Lsb Industries, Inc. · NYSE:LXU
Lsb Industries — Q4 2020 Earnings Presentation
22 slides from Lsb Industries's earnings presentation, Feb 25, 2021
Slide 1: Q4 2020 Earnings Presentation
Q4 2020 Earnings Presentation February 25, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assum
Slide 3: Health and Safety Is Our Top Priority – Goal Zero
Health and Safety Is Our Top Priority – Goal Zero We achieved significant positive results with our enhanced focus on operational safety in 2020 • ~58% decrease in recordable safety incidents 2020 versus 2019 • Full year 2020 total recordable injury rate of 1.06 Baytown facility has operated ove
Slide 4: Q4 2020 Overview Executing on Our Strategy Despite Headwinds
Q4 2020 Overview Executing on Our Strategy Despite Headwinds Increase in sales volumes quarter over quarter despite impact from COVID-19 • 64% increase in agricultural sales volumes including a 105% increase in UAN sales volumes • 18% increase in industrial and mining sales volumes Lower selling
Slide 5: Agricultural Market Overview
Agricultural Market Overview $6.00 5 Year Corn Prices Significant increase in commodity prices $5.49 $5.50 since Fall 2020 $5.00 – 2020 farmer income 2nd highest ever $4.50 – Significant increase in Chinese imports of $4.00 all agricultural commodities $3.50 – La Nina drought conditions in South $
Slide 6: Industrial and Mining Market Overview
Industrial and Mining Market Overview Industrial Mining Automotive industry halted production mid-March Copper prices rising, reaching $3.55 per pound on but has since resumed production. Seasonally February 1st, the highest price since February 2013. adjusted annual rate (SAAR) for light vehicl
Slide 7: LSB Consolidated Financial Highlights
LSB Consolidated Financial Highlights $ in millions, except per share amounts 4Q 2020 4Q 2019 Sales $88.9 $73.9 Sales up 20%: Volume up 31%, Price down (11%) Adjusted Gross Higher production and sales volumes and lower $14.2 $9.8 gas cost partially offset by lower selling prices Profit 1 43 days
Slide 8: Fourth Quarter – 2020 vs. 2019
Fourth Quarter – 2020 vs. 2019 $ in millions 1 2 (1) Volume is net of higher railcar expenses and higher distribution fees related to higher sales volumes. (2) Represents $9.7 million from lower selling prices net of $0.1 million from lower natural gas. 8
Slide 9: Underlying Business Continues to Improve
Underlying Business Continues to Improve $ in millions ~200% increase 1 (1) Represents $9.7 million from lower selling prices net of $0.1 million from lower natural gas. 9
Slide 10: Adjusted Gross Margin Remains Stable as Operating Gains Offset Lower Pricing
Adjusted Gross Margin Remains Stable as Operating Gains Offset Lower Pricing Tampa Ammonia Price Adjusted Gross Margin % $325 30% 25% $300 20% $275 15% $250 10% $225 5% $200 0% 2018 2019 2020 Adjusted Gross Margin 1 Average Tampa Ammonia Price (1) Adjusted gross profit margin excludes turnaround, ve
Slide 11: Current Capital Structure / Opportunities to Improve Capital Structure
Opportunities to Improve Capital Current Capital Structure Structure Senior Secured Notes Reviewing refinancing opportunities $435 million at 9.625% – Favorable fertilizer market trends and Due May 2023 continued recovery of industrial demand Call premium of 103 in May 2021 exiting pandemic
Slide 12: 2021 Outlook
2021 Outlook Operating: Full Year 2021 Full Year 2020 Ammonia Production (tons) 830,000 – 850,000 827,000 Turnarounds Cherokee - 30 days in Q3 No turnarounds Approximately $10 million in turnaround expense ($7 million Cherokee, $3 million other) Capex ~ $30 million $30 million Sales Volume: Full Yea
Slide 13: 2021 Outlook
2021 Outlook Financial (Full Year): Variable Plant Expenses: Natural gas feedstock consumption (on average) 30 – 33 MMBtu/ton of ammonia Electricity 5.0% – 7.0% of sales Catalyst expense (burnoff) 1.0% – 2.0% of sales Freight 9.0% – 11.0% of sales Other purchased products (primarily Ag Centers) 2.0%
Slide 14: UAN Continues to Trade at a Discount to Urea on a Nitrogen Equivalent Basis
UAN Continues to Trade at a Discount to Urea on a Nitrogen Equivalent Basis UAN (N equivalent) Ammonia (N equivalent) Urea (N equivalent) $0.90 $0.80 $0.70 $ / ton of N $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 UAN Ammonia Urea $700 $600 $500 $400 $ / ton $300 $200 $100 $- 2011 2012 2013 2014 2015 2016 20
Slide 15: Increasing Global Energy Price Spreads
Increasing Global Energy Price Spreads International Natural Gas Benchmarks - Front Month ($/MMBtu) $12.00 Henry Hub TTF NBP $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 15
Slide 16: Record Production of Ammonia and UAN in 2020; Strong Production Year Overall
Record Production of Ammonia and UAN in 2020; Strong Production Year Overall Ammonia 900,000 800,000 Tons 700,000 600,000 500,000 2017 2018 2019 2020 UAN 500,000 Tons 400,000 300,000 2017 2018 2019 2020 16
Slide 17: Positioned for Growth and Improved Financial Performance
Positioned for Growth and Improved Financial Performance Realizing returns from completed maintenance and upgrades in 2019 • Record urea production at our Cherokee facility in Q4 2020 • Reached record ammonia, UAN, and DEF production in 2020 • Optimizing product mix to maximize margins Continued bro
Slide 18: What is Green Ammonia?
What is Green Ammonia? “Green Ammonia is produced using renewable feedstock, specifically hydrogen from water electrolysis and nitrogen separated from the air, rather than natural gas or coal, resulting in a zero CO2 emission process. Ammonia’s potential as an energy carrier raises demand for ammo
Slide 19: Appendix
Appendix
Slide 20: EBITDA Reconciliation
EBITDA Reconciliation Three Months Ended Twelve Months Ended LSB Consolidated ($ In Thousands) December 31, December 31, 2020 2019 2020 2019 Net loss ($21,692) ($27,714) ($61,911) ($63,417) Plus: Interest expense 12,606 12,080 51,115 46,389 Depreciation and amortization 17,939 17,064 70,841 69,574 B
Slide 21: Gross Profit Reconciliation
Gross Profit Reconciliation Three Months Ended Twelve Months Ended LSB Consolidated ($ In Thousands) December 31, December 31, 2020 2019 2020 2019 2018 Net sales Agricultural $ 41,595 $ 32,851 $ 180,036 $187,641 $187,164 Industrial and Mining 47,308 41,045 171,280 177,429 190,996 Total net sales 88,
Slide 22: EBITDA Sensitivity Grid at $3.00/mmbtu Gas
EBITDA Sensitivity Grid at $3.00/mmbtu Gas $ in millions Significant Earnings Power at Optimal Operating Rates Average UAN Price/ST For A Year $ 210 $ 190 $ 170 $ 150 $ 130 $ 400 $ 180 $ 170 $ 160 $ 150 $ 140 Average Tampa Ammonia Price/MT For A Year $ 350 $ 160 $ 150 $ 140 $ 130 $ 120 $ 300 $ 140 $