LXU - Earnings call transcript Q3 2020

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Operator

Greetings. And welcome to the LSB Industries Third Quarter 2020 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] Please note, this conference is being recorded. pleasure and your Treasurer. my Senior Kristy now President Vice is to host, introduce Carver, It Thank you.

begin. may You

Kristy Carver

Good morning everyone.

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

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

Mark Behrman

morning, to to good our interest glad and and our like I'd call Kristy, shown Slide and employees the dedication, have improving morning that safely commitment you in in and this you, everyone. performance. appreciate your three, by safety begin could Industries. participate our acknowledging operating We're Thank on LSB that

Our across our and quarter doing it all facilities operating strong owned levels third team achieve and during product of the record to categories, while another operated manage production delivered several performance, in safely.

in LSB took of months performance, As avoiding many physical indicated at something on These our goes which the only celebrate. for course over strides safety it XXXX, course illness the granted eight made of is of injury, workday. our have encompasses beyond slide, everyone serious should is we days, with also the which something us ago, significant avoiding safety

at are now all protocols of vigilant of day. policies improved of virus, upgraded all with we remaining this about something put the a personnel the virus, ago, our have of we regard, the these to actions ongoing and we've we every about effective. learned in the credit and transmission facilities for more COVID-XX the With procedures, take and and what months offices we spread most In that this place think as number is prevent can

on level early maintain in all manage has knows intensity this at attempting difficult high a been call unknown since a everyone we've too many this point, year. of to situation duration to it's and As this dealing as what uncertain with that well

provides an the key terms able year-over-year, relative quarter volumes the the and that we're disciplines integrate production developed wish case, at of in And sales positive order of in third COVID at view is our situation, the overall our safely. end and finding Dorado we've point growth we're approach four in quarter. to Slide we deal Pryor to quarter due on have was continue the planning environment operating this to to period El both of to same absence we Our The in this the aspects to compared XXXX. that to year. the into operate side, we'll this significant until weren't to COVID result the But overview in be mining in and turnarounds stronger we of are the going volume to year's third products last accordingly. back turnarounds of as the performed of increases protocols with in and XXXX. We agricultural of industrial third generated the

demand ag the we the of improvement other enabled In pricing upgrades to again on UAN plant record plant, while turnaround. Pryor reactor had optimize the XXXX the for on the anticipated business of side due costs reflecting during and balance. our aspects a us which the the our the cooperative, job the new rationalizing and quarter performance within short, did ammonia of and to of our business made money manufacturing its our urea utilization facilities, performance product particularly of in optimizing a We good operating products and to production, our Additionally, that control, focusing our once COVID-XX. weakened urea the third continued industrial respect the its and to of our impacts was not with

prices have fact, of which been an had to pandemic weakness, has past the carried resulted XXXX, the the over the markets. remain induced the with ammonia of itself deteriorated that reduction approximately ammonia than enable to in which comparison, this in continued pre on which our will the the prior we've what year, products operational EBITDA for been that the UN be the third an plains market significantly eventual was adjusted imbalance and pipeline southern exacerbated with last quarter it With recovery solid below quarter Along pricing of as levels had Magellan ammonia compared for and weakened closure the quarter several to more same the this has respect further on the quarter pandemic quarter, The export been months, of pre the eight last to is by underway in are reflective levels, XX% industrial demand In industrial robust unfavorable which it the industrial to of what import year. higher expect we've on foundation, capitalize to this around This with continues around been analysis particularly second fertilizer months which will third calls, facility. September also several an of fertilizer the anticipate anticipated, causes as to well same impacts year. in particularly from XXXX, excess of respect negative levels of in Cheryl year-over-year the for prices with we various disrupt discussed from pandemic as movement detail demand selling XXXX price line the provide of were the consistent call. fertilizer. in of in inventory wasn't our ago, improvement we Unfortunately, and prices. would that than the third more us demand in established later

we have the significantly and the end months. than a seen last products also of extent of industrial the agricultural our money albeit products. impacts result pricing several much However, was lesser our on the pullback speaking, to was that markets. over our for of lower, imports this Broadly crisis negative pandemic Overall

supply that adequate discuss as nitric later, state we update of reopened demand the for liquidity during that have uncertain of with aspects the came signed the economy quarter. the a markets with activity five in Cheryl enhancing face more continue have enable evolved our margins provides As in long-term will agreement, end One particular acid implement to our in an since than economic trends to ended of environment. various to us sales and how we quarter new our strategy regard success April. and Slide on the bottomed

agricultural during supported demand side the which On of X% corn million increase XXXX, was of a of planted our for XXXX. of the XX approximately U.S. acres healthy as an were in increase This level fertilizers. to business, compared

XXXX. well U.S. out a The turned drop onset is previously ethanol a which a levels, Approximately production our reduction demand dramatic consumption their U.S. seen replaced be ethanol reduction across XX% and usage used enough and spring. demand. mining in at of I several the attributable to it our since returning and in prices. trips, homebound. into With ethanol. which Since meaningful we markets largely the a rebounded abrupt point in corn and near of in production months, translated spring bodes the their flights automotive as coinciding industrial to left think the several business, was crop in what respect resulted product for of The crisis to recovery most pre gasoline people selling busy drivers additive rebound Although, corn lowest with to years, ethanol pandemic end of consumption summer to to have April, less for U.S. has generally which last not low a fuel as for became produce sharp in inventories last ethanol drop the boost was indicated, hitting sharply in gasoline has pandemic vacation in road level Americans

also largest the the a months In a industry, acid. a surged, since major and two-month as of is is into approximately of which consumer U.S. a production. which the of One end in major recovery followed, production of April these auto of After low nitric input vehicle auto September, May. homebuilding of support acid Nitric resumed that is continued sales products. of variety should increased the XX% levels, shutdown, the light auto manufacturers

in mass levels vehicles. two persist growing copper of recent shortly. applications, mining have on highest to general to have call fourth trends to the the expansion into risen seeing been that products copper that aforementioned drivers incurred to first, COVID an from metal driving rebounded in in increases for and in This As primarily don't But permit an foreseeable lead XXXX pandemic spanned XXXX, favorable provide end regions North increase the levels. the cost key litigation increases hand over market, of mining another I'll our new cases nitrate, Products and production shutdown. future, the various current ammonia has mining over and September, as country housing the pointing ammonium to to extent sales project against overruns. and given expect that I'd Collectively, prices activity El sizeable demand which had of where manufacture continued the been demand of nationwide we substantial we starts American to in markets, we this relatively like for for as we the building bought Leidos, from towards throughout of particularly such that near years. we're end industrial across contractor pre Dorado copper low-density update emerging the the the XXXX, to plant indicators the we our Cheryl in in electric quarter U.S. applications view the

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

has We be a XXXX. by to case trial case merits. jury a believe our the first are heard in and litigation, waiting to we expect and of that guarantee new can't serious we having in looking while the outcomes We're date any forward half

We appropriate. to provide updates as will continue

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

Cheryl Maguire

adjusted selling of XXXX of modest prices market. Thanks, Keep is our weakest largely that EBITDA XXXX adjusted decline QX seasonally the Mark X Page QX, The quarter. in is good for to result a million quarter agricultural million. for lower of our $XX.X verges consistently morning. and year-over-year third our in $XX.X EBITDA mind

as well persistent gas combined Magellan as the the exports costs for inventory stated, over increased Mark pipeline pricing. lower months and third of impacted to quarter elevated decreased levels imports in UAN XX offset closure by on selling ammonia negatively last As the have of Lower September natural $X.X of million. approximately continued by the weigh with prices XXXX

production. offset However, we to prices were improvement lower with able continued in selling year-over-year

facility at of of XXXX volumes production no million You turnaround XX-day that third XX-day we increase facility our XXXX. in products the approximately all Pryor of an turnarounds El in at and contributed may the sales EBITDA an in recall for With our our had Dorado a quarter year-over-year. turnaround $X.X quarter and third

well. second at UAN facility, as us UAN In and production sales allowed quarter consecutive urea out fact, posted record Pryor record which a we of achieve Pryor facility our to our of

as quarter Continued headwinds $X.X weaker result the million. of from demand mining approximately and COVID-XX industrial by a impacted

chart to our but conditions. of X, page the market illustrates earnings normal under business this robust more power Turning not

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

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

outlined business. of of the for have page our of to our margins segments we X, representing the cash margins each market profit each underlying gross Turning

offset and gas As have industrial as see remained at prices fixed this able with you year-to-date, sales margins combined mining to natural reduced you and cost production as consistent - XX% volume, our may costs can ton we product. and slide, selling per from with been of lower lower higher

environment. of experienced have our impacted expect with pricing normalized of a ended all liquidity. liquidity, more products. focus across the XX on been million prices We outlines $XX $XX selling mid-XXs have continued and low margins So cash margins mid-cycle ag very by we of we EBITDA Page total quarter our would approximately in million the fertilizer

existing quarter facility the refinance third to liquidity El of Dorado balance equipment we During loan our million the an adding sheet. $XX at approximately

borrowings In outstanding during addition, we've facility on all the third credit our repaid revolving quarter.

low ongoing business around on COVID-XX, acutely period the Given uncertainty pricing degree remain and to coupled downside of the focused disruption. with our maintaining liquidity some current managing a adequate to through operate continued the environment of market risk we

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

forward. evaluating of XXXX, respect We work environment the cost Board a Directors with currently turn additional to our continue quarter path to on With of avenues page are pricing please we to the capital, several fourth to and for XX. lower of our

XXXX. lower our MMBtu. trend approximately XXXX, discussed UAN, the to other maximize in view expect key see the note, much price expect production can higher HDAN the ammonia from remain to downstream On earlier. materially for selling despite to lower of fourth have of the year-over-year and quarter, turnarounds with quarter, we is To plan fourth gas continue environment, we expect we remain compared and the products. our UAN, As to some are and as Whereas you with of no higher turn $X.XX to variety to combined quarter achieving this over we QX I'll HDAN quarter to drive the slide, lower factors as back line wrap to it production a expected of of cost as And XXXX improvement to sales in up. fourth EBITDA and of compared result XX% natural a Tampa in XX% as to of Mark positive a fourth now per volumes, at expected

Mark Behrman

duties Pryor on And the still facility results, a an low factors natural elevated prices third implemented for our there results Thank prices you, impact by distant optimism the extremely had that XXXX in ammonia import regions. no online essentially in has came been period Magellan however, a of region impact two that respect out We impact are capacity globally, products expect harvest a resulted demand The the to pressure of result serves, and quarters, production past meaningful for both however, our our and Cheryl. is greater impact in for reason a the been To late XXXX XXXX products of weather on our certain numerous of the pricing lot of indirect outlook time, financial What Well, means supply geographies. which fertilizer we somewhat The on sustained words fertilizer entire today. past ammonia gas seasons discussed transported the but sitting pandemic levels to of believe, measurable and of we impacted XXXX. plus eased weak had over to have planting an in over closure year XXXX. to with the financial we've what fourth been has pipeline, times variety of do and the aforementioned on new ammonia has fertilizer. from quarter. year will there's which recap of due including that historically to of a been past the is a in more wave other quarter for excess a at the XXXX timeframe, in has

for lining planting application in a fall conditions the spring the get for up First, in are ground season. ammonia the in has well nutrients order preparation and recent weeks, been accelerating corn harvest to good fall in

We're Higher only as in as inventory over reflecting resulting prices planted is health ethanol past August, a of in the for estimates nitrogen significant at Current imports seen the in million This be should are corn period over twice belt of impacting Second, quantity between levels, to a to for recent movement illustrates strength bushel shipping market. enable several to back to in surge on driven XX the prompt the of correlated. future because which four Midwest months. the this ammonia consumption to market. by this levels impact good prices growers which the from of levels the with acres the a for demand very the as dynamics USDA trend growers across shown financial corn aforementioned the underpinning been basis, orders and fertilizer and lower countries how be for the the a recovery corn. still has a fertilizer the maximize favorably UAN poised at play acres, their if past historical product UAN, particularly at indicator million UAN these for the price an the points million particularly a while prices conditions prices well XX multiyear earn seen $X drought to products of of of slide meaningful in year, price we've respect is is a years. earlier, and that call corn other income, equivalent occurred that corn for pricing, expectations nearly flat indicated relationship year mentioned coming summer, urea by as With is more the the products shows as also as in I yields, three Slide UAN and XX the bottom multiyear for they downtrend between corn data derecho trend which a critical that corn were and important the focused damaging the are remain that fertilizers from to urea past seek on through spring year. which of XX well futures rebound of would U.S.

equivalent urea You or XX the price of past that at typically above UAN nitrogen over here has can the see years a on traded basis.

fertilizer However, better cautiously since We the factors than most modestly discussed fertilizer optimistic at at the corn XXXX. to believe relationship low, period. favorable better consider return the and will on us in - still to these historical but both a likely the given line prices for mid-XXXX, in has the we've far so UAN outlook environment that experienced least levels or than been historical XX UAN discount for of urea selling where in historically previously months what for rise urea trades we'd make in coming patterns demand, market Collectively, in XXXX, early growers. that based is that to

turn current our year. I'll view gas prices discuss impact on and how natural for Now to our outlook please coming XX. And Slide business the our

to our such But QX low primary prices natural XXXX of several low we in U.S., also levels chemical XX% oversupply down double-edged to were the which factor of may quarter efficient discussed for benefit natural I leading gross product the prices, nearly the a manufacturing into low world facilities product sword low of that our in quarter, At which gas. in quarter the the our effect prices been of or margins. of past third the incur the third from of producers selling price was run and continue feedstock products, already gas most geographic last pressure the nitrogen This imports products natural marginal markets. quarters, meaningful to the gas has As exception. to experience fertilizer otherwise for no to increased leads all weakness on a they not, less around

world. gas natural around moving the with U.S. However, in the prices and higher

illustrates end likely Europe to European at sit the primary marginal producers gas cost including trend producers of to Western We are natural the Hub, curve. the production, high This natural indices. of Henry reduced us tend slide gas index, the also see two versus who based

due benefit virus also natural that faster that natural throughout pandemic here in cost gas see how the in out dropped producers now U.S. chemical back of U.S. in a year. Western hard prices, to the gas with dynamic to are world, the illustrates impact was onset in advantage rising Europe This nitrogen in spring, a the U.S. chart You'll relative prices prices coming gas much particularly to Europe, significantly. our we the the expect Wiping

of business Turning to our are that our aspects in control.

in excited that very XXXX. are lead implementing initiatives been we've We of recent incremental months that EBITDA in should successful about number a to in

over and plants we capitalize the First the in on on that of consistency will become at we've foremost, rise. enable course our model, XXXX, illustrated can which our production to and proven as XX, that operating more with will inherent run prices Slide rates business apparent that's as product us leverage

regard, and as sulfuric got we El we've DEF first volume XXXX. we've in improvement this facility. performances production for quarters record While facility, well our the for facility, And as at Pryor we Dorado room very ammonia HDAN through still delivered track setting at Cherokee acid pleased and of the our urea and UAN at with are increased been record our consolidated production, on three for

drive of turnarounds. will two our legs Slide highlighting further strategy in to management the production summarize and Pryor and Looking our can to further for the in volumes. next least of been partially and planning the we that fewer we XX, addition and as year of XXXX have these But at days believe our for a On to expect other operating of the performance, further to on with third impact with strong improvement we and that facilities reminder, both capacity rates, production financial scheduled detailed Cherokee operating turnaround But quarter continue ahead we continue we stream tight have offset year. our the do results.

been per marketing recent intensified A efforts. successful of the the this and is in contract acid to year. with Over provide XXX,XXX very we've of to nitric XX,XXX great several new supply customer between example sales a quarters, our long-term tons past

is the of annual the begin in EBITDA change will full providing to a the XXXX year This will over making us basis. contract our tell and generate of months. under can and capacity marketing our previously order you excess mix nitrate While margins. efforts and have terms result during initiatives, levels of been our first marketing low-density product on focus the enhance contract sell investments sales sales past our along I mentioned course to production support this that incremental with ammonium from agreement agreements growing and prevent strategic our In details, from order stemming meaningful of order the XX COX, quarter we the the to

discussed in calls, installation production. storage us our facility we've previous a we to the new As on that completed fertilizer of April, maximize further enable will

a store historically As able amount season of approaches planting in to the the we it prices. current now product is we as versus that sell fertilizer it season XXXX this believe advance a of at pricing optimal levels at sell project, are this as it's significant produced spring and to result having of when

improvement over the at this and the quite given months of the in we We year. the course attractive greater further of margin this other expect investment lead to to looking we're expect we that on the coming margin opportunities be nature can sales returns on capture several will coming

we we call, on we've $X can attain savings, annual through reduction we actions Finally, fixed believe in million potentially of identified discussed last recent months. cost our

our to an additional confident cash increase generate realize I other taking outlined through Between of EBITDA incremental and improve we're actions about this prices. remain flow the than that any earlier, expect We selling profitability we to that to our and more independent XXXX. ever potential completely our in

but fathom pandemic this normal. the lost substantial the in the during risk our challenges and And communities. us you and that have the to to point the ones is our been of our concerted a of friends, they now when as future that that those than order attentiveness and sickened will thank employees, new believe support. company, for bring this we we've one It's we case reporting everyone effort ago. continued Our our our the day, to on updates facilities running shareholders and I serve our some about year go number and using our to control view grateful lessons forward said, due our to ever quarter lot our less capacity how subsided. our At every all we'll a hearts learned their the course quarters. the to threat our with safety priority, while overcome This a co-workers to view you we has truly our of remained goal current pervasive our regard attend business. and look which next four and in this over is offices is accomplishments. third We've and the make their new results and of world meantime, at in with suppliers environment. for within to improve continue well progress the the operating health adapt given to in circumstances the cliche, to is families, team focus In we what customers, importantly, our who that virus, more financial these out to on to as to hard But a loved to is providing

of the some on Finance to UBS events. remarks. Agricultural December Chicago Chemical over our take happy Bank and The your session, the November to Lynch XXth. I'd The back Leveraged Micro of to Conference the Conference with Morgan That that mention speak you of virtually. these with Conference questions. we to we Q&A like And - and XXth Industrial participating in XXth. begin prepared Sidoti all you on the course call operator pass I Cap We hope be the Packaging November concludes on on Stanley the will November be Before XXth. America Global Conference, to now Merrill And Agriculture Chemicals will

Operator

you. Thank

We session. instructions] will now Thank conducting be you. [Operator question-and-answer a

comes from of Please Sidoti. first with question. Our your with Joe Mondillo question proceed line

Joe Mondillo

Mark. morning, good And Cheryl. Hi,

Cheryl Maguire

Good morning, Joe.

Mark Behrman

How morning. you? Good, are

Joe Mondillo

well. doing good, I'm

You guys with that are doing off you've well? provided. XQ Just wanted the start to guidance

I the improvement little any it came was honestly, of comparable. little I stronger Pricing on to correct quarter, more fourth year-over-year down And in would this it little last So, think said at little a XX% of you down would primarily, perspective. a year-over-year had part that's EBITDA, you don't half a it's fact or me a I plan I quarter? pricing unplanned you XX% large two think guess a number have I think XXXX, downtime, I have one. bit prior comparable point, have given been more bit thought is if that wrong, a the and think quite number I'm

So you - have but thought to there? setting up would year-over-year see would a see better a maybe improvement, could I color any

Mark Behrman

indication you the gave in Cheryl think and presentation part slide. as I earnings pricing of prepared her of some certainly, comments

be industry the I But think about. quarter, have pricing Production to impact the weigh I and others think to as talked quarter. pricing on will we've about, is fourth up in going up a actually continue have the in talked should significant significantly. fourth and pretty

Joe Mondillo

capital as the just of And you the Okay, fixed then that just clarify that expecting sort savings of all could you initiatives, far from versus mentioned? million much cost how right. as cost you're improvement projects $X

Mark Behrman

new a of contract and kind we projects awards. of some the indication the haven't capital given Yes, EBITDA on out range any

I'm kind that hesitant of give So, out. to

Joe Mondillo

that thought $XX notes, notes all that prior savings and capital have was in million projects. of related million $XX I my the to to Well, I thought I

conference thought an last to million And so said if I addition million is wondering this $X on that. the $XX I'm you call. million $XX to

Mark Behrman

part of. it's addition, in not it's Yes,

Joe Mondillo

part It's of.

Okay. then have may all wondering. And was missed I That's I this.

this could but remember Mark, remarks, trial I your go on hearing just the in you the think mentioning over I update what again? prepared is you Leidos

Mark Behrman

Yes, more. I so, difficult imagine, that will might go trials. as the elongated have or pandemic, We really to you weeks think four it's trial three, during a been anticipate,

during pandemic seeing you're the what so And shorter trials. is

us to things get the and to to earlier improve until rate a incurrence have comes to vaccine going pandemic incurrence we're or So, from and the in to for out trial. year COVID-XX hopefully wait a start the maybe

year. the So, part in right talking the we're now latter half first next of somewhere about of probably

Joe Mondillo

little Okay. update the approaching far your year, utilization that, on we to refinancing balance this markets weak. better. what as improvement could lot But prepared plants amount of in financial And as the in mentioned thoughts, the about get Any then year, as Any going rates sheet? seen balance of next just things remarks approach on you're your further you've how thinking in a a pricings in sheet. the addition tremendous you

Cheryl Maguire

do Sorry, want you go Mark, to ahead?

Mark Behrman

callable think today I mean, I Cheryl XXX%. are mentioned, at bonds Yes, that,

a to So, expensive that's fairly refinance.

XXX% so of year, call range. May down And that in drops premium to next

COVID-XX an some that on next in premium, would call May so that, things the And be pricing here that also continue so with coupled less and that least today. but we'll expectations much our in better see thought we'll to we get say think that impact improve the us operating to at from of probably, standpoint, XXXX, where improve, should an today next on sit year, to past I would dropped will of current also, from business, to less, industrial start want see which lead hasn't

Joe Mondillo

Okay, yes, figured. what I that's

far the Just season as last how are full lastly, to if, relative application XQ about year? thinking you as guidance, your

Mark Behrman

for had down very the the to it so that, up. them tight window The should But is harvest to And did really move was season the while fall that, a in bit significantly a be, the weeks going I'll should last really either technology of growers couple or in get get longer much really that they've they and over stronger strong. last application year, is be, year, Texas, where state tell Minnesota. strong ground. Remember, actually application right do and pretty little window, swiftly the too This window really that. done. was ammonia ammonia now was was And there you application the application improved much year. season is like precipitation. the ammonia ammonia much last small to almost we too a be to than Belt Yes, gone But down. seen there Corn as have behind itself you pockets, expect

the some year. in think of between I ammonia the and we now good end expect would pretty demand So,

Joe Mondillo

it. have question, be actually I'd I I ask and last just of didn't miss Okay, sort if one

pricing seen any or any or four Any above the that the five corn years here. four more times we're that regarding in than if Just three sustainable four we've last this it seeing in thoughts is on hit there? the thoughts

Mark Behrman

Yes, recently I experts. at of variables we good we're feeling XXX a I And really today. said there's could were I pushing good in the calls that think with number XXX comments, that as corn mean, levels some a really corn to industry are on sit think I range. really just few a in the my prepared that And the there's to

last One with to swine a them that China several months. on I that'll different wanting call corn things and hog of I over I of continue. they is, population recently I the mean, the the lost the purchases the flu, to several that think purchased, And feed in the of due didn't think the replenishment mention way.

just see from which as higher supply, much pretty outstripped demand. it's think about stronger the support don't pricing but demand. corn I significant know will demand, ultimately, you'll I China,

Joe Mondillo

Well, it. my Good luck the year. questions. thanks Got the rest for with of taking

Mark Behrman

And Okay, luck. Joe. good thanks,

Operator

question with from Goldman your with Edwards next Travis comes proceed Please Sachs. Our of question. line

Travis Edwards

think you I cost impact expectations any margins side? for sort to your had talked maybe net thanks about sort and Cheryl, the lower of that producers going or as Anyway production. this Mark. benefit and you both on potentially I detail morning, the morning some on for our that question answering gas good can maybe also having rising share and marginal a for of pricing year, about color next Hey, costs questions. into on, guess or

Mark Behrman

on increase don't should that One cost prices. would my that you've in prices relationship in that offset I gas think probably direct mind. there's drive I you higher steeper higher in versus about, prices that variables the U.S. is, global natural got tell Well selling when here selling curve nitrogen gas know three I a prices, there's will

be would strong. demand second remain global The

discount. expect would XXXX industrial both the in then I that we So the worst from that U.S. ammonia a markets And to pandemic. believe third, weaker think, the over seen we've be demand less nitrates, we for is given of

in think, products, prices ammonia So, in definitely and both fertilizer themselves. certain certainly nitrate on in has an weaker I industrial impact demand

to us costs. see So I selling would despite higher selling higher offset think costs, believe those that we prices we'll feedstock prices see three sometime - feedstock should lead in XXXX really those

Travis Edwards

Got share color looking incremental and the it. year those expectations next for That's sort I come to Any as needs That's for. Thank you. capital gas working Maybe nat helpful. you the just on can of was follow-up side. costs up? color

Mark Behrman

I'll let that Cheryl one. answer to

Cheryl Maguire

Yes. on side I $X mean, gas fertilizer would capital flip probably in would $X drive to I'd very say, needs. on say that I'd about that, some well I working material, But rising of the we have higher million prices increase the wouldn't natural be think side. $X of price hopefully million as

a So working I to material wouldn't it expect capital. draw be on

Travis Edwards

little ultimately the shares? less Okay, on on for got I it down. the those near just urgency balance getting know I thoughts us a know, refresh about with thanks there's just you rising can on sheet. up address asking those time, preferred it. what to comes in those do investors helpful, But that latest but benchmarks. That's from Question to how balance we term. comes your time to

hoping to maybe refresh get a your So just thoughts. on

Mark Behrman

way is that some maybe it. higher refinance our I amount slightly think about asked one earlier redeem preferred. that's Well, I part debt for as I way of to that that we some refinance to use mean, I and think refinancing, Joe one mean, If think we could about

a take that. creating at much we'll it think leverage. won't at of We do too I the look expense

in. interested So that's we're something that not

lawsuit things about. think working And on. we're As another then a you talked a of that there's other generation and got that I know, we've that's we've form cash couple of

really bullet preferred. think the one I with don't there's that So deals silver

going it's be things in our of will help that to off number we've and sheet. that take reduce us balance got ultimately discussion balance, going think hopefully debt a today preferred I the

Travis Edwards

Yes, thanks scenarios. for having walked different through those

I about at? but million hard considering can you're achieve that about want thinking one you've out you thinking a and the like EBITDA think basis overall by seemingly refi before sort every generally to I standpoint, I is extension. normalized on sort still guess, know of to from you I general a and this quarter, or business bridge be maybe between $XXX asked the know, an fast just they're maybe benchmark of of any you're sort I refinance up Again, rule thrown refinancing. Joe past, means, operation how you'd earlier operations a of that's where where more how not level think but comes in is

Mark Behrman

most that's for thumb improving think number an - on think we're be important I rule that's focused why S&P and I rating an good mean, with really I as so may Yes, of important Moody's. a our which and that us,

and that agree, would think for And have be a important I will as B think you will terms implications I to getting significant on rate. us. really a

Travis Edwards

or detail one great. a Sure, contracts to Obviously, awards. far you'd which straws you've But may nitric contracts lot coming that on mentioned grasping on EBITDA you your appreciate shared specifically, more general I in, much it given even not the new maybe last look I XX,XXX have of like? haven't ranges nitric Anyway, the potential that. can Again, of specifically of some new ballpark And XXX,XXX acid limitations I'm for of then - me. with here. got additions, sure? of to maybe but, customer, contract as as you understand you the tons or know the sort what acid, quantifying for And of grievance around can sort is is sort

Mark Behrman

do point, Yes, not that this rather I Travis. think probably at I'd

Travis Edwards

stay the best I the no and of luck Okay. Thanks. the appreciate and in color safe. Yes, problem. quarter

Mark Behrman

Thank you.

too. You

Operator

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

JP Geygan

Good morning.

volume Given and the you've achieved that you the next reliability previous year's at disruptions turnarounds cost relative your operational to plants, turnarounds? can characterize in

Mark Behrman

think planning stages we're in issue the Well, I think really still we're - I turnarounds. still question. those a That's of the good JP is

at would Cherokee, turnarounds, three we are to or another one day typically, XX say So that they year XX turnaround cycle. one

So want sure proper that exercising on facility. to maintenance we're the we make that

year. At last three did extensive a pretty we that another turnaround years turnaround will without As we a finished Pryor, go turnaround.

facility. that bring way sure trying those continue a more focused do we're would on focused and I reliability to of done work that expanded acutely make days than need down. we the in turnarounds much to the do for we that, that to to improve want those we've planning and we the you to tell on So that historically, operations acutely

give it's position. think for next I I we'll to So that, on much a better you be quarter early us think a but little probably some in color

JP Geygan

XXXX? you to projects And any planned new particularly give storage Can projects your capital relation considerations any great. and introduced? in color then Okay, there capital either liquidity have completed on working or more projects, for planned have product us you been the your or to

Mark Behrman

to of the some both that I storage so make new investments and support are business. going we some mean, awards, loading improve contract Well, to unloading to and

projects be those So we're year. earlier other of of couple the in part that A complete evaluating. should next

I know color much it's given worth that So on don't that.

capital a our We of contract to well, El facility. little that customers also a a that building. Dorado COX gas long-term awarded talked about a that and new to COX requires of build were our out plant we pipeline as bit And certainly

underway, others year then that. couple are question. of all answered less we'll have or two know the near-term that a are We're things projects the payback. probably I if and those two don't that evaluating So the that

JP Geygan

helpful. That's Yes. Thank you.

to track in you're sulfuric mentioned your that reach on acid XX-year Finally, a production. deck high

in growth that about for your area. acquisitions this at More appetite you this talk previously can suggested acquisitive consider you point? You've would generally,

Mark Behrman

Where hope I said able where now, to to more while getting we'll expect the to do not think mean, productions, improve are as record levels to we'd we're I we achieve much to plants Yes. the we like that we're we're reliability. at I've this and - to. previously, reliable, which continue the operating that point optimum

of can industrial could love focus key And it could use then could is of where we opportunities be side business. some looking it to sense the on and we're in business out our look realize And the on that. make strategic business, marketplace hopefully side really it the that the storage, be in could a to could would core I And be synergies. I'd to the certainly opportunities improve for us. at it and fertilizer really take our on think, that our competencies maybe in So logistics, production, be for in be

JP Geygan

for Thank Great. my taking questions. you

Operator

Robert proceed next Brian comes your with question with of Please Baird. Our W. question. from DiRubbio line

Brian DiRubbio

sure right on I that Good you Can gas. looks a hedging like now, what little of do I'm natural us think program? guys morning, your you hedging give a bit sense of

Cheryl Maguire

fourth about Sure. MMBtu. We're XX% $X.XX hedged per for the quarter, around

for we're Looking next XX% opportunities the for here team closely. some year. year, We've We're watching hedged that first buying got next into maybe working our quarter. for with,

watching that be closely the we'll So, several over next months.

Brian DiRubbio

that Got it. us you debt And storage ammonia the on just details can you refinance. give

I think that you added due that year, million said in that was was $X full the next you XX.

XX.X cash? So, is XX that with netted you and of you million refinanced that

Cheryl Maguire

and for mean, was paid million I we that refinanced million Yes, outstanding. back $XX $XX

balance a of liquidity million additional to sheet. So, the net for $XX

Brian DiRubbio

rate refinance? that the was what And on

Cheryl Maguire

It's right to around X.X% range. that X%

Brian DiRubbio

Okay, the weight, versus and Correct? that like X% X% on existing. was to that the

Cheryl Maguire

Correct.

Brian DiRubbio

refinancing, preferred think maybe the gears, was I there this New when an Because sale of middle registration with Then listing perfect. it and the switching the Stock of if last Okay, Exchange, York you I filing, do business. of actually remember correctly, obscure talking was stock. August, HVAC the about

that XXXX. You XXXX, date but to or stock. push preferred could guys basically put in got the preferred data off And I owners on their their think is

listing sort refinancing, managing first how the to you're as filing talking step put so, of about, put is So, possibly that you're you preferred I'm just trying think those shares, to about a this can in, restriction? remove potentially

Mark Behrman

in was rights shareholder actually August, NOL filing plan. was the an so Yes, that

in So, a wanted easily pretty $XXX And a environment. tax actually losses. trip, so of those. that And net there's price didn't some little that $XXX operating ownership lose to we people we stock than got on more could complicated rules million or changes we've especially ensure low

rights NOL that have place. we that in is what that's So, to, an related filing it's plan

Brian DiRubbio

Okay…

Mark Behrman

nothing to do has existing preferred. with It

Brian DiRubbio

renegotiate that it. But those holders it be possibly Okay, to option. got preferred put would

get try to that refinancing are correct? done. to you going Is any If

Mark Behrman

with be that would the issue preferred and down. we If last that, the that, holder our had largest that think good went and occurred that really with. the suggest I stockholder, relationship Yeah, refinancing, I they're an shouldn't we've a of it's world given that's that

Brian DiRubbio

loan Two repay million next for or last that questions, if out not? Understood. you to to PPP have the $XX going we're year that find

Mark Behrman

get to forgiven our qualifications the that all that so would expectation. meet be loan We

Brian DiRubbio

and know focusing lawsuit, Okay, your Leidos. you're finally, the on then I suit against

the that? stand does there you're $X but terms was that. Leidos? think this with judgment that now do in against timing I you right stand think to appealing of potentially a Where related where lawsuit sort against million I year, vis-à-vis, of like that earlier you

Mark Behrman

there's is the with and any no we part it have payments, Yes, that to of requirement are Leidos. so make greater it appealing lawsuit we

Brian DiRubbio

Okay.

indication be heard? that going no to when is So appeal on

Mark Behrman

No, unfortunately not.

Brian DiRubbio

Got it. Great. you. Thank

Operator

now would turn further floor over We for to closing have no the to at comments. time. like questions back I management this

Mark Behrman

I and a that want to have our great to day. report can you Hope quarter. for next all additional progress everyone lot call thank on progress so conference the to questions we're for received. we hope see and listening Thanks that making a of much and

Operator

does gentlemen, and Ladies this today's conclude teleconference.

you You this a for may day. Thank wonderful participation. disconnect your at time. And lines have your

LSB Industries (LXU) 6 Nov 202020 Q3 Earnings call transcript