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    LXU
    Earnings call· Jun 2026(Q2 FY26)

    LSB INDUSTRIES Q2 FY26 earnings call LXU

    Jul 30, 2026 Source

    Executive summary

    LSB Industries Q2 FY26 — Strong Operational Performance and Growth Initiatives

    LSB Industries delivered a strong second quarter, marked by significant operational improvements and strategic advancements in growth initiatives. Despite planned turnaround activities impacting short-term earnings, the company achieved higher production rates and optimized its product mix. Key developments include assuming full ownership of the Eldorado carbon capture project and advancing plans for an ammonia expansion, positioning LSB for stronger financial and operational performance through the remainder of the year and into the future.

    Highlights

    5

    • Adjusted EBITDA increased by approximately 40% year-over-year to $53 million, despite planned turnaround activity.

    • Eldorado ammonia plant achieved some of its highest daily production rates since 2016, running at ~1375 tons/day post-turnaround, significantly above its 1150 tons/day nameplate capacity.

    • Successfully completed extensive turnaround at Eldorado ammonia plant on time, on budget, and injury-free.

    • Assumed full ownership of the Eldorado carbon capture and sequestration project, expecting $25-$30 million in annual earnings and cash flow when fully operational in Q1 2027.

    • Anticipate meeting or exceeding annual production targets for 2026 due to major turnaround activity being substantially complete and higher production rates.

    Concerns

    3

    • Planned turnaround activity at Eldorado and Pryor facilities impacted Q2 results by an estimated $35 million to $40 million in adjusted EBITDA.

    • Middle East conflict and Strait of Hormuz disruption continue to create significant ongoing risk, impacting product pricing and global supply.

    • European TTF natural gas prices have been above $19-$20 per mmBtu, increasing European ammonia production costs to nearly $700 per metric tonne.

    Guidance & targets

    6
    CategoryTargetConfidence
    Annual earnings and cash flow from Eldorado CCS project
    $25 million to $30 million
    high materiality
    High
    Additional annual EBITDA from specific initiatives
    $35 million
    high materiality
    Medium
    Eldorado ammonia expansion project cost (net)
    $105 million to $120 million
    high materiality
    Medium
    Eldorado ammonia expansion annual production capacity
    100,000 tons
    high materiality
    Medium
    Eldorado ammonia expansion incremental annual EBITDA
    $20 million
    high materiality
    Low
    Full-year production targets
    Meet or exceed
    medium materiality
    High

    Operational metrics

    18
    Adjusted EBITDA
    $53 millionUp approximately 40% YoY
    Q2 FY26

    Impacted by an estimated $35 million to $40 million from planned turnaround activity.

    Illustrative Adjusted EBITDA (excluding turnaround impact)
    $90 million
    Q2 FY26

    Calculated by excluding the estimated $35 million to $40 million impact from turnarounds.

    Adjusted EBITDA (Trailing 12-month)
    $200 million
    TTM

    As of June 30, 2026.

    Cash balance
    $220 million
    Q2 FY26

    At the end of the second quarter.

    Net leverage
    1.1 times
    Q2 FY26
    Sustaining capital expenditure
    $27 million
    Q2 FY26

    Capital required to maintain operations.

    Growth-related project investment
    $13 million
    Q2 FY26

    Includes $11 million related to the acquisition and development of the carbon capture project at El Dorado.

    El Dorado ammonia plant daily production rate (post-turnaround)
    1375 tons/dayvs. 1150 tons/day nameplate capacity
    Post-turnaround

    Running in the heat of summer; expects higher in cooler weather.

    El Dorado ammonia plant production increase (post-turnaround)
    100 tons/dayvs. pre-turnaround
    Post-turnaround

    pretty significant increase from where we were pre-turnaround. We could probably see 100 tons or a little over 100 tons a day of increased production.

    Tampa Ammonia Price Index
    $635Moderated from first-half highs
    August
    NOLA UAN trading price
    $300
    Current
    US Natural gas costs
    $3.20
    Q3 FY26 (thus far)

    Average thus far in the third quarter.

    European TTF natural gas prices
    $19-$20
    Recent days

    European TTF natural gas prices have been above $19 and even $20 per mmBtu in recent days

    European ammonia production costs
    $700
    Recent

    Due to increased European natural gas prices.

    Planted corn acres (USDA projection)
    95 million
    2026-27 marketing season

    USDA projection.

    Global ending stocks for corn (USDA forecast)
    Lowest level in over a decade
    2027

    USDA reduced forecast in July.

    CO2 capture volume (from 100k tons ammonia expansion)
    120,000 tons
    Annual

    Derived from 100,000 tons of additional ammonia production, assuming 2 tons of CO2 per ton of ammonia and 60% capture rate.

    45Q tax credit (from 100k tons ammonia expansion)
    $6.5 million to $7.5 million
    Annual

    Based on 120,000 tons of captured CO2 at $185/ton net.

    Industry KPIs

    1
    MetricValueDetails
    Productivity cost savings program$35 millionUSD

    Deals & partnerships

    1
    Lapis Carbon SolutionsAssumed full ownership of the Eldorado carbon capture and sequestration project.

    Milestone-based structure aligns capital deployment with project advancement, limiting upfront capital exposure. Provides enhanced commercial flexibility.

    Capital programs

    2
    Eldorado Carbon Capture and Sequestration Projectunderway
    Period spend: $11 million

    Benefit: $25 million to $30 million annual earnings and cash flow

    $11 million invested in Q2 FY26 related to acquisition and development. Expected to begin operations in Q1 2027.

    Eldorado Ammonia Expansionfeasibility study advancing$135 million to $150 million (gross); $105 million to $120 million (net)
    Funding: Existing cash on balance sheet; USDA grant (approx. 20% of gross cost)

    Benefit: 100,000 tons of annual ammonia production capacity; $20 million incremental annual EBITDA

    Final investment decision targeted for Q2 2027. Capital cost per ton added is significantly below current new build costs.

    Risks & headwinds

    4
    Middle East conflict and Strait of Hormuz disruptionOngoing

    Shipping within the Strait represents about 20% of global ammonia seaborne trade, 30% of global urea trade, and 45% of global sulfur trade. European TTF natural gas prices above $19-$20 per mmBtu, increasing European ammonia production costs to nearly $700 per metric tonne.

    Mitigation: Leveraging flexibility in production assets to optimize product mix; US structural production cost advantage due to cheaper domestic natural gas.

    Elevated sulfur costsCurrent

    Caused phosphate producers to curtail production.

    Mitigation: Resulting decline in ammonia demand balances some of the loss of supply from Strait of Hormuz.

    Global supply uncertainty and production restartsNear to medium term

    Unclear timing and pace of potential production restarts from Russian plants damaged by Ukrainian drone attacks and Middle Eastern producers impacted by Iranian conflict.

    Mitigation: Market supported by relatively tight supply environment and high non-US natural gas and energy prices.

    Inflationary pressuresOngoing

    SG&A costs trending higher, with about half expected to continue due to non-cash items like long-term incentive and stock-based compensation.

    Mitigation: Expectation that per-ton controllable costs will trend lower due to higher production volumes, offsetting some inflationary pressures.

    What to watch in Q3 FY26

    5

    Eldorado CCS project operations start

    Q1 2027
    CurrentUnder development, Q2 FY26 investment of $11M
    TargetBeginning operations

    Why it matters

    This project is expected to generate $25-$30 million in annual earnings and cash flow, significantly impacting future profitability.

    We continue to work closely with senior officials from the EPA's Region 6 Office with the expectations of beginning operations in Q1 2027.

    Q&A highlights

    7

    Will LSB add logistics and distribution to sell the extra 100,000 tons of ammonia from the El Dorado expansion to maximize price?

    The quoted project cost includes some infrastructure build-out. Management plans to determine the best marketing strategy over the next three years to maximize margin, noting they currently sell 200,000 tons of merchant ammonia.

    “Yes, actually, inside the cost that I quoted is some infrastructure build out to support that expansion. ... I think what we'd like to do is figure out how do we get the best margin that we can on those 100,000 tons.”

    asked by Andrew Wong · answered by Unknown Speaker

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Improvements and Turnarounds

    LSB Industries successfully completed extensive and complex turnarounds at its Eldorado ammonia plant and site infrastructure, as well as pulling forward scheduled work at the Pryor facility. The Eldorado turnaround was completed on time, on budget, and injury-free, leading to significantly improved daily production rates of approximately 1375 tons/day, well above its 1150 tons/day nameplate capacity. These investments are expected to drive stronger, more reliable performance and higher annual production.

    02

    Strategic Carbon Capture and Sequestration Project

    The company announced assuming full ownership of its Eldorado carbon capture and sequestration (CCS) project from Lapis Carbon Solutions. This milestone-based agreement limits upfront capital exposure while providing enhanced commercial flexibility. LSB expects the project to begin operations in Q1 2027, generating $25 million to $30 million in annual earnings and cash flow, and is actively pursuing low-carbon product supply opportunities and evaluating environmental attribute sales.

    03

    Commercial Environment and Market Dynamics

    The Middle East conflict and its impact on shipping through the Strait of Hormuz continue to create significant ongoing risk and volatility in global ammonia, urea, and sulfur markets. Despite a recent reduction in the Tampa Ammonia Price Index, global natural gas prices, particularly in Europe (above $19-$20 per mmBtu), are driving up production costs for non-US producers, creating a significant structural cost advantage for US ammonia producers. Demand for ammonium nitrate in industrial markets and urea ammonium nitrate (UAN) remains strong.

    04

    Fertilizer Market Outlook and Demand Drivers

    The fertilizer market backdrop remains constructive due to ongoing supply uncertainty, trade disruptions, and macro volatility🌐. Global corn demand continues to outpace supply, with USDA projecting over 95 million planted corn acres for 2026-27 and reducing 2027 global ending stocks to a decade low. This is expected to incentivize US farmers to increase planted acres, driving strong nitrogen demand into 2027. The company anticipates favorable product pricing with potential for a Q4 rebound.

    05

    Financial Performance and Capital Allocation

    For Q2 FY26, LSB reported adjusted EBITDA of $53 million, up 40% year-over-year, despite a $35 million to $40 million impact from planned turnarounds. The company generated $200 million of adjusted EBITDA on a trailing 12-month basis and ended the quarter with $220 million in cash and net leverage at 1.1 times. Operating cash flow was $59 million, with free cash flow of $32 million after sustaining capital. The company continues to evaluate expansion projects and aims for an additional $35 million in annual EBITDA by the end of 2027.

    06

    Eldorado Ammonia Expansion Project

    LSB is advancing the feasibility study for a potential ammonia expansion at its Eldorado facility, targeting a final investment decision in Q2 2027 and completion alongside the 2029 turnaround. The project, with a net cost of $105 million to $120 million (after a USDA grant), is expected to add 100,000 tons of annual ammonia production capacity and generate approximately $20 million in incremental annual EBITDA. This expansion is projected to be funded with existing cash and offers a capital cost per ton significantly below new build costs.

    AI-generated summary of the company’s earnings call. Not investment advice.