LXU - Earnings call transcript Q2 2020

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Operator

Good morning. Thank you for standing by. Welcome to the LSB Industries 2Q '20 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. this being note, Please Instructions] conference recorded. is [Operator conference your and host, will for now Carver, to the turn President I Kristy over Senior Industries. LSB Treasurer Vice Thank you.

You begin. may

Kristy Carver

and David, Thank everyone. morning you, good to

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

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

Mark Behrman

work of to high our level you We're the us enabled our once continue a with safety efficiency again Thank you, interest sustain in the for to efforts Industries. operations an like Kristy, thanking that to appreciate Their I'd and this in and performance hard of to in the everyone. improved business continue enabling in their LSB and your begin good deliver glad pandemic call run morning midst quarter. second commitment crisis. us to and our during to of could employees our all morning, by participate

team this operating corporate both improvement last culture proud LSB's recordable last on years. focus focus a performance, accomplishment injury for define come continue and XX efficiency which in the for on our their to to currently X.X safety extremely the and our I'm over of months. safety several that's at We rate improving continuous stands

for while our safety of reach way. business never we are work the to onstream on rates side and well focusing our good industrial aspects stops to COVID-XX, costs the our with and ag summarizes due weakened business of takeaways of second of of on the XX%, cooperative, particularly rationalizing long-term a job main targeted zero In performance we ammonia the goal facilities, our for our our as and operating to mining our our pricing Slide short, not of maximizing X While on our did the respect our our control, of was anticipated, demand products the quarter. product balance. and manufacturing impacts within

making that quarter, with in are fourth installation reactor urea was X% higher the to quarter. later driven in total achieving that was production the analysis the XX% year-over-year an our levels would second it wasn't the in The year. of the were record sales new by this the our the on in business call. XXXX last the been robust fact, around in us for performed which increase sales more quarter was in with will and agricultural over This improvement was X the We return than pleased and for volumes during industrial detail facility been UAN and approximately quarter. of adjusted the increase an capitalize quarter. with itself, our for year-over-year the direct that UAN plant work resulted have demand improvements second that in to This improvement of other XXXX result particularly we allow facility prices. Pryor at total urea Pryor quarter, pricing In pre-pandemic had ago, provide demonstrates and Cheryl the months industrial on with line pre-pandemic demand nitrogen levels just will on XX% the EBITDA the that of consistent of

sales HDAN quarter. strong had for also the second We

earlier, decrease also Magellan experienced prices with Pryor last movement, this period our prices the XXXX, at UAN ammonia increase records. which performance for downstream the in along fall, our as compared declined quarter of facility. inventory imports were our of result selling to prices continued U.S. first resulting in record market over was more in carried over fertilizer the excess production course XXXX decline year of closure which products year-over-year collectively, I demand. and XXXX, The also in on the quarter reflect particularly the to Lower to and of we and the available exports, our significantly a lower disrupt around continues in we year, pipeline to from weakened Unfortunately, the remain last would meet agricultural second the relative Plains as for the XXXX, of Southern mentioned function full in weakness overall other sales discuss and exceed more also prices in volumes same year. I'll production certain X of Looking a which ammonia product of supply year-over-year facilities detail corn a track in to ammonia shortly. the

natural most primary our you is of the know, products. As gas raw for material

low year-over-year cost we be a experienced worth natural sword. gas natural gas was It's margins. lower a out, that pointing our however, gross the double-edged costs the positive So for very can

leading second which puts manufacturing prices, supply, pressure we their in product levels to factor at world X past chemical fertilizer quarters nitrogen on reap to the higher the our we we've to the of worldwide operate sales allow the product products, weakness another benefit which contributing the for price was cost lower to produce gas the seen to quarter. producers operations, experienced tends the marginal around costs While

vendors our been customers our Slide good by level, the protect COVID-XX. offset for at in been to have selling benefit So contractors, and doing pandemic taking and can actions more is team gas from we employees, prices. we to healthy. than have strongly the to are we March, hit of Since some cost our prices safe deterioration committed everything product keep cost X, manufacturing. the low of discuss natural a we But On

have been the COVID-XX continues and no since as With update insight trends in evolve. see has procedures workspaces, in pandemic will with will with measures enhance around from regular when put all to economy aspects health of effective provides to place. cleaning have equipment our employees the necessary of at are in where down mandatory last into doing among we protocols home including had review call on to continue as spread earnings end this, continued proven cases at an significantly this known and we and are our As for virus workforce. to the what as, markets have other to changes and which adjustments drivers doubled as date, monitoring of for to doing plans social X travel, manner working measures. and and prepared plants, interact Slide on have facilities the extra of how and our our demand not we reopened the disinfecting our to no contingency in so we masks, for very be restrictions personnel, distancing our on-site personnel an continue we state We've we've our our the more early crisis, have evolved states our various located, we facilities, that the among end These have guidelines delivery strict May.

unfolded as for the of now expected that USDA to. side planting the agricultural the our XX business, the XXXX spring much we indicate it were season approximately acres of U.S. in planting On corn estimates season million planted

increase past automotive which previously, million ethanol, of prices. below and U.S. dropped orders the sheltered-in-place as of While This production rise citizens this which a a as the a accounts is acres, X% not significantly of usage forecast nation fertilizers, XX% to we reduced the initial corn their product This it XX of gasoline solid shut participants indicated aspects industry additive, under XXXX. this for for enough U.S. of economy dramatically, was was increase demand. boost compared in important aggressive, as most demand spring, it across they to total as approximately down, consumption gasoline. the viewed were as still selling U.S. and stay-at-home Throughout represents although, supported most

on demand, as a various impact low corn So ethanol have pricing. hitting XXXX production reduced a pre-pandemic the corn has lower expected Since gasoline inventories levels has ethanol aspects April, and consumption in has economy near significant led point which demand, corn to rebounded to of returning sharply, reopened.

consumer second the improvement assembly we the while auto by for Dorado hard-hit we momentarily. acid I'll While which I'd mid-March, in into expansion to brought provide initially elevated first, favorable a mining XXXX in building anticipated. vehicle industries Considering acid. levels, been nitric economic on U.S. XXXX, we which nitric This been cost be substantial indicator homes reactivated the nitric of our El to had bottoming our to the The in gradually respect Cheryl for and the disruption already demand in activity realized over situation like trends of than general to industry, experienced we production their corn rebound new ammonia acid, in of back to a market cautiously May. market sector will the turned Since contractor drop a is products the had half is a of sequential expected for by has But home overruns. months, the ethanol and is not a of key our April, favorable for After used are to Leidos, making our sales, are that we've quarter. that we demand the construction third litigation during corn to the in indicators market markets, and plant light some be that that in industrial several with update call increase U.S. extent major coincided pandemic. end optimistic pre-pandemic from also and new the out halting the better project and to brief against coming the lines stocks, demand. XXXX which recovery. home anticipated a see continue sizable we industrial that out to these to may due incurred to With continues felt has spanned in volumes hand to steady

negligence, than Leidos' breach for as which compensation more of negligence $XXX seek and damages to in continue million gross wrongdoing, We contract, negligence. fraud, professional involved

back until COVID-XX start call of our the late in trial was due the to delayed from onset September. indicated the of and closures, the May, in related we court As April

delayed As of trial pandemic, the again. the today, been ongoing to has due

We date, jury. are new are by having our heard and we awaiting a to forward a trial case looking

guarantee our case we in outcome merits. can't any we serious has While litigation, believe

continue as will provide appropriate. to We updates

about go financial will Cheryl QX into our detail Now more Cheryl? results.

Cheryl Maguire

year-over-year decline of our good bridges EBITDA our EBITDA $XX QX Thanks, for prices, agricultural adjusted the X of adjusted The of is Page for to morning. Mark, XXXX market. in and million XXXX particularly result million. QX selling lower $XX.X

quarter production lost COVID-XX volume elevated Mark over our As million a was combined mining demand pricing. UAN, million of on stated, second ammonia higher largely products, to record on increased the offset decreased the a were products we volume to impact first industrial continued $X and XX approximately persistent facility. of impacts the related and for inventory $X.X a as from mining to with have with end this of as last result production UAN market. sales imports weigh from levels agricultural and our approximately some EBITDA months. Pryor to of lost due volume year-over-year, volumes months COVID-XX Overall, primarily our for From weaker result industrial of perspective, decreased for Sales exports six able and for and sales the the

acid by which recover second start-up of gas EBITDA were quarter XXXX. from declines natural costs, quarter previously offset our facility Furthermore, with favorable the we the and averaged approximately in these below XXXX, in was nitric of of where $X.X expenses operation to our million negative Additionally, XXXX, certain impact in XX% El the associated Dorado of recorded. vendors constructed new our the recognized to plant second settlements partially

million plant costs Lastly, monitor expenses we where And approximately spend $X.X as possible. lower last or period were year. closely than such, eliminate the same continue and defer to

the our Page making is stated in earlier, with Mark of operating to for illustrate business. pricing are result by obscured we coupled agricultural performance the mining low demand pandemic, as for our environment As products. industrial very our improvements the intended second quarter was eight the and depressed products a

our match view underlying to This we in comparative business. to selling from directly in normalized economic improvement purposes, For those prices lower and added both slowdown. also for us sales from the operational prices have volumes back gas lower XXXX experienced we demand, allows the natural and COVID-XX resulting

keep in With than EBITDA. almost quarter second second quarter been believe the many the that improvements selling initiatives to would mind these the we $XX.X not adjustments, adjusted this XXXX EBITDA XXXX would higher from illustrates that million several We that have XXXX, robust. consider adjusted over completed Also business last in have in years. what in we XX% of were prices our be

have cash our nine, which each of margins Turning we our to underlying market for outlined margins gross Page segments, true businesses. represent the each of of profit

As from can see slide, averaging costs costs, production as selling and higher fixed gas remain you mining industrial and this we've natural offset prices been XX%, lower our robust, to approximately with able margins lower lower volumes.

mid-cycle environment. ammonia, selling experienced we have the expect very Although prices in UAN more pricing and margins normalized been would impacted by EBITDA low for margins ag mid-XX% we primarily a

allowed continued weakness, Page spend to liquidity, In are taken likelihood until are and further monitor uncertainty summarized we furloughing base avoid under ended closely maintaining the Given We the pandemic. or April, XX. laying full actions the we loan Act. our number $XX keeping any has of a million million approximately of during us fully and employee we to of PPP our a plants pricing continue the ag preserve have all on employees, operational quarter loan to with around and liquidity, future $XX received nonessential CARES we the The off COVID-XX notice. and which

to pandemic. been $XX additional the certain process approximately of we has hold the of have to million on of due that could exploring That after $XX Additionally, debt put sale million. non-core generate assets cash been repayment the

when of We focused as existing the However, to managing such resume liquidity. would additional those assets acutely loans we the have add to the remain we favorable.Lastly, period market prudent as our equipment it plan will. of to more become intend exploring Hopefully, of liquidity. we One sale additional market that pull, conditions liquidity refinance on headwinds. if it on maintaining operate will the but through believe risk to protracted not could downside be be this and adequate business a case, note final to levers

of costs availability Both lead the working is sustained for receivables, As base. for capital, to as lower. well products gas of means XXXX, natural on into implications low for we borrowing lower inventory cost gas has prices revolver. to move half agricultural lower our and outlook and as Lower our second natural pricing lead our selling the factors therefore, low a

to since gas needs working manage our therefore, production capital to is our natural lower. However, lower also cost, requirements overall business input major a and, are liquidity our are overall the

at the remain heading the half end So at $XX of million outlines Page liquidity of of our June, structure of end XX the into QX. the we capital at year. second very comfortable

at improved recovery to ways improve believe actively and operating lower to of seeking pandemic overall on term, We XXXX, And our improvement call to declines notes pricing remain for those and near continued preserving the that XXX.X%. capital. our be are XXX%. premium through a structure cost combined In capital our managing in performance, economic We pandemic. and we in efforts. achieving the will callable are the our focused the senior products, COVID-XX from benefit in liquidity Today, May

turn However, our to quarter, several of our to forward. cost and capital avenues we the see third Page lowering to for on respect please work environment to the a pricing With Directors with of XX. path continue Board

Tampa you of materially ammonia compared discussed lower from are UAN, supply the XXXX expected as a can factors see increased this from of to HDAN as remain As slide, result earlier. and to variety

although result we we quarter. to gas offset to favorable in lesser experienced million expect with to investments and expect turnaround no a From as and continued EBITDA expect we price portion planned and reliability selling demand in lower said, of On volume pressure related than do a continued being the XXXX ammonia, of we COVID-XX, on the what That impact third volume $X though, extent perspective, second million. a quarter dynamics. acid a However, sales a lost with in to would work we and associated from expect production the quarter. positive COVID-XX by note, $X UAN the increased between made sulfuric

despite sales, higher for And production a third XX% XX% so now the price environment, it sum quarter, to to view lower much combined drive turn over back compared and up the expect quarter to to to with in improvement up. lower third to our selling EBITDA the costs, we of And XXXX. as I'll wrap Mark

Mark Behrman

past and crisis throughout have their Thank the and Midwest Between record held company. XXXX, our you, the quarters the share our challenges the Cheryl. of pandemic for X industry rainfalls

year for the This another continue aspects many teams been our across deliver our business outside our procedures and processes the managing to our can improved our are annual past obstacles our operations, enhanced of made at our implement our we in manufacturing will investments XXXX of safety that discipline onstream to of business would record control. over our have reflects of and control, the result combination of successfully what for to initiatives sales the that work production hard our years. of include coupled products, respect development manage significant and we With these operations, and we've success facilities, facilities products. our the While several to with costs. our are reliability in These of we performance, rates plant expect

million on addition yield are, implemented. we course, $XX see our to impact in cost incremental fully to yield initiatives reduction opportunities our annual from should We EBITDA improvements We've to million selling increased that, our the expected that initiatives, these when of operating with combined from business opportunities these rates, products Beyond EBITDA these enhancement None of the discussed actively sales production when several will COVID-XX believe to of higher production the prices begin and early as we volumes on aimed opportunities expect we daily selling of our in efforts at margin such in are intensified further have sales calls, XXXX. increased plant improvement expect lost pursuing several we for results are and to out reliant and recover. marketing starting generate of secured and development $XX and previous volumes. and

XX,XXX of secured impacted we the beginning currently although and quarter, with the when contracts first XX,XXX between LDAN, should sale tons the implemented, in During both new second And represent quarter. fully COVID-XX, of by new volume. X

We of our El per sell a approximately where contract building facility, of Dorado also customer year COX to plant. new XXX,XXX out gas executed tons a our is

to We quarter expect the of this fourth in begin sales under agreement XXXX.

addition these excited long are we contracts, term supply other regarding to In about. have agreements we dialogues several that underway potential

As on savings. pricing similar other several fixed $X volumes reduction opportunities our our in actions QX to at plan April, approximately profitability, our key over product lead ammonium further El will of result margins. on sales that we increased expect cost to Also production, address production identified ton we we allow a the increase us million enhance the expected about that lower will call to product included nitrate throughout our and our in of per annual enable We're quarters we us sales believe both identified achieve bolster environment, and an are in and completed to that expect facility, periods returns that a regardless high-density in Dorado project year, have the discussed of of attractive production investment our we storage more to the to maximize particularly cost during excited pricing. this and in higher would which several very next

solid within With continuing see virus families, EBITDA coworkers implement #X of the $XX employees, goal while to by safety the of hope strongly we are learn battle and what clear to in shareholders, our the said, we the cash control and an in carries of rebounding health it of strong economy second financial learn historically in of areas So year but is while year-over-year our in and to additional COVID-XX. it, us that than the makes ever the friends, million are continues along the on up, with certain we maximizing in next our hampered every to flow focused these quarter $XX XXXX. performance believe focus also our communities. make of flow everyone U.S. to progress path months. and on, a our world, and control. others. midst the over performance in a the in important for challenging more XX our and in that of of and the million that products and we operating of all to on we actions we for ability our confident performance, EBITDA an The of environment. constantly the albeit is The many to EBITDA incremental all day by our full in improving accelerating improvement of This of spread also on, part remains economy, The country In pandemic face their deliver value and evidenced sectors, our the priority sum cash

With actions are positioned in that well to the taking, XXXX. we continue improvement are we various

Our opportunities from present business we and themselves. so can pandemic that the on to goal expect our that to continuous efficient we more is grow improvement a the company capitalize emerge

to August the session, and we to We mention that we Virtual your Q&A back course happy the concludes call with the on like to that in begin Xth. now event. hope questions. some the Jefferies Industrials you operator Thank will to pass over take That Conference will I'd the to I and be remarks, of you. Before of participating Xth be speak prepared our

Operator

Instructions] [Operator Sachs. with is first Travis Goldman question Edwards Our from

Travis Edwards

the for color the the see on all in operations It's on quarter. plants. great the Thanks to progress

that front. that into the in cost if as you've willing was deferring turnaround the or nonessential interested some rates giving year? next forward just you be that commentary secondly, plant. just as then going changes And wondering of would you this I One, later I as if talked now. was had kind had far about shared schedule wondering to anything question, year, onstream by historically, the color Just on a of or

Mark Behrman

It's interest. Travis, the Behrman. thanks for Mark

operating quarter. So plants, across about performance for rate XX% the ammonia the the onstream was

get know, unexpected the ratably going run it or downtime you a have spurt, kind a usually throughout in of you As forward. year, and downtime then come doesn't great

onstream the the focused we So on still and for we're rate that's achievable. XX% think very year,

change have As we the turnarounds turnaround plans have turnaround, year. schedules. of to We no far as planned don't turnaround any schedule, no, this a any for

for However, have planned year. do we X next

Travis Edwards

You little with I about again, those up about specifics, preferred are structure, tends the potential higher internally, the calls. the but to you're down bondholders the Obviously, finance about talked as have and you notes a bit from which shares, refinancing about want capital price to markets capital know open. market? you But conditions stepping on with preferred you're notes? give call EBITDA shareholders, But hit before you from necessarily wondering, are come come of X.XXX% rate structure, you don't next hearing addressing think to thinking market what preferred dependent costs, year, those more that both just to addressing dealing perspective run what just having kind are a certain we whether conversations and of the on reducing we wondering,

Mark Behrman

our Well, notes. I And rating. credit interest don't I like our on don't rate X.XXX% certainly like

rating improving So of will our ultimately we part becoming on single B be improving and the focused are very that cost a the credit And credit. our, of debt.

comments, financial that prepared one obviously, we the improvement really and, translates in to drive to we're And things performance. can the my focused is as things business that of the in earlier a really I control bit so on, of said

continue I of to we subject market the conditions, addressing to improvement to efficient, with believe capital the -- we're structure become that in outlined, to so the of next notes market $XXX of EBITDA, refinance a target to to part credit on if us in prudent So price, some million certainly more operate I our sometime of well, probably really annual clearly that -- given an is And be notes. efforts refinance continue would year. focused irrespective

Travis Edwards

reports, frequency to you're too, one conversations I agency the as the those that to of the rating, -- sort are I'll have any guess and we those you the more. far that have how On of or have to as I follow-up. metrics? access their B ongoing, they far a agencies, -- single I Got but note, talks sneak what's Obviously, quick with B just getting the guess, it. was indication get given conversations conversations Maybe with as regarding just as these single rating? curious, having

Mark Behrman

Yes.

So I are can't on what comment or thoughts the agencies' aren't.

agencies think nor expect definitive, never do them I I are be. to

As markets had proactive we've markets them industrial either S&P. Moody's change or and to and every thoughts credit a quarter. with markets and agricultural talk feelings But their meet change, relationship with change. markets pretty both both or and We them

that aware and should I improvement continue to an credit improving business, where that And in think our and understand they they're our of rating. these metrics and we're so sort lead think going, we'll to have conversations. we're I And

Travis Edwards

time, appreciate I’ll I guys. for queue. back the it. Got in really thanks

Operator

question Company. next with Our & is Mondillo Sidoti Joe from

Joe Mondillo

Good morning Cheryl. Mark and

Mark Behrman

Good morning, Joe.

Joe Mondillo

this how have through handful describe the year sort application season? been weak. a what season, So know wondering off fertilizer but that of on I'm you -- spring your slow start, really the seasons of last And we're I whole now the started

Mark Behrman

Yes.

a had last really good spring versus season. obviously, planted with actually up, we fertilizer more think year. Demand I this was acreage year

anticipated. the there. mentioned, we was we pricing, had unfortunately, wasn't But So think I what as demand

Joe Mondillo

prices be look reasons we one so I to highs, they of well. ratio fertilizer the are as brought acreage end the is year, estimate, down is low indirectly low multi-decade still why think the USDA And corn expected which when stock-to-use the even estimates, prices of are why though towards the maybe planted the and

application and season year? to curious and regard thoughts Just your what demand maybe on this next going just in general into fall later

Mark Behrman

you're Well, think I right.

record of some I going they're the had have pretty certainly they're to that -- can't highest not, back last to see stocks. think the some I high we've corn look or if I stocks we're to have years. but XX over

will think have so an always pricing how then planted. on pricing corn corn fertilizer, certainly, are and impact some have an of many I And impact will corn has the on, that and on acres impact price

beans, out the you see on could some into of acres of rotated price corn and beans. So depending

remains that think I to be seen.

vacations I a the ethanol prepared little think you strong. year, first quarter lot in something about return driving I of ethanol lot to about And was there's has think more the that a nervous and talk really demand. and a comments, we come demand fairly our on less our ethanol people as call, taking we were pointed back out flying. But this

and it's would see, and interested whether certainly, So people up to I'll more. summer be driving end into gasoline of fall, just year-over-year usage are the this be because the what

think I So be we certainly and as it will don't have a number acres slightly think corn planted more. next could -- match year a I in year far the spring. you robust see for planted, we'll what last as acres of had But we'll

Joe Mondillo

guess, I a fertilizer how that are dollar? Okay, over U.S. months. affects the last as probably, And how what as and then just any several be maybe imports far far industry overall as It's made and thoughts directly even and on just wondering corn? that the pretty the positive? would could your significant I thoughts more a maybe drastic And as move think,

Mark Behrman

more the is you're U.S. in here I North to and America. I what's Yes, going drive think just right. imports pricing mean,

the And pricing world for I UAN, some field this earlier-than-expected U.S. normally seen would I makes have don't of say, we're very about and some point, the seeing some we get we States. started kind pricing come the than don't you month certainly lowest we've summer, let's imports mid-October, certain low. of And a prospects really see. a imports throughout the fertilizer it date, imports into think had products in don't was here sometime the then to mean, so think spring. the And program U.S. imports. the fairly and pullback, coming coming early with an early you the attractive off I for shut of at into in imports in until to it if don't in for

rate more like of or the I So exchange that, think than the pricing dynamics where just is. anything dollar it's

well. ammonium less less with are seeing we think imports, as We're some I -- with also So UAN. some seeing imports particularly nitrate

Joe Mondillo

follow-up I compared to to that year. the before it of you stream think back XX% question here. just was what second And wanted did I was before, I asked did the then XX% last regarding was me, and the to on quarter going rates. around on you Okay,

record Pryor, was release that high. at the I in mentioned a think, You press

So I well El maybe as Cherokee as and last Dorado run didn't year. assume

on forward? how and how Just Dorado, the of curious onstream quarter at going in thinking the terms you're third Cherokee maybe in quarter El went specifically, and rates

Mark Behrman

Yes.

right? the So The plant tended ran one think to not not on onstream which or think and rate that month, skew reporting even average mean production across I the comment every I to thing you things. well. say this onstream earlier on said and get ratably happens don't to So about I'll I'm we've unplanned downtime quarterly is, well to tends Travis an rates on call, report plants. going I I basis a

then affects I you think X an a rate. about basis for on you downtime to on run really a and have basis. or you higher can quarter think that targeted than well XX-month really quarters, need any some annual Because

year. And where average so tends overall the the is your target for be to

well. running So far, we're

would This different. anticipate quarter nothing we

anticipate to having our to we for and third a report so good able really high quarter. hope high that production And and onstream be

Joe Mondillo

preferred equity I'm regarding at wondering, over then asked relationship I'm dividends, that? haven't a your And accruals to the doing year. of there this just, the I in holders, is ability the or what least continue just question But Okay. the

Mark Behrman

some we'll expectation Well, $XXX paying would that EBITDA have on significant my until in excess be as cash cash. we up wind have or to to we paying start in in opportunity start cash we to higher kind than get kind. that, dividend pay or pay the But to dividend. flow, million to And either start the up

Joe Mondillo

in And a Or level on the is EBITDA, writing in there is is something paying or threshold, just disciplined that? there in where terms of you have it more be to kind? of

Mark Behrman

think have. I an mean I that's that option we No.

our preferred. We over indenture have $XX you you look encourage of the And indenture ability details and bond bonds repay detail. the through want I more million and/or use would go in just to either our excess to any to at if liquidity

Joe Mondillo

The on that noncore remind question. and that is? Last you're what us sales, timing what thinking Okay. asset you can of is,

Mark Behrman

to own said, that us natural are of we right? timing ready think as we facility. sell is when pipeline Cheryl I think kind attractive El asset, unknown, market's I for and down Well, think we at is Dorado, the gas asset a the our an Arkansas the

Operator

Investment is from Our question next Global with Value JP Corp. Geygan

JP Geygan

SG&A controlling very difficult margins a gross but also a costs, adjusted job perspective, sales which nice of environment, done You've from both a from perspective. cost on an robust shows in your

to operational Can around that put the release that? are you more color press enhance further there some opportunities efficiency. Your significant makes statement

Mark Behrman

$XX about, the about, an initiatives talked operating million whether identified annual initiatives, initiatives, of EBITDA. incremental business we've we $XX that have, development those to I cost-saving Sure. with got initiatives even million of they're or some that through initiatives,

it. sales opportunities combination COX So development high-density and do our plants. products like or run other Dorado. they facility for new also business position we dome El and sell storage we actually we not two built to the product To nitrate that that be date, the We a We've would out And sell also ammonium higher production. of talked about vent COX. of it's a at ability

be So our rates, onstream tons from buy got they better folks, gas a from where that going And and industrial cost savings. think anywhere of identified customer give secured we and fixed good production annual to COX as efforts that and XXX,XXX some million, through XX-year can about plant, agreement marketing the we've a then Better facility. out they'll obviously, million sales with more of of of are absorption really build $XX costs. we mentioned, $XX us savings we've

really the $XX those back see that through those, focused we pandemic you add is wouldn't once million going of So impact to which achieving million when that, $XX to to COVID of incremental we're all initiatives. the EBITDA expect on from kind And of either over we on be the real of the obviously, or top just pricing less from of focus improvement will some EBITDA And that. gets today. getting any $XXX pricing then back to million without and are is the improvement, where to of economy level normalcy,

JP Geygan

as can working But throughout this that HDAN your about projects build situation develop, the, you storage putting You've projects where terms the we with season? of particularly come and those enhancement million numbers or some you the bit I around results it the you year would we $XX inventory $XX done to intent of million look a through the to a see when dome, product selling think in projects how talk expect range. EBITDA. timing like of your with margin understand at presumably capital earnings good And in storage might to job make the a

Mark Behrman

is it the it, question require does additional JP, any will working capital?

JP Geygan

can that give And you Essentially. year? fluctuates the throughout much for an idea how us how or

Cheryl Maguire

higher into Sure, see as some JP. I'll quarter. head capital the take we needs that one. into the quarter and Yes, mean, generally working fourth I first we

months, producing the in selling in storage we're then summer it So in and product it season. putting

working we'll in so frame. that little And January, February December, see a carry probably capital time bit more

JP Geygan

as to conversation on for ability nuanced, you and can And that much could some you a then produce? obviously there's have shift products. about and little of that developing an capacity you given given new resources, is existing how finite talk you give curious, your idea bringing But capacity I'm production customers, realize customers additional sort us between I constraint

Mark Behrman

at through And quarter I'm the going a be conversations Well, that to a additional some get mean after position to third plant, the on having think better quarter, that say yes. I we in and of right? each not I obviously, conversations call different in position we're we're in probably that be having. today it's third our

James Geygan

you, Thank great. time. for Okay, your

Operator

from is with Brian question next Baird. DiRubbio Our

Brian DiRubbio

you. Good morning. that? million. loan, Do questions PPP $XX for The the repay you of couple have A to

Cheryl Maguire

-- Our expectation that forgiven. we is should that be

Brian DiRubbio

are to determination final have when that? you Okay. And on going

Cheryl Maguire

next know through suspect, that. the on the and working of rules of the should regulations. six more We're kind I course And over months, we

Brian DiRubbio

natural -- Is non-core have in also it. assets, you Got cogen as you the that to the you that at gas possibly addition El consider something then selling? And pipeline, facility Okay. Dorado. the

Mark Behrman

cogen we've something at consider on it. buying if that sense someone on on for and we that a acquiring made industrial was it was interested great and Well, parties that either today, cogen would that, building not there that's question. focused several to have looked It's I I we're or focus facility sites. mean facilities but the us, we in think economic spoken

Brian DiRubbio

-- to you the sales, about those that the at, But buying just these would asset sort offsetting are hit cap the in. flow think rate would Understood. going proceeds? experience as of targeted you're or put to cash seized it be what have buyers to non-core get way, you And probably EBITDA obviously, another

Mark Behrman

Yes.

I in that. to talk think about we're not a position

Brian DiRubbio

Understood. Okay.

for more two me. Just

average turnarounds what's scheduled EBITDA hit remind for turnarounds? two year. Can with have me the sort been You next to you of those

Cheryl Maguire

maintenance that adjusted lot perspective, million add because EBITDA, and we million group, a cost a back of $X to from $X amortize generally turnaround, generally, peer Well, those. probably they capitalize in each our and for

XX would that the parts. main generally, to of And each XX So turnarounds, one facility. for be days then those

think days, then production. XXX about tons about about you ammonia, it, days day of over tons of if So of Pryor, Cherokee XX and XXX XX runs XX lost so ammonia that's, to call a

Brian DiRubbio

your XXXX? now in then XXXX? one And -- Okay, Is next have got is it. it you one not until do XX

Mark Behrman

Yes.

year. on then both Dorado we've in then quarter and the in So turnaround are Pryor, in turnaround three-year we'll and make third year's Cherokee And and turnaround. El got El cycles Pryor, Cherokee Dorado we've next And after got determination next of a XXXX.

Brian DiRubbio

the And running run but contributing industry thoughts the your there. then a specifically. the just for just they're why more love to you are now, of question. it's I string just question, after Mark, given when an It's of well nature when full of price decline? sort obviously out And plants But the not they of industry maybe a know oversupplied broader years the plants right weren't.

Mark Behrman

the a we're mean so pretty off, small I first in player industry. Yes.

plants our if from you perspective, don't that I that's can't even and the From has produce, it plants. each we the the -- make in again, So general plants money lower, for to much sense feeling our you think, I an run if it of ran believe the industry. ton you I makes run can I incremental in probably industry. then And think the can speak others. on, impact well

because and make rates, higher produce But lost operating up. money, going as once lower right? to as at rate forever, You back are they're them run you you can't your have You'd them. people production don't you're ask tons, long making those to

Brian DiRubbio

you. Understood. Great. Thank

Operator

call gentlemen, Behrman to have back the reached would I for Mark end like the question-and-answer turn remarks. Ladies the closing to we session. and of

Mark Behrman

Thanks Thank you. Industries. are making hope And see free to much. calls, that you if interest be Appreciate and any in the -- so your I feel to progress. happy a call, questions. follow-up we're and we'll everyone's answer us LSB any there give

Operator

today's you participation. concludes for Thank This conference. your

disconnect may lines You this time. at your

LSB Industries (LXU) 1 Aug 202020 Q2 Earnings call transcript