LSB Industries, Inc., the operator of El Dorado Chemical, has announced results for the second quarter ended June 30, 2023.
Second Quarter 2023 results compared with Second Quarter 2022:
— Net sales of $166 million compared to $285 million in the second quarter of 2022
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— 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 of $0.25 compared to $1.22 in the second quarter of 2022
— Adjusted EBITDA 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
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— Repurchased approximately $17 million in common stock under company’s $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,” said 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 plating season.”
Behrman said, “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 poin 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 opportuniies will allow us to generate additional meaningful incremental profitability and shareholder value.”
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