Lsb Industries, Inc. · NYSE:LXU
Lsb Industries — Investor Presentation (September 2021)
32 slides from Lsb Industries's investor presentation, Sep 21, 2021
Slide 1: LSB Industries Investor Presentation September 2021
LSB Industries Investor Presentation September 2021LSB Industries Investor Presentation September 2021
Slide 2: Cautionary Statement
Cautionary Statement IMPORTANT: The following information applies to this presentation, and you are therefore advised to read this page carefully before reading, reviewing or making any other use of this presentation. By reviewing this presentation, you agree to be bound by the following terms and c
Slide 3: Cautionary Statement (cont'd)
Cautionary Statement (cont’d) Recipients This presentation is not directed to, or intended for distribution to, or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or re
Slide 4: Presenters
Presenters President and CEO of LSB Industries since 2018. He joined the company in 2014 and served as Executive Vice MARK BEHRMAN President and CFO from 2015-2018. Prior to LSB, Mr. President & Chief Executive Officer Behrman had over 35 years of financial and investment banking experience in the i
Slide 5: Agenda
Agenda ▪ Company Overview 6 ▪ Key Credit Highlights 12 ▪ Financial Overview 24 ▪ Appendix 28 5Agenda ▪ Company Overview 6 ▪ Key Credit Highlights 12 ▪ Financial Overview 24 ▪ Appendix 28 5
Slide 6: Company Overview
Company OverviewCompany Overview
Slide 7: LSB at a Glance
LSB at a Glance (1) (2) LTM 6/30/21 Revenue by Business YoY Gross Margins Business Overview ▪ LSB Industries, headquartered in Oklahoma City, OK, manufactures and sells chemical products for the agricultural, mining and industrial markets through 32% its three production facilities strategically loc
Slide 8: LSB Industries – A Brief History
LSB Industries – A Brief History ▪ Founded by Jack Golsen in 1968 and grew as an industrial conglomerate focused on industrial 1968 products and climate control systems ▪ Acquired El Dorado, AR manufacturing facility (“El Dorado”) from Monsanto 1983 ▪ Acquired Cherokee, AL chemical manufacturing fac
Slide 9: Recent Business Updates
Recent Business Updates ▪ Signed a definitive agreement in July 2021 with LSB Funding (the “Holder”), an affiliate of Eldridge, to exchange the shares of LSB Series E and F Redeemable Preferred Stock held by the Holder for Shares of LSB common stock - The Transaction is expected to close in late Sep
Slide 10: Strong Management Team with Deep Industry Experience and Track Record of Success
Strong Management Team with Deep Industry Experience and Track Record of Success… Cheryl Maguire Kristy Carver Mark Behrman Michael Foster Damien Renwick John Burns EVP, General EVP, EVP, Chief Title President & CEO EVP & CFO Counsel & SVP, Treasurer Manufacturing Commercial Officer Secretary Years
Slide 11: Resilient Financial Profile with Strong Performance through COVID-19
…Resulting in Resilient Financial Profile with Strong Performance through COVID-19 (1) (2) Revenue Adjusted EBITDA 2019A – LTM Q2 2021 2019A – LTM Q2 2021 ($millions) ($millions) $84 $402 $365 $366 $354 $351 $69 $338 $336 $67 $66 $65 $63 $62 2019A LTM Q1 20 LTM Q2 20 LTM Q3 20 2020A LTM Q1 21 LTM Q2
Slide 12: Key Credit Highlights
Key Credit HighlightsKey Credit Highlights
Slide 13: Key Credit Highlights
Key Credit Highlights Significant Operational Improvements and Enhancement of Operational and Maintenance 1 Programs Resulting in Continued Margin Enhancing Opportunities Highly Diversified Nitrogen Chemicals Business with Sales Mix Offering Significant Contract 2 Pricing Stability Multiple Organic
Slide 14: Operational Improvements Benefiting From Over $1 Billion of Investment
Operational Improvements Benefiting From Over $1 Billion 1 of Investment Total 2013-2021 capex spend of over $1 billion to drive improved financial performance: ▪ Expansion of El Dorado facility including new ammonia plant, nitric acid plant and other upgrades ▪ Replacement of urea reactor at Pryor
Slide 15: Upgrading Low-Cost Feedstock to Margin Enhancing Chemicals
Upgrading Low-Cost Feedstock to Margin Enhancing 1 Chemicals LSB Products Sold to Market Ammonia (NH ) 3 (storage, trucks, rail) Nitric Acid (storage, trucks, rail) Ammonium Nitrate AN Solution Solution (ANS), Nitric Acid HDAN, LDAN (storage, trucks, rail) Urea-Ammonium Natural Ammonia Nitrate (UAN)
Slide 16: Diversified Nitrogen Chemicals Business with Differentiated End Market Positions
Diversified Nitrogen Chemicals Business with Differentiated 2 End Market Positions Key Products End Markets Application ▪ Urea ammonium nitrate ▪ Fertilizer for corn and other crops solutions (UAN) ▪ Primary nitrogen component in ▪ Ammonium nitrate (AN) – nitrogen, phosphorus and potassium High dens
Slide 17: Sales Mix Provides Stability and Visibility Into Contract Pricing
Sales Mix Provides Stability and Visibility Into Contract 2 Pricing Q2-2021 TTM Sales by Pricing Method ▪ Approximately 38% of sales non- seasonal and priced pursuant to contract agreements Cost-Plus ▪ Contributes to margin stability through pass-through of raw ~35% materials and other manufacturing
Slide 18: Multiple Organic Growth Opportunities with Margin Enhancement Projects Well Underway
Multiple Organic Growth Opportunities with Margin 3 Enhancement Projects Well Underway Multiple Organic Growth Opportunities ◼ Negotiated 7-year agreement for the sale of 70,000 – 100,000 tons of Nitric Acid from El Dorado, and secured right of first refusal for the construction of a new nitric acid
Slide 19: Well Positioned to Capitalize on Green Ammonia Opportunities
Well Positioned to Capitalize on Green Ammonia 4 Opportunities As an existing ammonia producer, LSB is well positioned to lever its assets and knowledge to capitalize on potential green ammonia opportunities Blue Ammonia Green Ammonia ◼ Produced using renewable feedstock, specifically ◼ CO emissions
Slide 20: Agricultural Market Overview
5 Agricultural Market Overview ▪ Corn is currently trading around ~$5.00 per bushel and is 5 Year Corn Prices expected to remain at elevated levels throughout the year $8 ▪ Robust pricing for nitrogen products is expected to continue in $6 ~ $5.00 Sept $4 2H21 $2 ▪ Many factors point to strong 2H21
Slide 21: Significantly Higher Pricing vs. A Year Ago
5 Significantly Higher Pricing vs. A Year Ago September 2021 September 2020 Average Selling Prices Average Selling Prices Tampa Ammonia $615 / MT $225 / MT Urea $490 / ST $230 / ST UAN $320 / ST $120 / ST Ammonium Nitrate $400 / ST $225 / ST Source: Green Markets as of 9/10/21 publication. 215 Signi
Slide 22: Strong Industrial and Mining Fundamentals
5 Strong Industrial and Mining Fundamentals Industrial Mining ▪ According to the U.S. Department of Housing and ▪ Copper prices rising; reaching $5.72 per pound in Urban Development, new privately-owned housing July, its highest price in history, and has continued to unit starts totaled 1.572 millio
Slide 23: Record LSB Production of Ammonia and UAN in 2020
5 Record LSB Production of Ammonia and UAN in 2020 Ammonia 900,000 800,000 700,000 600,000 500,000 2017 2018 2019 2020 UAN 500,000 400,000 300,000 2017 2018 2019 2020 23 Tons Tons5 Record LSB Production of Ammonia and UAN in 2020 Ammonia 900,000 800,000 700,000 600,000 500,000 2017 2018 2019 2020 UA
Slide 24: Financial Overview
Financial OverviewFinancial Overview
Slide 25: Historical Financial Overview
Historical Financial Overview ($Millions) ▪ Q2 2021 sales increased 34% YoY driven by higher pricing (2) ▪ Q2 2021 Adjusted EBITDA increased 58% YoY ; record $46 million compared to $29 million in the second quarter of 2020 on the back of favorable pricing conditions ▪ Net sales of $141 million comp
Slide 26: Next Months Outlook
Next 12 Months Outlook ▪ Robust market conditions and solid operating performance expected to continue for remainder of the year and into 2022 ▪ We Predict Significant Pricing Momentum - Robust pricing has continued in 2H21 as there was no price reset for summer fill - Corn is currently trading arou
Slide 27: Positioned for Continued Growth and Improved Financial Performance – Long Term Growth Plan
Positioned for Continued Growth and Improved Financial Performance – LSB Long Term Growth Plan Realizing returns from completed maintenance and upgrades • Reached record ammonia, UAN, and DEF production in 2020 • Several initiatives underway to drive further improvement in operating performance • Op
Slide 28: Appendix
AppendixAppendix
Slide 29: EBITDA Reconciliation
EBITDA Reconciliation ($Millions) LTM LTM LTM LTM LTM Adjustments 2018A 2019A 3/31/20 6/30/20 9/30/20 2020A 3/31/21 6/30/21 1. Stock-based compensation: Non-cash adjustment for options and restricted stock unit expense recognized in each period Net Loss (72) (63) (71) (78) (68) (62) (56) (32) 2. Non
Slide 30: Revenue Reconciliation
Revenue Reconciliation 2019 2020 2021 ($millions) 2019A LTM Q1 LTM Q2 LTM Q3 2020A LTM Q1 LTM Q2 Net Sales Agricultural Products $ 188 $ 182 $ 175 $ 171 $ 180 $ 183 $ 185 Industrial Acids and Other Chemical Products 140 137 129 131 133 138 169 Mining Products 38 35 34 34 38 44 48 Total Net Sales $ 3
Slide 31: Gross Profit Reconciliation
Gross Profit Reconciliation Six Months Ended Twelve Months Ended June 30, December 31, ($thousands) 2021 2020 2020 2019 2018 Net Sales Agricultural $ 111,421 $ 106,455 $ 180,036 $ 187,641 $ 187,164 Industrial and Mining 127,391 81,989 171,280 177,429 190,996 Total Net Sales $ 238,812 $ 188,444 $ 351
Slide 32: Preferred Stock Reconciliation
Preferred Stock Reconciliation Quarterly ($millions) 12/31/20 3/31/21 6/30/21 Beginning Preferred Balance $ 269 $ 278 $ 287 (+) Preferred Stock Periodic Dividend Accrual $ 9 $ 10 $ 10 Ending Preferred Stock Balance $ 278 $ 287 $ 298 (1) $ 2 $ 2 $ 2 Participation Rights Value Total Preferred Stock Ba
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