LSB INDUSTRIES, INC. Q4 FY2024 earnings call

• Adjusted EBITDA up despite Q4 2024 turnaround vs no turnaround in 2023. Ammonium nitrate and nitric acid had strong production/sales volume increases. - Completed Cherokee ammonia plant turnaround, expecting increased production in 2025, with urea/UAN daily rates at record highs. Cherokee and Baytown facilities had injury-free years. - Continues energy transition projects. - Industrial business focus with contractual arrangements and cost-plus pricing. - Nitrogen market dynamics: UAN prices up since summer, urea demand from India, Tampa ammonia price above year ago. - Financial results: Q4 2024 adjusted EBITDA $38M, up from $25M in 2023. Stronger sales volumes, lower gas costs. - Balance sheet strong, 2024 year-end leverage ratio below target. CapEx $92M in 2024, $80-90M planned for 2025. - Margin enhancement projects: urea capacity expansion at Pryor, nitric acid storage at El Dorado, both completed in 2024. - Low-carbon ammonia projects: EPA approval key for El Dorado CCS project, Houston Ship Channel project in pre-FEED with price discovery discussions.

Adjusted EBITDA was up significantly year-over-year. Ammonium nitrate and nitric acid operations had strong production and sales volume increases. Cherokee facility's ammonia plant turnaround led to increased production volumes for urea and UAN, with daily rates at record highs. Baytown nitric acid facility had an injury-free year. Industrial sales are core, with contractual arrangements and cost-plus pricing. UAN prices increased due to urea demand and low imports. Corn prices incentivize fertilizer use. Absolute terms: adjusted EBITDA was $38 million in Q4 2024, up from $25 million in Q4 2023. Revenue contribution not explicitly stated in percentages but key segments are ammonium nitrate, nitric acid, urea, UAN.

• Expect ammonia production to increase in 2025, offsetting El Dorado turnaround impact. Downstream products (AN, nitric acid, UAN) to see volume increases. - CapEx planned: $80-90M in 2025, including $60-65M EH&S/reliability and $20-25M growth. - First quarter 2025 volumes flat vs Q1 2024 due to lower inventories post turnarounds, but full year uplift expected. - Gas price: average $3.85 per MMBtu in first 2 months of 2025, higher than 2024. - Efficiency initiatives and profit optimization to drive earnings growth. - CCS project at El Dorado expected to add $15-20M incremental annual EBITDA.

• Tariffs: broad-based tariffs on Canada/Mexico could impact U.S. nitrogen imports and pricing. India retaliatory tariffs likely to affect U.S. exports. - European Commission's proposal to introduce fixed rate tariffs on fertilizer products from Russia/Belarus may divert Russian volumes to U.S. - Uncertainty in EPA Class 6 permit process for El Dorado CCS project. - Timing uncertainty for low-carbon ammonia demand in the global energy transition.

Q: David Begleiter asked about the $600 price for low carbon ammonia and implications of Canadian tariffs.

A: Mark Behrman said price below $600 needed for off-take; Damien Renwick said Canada exports ammonia to US, tariffs could increase prices short-term but level out over time.

Q: Lucas Beaumont asked about Houston Ship Channel project, ammonia production outlook, and gas consumption.

A: Mark Behrman said working to reconfigure project to get below $600; aim to increase ammonia operating rates to 95% by end of 2026; Cheryl Maguire said gas consumption change includes processed and fuel gas.

Q: Laurence Alexander's question (via Dan Rizzo) about El Dorado turnaround, downstream capacity, and EPA updates.

A: Mark Behrman said El Dorado turnaround in 2H 2025, expect 3-year gap post-turnaround; Damien Renwick discussed European legislation and Trump administration's Paris Agreement withdrawal impact; Mark Behrman talked about EPA conversations and positive changes.

Q: Rob McGuire asked about European legislation, Paris Agreement, and AN sales volumes.

A: Mark Behrman discussed European policy shifts and CBAM delay; Mark Behrman said low-carbon ammonia adoption is financially driven; Damien Renwick said stronger AN sales due to reliability and customer relationships.