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Sep 30, 2020
LSB Industries Q3 2020 Earnings Report
LSB Industries reported a net loss for Q3 2020, but saw increased sales volumes partially offset by weaker pricing.
Key Takeaways
LSB Industries reported a net loss of $20.4 million on net sales of $74.0 million for the third quarter ended September 30, 2020. While the company experienced stronger sales volumes, this was offset by weaker pricing compared to the prior year's third quarter. The Pryor facility achieved record UAN production and sales, and fertilizer sales volumes increased by 19%.
Net sales increased 12% due to stronger sales volumes, offset by a 14% decrease from weaker pricing.
Net loss was $20.4 million.
Adjusted EBITDA was $10.2 million, reflecting an $8.8 million benefit from stronger sales volumes, offset by a $10.4 million impact from weaker pricing.
Fertilizer sales volumes increased 19%, including a 33% increase in UAN sales volumes.
Forward Guidance
LSB Industries is cautiously optimistic about improving sales volume and pricing in the coming months, driven by emerging demand trends in both the agricultural and industrial sectors. They anticipate stronger corn prices leading to higher plantings and increased demand for fertilizers. Gradual improvement is expected in demand for nitric acid, industrial ammonia, and ammonium nitrate as key sectors recover.
Positive Outlook
- Stronger corn prices could result in higher plantings in 2021.
- Increased demand for orders of UAN and HDAN for the 2021 spring planting season.
- Gradual improvement in demand for nitric acid, industrial ammonia and ammonium nitrate as sectors such as automotive manufacturing, home building, and copper mining have increased activity.
- Stronger demand in the agricultural and industrial sectors should drive greater consumption of ammonia in the U.S. market, reducing the current inventory buildup and allowing the Tampa ammonia benchmark to rise, benefitting our selling prices.
- Expectations for continued operating performance improvement.
Challenges Ahead
- Effects of COVID-19 protocols and restrictions continue to weigh on the U.S. economy.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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