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Jun 30, 2020
LSB Industries Q2 2020 Earnings Report
Reported results with operational performance partially offsetting pandemic-related headwinds.
Key Takeaways
LSB Industries reported a challenging second quarter with net sales of $105.0 million and a net loss of $0.4 million. The company's performance was impacted by pricing issues, particularly for agricultural products, and depressed demand for industrial and mining products due to pandemic-related economic disruptions. However, solid production at its facilities partially offset these headwinds.
Net sales reached $105.0 million.
Net loss amounted to $0.4 million.
Adjusted EBITDA was $29.2 million.
Pryor facility achieved record UAN and Urea production for the quarter.
LSB Industries
LSB Industries
Forward Guidance
Substantial uncertainty remains in the end markets for the balance of the year. The company projects year-over-year improvement in adjusted EBITDA and cash flow in 2020.
Positive Outlook
- Corn acres planted for the 2020 planting season are now expected to be approximately 92 million, which is up from 2019 plantings of 89 million acres.
- Seeing pockets of recovery in the industrial and mining part of the business and expect continued improvement in the second half of 2020.
- Continuing to operate the facilities at the levels delivered in the past several quarters, which has translated into continued production volume improvement.
- Expect this trend to continue for the balance of the year.
- Given our operational improvements, we continue to project year-over-year improvement in our adjusted EBITDA and cash flow in 2020.
Challenges Ahead
- Lower expected corn acres planted is a positive for expected ending corn inventory, reduced demand from ethanol-related consumption due to the stay-at-home orders experienced in the U.S. combined with strong yields projected from the 2020 planting season, all point to expected higher ending corn inventory, which will impact crop pricing and challenge fertilizer pricing for the balance of 2020.
- Much hinges on the ability of the economy to continue to gradually increase levels of activity.
- Pricing for all major agricultural product categories was impacted by the continued oversupply of ammonia in our primary end markets, along with greater imports and decreased exports of some of our downstream products.
- Industrial and mining product volumes declined as a result of pandemic-related weakness in demand in several of our end markets.
- Substantial uncertainty remains in our end markets for the balance of the year.