Lsb Industries, Inc. · NYSE:LXU
Lsb Industries — Investor Presentation (June 2014)
36 slides from Lsb Industries's investor presentation, Jun 11, 2014
Slide 1: LSB Industries, Inc. June 2014
LSB Industries, Inc. June 2014 NYSE: LXU Exhibit 99.5
Slide 2: Safe Harbor Statement
Safe Harbor Statement The comments today and the information contained in the presentation materials contain certain forward-looking statements. All these statements, other than statements of historical fact, are forward-looking statements. Statements that include the words “expect,” “intend,” “plan
Slide 3: Company Overview
Company Overview
Slide 4: Business Overview and Financial Snapshot
2013 Net Sales by Business Segment 2013 Consolidated EBITDA by Business Segment LSB operates a well-diversified business with differentiated market positions across two distinct business segments Business Overview Diversified industrial manufacturer of chemical and HVAC products sold into a wide ran
Slide 5: LSB's Two Core Businesses
LSB’s Two Core Businesses Consolidated Sales History Chemical Provides nitrogen based agricultural, mining and industrial chemicals to North American market Leading merchant marketer of nitric acid in the U.S. Major investments underway to reduce costs and increase facility reliability and capacity
Slide 6: Business Segment Overview
Business Segment Overview
Slide 7: Attractive Industry Fundamentals – Agro Chemicals
Attractive Industry Fundamentals – Agro Chemicals World Situation: Growing populations Developing economies Changing dietary habits (from grain to meat) Worldwide grain stock-to-use ratios at below historical levels North American Situation: World grain shortages positively impact grain requirements
Slide 8: Chemical Market, Products, Uses and Competitors
Agro- Chemical (44% of sales) Nitric Acid Semi-conductor, nylon, polyurethane intermediates, ammonium nitrate CF Industries, PCS Sulfuric Acid Pulp and paper, alum, water treatment, metals and vanadium processing Cytec, Chemtrade Logistics Anhydrous Ammonia Power plant emissions abatement, water tre
Slide 9: Major Chemical Customers
Major Chemical Customers Bayer
Slide 10: Strategically Located Chemical Facilities, Long-Standing Customers
Product offering applicable across a broad range of end markets Chemical End Markets Strong Market Positions Across Footprint Strategically Located Chemical Facilities, Long-Standing Customers, Unique Business Model Nitric acid for industrial uses UAN, AN and NH3 fertilizers AN and AN solutions for
Slide 11: Operational Dynamics
Operational Dynamics Diversification Strategy with Product Balance Options Sales by Market Cost-Plus Agreements vs. Spot Market Sales A key strategy is to OPTIMIZE SALES MIX: industrial vs. agricultural. Approximately half our sales are NON-SEASONAL and priced pursuant to COST-PLUS agreements. 2013
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Slide 14: Capital Expansion Projects at El Dorado
El Dorado Ammonia Plant El Dorado Nitric Acid Plant and Concentrator Construction Process Well Underway Ammonia Production Offers Attractive Economics Capital Expansion Projects • Cost of $250 million - $300 million • Reduces production costs significantly vs. purchased ammonia • Enhanced product ba
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Slide 16: Climate Control Market and Products
Climate Control Market and Products Geothermal & Water Source Heat Pumps (64% of sales) Hydronic Fan Coils Heating and cooling for commercial/institutional new construction, renovation and replacements Leading share in hydronic fan coils Hydronic Fan Coils (23% of sales) Water Source Heat Pumps Heat
Slide 17: Significant Installed Base of Climate Control Products
Thousands of premier installations and over 4 million units Significant Installed Base of Climate Control Products Millennium Towers, NYC Bellagio, Las Vegas Statue of Liberty MGM Grand, Las Vegas Trump Tower, NYC World Financial Center, NYC Chicago Hilton and Towers Wynn Resort, Las Vegas Disney’s
Slide 18: Financial Overview
Financial Overview
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Slide 20: Segment Summary Statement of Operations
3 Mos. Ended March 31, $ in millions 2013 2012 2011 2010 2014 2013 $ in millions 2013 2012 2011 2010 2014 2013 3 Mos. Ended March 31, Calendar Year Ended Dec. 31, Calendar Year Ended Dec. 31, Segment Summary Statement of Operations Chemical Business Sales $380.7 $477.8 $511.9 $351.1 $115.2 $77.5 Gro
Slide 21: Strong Balance Sheet, Solid Financial Position
March 31, December 31, 2014 2013 $ in millions Debt to Capital Solid Financial Position Strong Balance Sheet Note: As of March 31, 2014, total debt consisted of $425 million 7.75% Senior Secured Notes due in 2019; a $28 million Secured Promissory Note with final payment due in February 2016 and $9 m
Slide 22: Planned Capital Spending
Planned Capital Spending Remainder of Total Chemical Business: El Dorado Facility Expansion Projects $200 - $235 $117 - $152 $317 - $387 Development of Natural Gas Leaseholds 8 - 10 11 - 13 19 - 23 Environmental Projects 9 - 11 5 - 6 14 - 17 Major Renewal and Improvement Projects 30 - 40 20 - 30 50
Slide 23: Outlook
Outlook Chemical Positive fundamentals remain for the nitrogen fertilizers we produce. Gross margins remain historically strong although lower than 2013. 2013’s improved corn harvest resulted in a higher stock-to-use ratio and lower forward corn prices, however pricing remains at favorable levels fo
Slide 24: Key LSB Value Drivers
Key LSB Value Drivers Comprehensive upgraded Chemical Business safety and plant reliability systems – intended to improve plant up-time and reduce risks of unplanned downtime. Pryor facility reliability improvements - including new senior management, additional engineering support, extensive monitor
Slide 25: Appendix
Appendix
Slide 26: EBITDA Reconciliations
EBITDA Reconciliations (in millions) Reconciliation of Consolidated Net Income (Loss) and Segment Operating Income (Loss) to Non-GAAP measurement EBITDA. Management uses operating income by business segment for purposes of making decisions that include resource allocations and performance evaluation
Slide 27: Chemical Business Operating Metrics
Chemical Business Operating Metrics *Gross cost excluding any hedging activity Three Months Ended March 31, Agricultural: % Change Product (tons sold) Urea ammonium nitrate (UAN) 83,516 32,419 158% Ammonium nitrate (AN) 86,403 39,904 117% Anhydrous ammonia 15,057 3,012 400% Other 5,557 5,222 6% 190,
Slide 28: LSB's Agricultural Distribution
LSB’s Agricultural Distribution Multiple distribution channels Diverse geographic coverage Longstanding customer relationships Direct rail linkage to corn belt Southern Plains, South Central, Midwest & West
Slide 29: What Our Chemical Products Are Used For
Agrochemical Products Uses Industrial Acids, Ammonia, DEF Uses: Industrial Mining Products Uses: What Our Chemical Products Are Used For: Urea Ammonium Nitrate Solutions (UAN) 28-32% N Manufactured nitrogen content fertilizer High nitrogen content fertilizer for corn and other crops with high nitrog
Slide 30: Typical Facility Process Flow (Pryor)
Typical Facility Process Flow (Pryor) Products are marketable at every intermediate and final stage of production. Pryor facility process flow is typical of plants with natural gas feedstock. Pryor and Cherokee use natural gas feedstock. El Dorado and Baytown use ammonia feedstock.
Slide 31: Climate Control Sales & Marketing Data
Climate Control Sales & Marketing Data Diversified End Markets Commercial: • 238 Commercial representative firms with 438 locations • 2,200+ Sales Engineers Residential (Geothermal): • 600 Residential distributor locations (approx.) • 4,000 Residential contractor-dealers (approx.) Plus: OEM distribu
Slide 32: Focus on Geothermal Heat Pumps
Focus on Geothermal Heat Pumps How does a GHP system work? The Earth absorbs approximately 50% of all solar energy and remains at nearly a constant temperature year round (below a few feet deep). A GHP system uses a sealed in-ground heat exchanger (loop) filled with fluid and a GHP unit to exchange
Slide 33: Typical GHP Costs and Savings
Payback (GHP vs. Hi - Eff Gas Furn+AC) Positive Cash Flow Typical GHP Costs and Savings For a GHP System in a 2,500 sq. ft. new house in St. Louis, MO (typical middle America) Installed Cost of a 4 ton GHP System = $6,000 per ton (12,000 Btu/ton). System Operating Cost Comparison GHP vs. Conventiona
Slide 34: Notes
Notes:
Slide 35: Notes
Notes:
Slide 36: Investor Relations and Company Contact
LSB Industries, Inc. is headquartered in Oklahoma City and does business through its subsidiaries, with seven HVAC manufacturing and distribution facilities in Oklahoma City, chemical plants in Texas, Arkansas, Alabama and Oklahoma and an engineered products distribution center in Oklahoma City. App