On November 1, 2023, LSB Industries Inc (LXU, Financial) released its earnings report for the third quarter ended September 30, 2023. The company reported a significant decrease in net sales and a net loss, attributing the disappointing results to a weaker pricing environment and lower production volumes. Despite these challenges, the company announced a new large-scale, low-carbon ammonia project and maintains a strong balance sheet.
Financial Highlights
LSB Industries Inc (LXU, Financial) reported net sales of $114 million in Q3 2023, a 38% decrease from $184 million in Q3 2022. The company recorded a net loss of $8 million, compared to a net income of $2 million in the same period last year. Earnings per share (EPS) stood at ($0.10), compared to $0.03 for Q3 2022. Adjusted EBITDA was $9 million, a significant drop from $50 million in Q3 2022.
The company reported cash flow from operations of $17 million and capital expenditures of $9 million. As of September 30, 2023, LSB Industries Inc (LXU, Financial) had total cash and short-term investments of approximately $318 million.
Company Commentary and Future Outlook
“Our third quarter results were disappointing relative to our expectations headed into the period," stated Mark Behrman, LSB Industries’ President and CEO. "We continue to experience a weaker pricing environment relative to last year, but our results were also impacted by lower production volumes versus our expectations. While we hit a speed bump early in the quarter, our manufacturing operations have been performing well since early September, and we expect that to continue, setting us up for improved results in the fourth quarter."
Despite the challenges faced in 2023, the company continues to generate positive cash flow and maintain a strong balance sheet. LSB Industries Inc (LXU, Financial) also announced a new large-scale, low-carbon ammonia project, which is expected to contribute to the company's growth profile and profitability in the future.
Market Outlook
The company expects strong demand for nitrogen fertilizers in the Fall 2023 ammonia application season and the Spring 2024 planting season. Despite the increase in U.S. ammonia production capacity expected in early 2024, the company anticipates that current prices for ammonia and other nitrogen products will prove attractive to retailers and farmers.
LSB Industries Inc (LXU, Financial) also noted that the demand for industrial products remains steady, supported by a resilient U.S. economy. The company expects to determine its next steps on potential capacity expansion projects in the first quarter of 2024.
Explore the complete 8-K earnings release (here) from LSB Industries Inc for further details.
