LXU - Earnings call transcript Q1 2020

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Operator

Greetings, ladies and gentlemen, and welcome to the LSB Industries First Quarter 2020 Conference Call. [Operator Instructions].

It is now my pleasure to introduce your host, Kristy Carver, Senior Vice President and Treasurer. Thank you.

You may begin.

Kristy Carver

Jen. you, Thank everyone. to Good morning

differ statements, Joining factors projections me Chief Financial Mark our future a current include today Please based and statements on performance, the cause are the Officer; and not materially. the call company's actual forward-looking will Executive call Chief expectations that are because Cheryl results these note are could and Behrman, to intent, today's on of and they Maguire, Officer. of variety our guarantees

As of call to information results, lsbindustries.com, this reconciliations include will non-GAAP results. in further GAAP and please references release press of the reference to non-GAAP regarding for our the forward-looking statements Investors results section website,

to Mark opening time, for this like ahead I'd and over At remarks. go to turn call the

Mark Behrman

morning, Kristy, you, good and Thank everyone.

our participate crisis, that discuss in Today we're Industries. in call glad in your I'll what COVID-XX this I'll looked our quarter wrap appreciate points a discuss financials, quarter markets are will provide you the Cheryl our review position second far. thinking Then Then to like quarter morning our what interest current to in our you and about use We provide with expectations. some and first liquidity sense LSB for for end seeing come and data back our so second our response up. has could

all the continuity highly so our the put implementation for but operations throughout effectively. the ensure employees we period of they thanking and LSB to pandemic. did is efforts course their of and by able procedures out of only practice unprecedented and over the Their that operations start the our to dedication place enabled work time, to not in of safely like of this sustain protocols I'd in that hard and

we quarter in this first successful were with zero injuries. recordable very the regard, In

developed these facility a extremely accomplishments loss and of the new two time reached for our past Additionally, milestone, the team proud to the as several reflection strong LSB it work Dorado a improve. a for I'm culture over injury. in years continuously of April across we've and we El view years without that safety

We level year-over-year overall by despite both to in the sales led with achieved demand business. extremely were of which sides plants, X% increase headwinds our volume, an our also of pleased on production

Our Pryor facility's direct increased a from plant new fourth first result urea performed as urea its XX% XXXX UAN reactor was of the production and installed prior the during almost we work the quarter that on quarter. other year

Dorado's XX% of quarter El plant this led for as of rate We XXXX boosted to and, to X,XXX day, output expected, volume in fourth first per tons an in record quarter average which also production to resulting some for the of performed we XXXX, plant's ammonia a optimization period. ammonia the onstream the

historically facilities, outbreak. employees Lastly, COVID-XX operate Slide our quarter. measures facilities, consistent the our most as throughout to reliably keep once we our Baytown X through the taken Cherokee to again safely have continued the operated and we've healthy and summarizes

designated as been and Cybersecurity As Homeland critical on states Security we based have of release where essential States Infrastructure by our United issued Agency. operate in Security's we guidelines press in early our April, infrastructure the in announced Department facilities the the

of have and ensure to received our which health priority team. very have We the been fortunate to our obligation it top grateful well-being and this makes designation, and

working work social at health facilities, of cleaning As extra of and all strict from personnel; including for and distancing around other and monitoring with and not spaces; home our our restrictions for site and on necessary equipment protocols measures. implemented guidelines which among a travel; be result, employees manner we've interact delivery disinfecting regular at our plants; adjustments to in the to drivers; our personnel

among COVID-XX to date as cases of workforce. our been procedures These working, have no have we had

to We keep will our long in be healthy. employees we that to regard can this vigilant necessary continue as ensure as

to will the that an working states bring in to rush try and reopen back of improve normalcy, we not While home. economy are beginning to to from and are people many effort some get level back

protocols that are place our strategies today to back successfully continue to to see follow in not We in we will effect. how be of implement and any will All in work. people wait bring to and see benefit a first-mover being do others regard to this

company, like way. the I keep not to one to As case have mentioned, would try COVID-XX it we had and that at I

the on for an Slide trends the provides the markets, having products pandemic on and impact is update of our them. state current demand X our end

our is a season agricultural up to good the of corn continues of year. the a maintain to X% U.S. planted acres XXXX, this The million forecast and, planting represent substantial of On its be side off business, start. in would XX fertilizers the XXXX to for in in if USDA demand accurate, from spring increase

that X average, XX% of end indicator of this should XX% be been season. the X-year strong indicated May good the corn by had preceding week progress significantly acreage which expected XX%, corn view that planting was respectively. We year a planted, dated the as historical USDA's and a by and above very spring report previous this

demand from represents headwind One a corn to corn. dynamic additive made gasoline primarily related ethanol, a is weakened the for potential that market the

the significantly. the the gasoline shutdown for the number With reduction in demand nationwide on drivers road, has of and ethanol and COVID-XX-related dropped

later has and USDA's or corn While something demand year as is in the on it yet it on could into forecast are acres watching XXXX. an reduction this this in a we planted closely, have translate for fertilizers, demand for pricing and to impact

weeks. by auto which customers. consumer several have industrial acid softening pandemic. industry, production U.S. our shut for to the hit the and industries seen nitric a number are demand industry more major a impacting related such acid significant demand produced has products several by we products is down our have that in of fluid, are of been mining and The that manufacturers in nitric One for trends mid-March, automotive Demand been

announced some from demand they to have intend resume their restart should in May supply and assembly chain vehicle their weeks. in they on some production rebound that However, the lead coming XX, which lines to

nitric acid weakening in where building impacting demand coatings a used paints, of the Also materials. the and of nitric other housing is acid variety sector, is

in for our diminished of Additionally, manufacturing, power consumption ammonia. industrial general, throughout and volumes. of Further, which manufacturers demand the sulfuric industrial has the treatment for slowdown the has reduced municipalities reduced U.S., water has acid impacted industrial

the for While of were an April up COVID-XX to on growth. April volumes has impact most slightly XXXX, volume compared as expected our had month

which the a impacted an coal, reduced industrial we low-density our vanadium see In in iron to mining until recovery sulfuric sales mining business has seen economy. sales. or our complete gold, nitrate copper, expect ammonium in we our closures ore and acid volumes production have impact and both and we So see ore mines, of

working up We are new possible. business to are watching pick these teams where closely, sales hard and our trends

also have seen towards where production We shifted we robust. demand products have remain alternative

out indicated As quarter onstream mentioned. leading in on our Slide production X, record All I for April, the and month rate in well consolidated second plants that despite mining to just started our industrial operated company. a has headwinds at XXX%

facility shipments, continues another highest and pace and Pricing though, for ammonia this at in urea the March April brisk run our region, these set facility on thus strengthened facility, far of COVID-XX. the achievements April. by to Pryor record that continues closure of spring distribution UAN of in with effect managing the April, where Magellan ammonia its for Plains of team that the sell a May. pipeline of production last and the of the region. Pryor in was proud am a HDAN and the in impacted Ammonia out HDAN movement week added while for the Southern record throughout extremely through in its to our we history. be very I complexities Additionally,

increased planting movement picked pricing gotten UAN beginning approximately deeper and the the into since we $XX of as ton March. have has season, a has up

some it businesses, the However, business were strong COVID-XX. line mid-May, reopening production XXXX are occur. half caused some of new automotive expected mining announced the year's that see Industrial and the April back demand industry were lost industrial helped to of quarter recovery the optimistic we to cautiously of volumes, would with volume If second see last we and have for awards that below as volumes in by remains April offset levels. if we including for in

XXXX wanted general I just over call I litigation overruns. from to to quick Before in Dorado project substantial a cost spanned we XXXX, update of expansion which plant contractor that to the on the give El Leidos, ammonia Cheryl, turn the brought that against incurred our we've

as fraud, involved professional third we in As quarter fourth breach negligence, I for million than mentioned and contract, more negligence. compensation are $XXX negligence and seeking our gross damages wrongdoing, which Leidos' on of calls,

September. in requirements, April begin been social to has the until The delayed due trial scheduled COVID-XX was late but, distancing to

are we forward case heard, believe has having merits. to looking We our as serious it

an are can't in continue we outcome guarantee will we matter this updates appropriate. to as While provide and vigorously litigation, pursuing

Cheryl Maguire

morning. Thanks, decline result Mark, year-over-year QX and all lower million million. is consolidated EBITDA of adjusted $XX.X of adjusted EBITDA our XXXX markets. across for bridges QX X selling to XXXX Page for $XX.X The good our of prices a

into offset have quarter continued approximately gas ammonia, pricing. which for The first below averaged weigh combined by of imports to pricing natural the was increased inventory X elevated XXXX. favorable the over Continued partially the UAN with lower levels months, last of on costs, U.S. XX%

the for which translated lower Additionally, overall last compared as same plant was year. mentioned, strong sales period into and quarter, as volumes the to Mark production higher costs

quarter each expenses true market our X, turnaround presentation margins have of we of to Turning each cash Page businesses. outlined This therefore, for should segments. margins of amortization profit represent our excludes the and depreciation, underlying and, gross first

this Slide as the back to profit XX. on financial statements, have reconciled presented on gross We

ag margins the profit partially primarily first and natural lower of gas driven from quarter ag production Our X% XXXX costs. sales by gross first volumes in basis the prices, quarter by to overall selling in business XXX lower higher and points, of offset decreased XX% XXXX,

benchmark in our higher into margins Tampa to remain continued Tampa acid. industrial selling upgrading combined offset ammonia on like price impact. more higher-margin profit We ammonia robust, the mining the price on despite industrial production, markets price. leverage than with focused nitric ammonia Upgrading products, from operating products, ammonia lower Gross and pressure increased higher-margin remain

to preemptively around taken preserve million we have on to our uncertainty date the liquidity. those outlines Page revolver actions X we COVID-XX, the ensure funds. access we $XX to Given In had mid-March drew to

Additionally, open further and contractor we until including spend notice, costs, hiring training halted all nonessential positions. of

environmental million quarter identified to also $X that to chosen to $X defer fourth investments capital investments not possibly the of and have million into XXXX. related health and until safety We have we

operational fully April any furloughing employee employees, laying or the package. million and has us allowed and the off are keeping our Additionally, base received under plants our avoid we loan loan a we federal during full The stimulus $XX in maintaining pandemic. to

had been to That been we certain after put sale Lastly, of $XX on hold has would due debt, repayment assets generate the approximately $XX that cash, million of additional the noncore million. pursuing the of pandemic. to process

However, we become conditions pursue sale intend those to of assets favorable. when the market more

pandemic The ongoing highly this impact of uncertain. remains

business we to we not believe result, acutely will risks be of focused to the will. a are through to it Hopefully, if it period headwinds. the downside managing be as plan on protracted a prudent but this adequate operate maintaining As liquidity our market to and case,

the approximately and Page revolving giving $XX.X liquidity our in million us $XX.X We our total cash of at on structure quarter million. facility, ended end XX outlines availability with XXXX. of the of credit approximately capital QX $XX million

out million. $XXX senior that approximately debt on was I the would on quarter-end at we earliest our point maturity have and covenants also our no XXXX. is debt notes outstanding maintenance Total

or UAN the ended This of XXXX, our ammonia cost our for price also current prices illustrates dividends. natural and please quarter and average and environment current have that the natural unpaid the prices prices accrued based of respect are quarter or the We market of Tampa we average current second of preferred second average for million, Page price, spot prices turn net average $XXX to for selling to stock HDAN approximately and XX. With hedged. ammonia with to on Tampa gas quarter outstanding average sales gas paying realized the sales the pricing selling including page and product and compares forward

pricing our of And a ammonia in As locked in can quarter Tampa the of of XXXX note, quarter with the is quarter, see slide, and second positive second we needs you from this period on pricing is have XX% second a XXX,XXX imports XXXX. up over which for gas HDAN line the over months pricing, quarter same to at the per approximately second XXXX. MMBtu, the past $X.XX challenged, lower continues year be versus tons UAN into U.S. than however, are over as XX% earlier. the the of X for net

approximately quarter, the we ton a ton a compared average for a year a approximately second expect As $XXX as ago. to result, to $XXX pricing

As with and mentioned, April production records we to in company well Mark respect several operated set very new and shipments.

we quarter, to expect result by industrial primarily mining and agricultural partially of volumes second drop-off markets volume the higher offset higher driven end production COVID-XX. for For our a as overall in UAN

Additionally, of to on this we our costs side are plan other continue reducing on the we focus pandemic. until

Despite caused by adjusted demand the the forecast the approximately EBITDA this quarter implications pandemic, and lower XXXX. to second environment of pricing be of global XX% we

through with costs price continued to lower gas savings natural ag volumes expect increased cost selling declines earlier. impacts We discipline production and sales partially with for the COVID-XX strong spending discussed offset our feedstock efforts products, and volume overall coupled and

to Mark I'll now wrap over up. turn to it back

Mark Behrman

Cheryl. you, Thank

that we control. We improve areas our can have continued the in business to

will crisis focused disruptions the created seen pricing economy are and occur of in pandemic. results despite year-over-year such of drive to and of unfolds. our weather control. us COVID-XX improvement resolution X with enable that by We outside the a normal when uncertainty It remain U.S. be to the path our how levers the and will will key take financial the business and remains resolution disruption, uncertainties the the pandemic Along as as on the

our these as strong very in deliver view our Despite XXXX we much to continue ability factors, to in control. performance

acid on combined production absence urea very anticipate and to sales call, expanded onstream our improvement sulfuric of well turnarounds discussed capacities rates continued we the our our quarter's us XXXX. increased As any last for year positions we volumes which, and in production at scheduled this when drive to with facilities, our and

at year. this As any I turnarounds just our of mentioned, facilities we scheduled have no

is With we on cycles, this completed XXXX and now of and work in turnaround the XXXX. Cherokee quarters and El scheduled respectively. next XXXX, are facility's during Pryor X-year next fourth for our third XXXX, scheduled extensive with at the Dorado facility turnaround turnaround the

efforts to I've customer The COX expected volumes discussed our new of our El COX to facility, LDAN and of of where order Dorado marketing our ramping will in been recent Recently, executed long-term in plant. second a of higher quarters. X in half next a contracts contract previously will out sales up production sale build the sell on our capitalize that secured new begin gas year. and we've we for sales

agreements to have products discussions to continue We sales margins. as improved well exploring on upgrade options additional to with long-term as

to regarding us during margin key prices. Lastly, selling at sell enhancement completed investments, we season more higher our in to a product the produce to March storage that product project and allows off-season annual position in that

emerges million next projects, to current prices. in annual $X of which second months, we COVID-XX the progress greater when the million have clearer added have an markets, we completed for until XX end which at uncertainties, do year. our we this incremental certain planned of our will the expect all expect in on Given of our slowed we visibility we to half projects have will become industrial $X we anticipate Ultimately, EBITDA

of of our flow goods are is times our to economy and families, to the U.S. XXXX. to employees, proud a in our timing the we top to will of We unprecedented and and year-over-year priority expect in with and, of of when. that supply while we communities. friends, deliver although and EBITDA the in order will recovery, our hampered are say highly and full of health is the to cash Regardless normalcy, everyone unusual and and as always, that be With to our coworkers safety essential citizens level that. operate said, year continue that continues grateful economy their part significantly improvement impossible by for pandemic, back in Eventually, be the we it services,

like all to out responders I'd and who others. to hearts those especially like line and their on sickened that have the of ones, lost go the workers to say have healthcare that put have we'd virus, first by those thank loved all lives the our to that of to been protect

the that born-and-raised of area constantly As in am for get hoping I and about you that hard-hit things all New soon. thinking people better a Yorker,

your concludes our remarks, be you. we Thank will take now questions. and prepared That happy to

Operator

Instructions]. [Operator

comes first & Company. Sidoti Our the of with question from Mondillo, line Joe

Joseph Mondillo

the question as side about that much given first as economy. related it of the my of the business. to So side, mining in talk but just industrial downturn Don't ag portion cyclical the the

company's But give you curious of year-over-year specifically, you how effects potential on guess be. you I maybe quarter. How You assumptions that the out. gross to we could you Slide sort made in And year about And much could the make profile? are profits based it. how can did the I decline. about, some are idea so the more of think know thinking on us relative to a I'm I up the comments do where talk margin there's play uncertain; those were will volumes just lot regarding variables margins? an X our They volumes guess, last we what first

Cheryl Maguire

Sure, Joe.

Okay.

when margin quarter, of the first in the probably mind that the until So didn't really the looking start March. of we impact for at in middle COVID-XX industrial we're keep feeling

probably impact $X the to volumes so would quarter. less, the And million, full I say, or lost from was

month. into to May $X looking probably a we're around trending and April more, forward, Going million, per bit

the the to close million. decline $X impact from total million, So quarter to the $X second probably volume is

Tampa they If Dorado operating margins but lower and higher to production, contributor for gas per big the had El think was leverage. and were down a in lower. fixed ton, much about quarter was first costs and mining, you industrial we record was

the into first nitric ammonia quarter. acid, margins combined So those X to more really drive the things, in upgrading industrial with helped

Mark Behrman

if come it third and here kind I a a of color, it's out to us to the to today unless sit a is is bit we U-shaped to, is look and it's more or V-shaped know hard fourth Joe, back impact but little is economy we'd think as or quarter what the when for the it to know going we the provide return. love going Right? return

Joseph Mondillo

Right. margin of And the that most your are So on side drastically? should change that contracts Right? cost-plus.

Mark Behrman

cost-plus. yes, Well, they're

play think fixed we there Right? the that. a produce more there's I lot leverage of costs, So margins. to do the big a with same has on volume product

Joseph Mondillo

understand volume I'm know. I Okay. the Any us could understand be declines. decremental help on potentially way to of based sort to the don't trying just downside margins? what

Mark Behrman

think have and to back you. about come it We'd to

Joseph Mondillo

Okay.

So reported CF the dynamic as aware, of first ag the throughout markets, the Was pointed X given similar that that comments regarding and So and months of April. was the it wet What all sure Industries favorably of season, the month the out to you're what night, just market, of just made in just in the And the closer last more pent-up the they month demand I'm drove regarding type sort you turned that April? planting just so demand? you was uncertainty weather April? is in that got end as it year? that

the and very about given on very and Because good April that trends? year. are and solid good, market economy saw see a But are the do May weather, that end I and solid, how side the harvest trends dynamic pretty this just of fact with see we maybe whole imagine a April you obviously, really the depending season. you good then at of to we sort could And the given the the a in year planting planting of how thinking ethanol the probably be going if things

year the of with looking a half be market. consumption the lot could off the and into of ethanol you So of supply back dynamic a at falling

may offset or other that wondering maybe you're So play or about dynamics could about you're factors any those just variables thinking into that some how I'm that it. of if come thinking there's

months? know that get we've And is what the then question, possible? there, you a Could pricing. I this last guess, than a, Is lastly, is could seen pricing long-winded XX I over see lower

Mark Behrman

remember to try I'll Well, the all questions.

we year, the went off hoops I'm first through a year at to logistical happened last we did probably what last And marketplace. started year, issues, and I as think similar of It nervousness answer petty we jumping had when weather the about and time. same you year, So off of this same tough year. during was at When last there thing. season questions really going the given year think multiple we what the this Right? was seeing through people lot with a we a the of spring in lot a starting started

got people a the throughout bit So I all nervous, think industry.

the and starting started then really large, would by weather. of weather it's and really advantage good we see farmers and say dramatically, We And really I that. to continued did in -- improved March I think took

a way in in the planting last even And ground, ahead my of where are average. so percentage of from as mentioned corn and prepared X-year we ahead I comments, of year we're and putting the

obviously. so think think I had spring in it's not and we've I good the us, And It's everyone really that a continue. will just industry. And

USDA to with for that. planting revised disagree don't at million industry XX The the about have corn, talked come I with Others XX million. acres out XX did in million.

think I planting this But good being said, aggressive. million be USDA later might when going bit out month out report. with the season. monthly a it's That to find corn be their a comes we'll XX

people probably doesn't ratios or norms than that in thinking XX%, happen already the And historical spring. of Because could an stock-to-use are ethanol. planted up the of application. acres a the have to lack on fall are So and ratios demand something ammonia if and harvested We'll to and higher have plant we'll offset going that what have hovering and Right? to then acres. lot the around clearly about they're stock-to-use impact on maybe

downside here of the bushels XXX get that think million all occur, were that if is So million corn demand could, XXX that to down. I to of you what's

$X.XX. near-term ethanol see And some lost from we've corn an seen is of impact already demand pressure on obviously year have could a towards and that the prices. prices, around there industry. be $X.XX, ripple you as which would fertilizer effect. of the we prices, on So out lack pressure So is on Right? from the that the corn would end $X And the

up if that talk stimulus the packages the we'll Chinese also comes industry. was purchases. with, for is There ethanol So commodity there's discussing talk see of government the government

And from would ethanol or down of planted headwinds. offset corn XX less those so any acres million either

how So going out. that's you but play the tell to kind it's of dynamic, I can't

Joseph Mondillo

you Right. the as as country into and far affecting pricing? seeing how imports coming What are that's the and supply

Mark Behrman

fertilizer ran pretty The starts July imports Well, X. on heavy. year

July but so I recent So X were I the March, imports or I data, UAN, say, they urea, down. let's think April don't ahead: fairly through for were have most similar not in slightly particular; much; ammonia, think

an have prices, European UAN the So the driven of earlier on implemented October. is UAN we've as increase and imports in really on had were by tariffs really calls, impact most last of that discussed imports,

And and what was and heard really say been so far seen more curtailed. in we've May April I is product. there imports would have about so But

So level X they're down coming pretty were significantly of for the first months. versus the in that imports

Joseph Mondillo

operations. on couple questions of A Great.

$XX in off, on XXXX spent turnaround, million terms the in of you First turnarounds.

Is a or top for and savings we'll you this year. lost those absorption see additional on any that's $XX see a savings So a turnarounds? comparison? as would million that in productivity as that about on of overhead there that positive What

Mark Behrman

Right? What absorb going having it during being that Well, and savings. to you're those you're I I better. costs turnarounds would by wouldn't producing the times. is say call plant not Because down,

this over for So costs our to we're those little more able ton production as turnaround for having cost to year, year, addition should turnaround spread see to we in tons. lowered no per expense costs this

Joseph Mondillo

that, for, don't know Okay. Any cost I I remember Dorado, were assume would pretty was lost And you was down is that. plant quantify like, Pryor days. the you way if think can't I were if you El it absorption all? down, or have significant. I it, to at XX-plus

Mark Behrman

agree that would quantify was could and we we very have think significant, it it I don't here. I numbers

Cheryl Maguire

Pryor over as Joe, a of significant out coming running production XXX expect days, year, day tons Pryor XX you would that this there's the some compared level, if think real to at XX, last higher Just XXX, high about we facility a year. about

Mark Behrman

And that's ammonia.

Cheryl Maguire

yes. ammonia, that's And

Joseph Mondillo

Great.

anything, made running to like quarter Okay. And terms stated much, are I relative but quarter all, if would last or years just the guys they jinx way but compared to significant April, profitability to you've also to the But sounds plant you really is operations, Compared that and have consistent in think this said all of are XXX%. relative think within X over running year want you throughout few at then a about I progress. How be how you don't year much ran year? well. last to to the ago, what and here what to it Any the so at that?

Mark Behrman

Well, last ended XX% Cheryl, or and onstream. year XX% I'm year, correct either if the at me wrong, we

Cheryl Maguire

XX%, yes.

Mark Behrman

quarter for Our year. target this that is we laid out last XX%

each significantly higher the and if even profitability marginal just produce costs, really going obviously So plants, the with onstream to we've incurring margins just not costs. of virtue is of At out and by your over fixed fixed fixed the produced the that have what again held we costs we better had that. cost utilization variable of same and ton we off we're all and capacity

to any chemical run highest -- given leverage, the is object got you've tremendous that the fixed capacity onstreaming costs because utilization you you have. extremely it's yes, can the plant operating So

Joseph Mondillo

year but said I'm think just kind opportunity, is next I also, of half your question Okay. opportunity those? I for sort of opportunity curious is And maybe, big regarding an an it, me, I that could expectation you projects. that? COX And last what second the -- what this just savings regarding it, missed of know you for stated be. to relative margin year of Could know of how dollar-wise then, I that enhancement you but

Mark Behrman

margin the we expect enhancement the from first the on part, kind So we've that of about returns them. projects, talked

we basis. think next when annualized $X those those million The that expect fully million is additional the we I on projects. project would will $X I finish to one be within of that of And an it months. operational EBITDA projects said would XX COX

positioning moving another tons we that to product storage said, was which periods, are XX,XXX to IRRs, of projects of with that. and X project, And as X.X of payback years. generally have not we I Those completed advantage storage. forward So take additional

high-profitability, high-margin, really they're So high-return projects.

The tons at high tons per we that Call COX signed about step of a a taking produce. it a ammonia similar of amount back, day production we out capacity a at of of Dorado. contract that XXX,XXX year COX rate, -- we X,XXX probably El produce utilization

the got so I'll sell And that say tons of maybe XXX,XXX we've COX. to ability

this that. for about a initially of one-quarter would so And be contract

the second of So year call million half it a additional starting in EBITDA of maybe year. $X next

Joseph Mondillo

a $X XXX% for million $X COX? Okay. of accounts to And sales the full the million

Mark Behrman

the that's this we're that COX No, pursuant to just selling contract.

we we the would COX sell have sell to XX% if it. still could of available So

Joseph Mondillo

So million of just for savings the to that COX your $X regarding accounts that's enhancements, of exhaust? this margin to clarify, XX% contract only $X million

Mark Behrman

Yes.

Operator

Our next with of Value from Corp. Global Geygan, JP the Investment comes line question

James Geygan

into logistics, lot you You've perspective? done production opportunities touched on high efficiencies? by I as as you but can engagements, these nice really consulting plant production largely improvements, job a is gross volumes. you've utilization, adjusted margin, put that your to projects, a in the your Recognizing and that onstream affected capacity all measured discuss past, know efficiency, evidenced your of and by with high procurement further can by achieve additional And rates including margin-enhancing volumes

Mark Behrman

we Well, about have. talk I translates the that can that know opportunities about to. talk some don't of can I that I dollars

that real a can every bit I little think continuous still a day you we on and believer continue focus do wake big have we you to better. something up, improvement, -- a I'm So

or contractors whether utilize whether cost costs. whether more do we're think throughout looking figure against ways effective And things, we it's lots out way, ways efficient a we the or we be cost so to product at I reductions certain efficiently, reduce opportunities, of can we hedge in operations can because that more we gas outside can in whether can procure more company

So think there's opportunity throughout we're that I the reviewing of lots company today.

equipment today, how is to optimize think It's thing plants a to production, a of CapEx and expansion other dollars. that the it's cost but doesn't more lot have great fine the lot talk up that we The have really of expanding you what sleeves to that your do I and opportunity understanding rolling today. and about or tune have we

be circumstances, continue that of XX day and And a as fixed We'll you're and have we against today, that production day, you've see out really it's again move plants because I'll that squeeze costs it, variable just you'll call in are XX so costs tons facilities which I extra to, got an the certain a talking that production high-margin along. about we more the able about tons sitting the when think there the production. talking you're to

James Geygan

a Magellan on disruptions I'm time. that period seen observed to supply the the network weigh the the pipeline after that effects expect prices? past in curious ammonia long and We've following of of normalized have shutdown the you you've of in what Okay. how might

Mark Behrman

Interesting question.

has really had alternative that they're ammonia facility, going at they storage. pretty Magellan they to of develop look on if competitors to of storage pipeline So that into at That allowed to and that's think the out were are. pipeline, really and that really either expand free ammonia think in their some you down main users in pipeline also and pipeline to offload locations shutting or distribution distributing urea Enid that their public particular, the on to position that that I there was up product facility. ammonia been Koch forced utilized who has for selling production three our some That there transport methods utilize of

And are so there's more trucks I that a think being used. lot

tight going pretty you're And So transportation the tight costs. a to Southern the higher any truck Plains have also truck market is market. you in market time see

an So had that. it's impact on

XX work to that's normalize ammonia for that handle that it market. we're of think of the of being probably XX the some methods done new to I to away months from distribution So

James Geygan

Okay.

us on a Or specifics in commercial And any number your one Is that of mentioned of that? around opportunities negotiation? segments, industrial of mining but and last previously engagements commercial particular specifics you'd under mentioned your can status potential in the the disclosing mentioned? commercial of still included opportunity, that is you give without You'd you've the call one that. that

Mark Behrman

for I nitrate. is low-density tons of that call referred I of I X new a contracts on contract award mentioned ammonium to. approximately think a last customer supporting That the XX,XXX one

James Geygan

the sale held you which $XX sale of that for finally, assets are debt after retirement million then you those that have assets you identify I [Technical the assets. And proceeds million would heard you. Cheryl, and/or think of for $XX Difficulty]. Thank against say Okay. generate gross to Can I

Mark Behrman

Are you there?

Cheryl Maguire

Are there, JP? you still

Operator

has his appears It line Apologies. disconnected.

Sachs. Our with Travis line Goldman of next question comes Edwards, from the

Travis Edwards

for sales Actually, if But just been gross and color the have of more gross the you look sounds could sheet. wouldn't you then debt down you would what mind question, that now. JP's just sharing be it from on proceeds to the $XX have is like left some color potential on like delayed have the color the number million gross which after proceeds, quick on the asset paid confirming million if a of follow-on, $XX if balance

Mark Behrman

that, and for have back to JP's don't think we sale. any question, assets going held I

proceeds assets would not. think benefit assets those to we're I are or sense that one us makes that we've got or whether a two it and we receive exploring the sell to

proceeds. really million And million only so $XX net the in I about we're think a of talk to $XX or position

Travis Edwards

Got it.

Okay. over just know Thank of quarters? any a about you. of you that on industrial I the a and of couple the you that next of you question side, And Cheryl, new color you coming there challenges offset could look the the I appreciate, other wins offset or bit bit talked little your quantify maybe quarterly But obviously in with downside be offsetting contract which of impact maybe may some is had of partially like quantifying way potentially A talked lower little specifically, that business. on operations. where, on a of maybe but bit months the what to areas industrial share about volumes. some sort benefiting either can some sort of back or

Mark Behrman

is sell right shift Right? robust now. to one Well, more more marketplace a agricultural fertilizers in product. Sell pretty

we've got in obviously to flexibility that. production facilities to the shift our So

really we do demand. think sell the products industrial any have other lost some that not is I other

to the to production can so done products we've shift those we extent And that, as well.

Travis Edwards

Awesome. Thank you.

flow, Just lot release can to of a CapEx your on about And I that pieces. maybe some in to the talked moving know I this cash are there plan appreciate free later year. press you defer

just to got, cash you But picture wondering we free the you Do then payment see the down that flow. put thinking for million hoping above year. the preserve I flow on like XXXX, the got that as about were And you've Just better again free you could appreciate million And cash cash a free bit can you've the breakeven little to help come for your trajectory road. how flow of progress get levels? sheet said, and and get into that loan $XX around $XX business. million balance to $XX the trajectory

Cheryl Maguire

So yes, our certainly think expectation. I that's

Assuming headwind XXXX in we thinking. the of normalcy comments, demand. Mark level in some original our as his return in said of a we to reflects ethanol half But second see potential

watching certainly we're So that.

haven't some included thinking proceeds looks like. second We certainly any the year we what depend in assumed sale assets. -- to any going That's from about on the But half the or not it how it. we're of of are is

Mark Behrman

ethanol cash we economy we somehow assuming a sit we return we still would have, said, normalcy the have and headwinds, anticipate as of kind tremendous being flow don't of think positive. as that here I today, Cheryl to

Cheryl Maguire

Yes.

Mark Behrman

an that's And without asset sale. obviously

Travis Edwards

let's Awesome. That's Yes, great. that. for hope

actually some the understand potentially really or to Leidos those ultimately question, from a misunderstanding that? like just Just piece it's Leidos delay last this. pieces again ruling you, could until at if appreciate upside a or paid that returned speak probably the to in of pieces, an some once? case. from I of I it's wondering there. when September, those but sort being get does that after of the made LSB on back put get damages? which things at paid appreciate I'm awarded can't Or again LSB flow there moving portion determination would all that damages and case, get lot favorable paid been Is a would looking damages appeal of you to damages to Just a But risk that wondering, everything and get hold to can a cash moving you potential case on has is

Mark Behrman

could directions. win with ways is lawsuit, as was in to a we award, out. of can There's of any the that appeal settlement it would different Leidos middle. go Right? transpire. So any before paid dollars lots it different appeal There that could can an go So absolutely be there actual in a it lot and could

April to broke out. and just I'm for and think We try were finally anxiously doing I myself to awaiting anxious pandemic the So this. then ready this that in try obviously

we're and we're set And we're and most and try of past really kind pandemic shape in now XX, country think we're the I for case. think solid as to think able is hope the I I September have we better shutdowns of that case, So I date. a the because a

Operator

question from line Baird. of comes next the Brian Our DiRubbio, with

Brian DiRubbio

questions. few a Just

the be next the still going quarters? of amount on same basis for With quarterly are to case couple the you delay in Leidos spending a the

Mark Behrman

No.

Brian DiRubbio

have is you going it be? will spending Okay. what that guidance on zero? to any Or Do

Cheryl Maguire

say well go pretty I'd to the There quarter April, start ramp third through of little the that less in a zero probably down when be to half trial. a to little probably taper $X.X will bit than to should up back million, and we bit

Brian DiRubbio

a that million, grant? that loan, Perfect. the Or loan? is a Okay. The $XX is PPP

Mark Behrman

the a loan, we guidelines out initially whether it's or grant not is a approves It is the and set that. by government government whether whether meet and

be it to So I remains as the think shift. continue seen, to guidelines

Brian DiRubbio

Okay.

TBD that's So that. on

Mark Behrman

Yes.

Brian DiRubbio

Perfect.

of already XXXX a that clarification, turnaround your Just EBITDA, point Correct? adjusted costs. excluded

Mark Behrman

Yes.

Brian DiRubbio

Okay.

that. clarify EBITDA-producing assets but to that? with non-EBITDA-producing the something assets wanted sales or potential I And the targeting asset are know Just future, down those with then is in you

Mark Behrman

impact question. to put I good it? Yes, be really a EBITDA. it do would How some That's

Operator

I the concludes this closing today's comments. would for gentlemen, segment. turn like floor question-and-answer and back management to to Ladies

Mark Behrman

business. and business, your operationally Well, And I LSB in really appreciate interest in we Thank progress our areas the And we're in Industries. Hopefully you. you safe. appreciate everyone's some both that of making interest. see other stay

Operator

concludes gentlemen, teleconference. Thank this and Ladies you. today's

this You your time. Thank at participation. may for your lines you disconnect

LSB Industries (LXU) 9 May 202020 Q1 Earnings call transcript