LSB INDUSTRIES, INC. Q3 FY2024 earnings call

• Safety: Excellent safety performance in Q3, with a major injury-free turnaround at a prior facility. - Facility Improvements: Completed a major turnaround at Pryor, leading to greater reliability and increased production; expanded Pryor's urea plant to produce 75,000 tons more UAN annually; constructed additional nitric acid storage at El Dorado. - Energy Transition: El Dorado CCS project on track for 2026 low-carbon ammonia production (pending permit); Houston Ship Channel project in pre-FEED phase, targeting FID in H1 2026. - Market Dynamics: Ammonia prices up due to global supply constraints; UAN prices firmed; corn prices showed strength, incentivizing fertilizer application.

Adjusted EBITDA improved significantly year-over-year despite a turnaround in 2024. Sales volumes decreased due to the turnaround but were partially offset by higher AN volume from El Dorado. The Pryor facility's urea plant expansion is expected to increase UAN production by 75,000 tons per year (approx. 20% annual increase). Nitric acid storage expansion at the El Dorado facility supports sales mix optimization. Ammonia prices were supported by global supply constraints, and UAN prices firmed due to tightening market fundamentals.

Fourth quarter EBITDA expected to be significantly above 2023 despite Cherokee facility turnaround. UAN sales volume to increase from Pryor expansion. AN and nitric acid sales to rise from El Dorado improvements. Natural gas costs expected to remain favorable. El Dorado CCS project aims for 2026 production; Houston Ship Channel project in FEED phase, targeting FID in H1 2026.

• Geopolitical instability affecting natural gas prices. - Supply chain issues and delays in commissioning new production capacity. - Uncertainty in agricultural market demand due to weather and corn price fluctuations.

Q: Josh Spector asked about industrial demand improvement and low-carbon material contracts.

A: Damien Renwick said industrial demand is stable with potential improvement; low-carbon ammonia has contracted 150,000 tons of AN solution with 300,000 tons remaining.

Q: Andrew Wong asked about 2025 volumes and NOLs.

A: Mark Behrman said 2025 has turnarounds but expect higher UAN volumes; NOLs are ~$250M, and being public has benefits and considerations.

Q: Laurence Alexander asked about bandwidth for projects.

A: Mark Behrman said resources are managed with contracted talent; Houston project will use supplemented resources, and offtake agreements are key for derisking.

Q: Rob McGuire asked about nitrogen purchasing and CapEx.

A: Mark Behrman said buyers are cautious but some are taking longer positions; CapEx included Pryor turnaround and Cherokee project, with nothing unusual.

Q: David Begleiter asked about turnaround expenses and Houston project financing.

A: Cheryl Maguire said turnaround expenses similar to 2024; Houston project to be 60% project financed.

Q: Charles Neivert asked about ammonia application and Pryor expansion.

A: Damien Renwick said weather delayed application; Pryor expansion reduces ammonia exposure, moving to UAN.

Q: Peter Gastreich asked about low-carbon ammonia in fertilizer.

A: Mark Behrman said progress depends on 45Z extension; low-carbon ethanol using low-carbon corn is a potential area.