LXU - Earnings call transcript Q3 2017

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Operator

Greetings and welcome to the LSB Industries' Third Quarter 2017 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kristy Carver, Vice President and Treasurer of LSB Industries.

begin. now may You

Kristy Carver

guarantees Please differ because today's on these expectations, cause are current Brock. variety and forward-looking factors of the will statements, intent, could not they projections, and statements results and future note you, performance call a to that actual include company's of materially. Thank are based

information and this will to include remarks. our reference of in release press section to call At references of please GAAP statements go call opening As this would the lsbindustries.com, and website, regarding non-GAAP results further time, over for the the for turn reconciliations like to non-GAAP forward-looking ahead Investors results. Dan results, to I

Dan Greenwell

appreciate morning, We're you and to Kristy, good you, Thank everyone. time. your call pleased and have on our

update financial this on XXXX We'll plant as a During our for Behrman nitrogen John Diesch provide maintenance operations morning, results review on on Mark and XXXX our thoughts views position. operations markets. XXXX. liquidity and nitrogen our and we'll early will quarter the our well of cover our significant some third of will comprehensive plant management. markets share our provide also plant initiatives results discussion an provide as

volumes XX%. were approximately compared The $XX quarter $XX increase quarter, the third revenues largely in decrease despite the the year overall prices. or of in was to to third Our approximately million XXXX prior million in of shipped higher $XX an million selling attributable increase

efforts year quarter The EBITDA prior improved and third enhanced results. distribution significant. from Our to continue positive yield marketing was the

SG&A $X quarter. from well a improvement were last year reduced by large approximately the increase million as Our also as savings. plant cost were of costs third volume contributor

that selling reduce We cover and into as costs. prices his improvements SG&A slightly lower were XXXX. prepared Offsetting will Mark move average will higher some in gas comments. of the natural continue we to costs

outages at quarter certain the that our to We the performance Pryor plant facilities were weather were and by the disappointing. on-stream operational events during our natural continue improve of El of caused we recognized these plants, Dorado Although systems. several and

costs However, lost the the additional approximately and third efforts, $X in quarter. were production, million repair restart

We to plants. enhancing, resources, rates state-of-the-art are the our maintenance personnel We're necessary on-stream to a upgrades and and systems, the making in on which focus equipment, us on-stream key improving improving to with implementing have all and activities. averaging at of provide will assessing, rate continue our of our maintenance engineering managing, management system, achieve XX% technology our goals

walk and incurring of have prices that reduced and nitrogen anticipate these XXXX improve. system added we've Diesch without until XXXX online originally had John do volatility effectively facility. turnaround now, in the completing been items matures by a this safe a we a the for quarters, to XXXX to during in and we not ammonia plant need work however, for process downtime have week to discussion. in the new may decided next plant currently channel will the channels capacities believe will us and past will distribution required the over improving efficiently of This the of November. you it this third the significant will the lead the remainder distribution products it the the gas in We noticed turnaround, more been work our efficient replace Once are rates for price improve Pryor release, and planned while further by our on-stream will ability press As reductions. We the be completing extend place coming product year integrating pre-heat at to much we've more enhance down. now, perform We customers price his to through several those our to believe Pryor XXXX anticipate plant.

The third and a pleased sales efforts quarter third with quarter tough we in are year saw from our prior distribution and the market. volumes improved

pricing. has We indicate businesses a decrease improve positive in urea Tampa to should industrial will agricultural continue product per debt per August and that ammonia to and from in prices and low our the of ammonia Tampa seek from point $XXX It's for Tampa ton a year-over-year many and ton impact strong key some customers at link we has Both U.S. continue for this recent appreciation where this the into our grow grow the U.S. and to we have net strong industrial as Nitrogen see the ammonia increase import/export net to sales bit a our index. can a statistics prices the Gulf $XXX of presence unusual our increased occur November. season. to coming

quarter So, a of not if net North pricing stabilizing higher, XXXX than XXXX. similar, pricing. further trend long be as the competitive, of remains international fourth American the should will little see in fourth currently we thereby this continuing, anticipate our pricing production quarter bit ammonia We

product premium strong. nitrate. low-density low-density nitric for continuing increased in remain as being production by go to However, a fall ammonium quarter we nitrate of and that the XXXX. acid XXXX order Ammonium prices pricing it to ammonium XXXX anticipate nitric markets was fill quarter into demand comparable will to the as be competitive requirements improved UAN of position and holding as ammonia taken Industrial for the in with We the of volumes were of reductions be acid nitrate expect lower volumes the summer coal fourth the we saw UAN at do late as seems third quarter industrial market first prices. not have significant pricing the market pricing its consumed remains

and higher We placed We we continue volumes market are logistics product currently into achieving. footprint our be our distribution than will we further enhance debt to salesforce. the the pricing with and net offer can enhance believe

down upgrading our assist procurement efforts in move in cost We outside us as we drive expect will experts and improved pricing XXXX. in XXXX. engaged We've personnel overall MRO into to

outside be us assist experts fully Additionally, processes. management and in maintenance the using utilizing maintenance will new who we'll systems and implementing

further us will our over for now firms John in We improvement operations engaged our quarter. will third to Diesch the call that facility review I'll who evaluating have plant also the turn opportunities. John? outside Pryor assist for engineering on-stream

John Diesch

morning. Dan. Good you, Thank

quarter further electric reduce generators adding have from done systems The the continues had to lightning plant. Our plant for third planned. took rooms. Hurricane a to XX% quarter. complex closure operate ship of Cherokee interruption at detailed previously ammonia ammonia urea the other downtime ammonia time on-stream time. channel. impacts quarter, lightning ammonia root-cause There critical Harvey The and power due hurricane Houston plant very thunderstorm XX% acid plant on-stream during of to Cherokee El and Dorado time on-stream had incoming the the disruptions, the damage second plant had improvement and El Dorado disclosed continues analysis well. upgrading we for and control over unscheduled had and however, of an facility backup quarter. additional to during events quarter. Baytown Pryor, on-stream no the equipment for with the The the time XX% third to was from UAN production above was XX% to from our plant with The nitric Downtime strikes the for of XX% power the are Despite on-stream operate the down, time supplied strong along that

of outage, XXth, and required The on significant this oil on auxiliary the ammonia of The after this the Dorado fabrication As from to exchanger October out XXnd. with repair nitric Shortly start-up the Xrd plant developed started. a press plant will prism heat was at next was production of has release service section the of design October announced El replacement With El the the be the respect refractory taken turnaround. of in and a on October number Dorado, boiler. shell. vessel a upgraded unit year's process in around the replaced abatement the exchanger, NXO be on two plant repairs of to acid upgrade burdens leak will

the quarter fall outage be XXXX. and the of expect planned the to the third in We vessel the XXXX of near installed delivered of during end

As a failure including the of issues. power its the ammonia third for on-stream under related facility XX% had replacement The an to reminder, previously disclosed are quarter, Pryor all costs plant warranty. time

numerous on two call, forward October reminder, plant inspection, cleaned primary was to performed turnaround the the July made reformer, plant out between secondary to modification turnaround and change high-voltage mentioned last a the reformers, pull decision heat we on instance. made piping replace The changed the As and and completed our this rotors, compressor earnings exchangers. maintenance primary systems, high-tech power after

Repairs releases. also to no of made reformer. section change release, XXrd September in the piping went injuries required of fire September stated at catalyst As instrumentation, primary XXth a the and down were Pryor a to There due hazardous outs. systems, in or the material convection plant the number press were

was system, an Following the and construction. materials engineering it at pre-heat coil decided the -- pre-heat and undergo in upgrade material to analysis mix gas replace

not addition, upgrading expected down the is entire at all XXXX. system. week of a November. improving turnaround work A management In the system, The to pipe on anticipate until reliability stress we turnaround. section was this the undertaken, taking we our originally reduce the is planned have component to for extensive design third in do which convection Because are key the piping plant we of XXXX be in maintenance plants

criticality major overhaul ranking system. This all of our and the major risks in a We instrumentation. of are includes and midst equipment that of

are the predictive analysis, our do We capability equipment analysis improving preventative failures, of root-cause and maintenance us programs. to improve to better and allow

have our buying well assist our stores programs. maintenance improve reduce improvement maintenance, and and centralizing cost improve as we hired the operating also purchasing us procedures, assist will addition, as and in firm an training to our firm improve in operational allow precision accelerate to to implement This our In implementation power. us outside us and

studies August, the leading a in and outside design the full balances plant. reformers, improving across we on for facility, our analyzed the event specialist September with efficiency, expect before has Pryor plants of material heat reliability, We and across our firms. plant of BD early ammonia Systems, emphasis initiated two Energy the secondary the In implementation engineering the by mid-XXXX. performance primary at all

study We systems. with will and firm. opportunities and system. and risk, to the to at reliability ammonia, and The and look study acid Black infrastructure reliability plants these a also engineering methods in utility risk another upgrade study risks the reduce Veatch, those reliability risk identify will This initiated modernize & nitric electrical urea, leading

the completion facility quarter recognize of and identify We the all at operation. studies Pryor our risks unknown reliability the first XXXX. both studies to The engineering of expect are expected We improve overall need to all facilities. improve and by time on-stream

reliability of and management We lowering significant operating embarked systems, on-stream cost of our have and time and on major expect maintenance in operating a overhaul improvement XXXX.

over to financial results call the quarter. third turn the Mark to will discuss I Now, the for

Mark Behrman

Page total In our production, a by compared each Gross offset consolidated approximately partially leading increased Thanks, our provides third volumes quarter of and decrease of in presentation improved our prices third to the good improved to John XX at operations XXXX facilities, versus net reviewing morning. quarter profit related for continuing one quarter operations, XXXX. of products. the for a were as which summary the increased $XX selling primarily to sales sales for the of million of average statement XXXX.

increased the us in fixed lower increase and absorption cost. from better I that profit cost just gross plant addition to gave fixed improved that sales production of overall discussed, In volume

operated of of recall, XX% compared an last the quarter up our therefore rate the you ramped of El XX% last of came third this As in the quarter year. May year ammonia rate year an to on-stream of and gradually plant for may plant online third for as as at Dorado production on-stream

be of of third the rates that of last versus of loss delivered of of quarter in Cherokee third purchase XX,XXX year. Pryor to during third respectively. XX% XX% XX% the rates quarter of hurdles coming the quarter that is orders from facilities this fourth $XXX,XXX some XX% and experienced cover quarter tons in year approximately year, quarter customer on gross the One for ammonia respectively, impact and Additionally, last year's out ammonia and will on-stream UAN resulted operational this our the turnaround an for on-stream profit for last

year-over-year the XXXX included million decreased and million last quarter reductions. As quarter XX% to senior Dan focus on $X repaid related over as the expense that the $X.X for cost we to previously approximately quarter continue process relating we of mentioned, SG&A expenses on of third $X were third to completed decreased quarter. that XXXX, notes million during year's solicitation consent October secured Interest million $X.X the as

of $XX.X to EBITDA a third plant million Please give for on the beginning and information earnings Lastly, XXXX favorable measures bridges non-GAAP incurred ago $X.X on largely versus QX EBITDA the on the $XX.X refer the improvement million breakeven to adjusted an results QX outperformance last I EBITDA The three for one-time for cost. period. further loss spending adjusted over of to indicated quarter fixed expectations XX further of to quarter of result the and the on our guidance non-cash for million consolidated better third absorption that our clarity EBITDA improvement and was adjusted quarter, last was the quarter, year's order XXXX. call. slide reconciliation a costs months In page XX XXXX our of during

$X had as selling as lower almost negative prices our As be products to of compared of XXXX. they mentioned EBITDA big I continues million impact to a on drag a earlier,

pricing higher versus further in EBITDA. this gas quarter reduction XXXX, third resulting slightly a Additionally, the natural in of slight was quarter

new for However, with QX volumes XXXX; of was volume distribution improved the has sales $X increased of production broaden EBITDA. several of some to facilities production across increase sales and HDAN, of product; better three ammonia provided in contract in U.S. the increased sales products improved all of of our pickup The customers LDAN, sales million market that we coal additional driven the continue as and sales UAN, experienced versus over awards our and quarter as had by

corporate of structure, the million with this were QX inherent costs analysis on of was prices that provided selling earlier, normalized from which showing XXXX, mentioned move This quarter third of provides The earnings same plant $XX right-hand and operational third we and market $XX both power have on-stream of focus cost prices our conditions. improved as overall of that assumes quarter The product rates EBITDA view improvement column increase enhancements facilities our realized reflects but EBITDA year-over-year the to Lastly, XXXX and and overhead the significantly activities we selling XXXX. operational of million compared including at operations. in the over additional improved that the our continued assets. as general a those approximately product reducing EBITDA, page undertaken

to forward fourth Looking quarter. our

of products, of quarter previously and over be from $XXX a a XXXX ammonia ammonia our the Dan and ton. Tampa ammonia suit. metric This November $XXX As are to will further discussed, ton October many increase pricing a $XX industrial price in Tampa increased metric $XX price averaged follow will ton a Tampa where much fourth somewhat $XXX metric Tampa With ton. trending ammonia which will ton, the September's pricing indexed higher, to for of metric improved sales to metric ammonia

fourth at by the EBITDA $X However, quarter million our $X results events our El we reliability continue and lower facilities, plants, improvements which downtime while and be rates between will we our our make and of in Dorado fourth to on-stream quarter estimate million. impacted previously will Pryor discussed the by

the sold be will August and occurred fall pricing orders the fourth ag period. in to taken that Additionally, quarter fill ammonia subject during program a during for UAN lower

cash. our ended those the that with products, after $XX We capital be QX first significantly over prices. expect Page end year, of million the in XX at of We the the at XXXX. will outlines higher done structure our quarter of sales

end, facility of ABL giving approximately million our approximately at Additionally, million. had us was of $XX undrawn liquidity $XX availability and quarter total

discount end reminder, receivable our $XXX associated million, debt the vary excluding our inventory on Total was the and with approximately borrowing at debt. issuance a costs will ABL As based unamortized and levels. base outstanding quarter accounts

million preferred and in dividends. outstanding accrued stock million, including had approximately $XXX approximately unpaid also $XX of We

of our do previously restricted the to quarter, currently coverage our expect stated, to by make notes would accrue as stock ratio on end charge we the continue meet fixed to I we As preferred X:X dividends payments. secured we not indicated refinance year. that we the Last seek senior to this needed

discussions in with of would year. a and prior refinancing consider to continuously end and advisers are lenders We the our the

might first half be better of However, conditions year. next in the

and options continue to timing. will evaluate We our

flow. we outlined of XX, page the free was first our months provided $XX to approximately operations from Moving XXXX million. nine cash Cash for

from were secured flow year. third senior during on $X of payment invested operations million, with our expenditures quarter every cash notes Additionally, QX interest approximately first that $XX XXXX. million semiannual and the includes Capital in occurs the XXXX approximately to-date

capital the of expenditures around expect $XX full in We which approximately million of right for quarter $XX will put year. the us fourth million XXXX,

of previously, year-to-date. mentioned free nine XXXX million. Of note, off for cash cash at as payments, sold we first the and investing in receive Summit $XX asset just final months with the primarily from business, non-core several occurred remaining Machine associated million will approximately used discussed of which million debt $X.X debt proceeds of flow $XX the reflects to Tool gross financing I assets, assets as sales in leaves premium including the the sale about in sale Additionally, from the $XX million closing that on That non-core proceeds Net increase scheduled payoff over we insurance non-core of regularly operations our our generated October. for financing.

decrease million. XXXX, first had of cash of For $X the nine a months we in

Now, Dan turn it wrap-up. back I'll to to over

Dan Greenwell

Mark. Thanks

and and financial expanding improvements has levels, with improving in on flexibility. continue several corporate rates and what new at reliability positioning underway into XXXX. our reducing of been sales and maintenance been on streamlining enhanced the capitalize both quarters, new plant have we the plant making on We and expect activities average plant distribution, We costs reliability, agricultural executing increased achieving reducing plant focused continuing enhance we last a expansion and the in initiatives markets, the that company environment favorable to our LSB at positive focus product including markets on on for more into the to expect of operating to of geographic leverage pricing remain major capitalize costs utilize improving to the and on-stream production in at be objectives pricing. our business XX%, distribution ammonia to capacity plant and improvements SG&A

to we Additionally, the deleveraging dates shareholders. we overall first flow extend capital. our and Collectively, to -- our strength of of to or for plan cost refinancing attractive dates item balance XXXX flexibility pursue to maturity factors to continues and in and our and sheet to financial and the both the by high-priority to of improving half extent potentially value these XXXX, stronger maturity expect a late reduce cash lead be

we Lastly, you both announcement resign may to where to was offered decided Bill voluntarily reduce have nine Jonathan reduction. them members. from our questions. We be and and largely will We're to grateful for size noticed Jonathan the had of overall two the cost yesterday that and in another efforts that, This Brock? made this have that due order Bill up to prepared seeking appreciate comments we effectuate in changes We the I'll business. missed. the With their conclude luck. over it of much XX very Bobb best reductions significant in past Murdy our we Board open to years. support Both wish

Operator

Joe & first this Please comes At a we'll question question-and-answer Company. be session. Sidoti conducting time, [Operator from Instructions] ahead. you. Thank Our go Mondillo of today

Joe Mondillo

Good guys. Hi morning.

Dan Greenwell

Joe. morning Good

Mark Behrman

Good morning.

Joe Mondillo

over out do over still business Just overhead, this years? much see last how regard if year as to And you of then opportunity? could taken -- cost last the couple you corporate of comment forward plant have the an wondering much the and or you going how on in --

Mark Behrman

Yes.

are, $X pulled sales, the which million really $X annual end really, on occurred, And And SG&A, annually. that op that implemented million the on we've So, was half closer I costs we're say an to and last and to year. starting last out would of of basis. $X in year cost of second million obviously, plant by

big SG&A. can out really then well, on overall procurement. million real of our can that and and Going we Dan there. and year, period focus logistics of another very to end over think a whole focus, we forward, next that now mentioned and purchasing take time, -- of on another logistics we have as effort the by And costs as mentioned, probably $X centralizing are We logistics time, reduce really have probably reducing pull $X right Dan million out there. focused on we the a John we centralizing over continuing probably But a as

say So, XXXX. very on $X we're probably focused another of have we by pulling that end I'd the out million

Joe Mondillo

I a the your sort obviously, do -- pricing be time trend, seasonal and we we Great. pretty of past Okay. continue we your you improvement season quite second if And mentioned and into the color of obviously relative year. prepared market thinking more that see the of the right the to little strong could sort regarding going -- of from outlook, could then on see been it's quarter the just or in tend in pretty where here, to the fertilizer XXXX remarks, in terms wonder and are to you this provide If first years. relative to good

wondering, your we just that this to sort a always half in here? going we thinking dynamics you think what's trend on Or see do possibility see on to first the of So, relative the there? that continue that's

Dan Greenwell

and attractive and And that pricing. plants import the to of so been be very see a imports been hopeful provide these a -- North ammonia product model place, positive of a out facilities reasonable the of are trends time. facilities balance with moment linear in for moment positive worked up product support give for do gotten analysis of that supply. wrong, I'll back-end Well, is the should product is have the we market wait being largely we first well, on folks the in modest. do -- be quarter fill took pricing as significantly. indicated pricing will expect August, Orders to -- on which orders some our prices. back I large do want will if fall last. But I quarter it's to sentiment believe we'll be have and increase We are determined be But to as price prepared and improve significantly cautious it outlined. is positive for we the I have fourth currently. it American market I that, give a to does with see. some higher that logistics the but wait at give running see want upgrading taken in therefore, We're in before a we'll down out to Joe, we today to comments, pricing, have you period but you with continuation largely our some pricing fairly be cautious hasn't but

Joe Mondillo

missed And some that the then the of Okay. but the I and I remarks -- some the I regarding we're missed plants fourth downtime in of apologize, seeing quarter.

-- things all? downtime of any are at the serious extending And on? a is wondering of downtime? time of Just further what's there are going How if risk the that risk

Dan Greenwell

October. mean, Well, announced some downtime that we completed. El Those repairs Dorado, in I had were we

some pre-heat not with that we upgraded system. the is will decision as process or El made gas repairs. of think basically They risky were unknown system. John we system and Dorado the be those the known. Pryor, we've I On announced the They're replacing to indicated The on completed indicated, so the material October finished. It's XXnd XXrd done replace pre-heat by gas repairs that process of repairs are October.

that have we'll done. So,

we had mentioned. of and We just that We with putting have have date the that the materials a it's procured, confident feel it now pretty place. matter done third in week of engineering we November

is positive practice take repairs, that uptime versus that to and accelerate allow and a been on for medicine think side the make what and of then later. now should them -- can basis. we that do, we've extent the other now, our go-forward get to continued do upgrades, reliability I made your them better to words, In it's it's

on doing installation we're welds how the the making describe doing and I nothing risk would time. think pre-heat the this what this just process gas It's at unknown and physically in of it that. and up and about I It's getting and at like is And it. point work things running moderate. that Pryor. that's There's So, system in profile

of the do So, Pryor we right for at here rest little for next plan plants feel then now. Got weeks the feel the about where good going bit into good of to and three pretty the a the XXXX. are work year and operating

Joe Mondillo

then major remind mentioned now regarding in plants XXXX. And turnaround two that for this a turnarounds. for and regarding what not XXXX, us regarding the to going that see doing schedules the just is you outlook Obviously, you're Pryor, that's But you're you and that? what for could XXXX -- Okay. year so other turnaround the

Dan Greenwell

in We be should doing in third the on quarter. turnaround El a Dorado XXXX

mentioned, XXXX we're may place. Cherokee putting we're And but NXO do that when have in as vessel the well going done take John in us a As to That turnaround Cherokee, that down. little as be well. shouldn't a will bit earlier, then

Joe Mondillo

In third quarter most likely?

Dan Greenwell

third be could It or fourth.

John Diesch

I one think we're trying to push too fourth. early the in

Dan Greenwell

will early fourth. Dorado fourth, be I El the think Yes, in

Joe Mondillo

Okay.

is that XXXX, should relative bleeds be that... Pryor third maybe quarter a to downtime down, fourth because versus little, comparable in maybe be Dorado and quarter not El terms then, Cherokee down comparables, of be but the the maybe quarter so -- too? And into XXXX to little third fact of might turnaround guess, Cherokee a And I the is more maybe will

Dan Greenwell

downtime in look when we that Yes, that you talked that anticipate I had at we quarter other do I occurring. mean, the that think, anticipate And the next the the lightning occurring don't just downtime again we've not we've year. early from strikes, third about,

negative didn't any see El downtime, and we Pryor And the replacing impact that. Cherokee with want while -- improved would it would to have so, call now, have Dorado we're we at that you at that to turnarounds wouldn't anticipate if uptime and

-- fourth with second, sorry, we'll look and our next and you replacing when at that our hopefully, third quarter quarter be, year. So, have cost, turnaround some third unplanned costs second -- downtime third we and our that

too a but to a be order of not wouldn't I if at for look be far downtime. by more it So, that it turnaround, from don't but when you going that's magnitude. wash, know probably Probably little bit

Joe Mondillo

question just last me. for And Okay.

there's where likely that do a pay was preferreds? potential the Just wondering the or option regarding scenario just refinancing regarding most refinance you I Any where think scenario not? any down could options. there's

Mark Behrman

so believe this at don't I point.

Joe Mondillo

for right. All me. it guys. does Okay. That a lot Thanks

Dan Greenwell

Joe. Thanks

Operator

Owen next The ahead. from of go is Baird. Please question Robert Douglas W.

Owen Douglas

guys. good morning Hi,

of on left some few operational sort Just questions reliability of these initiatives.

I working are working those there been has -- quarter So, year? this understand, or the to any of third second of in there just wanted advisers quarter or any perhaps advisers

Dan Greenwell

the August. of we be as in quarter started the some. of Those lion's in some August the significant a year. of next There's done will quarter The indicated in that this not but year, there been -- amount, some of work -- it first share were though has work third in quarter started fourth been was in

Owen Douglas

Okay. And should any to sort we with sort are with of share ballpark expecting? of able that associated be you cost that us

Dan Greenwell

I think it's we we should something that be It's significant that in don't disclose of disclosed. should order No, magnitude not believe that that it advance.

Owen Douglas

as And the still guys the refinancing far fair talking about of leave the a refinancing that to see. possibility is I assumption? as year, and were open seem you Okay. of before this end

Dan Greenwell

talking advantage certainly better an I I lenders. and if might off like as waiting to sense, do And to opportunity it. not, it it would take mentioned, makes there's of think the until we're mean, to advisers spring. our I we continually But Yes, if that be

Owen Douglas

And on liquidity the standpoint. Okay.

asset something that selling build spring gotten feel You million ahead proceeds about liquidity have do period think, guys, of non-core about that you inventory your heading season? of into How I the $X from sale.

Mark Behrman

million before $XX comfortable one it, at operating $XX said is to I with least million. we've unused cash which, we repeat think I and line million and -- between $XX pretty of think we're continue Yes,

feel were significantly think better fine. we're one year And so okay. we shape so We here we sit in today and ago, than I

Owen Douglas

you guys heard of sort but the party for this haven't of say $XX million. liquidity I a of $X.X related Beginning quarter, it -- million because it's to and before. sales about Yes, executed that about Okay.

in So, about -- how that that curious basically, just sale point execute and not was necessary whether that time? or at to

Dan Greenwell

go-forward of It the business. part a Yes, our I is basis. Tool was company mean, not a Machine strategic business small a on

bidders separate to impact so seemed on While we some of we they dispose flow it it. small attractive long-term, we cash it's got of. We our not -- had took it three and and positive got, a strategy decided values that part

Owen Douglas

Okay. Understood.

Mark Behrman

old don't using, on we've things we'll value, to business, of our we review change, and that. monetize assets our our to have are assets that have do we is talked there's that. think don't think that of there's monetize impact continue assets. the And that And previously to continue we're chemical either look that plants we an facilities where it really -- where will not about and other we'll One part opportunities assets I to idle

Owen Douglas

luck. Well, thank Okay very understood. Good guys. much you

Mark Behrman

Thanks.

Operator

Deterding comes question Fargo. next Please Wells of go ahead. from The David

Tyler Gately

Tyler It's David. for on Yes. Gately,

next quarters? In Just about a the follow-up the on I the of how prices, question. quick of over you capital working do couple face guys think liquidity ammonia a rising mean,

Mark Behrman

head where I some up think that, to build inventory we mentioned, like as Owen actually into at to just prices. the sell products we'd spring can higher

working So, I year and between end the think of probably now you capital. $X from of million to figure additional the can million anywhere $X

Tyler Gately

of or kind steady on of build prices out QX, into you flatten top to that And or mean, you continue would that something then higher, hold million? QX, $X modestly $X look I mean, as is that tick million I to assuming

Mark Behrman

everything good you you're it No, higher you you and producing as flattened June. much sitting you're it prices, you at mean, think season, in when as to that don't prices certainly as you're and sell be to -- can with certainly, inventory to come want sell you mean, want high because want -- sell if I producing. selling I out. I they're as

Tyler Gately

you. Great. Sure. Thank

Operator

question comes Management. go Bob from The next Morgan Please of Asset J.P. ahead. Amenta

Bob Amenta

Good Yes, morning. hi.

Dan Greenwell

Hi Bob.

Bob Amenta

follow-ups of that. Just couple a on

So, that can with negative, I I to the near stuff that $X way million, zero? I negative off and EBITDA increases hit, kind mean, $X in -- with have you that single-digits you if in, ammonia would it or--? give to million you $X positive, thoughts guys I'm in on million don't you pricing in I expect factoring of after the mean, know say a I factoring on $X base liquidity any million mean, have mentioned analysis, was EBITDA I QX, doing

Dan Greenwell

EBITDA Yes. Bob, give don't we typically forecast.

with quarter, additional know be But further in through really last that. don't comment little quarter in don't there's We, gave you another fourth EBITDA-specific coming we the a this some the where think, commit fairly -- that. point, if -- could do the have I'm color of be positive be. in talked provide so cost this positive, may quarter where pricing on Mark, I a to think downtime, given about at fourth are. we'd range historically, an quarter we want we I to on on but Mark haven't hesitant we to bit anticipate guidance, I think we comments I on pricing -- I would earlier

Mark Behrman

not moderately marginally we'll your commentary Yes, for mean be quarter. off. the far I or EBITDA I think I on probably negative is think

Bob Amenta

Right.

Okay.

sorry, cash like So, I the fine, it $XX basically sounds and I'm interest have interest with -- fourth again nominal or mean million, in is quarter. CapEx of liquidity that you but

You liquidity. I the again, kind that million, that point of capital, but should down be about mentioned to the so you low working in get $XX

fact the up guess, though I the temporary even you like that's low where bumping squeeze, basically. So, kind of to the that's that against that's you want feel be, makes point just

Mark Behrman

quarter fourth The for always Yes. would us. the point lowest be

Dan Greenwell

The liquidity. we But feel don't lowest squeezed. Bob, of

Bob Amenta

Yes, word the the on best in to liquidity -- not the But it's the low it's hopefully, use. point probably cycle. low

Dan Greenwell

Yes, with. that agree would we

Bob Amenta

mean the you I I the then is guess about thing of always -- other And last I this guys slide, put just know sensitivity. page

based one so you your that of quarter, ammonia some you on the pretty happened is pricing, is in about current you in anything there move the still, that -- think has UAN seems over I obviously, think, to just when UAN, few an with much. valid would Is there Or not it's is meaning it like on that so that mean, hold? as drop -- in did $XX I be reason that that's if Just would the last to any it historic of terms valid footnotes market relationship don't than that -- or still there the I that, you anything longer grid, if valid? no feel just or long-term about talk if that in that's average talks the better but years And that assumptions. know just is that is but won't that, it some think, guess? $XX,

Mark Behrman

kind reason is would way over coming there is period time. that of relationship we've had been probably I pricing the that Even that of been though so for a that seen has into relationships, two it getting out guess, lagged now rebounded some the historical that not we're in last and the quarters answer relationship back has back, is UAN urea, more now any that's there. been it's not it to of historical UAN I three And ammonia.

Dan Greenwell

on UAN is per a here, to trading discount urea, unusual. a the Yes. months, has couple which nitrogen last been basis at over pound has very

bit and we take mature those little the prepared the my logistics bit historical the next historical going the closer in that's UAN comes distribution to little so we'll you see, in but in. we're market. Keep so in back they back. UAN if little is And a get to import probably back line, that mind may more systems ,So to to see not Or basically, get wait comments, have that just price the to case. to more on it now going wait quarters have said North As for to all wait coming are products we're is, I bit correlation that's and as America, of few have probably in not a and in but the a there's historical lot if we'll there trends, self-sufficient longer. and trends a right come

Mark Behrman

But in I the there fairly can we have. that grid representative we feel operate put we like that that assumptions business is of think out with how conditions that certain the

Bob Amenta

million going you ended guess, the EBITDA, on then year next for know about in you that statement? them of year. and million and don't $XX if I off -- terms this turnaround income this on those -- I when next year. you expenses I $XXX recollection, had turnaround we've if turnaround -- you -- to need have And the And lastly, do if to be we expense, relative see you're before, -- thoughts slide where would so the take it $XX of to would would Right. just in the I of any know but where any about turnaround what then trying CapEx I'm to my have I you like say of talks million, just turnaround would CapEx or turnaround? talked up EBITDA at exclude

Mark Behrman

Yes.

turnaround and August, in with includes took we back prior So, we capitalized $XX first costs cost talked the that off, million that this about associated the turnaround year July.

Dan Greenwell

July.

Mark Behrman

July.

turnarounds for plants probably we're -- and year, the next to $XX $XX include Next that capital-- talking of year will million sorry, million two for

Bob Amenta

EBITDA you're wanted I'm -- refresh, to figure and burn. just to I Well, to cash year out with going from next generate a how starting just more trying much or

income line? number million no? to $XX of if that above already am or With $XX counting subtract the EBITDA Or is $XX EBITDA any that the off up the million million, buried in statement I double then I

Mark Behrman

it above None up Yes. is EBITDA. of

-- So, yes. it's

Bob Amenta

Okay.

true it's So, a subtraction.

Okay. I had. That's all Thanks.

Mark Behrman

Bob. Thanks

Operator

Please Partners. is Lucian The HPS next of go Tira question Investment from ahead.

Lucian Tira

I say, okay, is driving the these more conviction to a you're done? end have timeframe? XX% this implemented of every that be guys. popping a kind the able when given Is I have and already when addressing guys second be -- the that those, wondering, and issues more just of are to. XXXX that Thanks some an much items you that's like Or expect, XXXX, will now this up A to and you operational addressed. getting I operating was studies of us quarter are do in were for couple quarter time of what health it's of keep other rate therefore, of questions had that timing-wise, that professional bunch given

Dan Greenwell

work, going the I couldn't to Cherokee look, We and plant target. decision, -- us the quarters know what some occur. will trying we're so as and strikes there. an keep power they those. improvements on of years, we has necessarily that's in for those that get mind The when little said, of that. other things We've predict we're we and company well. I the I pre-heat the that. improved gas backup let's impact But those before that last that Pryor extent -- in may plus can't been occur, uptime predict really volume have needs we've still although bit making of show to process lessen XX% system get that, we on anticipate is our company-wide things El believe lightning a more making our get that it pretty it accelerate the Well, said to we're this think we ran to gotten quarter in four we plant we've The service XX%, improvements overall several basis, We Dorado and over in that the a think mean the our it. to to made XX% so that. The getting --

continue and of all these the So, us the things improve something and those as up events go we're number We doing forward. events to of is grabs lessen Every severity of comes going and will uptime. by surprise. think then, to to our continue now we

improvements. pretty we We're can that do we're confident think So, I it. making

for not but to we're average been we every we'll improve. We'll XX% how we companies continue now running have goal skinned then, plant and we've to every XXXX, and and knees have And characterize operations skinned before, and we people our the will it. and the our on company described XXXX. All a it stitches have year. overall to objective I improving and for to surgery that's think knee would As continue require immune don't believe up but that, is that

Lucian Tira

it. Appreciate Thank Got it. you.

Operator

ahead. question Please of next Global Value go The Geygan Corp. comes from Jeff Investment

Jeff Geygan

Hey, good your time Appreciate morning [ph]. today gentlemen.

Dan Greenwell

you. Thank

Jeff Geygan

to for some type there's indicated analysis. or in and consultants presume there with I you. questions experts do that you associated you Two studies are brought reliability cost that? of Number that one, outside

Dan Greenwell

firms experts. maintenance outside engineering are These is. There and

is that. associated there with yes, some cost So,

Jeff Geygan

will that $XX $XX if these that million, of improvements XXXX factored suggest study projection need in? be their for that to certain With XXXX your what of million been are to QX results any will in of results the have made. be study there Presumably available of CapEx

Dan Greenwell

Well, call improvements hear and overall we factored we best to flexibility within directed the, payback the that was our we do $XX have that And have look some where factored $XX We as to it, plan. in in -- that and put $XX at, what see cap and million, cap with we some result -- in. have the some in I million There capital But at upon some always based those to will were expecting that not overall look as our overall we'll $XX well. may place a right consider things that we'll in balance have be of spending as a opportunities, I to these. take think million we the that million, plan.

parameters. those So, I keep within think we'll

Jeff Geygan

All interesting That's right. to know.

little a these something this me reduction you Secondly, have surprised about Mark, given of the update from changed COGS. numbers? not your which page presented suggest XX to cost to Is misunderstand? appears grid the that, you in you that that helpful, earlier that bit reasonable have comments your deck, would referenced which very is on be last I Or it your few times

Mark Behrman

expense making reductions already we've that some No, anticipated I we that and included in grid. think it

Jeff Geygan

I see.

forward you be that roughly, thought us are -- million steady-state, you the production? So, earlier your thinking reduced inclusive was $X today it of from that cost is I will numbers gave projections said these a this of then reflecting previously

Mark Behrman

reductions. forward they No, include cost don't going any

Jeff Geygan

the clarification. good appreciate and Thank you luck. I right. All

Operator

no are turn Dan questions remarks. to like additional back closing for Greenwell time. call this There to I'd at the over

Dan Greenwell

care. you if after Take appreciate Great. to your have again, a much this forward meeting. year Bye-bye. we speaking and I good we time Thank questions and to finish take you. once happy end once with -- day. But calls wish always morning everybody very the We are you look we this your further

Operator

today's concludes conference. This

you lines. may your disconnect for participation. now your Thank You

LSB Industries (LXU) 31 Oct 172017 Q3 Earnings call transcript