LXU - Earnings call transcript Q2 2021

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Operator

Greetings and welcome to LSB Industries’ Second Quarter 2021 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kristy Carver, Senior Vice President and Treasurer.

Kristy Carver

Good morning, everyone.

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

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

In solicitation. contemplated will meeting Eldridge last information would statement transaction, accompanying we included to I discuss addition, deck related exchange the and for exchange the transaction like to and the the the go recently with regarding the Mark. stockholder page on this you to At call ahead slide over call announced of time, the we in and direct such turn proxy this and participation disclosures

Mark Behrman

Thank you, Kristy and good morning everyone.

LSB. very business, half recently for appreciate about both on sides to LSB of this stock exchange the of morning. interest we QX call preferred have lot a environment announced exciting As in certainly market Between our are about talk our gives our strong at to us are reason our Industries happy be you times the year products our optimistic results, second record join which We always, and your today. that These can the and transaction.

to to This U.S. has COVID-XX While vaccination the continued in many mirror, point fueled we people the widespread unfortunately, where can look we are pandemic has resume at normal the yet not on products the the predictions close supply many at a in chain life. the a shortages stress exceeded has enabled price the recovery some and and and caused cases, most across services. nation pandemic degree for that activity in and inflation economic the optimistic has about to even rearview

been that product have release last XXX% economic as end the to industrial key press in rebound night. greater it see our say, beneficiaries However, evidenced sales of by you industrial issued markets in suffice than growth we earnings the the year-over-year

traveling. side in ignite our the came XXXX, for as that factors produce products late surge intact the to a today. early of of sell Most we come from underpinnings On ago business, these sit recent the of demand year, XXXX, together corn, we the the also increased remain Past including business, Slide strong the a XXXX to agricultural market here China midpoint widespread The markets. normal in and our benefits lifestyle, from up at a lows more many demand surge people have the and related X-year of of XX% sit vaccination from increased prompted including high down the still as levels. COVID levels. consumption while of Beginning are not XXXX. a with resume and a multiple fundamentals year half driving of Commodity favorable in production market ethanol end second favorable than price rebound from the summarize to only fuel by but outlook as remain our providing X, exports agricultural strong prices well is drivers key highs, more relevant for on us led of this the continues above for we in pricing factors, optimism and to the year,

due upcoming for supply number Western increases, also during in in have creating a forecast finite year, harvest, the corn curtailments States fundamentals in the were increase for than Along deep have of million the as well X farmers as and robust conditions in February current well Prices ratios. the The U.S. a environment from year. demand, U.S. In prices driven is for addition concerns, for corn demand cotton, reflects the drought Brazil, to to the not corn yield to acres drought the price of acres impact global XX XXXX as driven have worsening XXXX years. demand resulting United XXXX including of freeze have production yields, fertilizers. central losses facilities, the unplanned agricultural planted fertilizers caused over available in coupled translated by global significant which caused XX USDA’s seek year market the has reducing appears most corn of with for steep all commodities million slight likely negatively competitive as beans, potentially Approximately in were downtime very that seen as that shortages other use nearly to planted, fertilizer stock the the to into fertilizer also imports, for planting which maximize reduced several nitrogen from acres levels producers a with production affect to increased indicates U.S. the fertilizer we healthy seen wheat more strong the at recent in

to Turning our have respect and spring. meaningful since end business, our recovery seen with markets industrial X, last Slide to mining

starts which on XX-year levels a nationwide of input reflect supply risen however, applications, end home acid above June, a of Based products. earlier. referred As calls, has appears Building to into nitric we’ve building the recently, high. variety declined of on as chain to issues to preliminary the permit discussed past is pre-pandemic major I U.S. new have estimates a housing

starts will end we least industry auto through believe strong large The of the also a consumer home remain of nitric acid. at is new that year. this However,

XXXX, in April of that exceeded rebounded to strongly the levels in the through shutdowns mid-March a pre-pandemic sales halt levels. Following production XXXX as that vehicle occurred of U.S. light result pandemic

shortage due to of of months, levels. have inflation as well sales ago inventory has due new shortage the Vehicle they Over as past price above microchips. the automotive receded, a a several remain occurred although car that year to

we U.S. demand to likely nitric this of cease a We are near-term the a at the time, believe seeing that result year. not are acid watching as later this the but situation headwinds industry in closely, we’re drop automotive

As nitric which new acid associated we earlier nitric benefiting on last agreement, are quarter. ramp-up have also acid in with from customer calls, our we discussed the volume began

benefited from strong end ammonium second by nitrate. including we also several for solution evidenced XX% which level products, markets years. growth a in quarter, low-density where This mining nitrate of is year-over-year variety have sales reached the our ammonium trends our and in LSB in highest We the in mining-related sell

American vehicles. by XX-year in production growing where pullback being part Our increasing stand a market driven highs factors, the a copper driven for mining including this recent prices North metal sales by at currently of after variety even of electric are

regions the U.S., throughout aggregates of many Additionally, production at peak has been with booming in residential levels. construction

mining We prices serving to shift over and half in of the than and trends is we are X% XX% our our of X mix mining as key well. us years, total towards the with our we in continued that products view sales mining demand to our XXXX, increases what across Importantly, respect XXXX future a into the of seeing for markets second reduced industrial XXXX. volume and to current mining pointing end coal have be exposure the of our from sales we business anticipate less past will

position, we and customer team product commercial has sold-out maximize X.X worked margins ways to a by optimizing seek hard mix. us now balance Over the years, our last and to in put our our

who for and call I will discuss the will over outlook our financial balance Cheryl? of Cheryl, our to Now, QX results the turn XXXX.

Cheryl Maguire

Mark good morning. Thanks, and

for Page you to Turning results a see of summary X, will our the quarter.

industrial agricultural our strong and pricing in in top and bottom for reflect performance products both largely Our businesses. line and our the increases mining

just illustrates was XXXX the an which quarter. material benefit impact selling natural first million great Page impact Our selling months our increased of on for our is X X an company EBITDA almost X of the the million are the the prices quarter including record, bar million bridges exceeded green of of shown a for $XX.X second of price XXXX, XXXX the light headwind has adjusted you has had adjusted offsetting $X.X second full impact for adjusted the EBITDA gas, for year results. and adjusted there million. on improvement. strength for $XX.X EBITDA in costs, XXXX net to higher product $XX The price represented $XX EBITDA adjusted EBITDA Partially million much room raw and Page see in of is still and quarter how

to that second is an of thus July weather from the Additionally, in as have the some compared we lower to with Southern and inventory far quarter meet as firm as wet experienced continued contracts storm resulting quarter, year wet combined of the sales of a production we news QX. weather Midwest the during result good spring, extension and May. is in curtailed the inventory to primarily result and of The across in last winter quarter, the Uri lower slightly volumes seen season into drawdown into the the first patterns during a pricing contributing Plains heading

Before for our be Pricing which way not call news the for has period. to a our products to I reset considerations it about review XXXX. to does typically will pass as agricultural Mark, quarter, strong few of for how the important results third remains I good the and third will quarter back in think the the

of average for above selling quarter order we ton. QX ton. That sold $XXX book prices are for out Given a per our $XXX UAN UAN, our at to third price the forward principally compares XXXX

the higher third prices average higher during approximately quarter MMBtu per offsetting of $X.XX quarter which a quarter versus will the third selling the north compares natural than agricultural our of we over the improved more which MMBtu of some price at a we ton, ammonia average sold Additionally, agricultural impact have XXXX is for per QX ton. favorably from Partially ammonia $XXX gas year. to pricing last expect the cost, $X.XX $XXX or

million impact production facility to a reminder, third despite contractors turnaround direct This the it rising $X.X $XX $XX during to adjusted the $XX expect at is quarter we $X third have cost to we quarter We to to our XXXX. EBITDA third sales EBITDA and the related Cherokee that materials our results. expected at turnaround impact Putting million. volumes XX-day quarter. be our the be reset is EBITDA currently and approximately natural for turnaround traditionally $XX weakest $XX expected million approximately year-over-year quarter facility, period and by a Cherokee prices. given the million million Xx expenses to $XX the during this of to gas during historical quarter significant altogether, of the between million fertilizer in over scheduled million the turnaround and or million Loss improvement As from of to are our expect

and focused have discuss XXXX on markets, issuer our detail. all performance respect out, Mark upgrade a ratings lining are business ability optimistic half the on in credit very remain fundamentals very of for remain credit in we sheet, and to the may for With the outcome are transaction further and pending improved will exchange placed XXXX. on S&P Looking announced seen, the balance we sides second we well, which market of financial for our significantly the by of both up generate Moody’s, been you And as more recently friendly. that watch have to

with close of the out the will with interest $XX tailwinds of combined the under ended interest. in is structure, the $XX cost of lowering clear in liquidity today, by in forgiven path notice that we a that of April loan amount quarter we PPP plus received also our to fully we received I’d CARES we improving Additionally, of closer of million that including principal entire capital have was million. our capital, experienced $XX and business. the as with XXXX the approximately balance I that last Act to month, note the saying liquidity. formal And million

are XXXX the second it I Mark. We and back turn prospects very And over thereafter. excited half our will now, to of about

Mark Behrman

Cheryl. you, Thank

model production issued you release LSB LSB. of with transaction acid to outlook will results stockholders. the are We X. of that capital in of but X XXXX Slide the ammonia, nitric allowed million. interest stock dividend upgrade our rate which at announced volume we as transaction, XX.X%, stockholders. to of Since will stockholder of summarize complete, greatly capacity, In to of common week, enable cash including favorable A us key of Eldridge stockholders, with achieve proposed issued investment were nitrate. E-X the to brief El our Once a holder our We giving kind Dorado and which of compelling believe summarizes is great our now as we supportive to the As important effectively been compounding turn for Eldridge their of majority and a El review LSB. and been to our to begin in been partner agreement the the an their to which in this to us benefit Dorado growth, to common while expect exchange at aligned Series will to cost these such and expansion exchange expansion It be in this other the and outstanding since other now flow free that has F-X company we become shares increasing invested implications aspects it with so, to they consistent in El in the production demonstrating transaction and we late carry more the preferred enabled a products stands the in profitable thus shares signed new side-by-side quarter. for of lesson of last on a shares preferred of we many is of posted us high for common all a will our us lower ammonia will This facility ammonia sell simplify to our of Eldridge balance, opportunities history those agreeing allowed to also we business our and our our XXXX, completion the $XXX us company the you. stock. in value facility. issued, Dorado, unlock directly most the Eldridge, Slide and few kind has fund second The the preferred achieve transaction, ammonia press approximately was our This paying have ammonium as financial confidence it doing their benefits. increased be structure, and the both shares our of rationale complete number to greater

of plan We which debt, us our preferred credit elimination back the us on materially currently an We expect business. could carries of enable which believe liability refinance cash growth lower a favorable receive interest more allow our expense. rate to to significantly annual stock of rate savings reduce the X.X, this to this interest at we interest and rating into our reinvest could cash

business will exchange time and opportune with significantly prices we high agricultural increased industrial flexibility cycle, nitrogen financial an multiyear given provide demand. Next, and strong chemical anticipate us the and in the

stock As reduced pro to the basis of effectively by illustrated on XXXX. our out Slides X we a and X.Xx XX, June XX, of as calculation, taking leverage ratio balance of our on this preferred leverage forma

and including the year-over-year with green strong than ammonia Given clean to the expect less for potential actions and target strategic and with business our improvement initiatives, favorable the greater expansion important Xx. in our markets. into will acquisitions, leverage us our These to provide growth plant flexibility outlook opportunities and we organic blue of pursue energy leverage operations EBITDA, our material reduce following transaction further environment, ratio exchange adjusted

have While approval Eldridge agreed transaction, both stockholders it from complete exchange. require exchange the this affiliated LSB Eldridge transformative are to who to and with our not does

early that stockholders that expect As special that part in a SEC we exchange our this discussing with statement vote a them within to a our process, out meeting of the anticipate then September. to and the stockholders We to recognize proxy mail thereafter. and file definitive holding look will company, further. shortly with to preliminary of next proxy the the week we on that forward value our We brings believe transaction

has government greenhouse pushed Turning are the there gases, significant support in given including many ammonia on hydrogen emissions. to forefront, public to COX to globally reducing many tremendous and reducing XX, the Slide benefits countries, focus

compelling is belief us, our emissions. that, uses reducing production and derivative for a Given growth potential products no that and global opportunity ammonia carbon the of given for low-carbon their represents carbon

value, financially become in friendly believe to a us Our more player sustainable, to world existing way storage create logistics knowledge this significant arena create help and handling, we extremely position and long-term ammonia a in both in manufacturing, can and socially. that well environmentally a

We current for to feasibility on during of Our quarter medium our that the derivative technology needed and be products focus to the of and determine each long-term produce will Board study a support help sites studies over its plan choosing commercial X that feasibility partner approve infrastructure sustainability green anticipate year. to next or LSB’s blue next a perform the will to to and would the of objectives. be completed ammonia Directors our presenting a second months to is

blue are through XXXx Lastly, almost nitrous and emissions in is we green atmosphere reducing the of carbon as to of warming carbon oxide its our reduce to on dioxide. production emissions impact our addition on the opportunities focused that ammonia,

from XX completion currently transaction our beginning discussed. will developments stockholders. includes with that. Slide reviewing achieve value for are that of believe enhance options growth the this strategic long-term we exchange Collectively, forward, that measures our greater generate the We I to just new summarizes critical point plan and with to these Eldridge. our ability It our profitable

conducted to take a Before XXth turning prepared hope Conference be you of to Q&A on that remarks will note many to September speak the We operator virtual our Basic will begin Suisse I’d over using with participating we be event. during questions. format. now which and will call That XX, the be we Thanks. to concludes Monday, the Materials session, happy Annual in Credit the

Operator

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

Travis Edwards

well are it if that note, should for I the and the time able coming to far detail increase on hope exchange. months. called on you so and flexibility. guess out, you’re transaction, that release news and complete as the Hi, you the thanks weeks in for quarter. things next the on good Congratulations I morning preferred over

about pursue financial talked you initiatives. some As three growth notes,

when curious exchange preferred then these ammonia notes, completed allocation elaborate pursue completed, Just more you projects or then of on operations, it priorities order transaction maybe blue if first could as the and is and far refinance bit if is capital possibly little green a go, the is as and M&A.

Just thinking in about curious priority? those you’re things order how

Mark Behrman

How Travis. morning, are Good you?

Travis Edwards

Fine.

Mark Behrman

is get where we shareholders and and complete shortly rate from ammonia think a existing grow appropriate blue exchange to an favorable well. green hurdle so have I’ve it gives to we in, will continue and M&A M&A, the our in refinance the the on Once we transaction. in Clearly, I there about been capital through sheet business look, we three a area we do the push I that, invest that. cleaning assuming spend we’ll last company place. thereafter, and to balance yes, we make returns to runway appropriate think that and pretty capital over public want or the quarters vote that that up wanting the us as So our two this intend require and to some we put the really think positive

number this be into Having free said year, if look for they of will like pursue that we’re that as we’ve next looked we markets will even amount we’ll think we balance cash continue of – and fair these to strategic transactions we those that, flow. if a a and year generate and transactions transactions, the of to to think those. at where so at I and shareholder value, And we’d continue obviously think accretive

shareholders going. of I capital where to a as well, it’s although any to a have we’re whether buyback I promises capital allocation, or want make to considers return stock think we’ll always that’s dividend, that, look don’t at

Travis Edwards

you’d I the of will. about pro you too you you you that fundamentals keep, leverage growth preserve we these whatever all Xx of leverage of get the I below up, you you that these Is initiatives? growth have or sort a target M&A leverage, is we’d debt any priorities, just that but to hope Xx, you assuming for can target outside establish once Or number attractive find for of to detail. Certainly. this there, to means to an be hope something that your project sense? doesn’t is, I of get there’s then but opportunity make appreciate comfortable but requires slides, maintain willing say, to X-plus a On targeting some range. noticed going that take first hey, growth support that you to want need or out some we’d think we that sense. think That forma Does that, the Xx and as curious X, called makes And it be sort getting

Mark Behrman

No, it’s a question. I great Yes. think

first, short time. and change can target. more So businesses hit commodity think I period dramatically to I our a commodity marketplace when pretty mean, we have in of business, the about in pricing

commodity generally I leverage better lower So is speaking, in think businesses.

So that an steady be opportunity, a M&A below run make we more to lever Xx target found would If X.Xx up could acquisition. on state. we

repay think up is that when and that, make net back us the generate could that months we to there cash about brings a really think that to down within more post-acquisition think to a we’d or runway XX debt lever have we X. is want that possibility we I the would below debt I What see acquisition. XX

get probability I So there’s feel to a back it we’d runway a would comfortable high runway. us be would that think and there, that have

Travis Edwards

Got it.

benchmark you’re if below even that that Xx out that is to of and the like of range. sort you’re be sounds hoping ultimately it So in temporarily

for $XX include One is that And guidance. So gave add-back clarifying an any last cheryl to volumes? does question $XX XQ $XX just $XX super million sales add-back million some of million sort wanted sort lost of the on or to helpful. to for of that million of detail me, the before clarify,

Cheryl Maguire

materials and I not. is back. but add is – million production any before $X.X the expense I there’s that lost for did of point back, that added out will That’s contractors Travis

Travis Edwards

for well. a Understood. Thanks Thank time the you as lot.

Operator

Research. proceed Rob is Our with with next question. Granite your McGuire Please from question

Rob McGuire

the morning, the plan all off work hard preferred. and Mark in Congratulations on paying Cheryl. with Good announced quarter and your recently your

Cheryl Maguire

Rob. Thanks,

Mark Behrman

Thanks, Rob.

Rob McGuire

affected relative have should products? volumes a capacity including to other to how result HDAN explain think to Can quarter about your them as produce shifting you been production And may volumes? your how of HDAN, we second

Mark Behrman

Yes.

So if volumes our quarter, looked year-over-year. you over at up HDAN were first

And of really the produced We right, first because good definitely and production a lot sell quarter, February we stored inventory, a so, had it winter. in all We lost then we freeze. some we of sold out during season.

So that us. hurt

And lost in first sales HDAN, February. production quarter of so, we higher came into – a had

into So that, I the inventory, with sold-out you we Having to as second quarter a starting came that’s lower lower and why a we’re said we’re mentioned, in position. definitely number. see –

really starting pricing to in So us than tends that for the look in at returns. even product the we’re better marketplace nitric see And we margins marketplace high-density and be at we’re better acid getting today. prices the to

Rob McGuire

at Great. tenders second about your we as thinking the should Thank contract and XXX,XXX by be nitric and quarter run-rate of tons nitric you. When Nice look this about forward? going ramp way acid for acid you other, well. the category Is on the how sustainable?

Cheryl Maguire

nitric would I are that acid as still contract. well up mean, ramping mean, on say, we I I yes, is. it

little as say think sustainable I contract to that the continue it’s on X in to higher and reasonable that a months. could that’s so, we And maybe be next ramp

Rob McGuire

couple turnaround regards Great. any should in be the to then, with next And that changes thinking about? years here, schedule we your of

Mark Behrman

No.

all in year. for now now prior turnaround as Cherokee right Cheryl at next on cycles. comments. our Dorado they’ll And prepared El we’ve then, X-year scheduled And turnaround in indicated got We’re be and

Rob McGuire

much. Great. further no questions. have Thanks I so

Mark Behrman

Rob. Thanks,

Operator

your with Our next question Company. Ferazani with question. is proceed with Please and Steve Sidoti

Steve Ferazani

did a number, obviously, a because, particularly questions quarter guidance ask to couple huge about that’s the with good I third morning. more the Hi, want turnaround.

are XQ? back through some that thinking into I it, know as I to So those be you prices of are to And I walked you very, mean, numbers. very going selling your average try similar to essentially

Cheryl Maguire

they better XXX ammonia might in little pricing a QX ag talked the Yes. And markets. realization I’m talked than about a I actually I point. $XXX about from and thinking Steve, be UAN

thinking a I’m higher so, quarter. than second little And yes

Mark Behrman

that into Steve into lower I mind freeze, at keep quarter. We of that going ran had fulfill Remember had to had to in third orders the don’t we that quarter. beginning that second was that have we of the just – going prices we because the the say,

Steve Ferazani

How third much much have how quarter? for so do – you your forward much sense already a how of – sold of you’ve

Mark Behrman

UAN, facilities, between quarter. the our two On principally out sold facilities, third production for we’re

Steve Ferazani

Okay.

a have third good now? take quarter right you that on number pretty So

Mark Behrman

fair statement. a That’s

Steve Ferazani

Great. ag When thinking mix. typically, you’ll see side. I’m about seasonality the ag And industrial your versus on

As does more come some this your you of come is of this out – seasonality the leveraged to even up level, industrial? or mix towards continue expand as at

Mark Behrman

Yes. X there’s seasonality industrial products cold weather. being clearly of in is in a the where or there’s less the industrial selling pure the we’re just Canada, some on XX%, months be than the I to we’re Having mining location, if their are because XX% maybe right? X business mean, the we business – still If depending delivering business. – There to mine demand lower we going much ag when the industrial that, seasonality about said talk probably has balance mining. with is

your mining to yes, has fertilizer business. So business the or absolutely seasonality less business the your than point question, and industrial answer industrial

Steve Ferazani

of per are how going gas a get and gas you are look costs And ton your when you prices at side your sequentially about those cost to costs? I trying then, And labor Are on sense here? up or a non-natural of sales prices the general down. well? in just seeing you I’m and as cost thinking bit inflation seeing natural

Cheryl Maguire

this side. Gas for look last $X.XX the are blend gas versus in per it’s the time about you if right $X.XX third year. average our primarily at costs quarter, now on $X.XX, Steve, MMBtu

those we of costs. higher And two gas business. as just higher primarily on see asset cost relates our seeing the primary are costs. metals it areas to it’s precious So where some run course, But catalyst we’re to

Mark Behrman

not really costs. seeing seeing not – labor increase We’re any in

We but call wouldn’t I material. seeing supplies, slight some are increases them in

Steve Ferazani

pulled feel Okay. to is positioned? bit year prices corn how does now this you’re you back – like a And already forward obviously, then, looking everybody next how here. and Obviously,

We’re China imports. thinking about

your thinking and year? mix Just positioned control fertilizer about you think just you into can’t how you’re prices, next but

Mark Behrman

Yes.

of today announced sits our with is this year. would So our year. I of pricing I the the half in expectation really half that’s and second year. second been book with first pricing already this I’ll half be order fact, – mean, comfortable quarter. And and Based of should of be I year some the to the fourth this second say, forward where feel this than for of the the on start half better and

year, really important. that’s next though prices, into and been back farmers corn, even still are $X they making historically, a corn pulled corn are good $X.XX it’s price, Going good, money,

think the good understand pretty I demand demand. think seeing now, still fast. could think change we’re some dynamics I still China. there. change. But And we from we’re seeing don’t right that That I could

the I corn think has is what’s in Brazil a crop year not great for been them. really interesting

Western United are States. are And states that we’re be so, going going of growing the out see here corn, than also should in out western or really of coming We’ve had yield hot that And expectations. weather to coming what was dry below Western ago. to that I states numbers and Brazil, some anticipated Midwest think lower we’re to months numbers some see that be going

a So planted I – of acres think you’re and to lot see going next year.

years. XXXX high anticipate we still that’s compared saw north a And that fertilizer we XXXX $X to really at the I those to be pricing strong of corn, that certainly during market. prices relatively will think

So we’re we’ll a We we to pretty good got room on improve really excited and year. to about continue think have year. our execution, if next we’ve that execute,

Steve Ferazani

everyone. Okay. the Congratulations Thanks on so quarter. much

Mark Behrman

you. Thank

Cheryl Maguire

you. Thank

Operator

DiRubbio Brian question. from Robert is proceed Baird. with question with next Please W. Our your

Brian DiRubbio

and Department on just any do Commerce Russia have you you of from mind sharing thoughts the off, investigation recently Good starting dumping U.S. Tobago? UAN into announced Trinidad, and of morning. Maybe

Mark Behrman

Yes.

an antidumping against on UAN. So I CF suit filed Russia Trinidad imported and mean,

it don’t remember the importing who’s anti-dumping and in I wouldn’t But is to in jumping that pricing – claim is kind artificial United the of pricing So suits, I’m and the paraphrase here usually I exact at low I’m wording. States. product someone in not because bringing in going it very say certainly

a it issue. So creates competition

could CF theory claiming prices be gas so, what And that is in want. Russian they

than totally is gas. a different for So it’s it market here

bit selling different, if And but Trinidad, they With And so, in? it’s cost the afford cost then, a same of the is coming actual concept. to product lower the can it’s prices. low, what’s

late this I with premise. filed So was suit saw suit think antidumping it On and phosphate year same just is filed follows year. earlier you an last the probably that

Brian DiRubbio

years, you have And has peers depressed I over have could business? that disappear. last on several UAN impact was, think thought the of the couple said that do been have those guess to flows your And what the seemed

that I’m impact So just you pricing you to from trying could think a get forward? sense going how

Mark Behrman

see imports Well, tariff put into suit either countries. usually, penalty they – anti-dumping some and other an import kind or there’s or a in tax moving when of an on when you or place you

price the is out price the – then particular you that So of supply selling And marketplace. on see taken appreciation product.

I I same. if happen, that would So expect the mean,

Brian DiRubbio

the update any Okay. then, provide you lawsuit? can latest on And

Mark Behrman

Yes.

don’t have we So date still a court unfortunately.

and We to that and about a fall surge cases state in the talk sit Arkansas have has scheduled next high steps in COVID number another down hearing of a certainly, the being in cases.

isn’t States now, top fact, in think five I helping the In matters. United they’re

Brian DiRubbio

XXXX? to pushing likely than more is this So

Mark Behrman

would I think Yes, so.

Brian DiRubbio

project study two-part much but you’re Okay. are plant today engineering risk question on years the several towards that sort guess different, is And importantly, independent. it’s given be I more is El assuming construction versus better commit How then, with capital of like But project, that ago? to the going the return know issue how the the company Dorado you know, approved. I circumstances there. that? to had willing to are you I manage blue/green ammonia conducting positioned a that

Mark Behrman

Well, yes.

like been is million. would nothing The in investment for first project me right? million, was $XXX So the That let Dorado, $XXX that we have answer part. of did the El it magnitude the

than significantly us. for to us – right that’s focus of still had it a of with said Is returns an the and less a has that, into lot has it’s big Having the placed we early provide by So us. lot commitment market. for a value, entrant it I that has that made value capital the think multiples there. do being

do can Dorado And contract, so, as Managing way get well. can the expansion. I as think a which project, the in that do you we’re focused didn’t El that we you price on fixed one

direction So could that’s go. we one

be be as in to to have other opposed this that that certainly materials greater level skin would straight contractor and just make the oversight The a much to any game, would of has contracts. working time sure on a and

to of lot are that. a that learned sure I lot would we precautions there our would I a make So lessons of And take think from we risk. mitigate think

Brian DiRubbio

Great.

Just final you issuing and you. consider question all alongside this is or – debt that? you something speculation. mentioned Would of M&A. potentially would equity a Thank for be me, as entirely that be would that But would you fund with

Mark Behrman

hard to – question answer. a ask it’s to think I

that that over would, that about an Xx up see below. clear could the down we would being months or for next think post-closing we asked acquisition to could Travis transaction. below earlier lever XX we my path I think months leverage was get leverage to and XX answer we XX XX and of back if a I And M&A the question

up we up up way position we’re the you’d think I down. a to couldn’t not us So that, for of in said to levering afraid a de-lever acquisition. put back Having see lever to good lever our where don’t company back see

equity, So, required if accretive for to issuance of do. has sense earnings. consider some but it be to Otherwise, make to we that would wouldn’t that, us it

Brian DiRubbio

Understood. Appreciate the thoughts.

Mark Behrman

you. Thank

Operator

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

Mark Behrman

and to your want I for in thank participating Well, the interest. call everyone appreciate

discuss proxy feel If a and for once to reaching a you. questions, you the some vote. we you favorable give to any follow-up we’ll Cheryl to file and And myself exchange looking be have free further out Thank transaction call. the of

Operator

today’s conference. concludes This

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

LSB Industries (LXU) 1 Aug 212021 Q2 Earnings call transcript