Lsb Industries, Inc. · NYSE:LXU
Lsb Industries — Investor Presentation (September 2014)
36 slides from Lsb Industries's investor presentation, Sep 10, 2014
Slide 1: LSB Industries, Inc. September 2014
LSB Industries, Inc. September 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: Net Sales and EBITDA by Business Segment – LTM 6/30/14
Net Sales by Business Segment – LTM 6/30/14 EBITDA by Business Segment – LTM 6/30/14 LSB operates a well-diversified business with differentiated market positions across two distinct business segments Business Overview Diversified industrial manufacturer of chemicals and HVAC products sold into a wi
Slide 5: LSB's Two Core Businesses
LSB’s Two Core Businesses Consolidated Sales History LTM 6/30/14 Sales Mix 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 rel
Slide 6: Business Segment Overview
Business Segment Overview
Slide 7: Chemical Market and Products
Agro- Chemical (48% 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 8: Attractive Industry Fundamentals – Agro Chemicals
U.S. Midwest Delivered Ammonia Cost Forecast ($US/ton) Source: Fertecon, Blue Johnson, PotashCorp (2013) 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 his
Slide 9: LSB's Agricultural Distribution
Pryor, OK Cherokee, AL El Dorado, AR 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 UAN Koch Southern Plains & Corn Belt UAN Transammonia, T
Slide 10: Diversification Strategy with Product Balance Options
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. LTM 6/30/14 Sales Mix Op
Slide 11: Industrial customers
Georgia-Pacific | KOCH INDUSTRIES INC (({ INTERNATIONAL (QQ) PAPER YARA
Slide 12: Chemical facilities
Slide 13: Chemical facilities overview
Slide 14: El Dorado Capital Expansion Projects
El Dorado Ammonia Plant El Dorado Nitric Acid Plant and Concentrator Construction Process Well Underway Ammonia Production Offers Attractive Economics • Cost of $250 million - $300 million • Reduces production costs significantly vs. purchased ammonia • Enhanced product balance opportunities • Incre
Slide 15: Climate Control Market and Products
Climate Control Market and Products Geothermal & Water Source Heat Pumps (66% 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 16: Attractive Industry Fundamentals: Climate Control
Climate Control LTM 6/30/14 Market Mix $204.0 Construction markets are poised for a recovery to pre-recession levels Green building market spending expected to grow ~25%+ CAGR from ‘12 – ‘16E Attractive Industry Fundamentals: Climate Control Significant upside as industry drivers return to levels at
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: Slide 18
Slide 19: Slide 19
Slide 20: Slide 20
Slide 21: Solid Financial Position
Solid Financial Position Strong Balance Sheet Note: As of June 30, 2014, total debt consisted of $425 million 7.75% Senior Secured Notes due in 2019; a $26.2 million Secured Promissory Note due in February 2016 and $9.1 million of equipment loans and capital leases. Our availability under the $100 m
Slide 22: Planned Capital Spending
Planned Capital Spending Remainder of Total Chemical Business: El Dorado Facility Expansion Projects $135 - $170 $139 - $174 $274 - $344 Development of Natural Gas Leaseholds 3 - 5 11 - 15 14 - 20 Environmental Projects 7 - 10 5 - 6 12 - 16 Major Renewal and Improvement Projects 20 - 30 27 - 35 47 -
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: Reconciliation of Net Income and Segment Operating Income to EBITDA
Reconciliation of Consolidated Net Income and Segment Operating Income to Non-GAAP Measurement EBITDA . by business segment for purposes of making decisions that include resource allocations and performance evaluations. Operating income by business segment represents gross profit by business segment
Slide 27: Chemical Business Operating Metrics
Chemical Business Operating Metrics *Gross cost excluding any hedging activity Six Months Ended June 30, Agricultural: % Change Product (tons sold) Urea ammonium nitrate (UAN) 186,204 96,102 94% Ammonium nitrate (AN) 160,039 102,843 56% Anhydrous ammonia 40,449 15,312 164% Other 18,957 17,013 11% 40
Slide 28: 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 29: Typical Facility Process Flow (Pryor)
AN Solution Nitric Acid Ammonia Plant UAN Natural Gas (pipeline) 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 feedstoc
Slide 30: Climate Control Sales & Marketing Data
Climate Control Sales & Marketing Data Diversified End Markets Commercial: • • Residential (Geothermal): • • Plus: OEM distribution channels Distribution Channels (as of Q2 2014) Product & Market Sales Mix – Various Perspectives June 30, 2014 LTM Sales Mix Data 238 Commercial representative firms wi
Slide 31: 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 32: GHP Payback and Positive Cash Flow
Payback (GHP vs. Hi - Eff Gas Furn+AC) Positive Cash Flow 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. Conventional Systems Note: System install
Slide 33: Notes
Notes: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _____________________________
Slide 34: Notes
Notes: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _____________________________
Slide 35: _________________________________________________________________ ___________________________________________________…
_________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________________
Slide 36: Company and Investor Relations Contacts
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
LSB Industries — Investor Presentation (September 2014) on 6ix