 $134.9 $143.4 $151.3
Gross Profit ($USD Millions)$27.4 $6.0 $14.4 $23.2
Operating Income ($USD Millions)$14.4 $(6.7) $4.5 $10.5
Net Income ($USD Millions)$9.6 $(9.1) $(1.6) $3.0
Diluted EPS ($USD)$0.13 $(0.13) $(0.02) $0.04
EBITDA ($USD Millions)$33.2 $14.8 $24.6 $31.1
Adjusted EBITDA ($USD Millions)$41.9 $37.6 $29.1 $38.3
Vs. Estimates (Q2 2025)Consensus*Actual
Revenue ($USD Millions)$158.5*$151.3
Primary EPS ($USD)$0.138*$0.04
EPS - # of Estimates3*—
Revenue - # of Estimates2*—

Values with asterisk (*) retrieved from S&P Global.

Product Sales ($USD Thousands)Q2 2024Q1 2025Q2 2025
AN & Nitric Acid$58,442 $57,618 $61,707
UAN$42,808 $43,865 $52,262
Ammonia$28,448 $33,272 $26,830
Other$10,375 $8,677 $10,497
Total Net Sales$140,073 $143,432 $151,296
Key Product Volumes (short tons)Q2 2024Q1 2025Q2 2025
AN & Nitric Acid147,619 150,531 161,509
UAN137,499 148,565 151,807
Ammonia72,294 73,403 66,069
Average Selling Prices ($/short ton)Q2 2024Q1 2025Q2 2025
AN & Nitric Acid$337 $324 $328
UAN$271 $253 $308
Ammonia$368 $432 $369
Benchmarks & Input CostsQ2 2024Q1 2025Q2 2025
Tampa Ammonia Benchmark ($/t)$440 $491 $416
NOLA UAN ($/t)$246 $276 $344
Avg Nat Gas in COGS ($/MMBtu)$1.70 $3.73 $3.50
Avg Nat Gas in Production ($/MMBtu)$1.92 $3.77 $3.37

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
AN & Nitric Acid sales volume (tons)FY 2025590,000–620,000 No explicit update in Q2 release; industrial demand “robust” Maintained (implicitly)
UAN sales volume (tons)FY 2025620,000–650,000 No explicit update in Q2; strong pricing; higher volumes expected YoY Maintained (implicitly)
Ammonia sales volume (tons)FY 2025250,000–280,000 Expect lower ammonia sales as upgrade mix increases Maintained (mix shift reiterated)
Q3 2025 pricing outlookQ3 2025—Tampa ammonia ~$487/t; NOLA UAN ~$350/t; avg gas ~ $3.25/MMBtu QTD New (directional)
Q3 2025 Adjusted EBITDAQ3 2025—Expect a healthy YoY increase vs Q3 2024 New (directional)

Note: Q2 2025 provided directional outlook rather than quantitative ranges; full-year volume ranges were last provided in Q4 2024.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Natural gas costsQ4 lower gas supported EBITDA; pricing strong heading into Spring Gas volatile; headwind in Q1; moderating into Q2 Gas materially higher YoY in Q2; expect less YoY headwind in Q3 (~$3.25/MMBtu QTD) Improving into Q3 from H1 headwinds
UAN pricing/demandSolid UAN market; low inventories; tight supply UAN prices well above YoY; strong demand UAN prices up significantly; NOLA ~$350/t; strong agricultural demand Strengthening
Industrial demand (nitric acid/AN)Stable demand; storage expansion at El Dorado Strong demand across mining and aggregates Robust demand; mining tailwinds (copper, gold); shift from HDAN to AN solution Stable to improving
Tariffs/macroGeopolitical disruptions tightening supply Exposure to tariffs limited on sales; potential cost impacts; domestic sourcing Monitoring Russia-related tariffs; import trends; EU tariffs could reshape routes Watchlist—potential pricing impacts
Low-carbon projects (El Dorado CCS)Target 2026 start; off-take announced Pre-certification achieved; operations by end 2026 Stratigraphic well drilled; awaiting EPA Class VI; operations by end 2026 Progressing on permit path
Cost reduction program—$15–$20M efficiencies targeted; benefits into 2026–2027 ~25% completion by year-end; annualized benefits flow in 2026 In execution

Management Commentary

  • CEO: “We generated a 6% year-over-year increase in sales volumes… healthy year-over-year growth in both production and sales volumes of higher margin upgraded products… stronger selling prices for UAN” while “materially higher natural gas prices… offset” these benefits .
  • CCO: “Demand for our industrial products remains robust… transitioning our sales of HDAN… to ammonium nitrate solution… improve stability and predictability” .
  • CFO: “Higher pricing for UAN, higher sales volumes, and a reduction in our fixed plant costs were offset by materially higher natural gas costs” and “expect… healthy year-over-year increase in Adjusted EBITDA” in Q3 .
  • CEO on CCS: “Lapis… completed the drilling of a stratigraphic injection well… gather data to support the EPA… expect… begin CO2 injections by the end of next year” .

Q&A Highlights

  • UAN capacity/volumes: Pryor debottlenecking performing at higher rates; working out consistency; expect higher second-half UAN production and sales, acknowledging seasonality .
  • Cost trajectory: Management targeting $15–$20M efficiency savings; ~25% completion by year-end; benefits largely annualize in 2026–2027 .
  • Tariffs/imports: Difficult to isolate tariff impacts amid broader supply dynamics; UAN imports below last year contributed to tightness; EU tariffs on Russia could redistribute trade and impact pricing in future .
  • Farmer economics: Limited demand destruction post Spring; some retailer hesitancy at current price levels; macro ethanol/corn policy could support demand .
  • Legal/regulatory: Increased constructive dialogue with EPA/state agencies; Leidos litigation set for late October trial schedule .

Estimates Context

  • Q2 2025 performance vs S&P Global consensus: Revenue $151.3M vs $158.5M* (miss); diluted EPS $0.04 vs $0.138* (miss). EPS estimates count: 3*, Revenue estimates count: 2*. Values retrieved from S&P Global. Actual results per company press release .
  • Implications: Elevated gas costs and AN/nitric acid ASP pressure likely drove the miss; stronger UAN pricing/volumes and fixed cost reductions did not fully offset. Given Q3 pricing setup and volume expectations, Street models may raise Q3 Adjusted EBITDA while reassessing gas sensitivities .

Key Takeaways for Investors

  • Sequential operational momentum: Volumes and pricing improved, lifting Adjusted EBITDA to $38.3M; watch for continued mix upgrade and industrial contract penetration .
  • Natural gas still the swing factor: Elevated gas compressed Q2 margins; management expects less YoY gas headwind in Q3—key for near-term earnings trajectory .
  • UAN tailwinds intact: Tight U.S. supply, lower imports, and strong global demand underpin pricing; LXU positioned to capture with Pryor expansion .
  • Mix shift reduces volatility: Transition from HDAN to AN solution and cost-plus contracts should stabilize cash flows across cycles .
  • Balance sheet de-risking: Debt repurchases reduce interest expense and support ongoing reliability investments and strategic projects .
  • CCS optionality: El Dorado project progresses toward 2026; EPA permit is gating item—successful approval could unlock low-carbon product premium and multi-year EBITDA growth .
  • Near-term trading lens: Q3 setup (UAN ~$350/t; ammonia ~$487/t; gas ~$3.25/MMBtu) plus expected YoY EBITDA increase could catalyze sentiment; monitor tariff developments and any EPA permit milestones .

Appendix: Additional Data Points

  • Safety: Zero recordable injuries in Q2 and H1 2025 .
  • Benchmarks: NOLA UAN up 40% YoY to $344/t; Tampa ammonia down 5% YoY to $416/t .
  • Cash/debt: Cash & equivalents $5.6M; ST investments $119.3M; total debt ~$452.6M (LT net $446.4M; current $6.3M) .