Revises Product Sales Volume Outlook for
2016
LSB Industries, Inc. (NYSE:LXU) (“LSB” or the “Company”) today
announced that Turnaround activities and various operational issues
resulted in unplanned downtime at its three primary chemical
facilities during the third quarter of 2016. The Company expects
the combined impact to third quarter EBITDA as a result of reduced
production, lost fixed cost absorption and repair expenses related
to unplanned maintenance to be in the range of $25.0 million -
$26.5 million.
“Our third quarter 2016 results will reflect the impact of
planned and unplanned maintenance activities at our three primary
chemical facilities,” stated Dan Greenwell, LSB’s President and
CEO. “While the reduced production associated with the various
unplanned outages during the quarter will collectively serve to
bring our results in below our expectations for the period,
importantly, our main focus has been on proactively identifying and
completing the repairs and upgrades necessary to position LSB to
deliver significantly improved financial performance in 2017. We
are confident that the recent work that we have done at Cherokee,
Pryor and El Dorado, and over the past year, will yield improving
on-stream rates, translating into greater revenue and EBITDA in the
coming quarters.”
Facility Level Detail
As previously disclosed, LSB’s Cherokee, Alabama facility
(“Cherokee Facility” or “Cherokee”) began its scheduled bi-annual
Turnaround on July 23, 2016, which was completed on August 19,
2016. During start-up, a head gasket failure on one of the ammonia
plant’s three synthesis gas compressors required the compressor to
be taken out of service, which reduced the facility’s ammonia
production to approximately 340 tons per day, as compared to its
nameplate capacity of approximately 510 tons per day. Repairs
required selected major parts replacement, extending the outage of
that compressor. Cherokee resumed ammonia production at its
nameplate capacity of 510 tons per day on September 22, 2016. The
Company estimates that the impact to third quarter 2016 EBITDA as a
result of Cherokee’s reduced ammonia production, related lost fixed
cost absorption and additional repair expense will be between $4.0
million - $4.5 million.
LSB’s Pryor, Oklahoma chemical facility (“Pryor Facility” or
“Pryor”) also had a Turnaround scheduled during the third quarter,
as previously disclosed. The scheduled maintenance activity began
on August 26, 2016, approximately two weeks earlier than initially
planned. While in Turnaround, management made the decision to
perform additional work to both the ammonia and urea plants in
order to increase their reliability going forward. Pryor’s ammonia
and nitric acid plants are expected to resume production on October
10, 2016 and its urea plant is expected to resume production on
October 15, 2016. The Company estimates that the impact to third
quarter 2016 EBITDA as a result of Pryor’s reduced ammonia and UAN
production, related lost fixed cost absorption and additional
repair expense will be between $7.0 million - $7.5 million.
After returning to service on July 31, 2016 following two weeks
of unplanned downtime related to a lightning strike that was
previously announced, the ammonia plant at LSB’s El Dorado facility
was taken down for a total of 18 days over the course of the third
quarter to address heat exchanger tube leaks and to make
modifications to the process vent system design to improve safety
and reliability. El Dorado’s ammonia plant has been in continuous
operation since September 22, 2016. The Company estimates that the
impact to third quarter 2016 EBITDA as a result of El Dorado’s
reduced production, related lost fixed cost absorption and
additional repair expense will be between $14.0 million - $14.5
million.
Outlook for Fourth Quarter and Full Year 2016
Despite the unplanned downtime, LSB was able to satisfy customer
commitments during the third quarter by utilizing product from
inventory. This inventory would have otherwise been sold during the
fourth quarter of 2016. Management believes the impact to fourth
quarter 2016 EBITDA resulting from lower sales from lower beginning
inventory, reduced production, related lost fixed cost absorption
and repair expense will be in the range of $5.0 million - $5.5
million.
The Company has revised its previously disclosed outlook for
full year 2016 Chemical Business sales volume as follows:
Products
Revised Outlook -
Sales (tons)
Previous Outlook
- Sales (tons)
Agriculture: UAN
395,000 – 400,000 435,000 – 445,000
HDAN 210,000 – 220,000 210,000 –
220,000 Ammonia 100,000 – 110,000
110,000 – 120,000
Industrial, Mining and Other:
Nitric acid 525,000 – 535,000
525,000 – 540,000 LDAN/HDAN 70,000 – 75,000
75,000 – 85,000 Ammonium nitrate solution
68,000 – 73,000 68,000 – 73,000 Ammonia
120,000 – 130,000 135,000 – 145,000
About LSB Industries, Inc.
LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma,
manufactures and sells chemical products for the agricultural,
mining, and industrial markets. The Company owns and operates
facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor,
Oklahoma, and operates a facility for a global chemical company in
Baytown, Texas. LSB’s products are sold through distributors and
directly to end customers throughout the United States. Additional
information about the Company can be found on its website at
www.lsbindustries.com.
Forward Looking Statement
This press release includes certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements generally are identified
by use of the words “will”, “believes”, “expects”, “estimates”,
“intends”, “anticipates”, “plans to”, “should”, “estimates”,
“projects”, or similar expressions, including, without limitation,
our sales outlook; impact of reduced production, lost fixed cost
absorption and repair expenses to third quarter 2016 EBITDA; impact
of lower sales from lower beginning inventory, reduced production,
related lost fixed cost absorption and repair expenses to fourth
quarter 2016 EBITDA; identification and completion of repairs and
upgrades to deliver significantly improved financial performance in
2017; and improvement of on-stream rates, translating into greater
revenue and profit in the coming quarters.
Investors are cautioned that such forward-looking statements are
not guarantees of future performance and involve risk and
uncertainties. Though we believe that expectations reflected in
such forward-looking statements are reasonable, we can give no
assurance that such expectation will prove to be correct. Actual
results may differ materially from the forward-looking statements
as a result of various factors, including, but not limited to:
general economic conditions; weather conditions; increased
maintenance costs; ability to install necessary equipment and
renovations at our Facilities in a timely manner; changes to
federal legislation or adverse regulations; increased competitive
pressures, domestic and foreign; ability to complete transactions
to address our leveraged balance sheet and cash flow requirements;
loss of significant customers; increased costs of raw materials;
and other factors set forth under “Risk Factors” and “Special Note
Regarding Forward-Looking Statements” in our Form 10-K for the year
ended December 31, 2015 and, if applicable, our Quarterly
Reports on Form 10-Q and our Current Reports on Form 8-K, which
contain a discussion of a variety of factors which could cause
future outcomes to differ materially from the forward-looking
statements contained in this release. All forward-looking
statements included in this press release are expressly qualified
in their entirety by such cautionary statements. We expressly
disclaim any obligation to update, amend or clarify any
forward-looking statement to reflect events, new information or
circumstances occurring after the date of this press release except
as required by applicable law.
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version on businesswire.com: http://www.businesswire.com/news/home/20161005006347/en/
LSB Industries, Inc.:Mark Behrman, 405-235-4546Chief
Financial OfficerorInvestor Relations:The Equity Group
Inc.Fred Buonocore, 212-836-9607Kevin Towle, 212-836-9620
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