Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and welcome to the LSB Industries' Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your host, Fred Buonocore. Sir, the floor is yours.

Fred Bonacor

Good morning, everyone.

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

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

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

Mark Behrman

the Thank the our final opportunity the you, year. today have results about to XXXX you We're Fred. to third speak for and quarter happy of with quarter outlook our

Page results presentation, execution. turnarounds and having environment of strong As we strong by third the favorable of solid on last aided X of summarized facilities our year. quarter these generated despite continued delivered on versus growth year-over-year only our turnaround pricing in X performed Notably, we X

completed The was in turnaround mid-August. began mid-July and El Dorado in

was the substantial completed began just at back-to-back completed in and the undertaking, While safely. mid-October. Successfully Pryor them X turnarounds Day both and we executing Labor turnaround was a

performance plant from improved expect We activities. these

to like for our facilities thank efforts. I'd teams tremendous their both at

allow and no manufacturing focus scheduled to our production compared growth have volumes initiatives. sales be progression XXXX us XXXX for continued turnaround our as and we XXXX beneficial and Fortunately, XXXX, which on to would capabilities of to the and

global continued and at global remain by multiyear America remain overview Corn presentation, U.S. conditions of our X an corn ratios above a factors, worldwide end strong averages, and in drought prices our for South the Page multiyear Domestic On including lows. and driven demand. stock-to-use of variety of provide markets. we

a remainder meaningful remain for and Based on to remain prices acres planted this attractive, profitability that increase farm will we and the supply believe construct, XXXX corn XXXX pointing spring. of elevated that will this in through

will higher As heavy nutrients XXXX yields weather ammonia into promote in the application farmers a make November, U.S. replenish expect we fall move to soil assuming for the in the crop. to permits, we order

Longer term, product pricing it corn demand the to historical to in pricing to averages. line continue good for bring growing stock-to-use seasons continued years reflecting X believe of X of that nitrogen ratios strong trends back largely take industrial remains our impact the strength Demand will Industrial stable. back we in be favorable, with products and fertilizers. for

the our in fertilizer we're to competing in pricing over across and year activity of fourth confidence Similar global in The demand mining XXXX, industrial has products. markets quarter mining lifting and these profitability the surge products demand and pricing are demand for currently seeing with mining add mining considerably as our has as flow remain trends a our cash XXXX. market strong to to optimistic The coal about the past led strengthened prices an well. markets, of increase business and the we for

our QX discuss and I'll Now results will to Cheryl, outlook. call over our the who turn Cheryl?

Cheryl Maguire

and Mark, good morning. Thanks,

the the operations commercial relative the manufacturing our the planned impact enabled both during us our businesses overcome with to of increased execution quarter. that reflects in along Our turnarounds strong performance which, XXXX and performed were pricing to solid across X

quarter, a third turnarounds. performance our record absence the Our us is in the of seasonally weakest adjusted EBITDA is which period third for quarter in of even $XX million

generated adjusted quarter. the we EPS in of Additionally, $X.XX

our sheet see summary a you'll and metrics. to cash of Page X, key flow Turning balance

a liquidity million $XXX quarter, price including and This we volume-weighted after per of Our $XXX continued stock in of short-term total us maintain we million the million profitability $XXX end investments. had liquidity at the enabled share. approximately repurchased approximately approximately strong cash is At average to position. a $XX of of our

Regarding stock. the of repurchase our

stake our shareholder their our portion a the of offering largest completed During secondary company. a of in quarter,

repurchase the an shares the way while As deemed offering, stock our of this of We X.X liquidity the we part shares program. efficient stock. took million to opportunity repurchase to in not our under repurchase impacting our of

million. Lastly, our announced an authorization Board earlier as total $XX program additional increased repurchase to this million, our we week, stock by repurchase the bringing $XXX

flow. During million, million $XX operations expenditures translating the $XX quarter, into of free we generated $XX of of had cash cash capital flow and million from

We We quarter trailing quarter facilities. strengthen X.Xx. where are in liquidity even net turnarounds leverage our EBITDA pleased the at XX-month due ability we to and a seasonally a meaningful third with and sales to with slow to ratio ended lost X our production debt of

ratio have mentioned be leverage or believe target is before, to I pricing mid-cycle than we what environment. during our our a less EBITDA X.Xx normalized generation As

EBITDA MMBtu. to Meaning Tampa increased primarily $XXX million approximately the gas Page net quarter our The by costs, costs for bridges $XX approximately is the in range the prices third versus to natural of adjusted ammonia range, prices third quarter of material quarter UAN per price of variable per costs XXXX shown raw of adjusted of in $XXX million. to $XXX X impact $XX selling million EBITDA ton $XX of third the increased XXXX. and $X positive $XXX that

but rose and quarter. of fourth XXXX, the substantially gas have through somewhat costs course over XXXX in the the of third eased quarter Our natural

green the expect the quarter dynamic year. fourth bar however, benefit the we gas, the this to As rising from natural to prices and continue of in selling price indicates, exceeded of have

in our tons XX,XXX and Volume lower which approximately production. of facilities, as quarter was us cost ammonia at both Dorado of a result activity Pryor third the planned El turnaround

to commercial period addition in for the $X higher cost the costs and materials by for contractors, Lastly, were million, supplies, higher technical and costs and primarily approximately talent initiatives. other of corporate related several

to the made optimize the we've operational line distribution of bottom our is improvements, years. contracts strong product and pricing mix. several Page favorable we've improvement result over X This customer the and illustrates delivered past investments trends, new

quarter XXXX. into and We expect of the to XXXX factors further in benefit from fourth these

fourth price the UAN Nola benchmark $XXX over quarter, a at the ton. is currently Looking

a November will ammonia which ton we Additionally, in the moderated economically, to to last metric at November. back trend that have benchmark substantially Europe, UAN and into previous $XXX ton $X,XXX strong producers gas a per continued and Tampa price continue translating in pricing. operate of impact Also, and imbalance levels, nitrogen ability natural metric settled prices to versus that believe in supporting weeks, the recent products supply-demand for

of U.S., last head gas into While several on currently upward Europe, moderated an as XX% combined locked following gas in the of below pressure of have the natural for on over do expect remain MMBtu, costs remaining We we extension if trends our U.S. the some natural prices across cost approximately gas weeks, warmer we get gas spot approximately prices weather per at in we'll needs fourth that the level. with lower XX% the have advantage months. but the quarter winter $X

Sales into lower early production result the turnarounds. by of Pryor will the be into the facility the the the volumes our activity a and the the at turnarounds Despite lost inventory in in and the quarter QX of at part headed planned fourth of somewhat of quarter as the Pryor what from in QX. inventories impact the coming our quarter remained lower impact impacted planned turnaround of

We of products with sales of volumes major expect to consistent be the QX XXXX. fourth quarter

EBITDA million turnarounds, This and coming lower in second put on quarter full quarter expect to August. $XXX outlook earnings pricing million we would and our communicated the both range approximately be adjusted million levels fourth back and $XXX year the full current of quarter volumes to $XXX if call our I the at the discussed remains our the quarter year at previously pricing with above XXXX that despite increasing weeks. in results from XXXX possibility the up adjusted fourth EBITDA in to $XXX of nitrogen million of previous firms fourth our Assuming

quarter on call. to providing back to turn now forward And it updates Mark. look over further I'll I fourth our

Mark Behrman

you, Thank Cheryl.

Cheryl be As U.S. how of to prices the continue the Page XXXX. the between months a prices to XX through play our over elevated widened natural products. and gas X for XXXX gas spread European role and natural volatile illustrates major of selling course indicated, in prices first continue

spike for and taken European a facilities gas in prices lower temperatures The inventory said, With have of trended warmer following production recently costs Europe in cost gas per into the buildup gas substantial that levels nitrogen still August resulted related European region. Prices importing seasonally that gas of $X,XXX at ton. being of occurred Europe an throughout natural in that are to LNG natural ammonia offline. European over due in many into translate

We months, colder the -- gas into higher. see will this we move that head European believe we that natural as prices winter

substantial continued to continue ammonia the even domestically, costs above if representing does produce occur, producers. to likely However, European cost production that be significantly U.S. nitrogen to not will advantage

what significant free intend strong to look XXXX, flow, generate on past into QX business expand XXXX capital our and a I we be anticipate we As our capitalize pursue to pricing shareholders. will to return environment to opportunities us to allowing cash

Employee environment of being we good primary focus by of growth is key priorities. On day, safety Page X, the single a facilities. show followed of our summary reliability every our our and stewards the

for these further all make opportunities have fronts improvements to significant progress. continue We and on

As Cheryl we Dorado Pryor recently and turnarounds mentioned, El performed at our extensive facilities.

best-in-class to completed We being environmental advance our initiatives chemical and expect safety, locations at we and reliability work company. both of closer our us manufacturing both a to the move goal

years, X capital investments profitability. facilities, contribution manufacturing Additionally, are rates pursuing we the initiatives our the to of that into next combined operating we the the are with increase should meaningful believe incremental over making, our we translating

our various debottlenecking we believe of of top that, can On through increase production initiatives. plants the capacity we

capacity demands. an potential production could increase volumes supply We would their increase production and are our of our increasing fertilizer domestic nitrogen significantly while appropriate and to in of investment The also fertilizer USDA's multiple production goal meet stated profile. currently return assist profitability meeting sales that have farmers evaluating increasing projects the ensure to our with that

expansion we With early to To funding on production providing to intend the in that pursue plans those USDA's program. our an fertilizer look We forward on clean to XXXX. to respect for update have The green decarbonizing industry. us to we we our emerge initiatives, compelling energy ammonia continue projects currently leader represent blue advance in opportunities underway as strategy. and our a X end,

very Not we've attractive. result to reduction both but could at project our the carbon ammonia Page Dorado ammonia with potential the XX our of green that only blue before. shared overview in economics be the you El substantial have and of to believe we is additionally, our site do our projects footprint, blue

that Reduction to passage significantly Act, Inflation sequestered with of credit Importantly, the raised was the ton and of project. has improved the that per of captured COX XXQ economics the $XX

we back plume formation expected. and wells which project assessing X as nearby completed indicated August, of the I Phase geological consisted well modeling in of studies, depleted deeper the findings As and we and of were conditions

on sits ideal facility sequestration. for COX Our an formation

Since the capture design completing geological work We been the Phase modeling and early the a preparation X, XXXX. late good of making have Class facility. Class of simulation in application anticipate the in filing X progress permit QX or with engineering we permit EPA QX X application with for and

cover cost would facility electrolyzers ammonia Reduction leaving project full zero believe We customers. federal carbon Page incentives sell that at tons hydrogen kilogram green operating part our largely per the ultimately Act. XX,XXX XX the project. summarizes rolled our this approximately of as for Pryor $X out ammonia qualify us the the production our to of of to will with of Inflation This for

final would our proceed We intend options we refining the on XXXX. half regarding feasibility on how decision and continue study to a best first in and of to this for to make work project

lower have mentioned that operating our improve rates, of product providing earlier, I've will further overall for opportunities costs. additional As and to our reliability our sale product the facilities improve we manufacturing current

We product exploring into would our with invest are to to sell. opportunities us facilities additional that debottlenecking capital provide

we We assist us that products efforts with energy a high-margin our decarbonization providing are what clean be believe will while initiatives to sell. advancing our will with

best lastly, have we are we long-term our where shareholders. creation we And capital value for believe allocating to the opportunities

discussing to with making call. about any business in I'm are to we concludes our and earnings and continued look all our about will prospects, extremely excited take our our As you progress and QX the we questions. our can I on future of prepared now be you remarks, That progress forward tell, happy

Operator

our And comes question Josh Spector Instructions]. UBS. from [Operator first from

Joshua Spector

bit in disconnect in Just the year-type you of there phenomenon that and quarter? assuming inland there exports fourth there's been that, U.S. have guess, think pricing the in the side. little your next a helps that that normalizes because increased? are more of your you view? given the pricing talk outlook you and pricing I about quarter What of just your Or Do on terms fourth Cheryl, a a is

Cheryl Maguire

line today XXXX. it Yes, -- still with with I be assume discount where the Tampa. quarter, normalize is see to I over fourth pricing in the might think is that But would it that expect We it the for of see is today. to where we course would for

Joshua Spector

you Okay. wanting not And I increase. just guys your necessarily flow. to on have reduce been mean clear the about buyback pretty

control a how to keep don't flow you And return special want that? for of market decide actually you form you open your what's if secondary do there? other in So you or would some execute repurchases, I on dividend go additional don't get and any guess, your you consider intact? opportunity And buyback, but to cash

Mark Behrman

a marketplace have company and our large have Josh, X that stock, years, been stock, so actually X we us, years. almost opportunity certainly but is go we the supportive out very to shareholder but in look -- has we for and also invested our in purchase of the I think at when

And and would willing have approach if to so be the price. we opportunity negotiate see to always a stock them and they sell

probably or kind any that, of for I dividend. us think a Absent early to special little a do dividend it's

production looking I think we've on could projects that have those really capacity, returns some and we at think expand employed. nice got that capital the we're

be And expectation that require and those what projects I dividend through dividend, special you dividend, might we I or to that once implement what a think to believe there's the a determine ongoing. are capital get would before do a that implement even we which so need

Operator

next comes question Anderson from our from Stifel. Vincent And

Vincent Anderson

under sure. potential out book I the a of you demand nitric I'm tighten your actually look for kind that at if of to side through rationing just would, prioritized and if But because so, products And wondering, for disruption winter ammonia agricultural nitrogen how on for gas understand gets into all, next acid this as flow business? is European through industrial there spring, use?

Mark Behrman

Yes.

markets as I the using nitrogen great prepared competing when markets, a these remarks, and it's mean, interrelated, Because markets we right? are question. mining about and all So were talking product. I mentioned they're of in for industrial all

other well. So to pricing see in that would products. expect continue scenario, to if to nitrogen up we to as by move obviously, higher for that were flows ammonia And prices nonfertilizer us move through up our

Vincent Anderson

very and you even we between different sense. last commercial flex I know And markets agriculture recessions. then ability softening? to makes it's Okay. That a industrial your and to can quantify did domestic team end operating maybe compared But if start seeing

Mark Behrman

Yes.

facilities to our like competitors, So -- generally right, to markets, between So these have trying the your production. ability flex many optimize of right? our you're

-- don't change mean, So would that we currently. I would this much. we it do know I

customer those to understand different commercial that the our We the on an understand environment sell can demand. But markets that team we think has we into. the pricing the outlook extent And in we you markets.

where we I and optimize understand So really markets is job as can. to think as their job our our well

we we if that towards right fertilizer and would either for we the increasing could try industrial our products high experiencing markets pivot mining for drop, they're production coal, and well. demand where there's as ammonium So demand we recession where now, solution saw and low-density nitrate nitrate means ammonium saw or high demand and a

Vincent Anderson

funding qualifications the Got and how you X take? initiative And USDA would form Can last really Okay. what quick. are talk clear the about and funding getting you. maybe just then for that

Cheryl Maguire

comes the States, The in the as intend as seems to for Sure. top XX. funding. you not X out. the Vincent, fertilizer be X can producers is of under for as yes, to absorbing apply that long kind so you're the of United guidance The we're It we grant apply deadline December program. it

intend So to that. we do

that's So current... the

Mark Behrman

grant pretty process Yes. currently we on detailed reviewing and couple we There's and proposal so have a what's grant that a debottlenecking for the working of required, will opportunities now. a are -- we're to writing

thesis with of it business an plan submit. investment to think that's case detailed and So to what it, we'll kind a of have as

Vincent Anderson

funding. -- Or NOLs. my cash? like quite don't you scenario kind only but have Okay. excuse clarify And come like tax a some the think in it see this form a is ask I of industries as I in grant just And Can this few because already of normally it ignorance, a just years would I you credit? get of

trying so exactly to out just figure I'm And look that what like. would

Mark Behrman

Yes.

in it's than the more XX% -- you So the of per announced might the being the project funding of funding XX% $XXX project. $XXX -- project form cash. cap as And with about remember, of of and million they a no cost million

Operator

Sandler. And Piper our question from Charles from Neivert next comes

Charles Neivert

far, said, and what heavy so on so you right November, couple ammonia the expect generated? of weather as forward weather about right to actually of ammonia How have interest or being applied. a on already near-term talked sort quick or kind response would of questions. on much seeing seen One, far is ag it on you you you based sitting sales early the how into sell to we're a A Obviously, gets like markets. strong are here you sales that fairly But much will now? that depend

Mark Behrman

Yes.

before a certain harvest think call right, country, I normal. we've of the in the of in I parts probably what couple would weeks seen

have we harvest. it's recently, But weather some pretty I of parts -- dry country know And certain that, had big So pretty window. in a there prior wet are had that been the think we've I are but we've we'll conditions. also dry. to still

pricing that been we ultimately similar purchases saw maybe that summer, saw for holding farmer the what the ammonia some go off think down. pull fall would where would on over thinking I the we slow. say has to So And I

some seeing that think well. as I we're of

fall of the in expect acres that will given that think ultimately a we're hearing, farmers applications really that based the spring. think everything we number ammonia we on strong do I But plant

Charles Neivert

And that you? some it. issue and issues is because River under of Is -- to for Mississippi all causing deliveries circumstances? normal don't for Obviously, companies the are other deal lack river an at a another Or to guys Got some pretty the need you you current question. would the benefit around problems. with least that your be

Mark Behrman

saying more probably use us, probably systems benefit. that's we to And makes or right, our industry, industry railroad not Mississippi thing away just situation. really river any the me the It's a too much The certainly a from move country. not I'll the it's our little because don't Yes, every it's that stay product. nervous across is hurting

Charles Neivert

say I to don't more the Right. seem being, river? to you be business places that any get for in mean they want does better shorted I benefit, are of, lack of a meaning of can't because up get product lifting it pricing

Mark Behrman

think we're don't I yet. Yes, seeing that

urea I to production it lower you get and some a to and Gulf they so product, they some see sit the it's pricing. you've not -- it but if is think some little river, is in got in, coming since up that. imports on want see urea early you've the you've it's got What could pressure causing got doing on can't urea

Operator

comes question Adam from from next Samuelson our And Goldman Sachs.

Adam Samuelson

Yes.

So up river on maybe the fall. question following the the on and

business? those price inland it actually distributors worried the seeing can't risk-off river? markets chain creates? the you getting is would behavior -- opportunities how distributor of who just on are inventories creating for river kind in about are bigger -- from of uncertainty who impacting it because it Or the that you get Or of off new creating and right the customer now? a because kind course of new Does some it incremental issue of normal product characterize volatility is their is inquiries Just whole attitude and and how creating

Mark Behrman

Yes.

that inland or using products think new folks -- are river seeing I have Gulf the certainly the mean, inquiries that up location some other from might from I gotten we're system.

I can -- months to system that as up continues river customers how over had So river, come I several maybe we if think expect much from before. the would the months, hadn't more see we demand couple of is next this product limiting weeks, where

Adam Samuelson

of some that some magnitude the that scale debottleneck the dimensions then of you're investments? That's impact on of it. about the contemplated? on looking or if funding being scoping to Got -- kind projects not on size how, -- some would kind are capital projects that bring how maybe we way think And of would helpful. you at those scope at USDA side. your of would the some And all, put as the of and the Any

Mark Behrman

Yes.

So I it's for us to early a talk mean little about economics.

on of largest is plant. skittish our expansion the tell can just So What there looking production think projects, ammonia nitric Dorado, in we at I'm at when little debottlenecking general, we're capacity doing about El our at acid I a that. plant down and you

both We're also UAN. urea our produce Cherokee to at expanding production looking Pryor at and more

are X those So probably the projects. primary

we'll I at to funding, think get present it hopefully agreement if USDA the we And the would make as without to economics there, the board far As look them then forward. sense funding. and move

on project -- we're only project we'll we'll I look that. I of creating us the might that's to the the our forward the move funding about with have on guess I of just not and project is returns. whether edge for either sort not, on investment think the it's has funding, forward long be I on to at is. able think hard that And where think and returns a opportunities push if of could way better USDA get USDA a the to There be forward. us edge move or we sort that profile

Adam Samuelson

on a the quarter. could that range inventories Cheryl, ask turnarounds that you for just noise drive and And quarter? can were, the expected where question I there's EBITDA clarifying sales I maybe EBITDA in you if know with fourth And gave but help know volumes the and provide some I fourth the quarter-to-quarter us Okay. banding the

Cheryl Maguire

Yes.

going our pretty see give and Adam, would to of expect So good look year, where to I we last to overview this a would that's volume fourth you quarter year.

completing inventory Pryor despite turnaround even X and kind coming in then of basically, last mid-October. shorter flat to on year the So the turnarounds

Operator

next McGuire our Granite And from from Rob Research. comes question

Rob McGuire

revenue will be of field summer fourth What at quarter pricing? XXXX portion

Mark Behrman

Rob, Say that I'm again, sorry.

Rob McGuire

XXXX pricing? your of fourth will at be portion What summer Sure. quarter revenue field

Mark Behrman

None.

Rob McGuire

And the urea? Great. you the fourth in UAN UAN And do remain we're driving What's anticipate seeing relative you that strength strong to what quarter? it? can discuss you relative -- to in

Mark Behrman

Yes.

market up This the of mentioned swings now. actually So to the down. have of earlier, I Gulf couple seems right or kind pricing as days, is was last morning mean, day, urea I in a every Gulf, choppy $XX ton. it up

a a products So lot which of pressure nitrogen a on urea, on frankly, trade quite basis. of content lot these

So products. little bit of move putting the a pricing not UAN yet. nitrogen of pressure, I think, seeing down on other really we're some But

happen I urea of that don't will strengthens. think really as sort

is I another think talking large about doing tender.

And I so a some little seeing market around but the that's we're will why And help urea. for strengthen think strength in world maybe also Gulf that the pricing the in bit.

is think prices for other wheat in So be today commodity will given and make and demand. lot We corn that the really at where are. a UAN, pricing a high we levels think of sense farmer

in anticipate don't off prices. any pull we So

Rob McGuire

the seeing so, uptick marketplace? products in And what are are if and producers And you can an what nitrogen participating? U.S. in exports about talk you

Mark Behrman

those can the get We're and definitely waterways exports for access seeing Yes. to Europe. that

UAN primarily the here as that X they by netbacks -- to would better be in exported Europe better States. getting price United getting actually ammonia are are it's they it than selling the are products So and

of bit products. UAN the main access be Gulf an be bit AN But products. X ammonia that's seen got who's and Anyone exporter eligible got would exported. We've of of very again, to little those a be would AN, little

Rob McGuire

as us the give idea was turnarounds of an you Can the tonnage in question. result last of a Then third quarter? lost the that

Cheryl Maguire

tons. Sure, Rob. was XX,XXX It about

Mark Behrman

Of ammonia production.

Cheryl Maguire

Ammonia production.

Operator

question our Andrew And next comes Wong from RBC from Capital.

Andrew Wong

up I ammonia a maybe that to bit thought project maybe that just might ammonia I line on first. ask on permit next the I want time on the with you Just just Class be half Can think kind still Does And the and running in ask of update up year. XXXX? the getting of X by second well blue little a some timing? wanted that project. to blue project

Mark Behrman

comments, the that in prepared Andrew, said moved I Actually, timing has Yes. up.

So second the we file quarter end early X expect to of Class permit would first or quarter.

Andrew Wong

Okay.

some just that. remind relative then missed these to and of the on the timing customers, on what get margin expectations renewed you've us new contracts duration the you can historically? contracts of and with for And might and industrial pricing some I on Sorry, the just of those when contracts seen

Mark Behrman

those average, speaking, side the as in the that right? don't don't to all roll have we've expiring contracts know, new generally X-year contracts the they're as at go when I -- haven't Well, range. bids off all roll roll on public, long contracts, X on years industrial the really can somewhere we contracts time. come And got and time, same But They to released not the contracts to for out. that

that expired that to We products. into the pricing we've year have that able last have not demand product we've been meet have really competing given increase our contracts renewed as seen to over for and and them the demand go nitrogen products today,

team where XX understand over where good are XX the so really done current we So really think today. that months the job our next be customers a clients to conditions. has And the nitrogen on commercial market markets will educating in they the

Andrew Wong

maybe And great. That's questions just production. on Okay. some then

there turnarounds this that know were on what cadence the of then mentioned the lighter came won't year. maybe going help It maybe like turnaround was sort is it there bit rates. sounded be there's of initially kind some of of mentioned unexpected And Like kind operating done you the looks operating on kind this things And next some just of cadence year. certain the year? for some any XXXX, little on a were pretty things that of for you're but maybe next impact expected. And production the should You of like rates like preliminary were? Can in for positive coming year? remind during a than those year, for that what there talk up any, expectations that you forward? your us I happened about

just that If mix. us you remind can

Mark Behrman

Yes.

to back going going you rates think from on that of see year, turnaround So operating this going see some years period to say for X period, over that production over any I that turnaround time to you're turnarounds, time. X-year go you're of into out I'd coming between deteriorate

lot the of would end excited ammonia that did But where our The our we saw at we we bit say re-harp ammonia coming a that lower we're Pryor I work that ammonia plant. rates about in reformer, plant, end work where we or whole retubed major the certainly Pryor that plant. the front we actually So ammonia into had really production a front the of turnaround. there did of

So we work, had piping think that compressor caused other we plus some have work that vibration issues that resolved. all might plus

expectations significant that production for the of reliability of have we that plant. the plant And and

plant control urea at means we at distributed more so of us reliable we which should that that Pryor, allow out to of urea or facility. say, started DCS automation rates, that I'd will plant, get in implementation run more systems, that Our UAN consistent production plant more system the consistent

that rates So did work all improvement expecting the of operating and At we will in ammonia some particularly we again, of for actually significant of we're a in lot El plant the on Pryor, work do, had facility. those reliability lot more our plants of that that, compressors went lot planning think at into inspections we a a way provide in consistency plants. did that we and the we a the but to operate Dorado,

a The that those meet really we to demand has there really running out have. our that in team plants been have actually plants great acid job running all the full in nitric done Same thing well.

will and work we dividends So we're excited there. investment the the think made. pay about We that it

said We towards ammonia next percentage at And would our previously next low that operating of points rates year, that goal on in I would year for the for of XX% plants. XX say expectations increase I've couple look a over the XX to least to XXs think I we're our moving months. next

Andrew Wong

And so remind on could the the on turnarounds? cadence you us

Mark Behrman

Yes.

do we'll So turnaround, We'll El at and X any in we as -- turnaround right, mentioned, turnarounds have we Pryor. we won't another a do a did Pryor Dorado 'XX. just year X-year

we that push So the we'll there as turnaround 'XX in have automation a site. really of

or partial and in plant, plant in the we'll DCS the we'll installation the full implementation do So ammonia DCS complete at urea Pryor. either of

on in And also then be Cherokee. we'll or after year turnaround X have We'll X either prior that. a a 'XX

And We year yet. a cycle. on is a decision haven't made Cherokee X then turnaround

then should turnaround on Dorado, we and 'XX, after then a turnaround El cycle in do 'XX. 'XX X-year we'll that. So and And be at a

Operator

question next Roger from from America. our And Bank of Spitz comes

Roger Spitz

if you the million? prepared don't I expect know remarks, said be do this $XX CapEx XXXX in to you but still

Cheryl Maguire

Yes.

I million. think $XX to million $XX

Roger Spitz

think something of Great. magnitude initial order And guidance, same XXXX how or should CapEx, we different? about any

Mark Behrman

to will our we're million for $XX conversations be would you the but as increase go may million. Well, by finishing year. to this $XX certainly, you tell that million process million, us in we that And $XX the $XX it -- up budgeting I see process, through

between would we say I somewhere and will land. So $XX million million as $XX

Roger Spitz

or QX of in that? Perfect. capital And can lastly, cash outflow, you working terms inflow any on provide thoughts

Cheryl Maguire

guess, I given are. So -- But I I where given receivables, in, just we're of of out mean, we're higher the coming carrying some costs course, inventory turnaround. also payables slightly market higher gas and say a we're the some costs little would given higher

versus we Roger, for net-net, really what average an quarter expect over no the period. would significant So so swings

Roger Spitz

I'm swing sorry, a could relatively the be in larger you're QX? for movement normal saying working capital seasonality it than

Cheryl Maguire

to had If $X I nothing $XX say, dollars, Roger, to material. No. million, put million I'd

Operator

that it closing at to And to for back the I'd all like any management to appears turn remarks. time. questions this be now

Mark Behrman

all Well, again, in LSB I the Industries. appreciate interest

you working number so Thank update much. I a think we've exciting got quarter. hope things you on, of we and to we're that next

Operator

conference. This We participation. does today's Thank thank conclude your for you. you

disconnect day. at lines wonderful have may You and time, your a this

LSB Industries (LXU) 2 Nov 222022 Q3 Earnings call transcript