Lsb Industries, Inc. · NYSE:LXU
Lsb Industries — Investor Presentation (November 2014)
36 slides from Lsb Industries's investor presentation, Nov 19, 2014
Slide 1: LSB Industries, Inc.
Exhibit 99.1 LSB Industries, Inc. NYSE: LXU November 2014
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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,” “believe,” “project,
Slide 3: Company Overview
Company Overview 3
Slide 4: Business Overview
Business Overview Diversified industrial manufacturer of chemicals and Net Sales by Business Segment – LTM 9/30/14 HVAC products sold into a wide range of end Climate markets Control, 38% Founded in 1968 and headquartered in Oklahoma City, OK; publicly traded (NYSE: LXU) Chemical Business operates 4
Slide 5: LSB's Two Core Businesses
LSB’s Two Core Businesses Chemical Provides nitrogen based agricultural, mining LTM 9/30/14 Sales Mix and industrial chemicals to North American market Climate 31% Commercial Control & Institutional Leading merchant marketer of nitric acid in Chemical Buildings 38% the U.S. 28% Agriculture 60% ($264
Slide 6: Business Segment Overview
Business Segment Overview 6
Slide 7: Chemical Markets and Products
Chemical Markets and Products Market Products Uses Competitors Urea Ammonium Nitrate Fertilizer for corn and other crops CF Industries, PCS, Solutions (UAN) Koch Industries, Rentec, Agro- Coffeeville Resources, imports Chemical Ammonium Nitrate Primary nitrogen component in NPK CF Industries, import
Slide 8: Attractive Industry Fundamentals – Agro Chemicals
Attractive Industry Fundamentals – Agro Chemicals World Situation: North America is Low Cost Growing populations Producer of Nitrogen Fertilizers Developing economies Natural gas is the primary feedstock for Changing dietary habits (from grain to anhydrous ammonia and all nitrogen meat) fertilizers.
Slide 9: LSB's Agricultural Distribution
LSB’s Agricultural Distribution Southern Pryor, OK UAN Koch Plains & Corn Belt Transammonia, The Cherokee, Eastern AL UAN Andersons, CHS, Koch, et.al. Corn Belt Ag Centers - 30% Southern Plains, El Dorado, AR AN Distributors & Dealers - 70% South Central, Midwest & West Multiple distribution channel
Slide 10: Operational Dynamics
Operational Dynamics Diversification Strategy with Product Balance Options Sales by Market Cost-Plus Agreements vs. Bayer Nitric Spot Market Sales Acid 16% Cost Plus Spot 50% Market Industrial 50% Agricultural Acids & 46% Ammonia 20% Natural Gas Mining 3% 15% Approximately half our sales A key strat
Slide 11: Major Chemical Customers
Major Chemical Customers Bayer 11
Slide 12: Chemical Facilities
El Dorado Chemical Co. Chemical Facilities El Dorado Pryor Cherokee El Dorado Facility Chemical Chemical Nitrogen LLC Nitric LLC Company Company Location El Dorado, AR Cherokee, AL Pryor, OK Baytown, TX Cherokee Nitrogen LLC Year Acquired/Built 1983 1999 2000 2000 Ammonia Design Kellogg Kellogg Prit
Slide 13: Annual Production Capacity of Products Available for Sale
Annual Production Capacity of Products Available for Sale (1,000’s of tons) El Dorado Pryor Cherokee El Dorado Facility Chemical Chemical Total Nitrogen LLC Nitric LLC Company Company Feedstock ammonia natural gas natural gas ammonia (1) Ammonia Production Capacity 220 /375 175 215 - 610/765 Product
Slide 14: Capital Expansion Projects
Capital Expansion Projects El Dorado Ammonia Plant El Dorado Nitric Acid Plant and Concentrator • Cost of $275 million - $300 million • Cost of $125 million - $130 million • Reduces production costs significantly vs. • Improves operating characteristics purchased ammonia • Enhanced product balance •
Slide 15: Climate Control Market and Products
Climate Control Market and Products Market Products Uses Water Source Heating and cooling for commercial/institutional Geothermal & Heat Pumps as well as single family residential - new Water Source construction, renovation and replacements Heat Pumps Geothermal Heating and cooling for commercial/in
Slide 16: Attractive Industry Fundamentals: Climate Control
Attractive Industry Fundamentals: Climate Control Construction markets are poised for a recovery to pre-recession levels Climate Control LTM 9/30/14 Market Mix Significant upside as industry drivers return to Other levels at/near historical norms 15% Education 19% Driven by high energy efficiency In
Slide 17: Significant Installed Base of Climate Control Products
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 Grand Floridian, Orlando Atlantis, Bahamas Rowes Wharf, Bost
Slide 18: Financial Overview
Financial Overview 18
Slide 19: Summary Statement of Operations
Summary Statement of Operations Calendar Year Ended Dec. 31, 9 Mos. Ended Sept. 30, $ in millions except EPS 2013 2012 2011 2010 2014 2013 Sales $679.3 $759.0 $805.3 $609.9 $551.2 $530.3 Sales Growth (11)% (6)% 32% 15% 4% (9)% Operating Income/(Loss) $105.3 $95.7 $136.4 $55.9 $48.4 $35.1 Net Income/
Slide 20: Segment Summary Statement of Operations
Segment Summary Statement of Operations Chemical Business Calendar Year Ended Dec. 31, 9 Mos. Ended Sept. 30, $ in millions 2013 2012 2011 2010 2014 2013 Sales $380.7 $477.8 $511.9 $351.1 $345.7 $303.0 Gross Profit 46.2 97.7 130.7 49.3 57.2 39.1 Gross Profit % 12.1% 20.4% 25.5% 14.0% 16.5% 12.9% Ope
Slide 21: Solid Financial Position
Solid Financial Position Debt to Capital Strong Balance Sheet 60% 55.5% 52.9% 52.1% 51.4% 51.5% 50% Sept. 30, Dec. 31, 40% $ in millions 2014 2013 30% 23.0% 22.9% Cash and Investments 20% $311.1 $434.7 10% (including non-current) 0% Mar. Jun. Sept. Dec. Mar. Jun. Sept. Total Debt $459.4 $463.0 31 30
Slide 22: Planned Capital Spending
Planned Capital Spending (as of September 30, 2014 - $ in millions) Planned Capital Expenditures Total Projects Remainder of 2014 2015 Total Chemical Business: El Dorado Facility Expansion Projects $80 - $93 $200 - $222 $280 - $315 Development of Natural Gas Leaseholds 1 - 3 14 - 18 15 - 21 Environm
Slide 23: Chemical Business Operating Metrics
Chemical Business Operating Metrics Nine Months Ended September 30, Agricultural: 2014 2013 % Change Product (tons sold) Urea ammonium nitrate (UAN) 231,153 200,549 15% Ammonium nitrate (AN) 184,450 124,070 49% Anhydrous ammonia 65,148 37,332 75% Other 23,478 21,714 8% 504,229 383,665 31% Average Se
Slide 24: Outlook
Outlook Chemical: Favorable indicators for agricultural market Expected 2014/2015 planting level of ~87 million acres of corn Current nitrogen fertilizer prices approximately equal to or higher than a year ago Natural gas feedstock cost relatively low historically Corn pricing lower than recent past
Slide 25: 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 26: Appendix
Appendix 26
Slide 27: EBITDA Reconciliations
EBITDA Reconciliations (in millions) Reconciliation of Consolidated Net Income and Segment Operating Income to Non-GAAP measurement EBITDA. Management uses operating income by business segment for purposes of making decisions that include resource allocations and performance evaluations. Operating i
Slide 28: What Our Chemical Products Are Used For
What Our Chemical Products Are Used For: Agrochemical Products Uses Urea Ammonium Nitrate Solutions (UAN) 28-32% N High nitrogen content fertilizer for corn and other crops with high nitrogen Manufactured nitrogen content fertilizer demand (wheat, milo, cotton) E2 Ammonium Nitrate Prill (solid) 34%
Slide 29: Typical Facility Process Flow (Pryor)
Typical Facility Process Flow (Pryor) NH3 (storage, trucks, rail) Nitric AN Acid Solution Natural Ammonia Gas Plant UAN (pipeline) UAN (storage, trucks, rail) CO 2 Urea CO2 CO 2 Liquification (storage, trucks) Products are marketable at every intermediate and final stage of production. Pryor facilit
Slide 30: Climate Control Sales & Marketing Data
Climate Control Sales & Marketing Data September 30, 2014 LTM Sales Mix Data Diversified End Markets Distribution Channels Retail Commercial: 100% Single Family • 238 Commercial representative firms with 75% Education 438 locations 50% Healthcare • 2,200+ Sales Engineers Multi Family Residential (Ge
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: Typical GHP Costs and Savings
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 Payback (GHP vs. Hi-Eff Gas Furn+AC) GHP vs. Conventional Systems Installed c
Slide 33: Notes:
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Slide 36: LSB Industries, Inc. contact and company information
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
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