LSB Industries (NYSE: LXU) reported Q2 EPS of ($1.27), versus $0.15 reported last year. Revenue for the quarter came in at $103.2 million versus the consensus estimate of $147.46 million.

Second Quarter Highlights

• Net sales of $103.2 million for the second quarter of 2018, compared to adjusted net sales(1) of $105.2 million for the second quarter of 2017 ($122.9 million originally reported) which excludes $15.6 million for the comparative impact to revenue from new revenue recognition standards adopted in 2018 primarily related to the Baytown facility, that are not reflected in prior year financials, and $2.1 million from businesses sold in the second and third quarters of 2017
• Net loss of $27.5 million for the second quarter of 2018, compared to a loss of $7.0 million for the second quarter of 2017
• Adjusted EBITDA(1) of $17.8 million for the second quarter of 2018, compared to $21.7 million ($22.2 million originally reported) excluding $0.5 million from businesses sold in 2017

“Our second quarter performance was disappointing relative to our expectations headed into the period,” stated Daniel Greenwell, LSB’s President and CEO. “As we previously announced, our results were impacted by unplanned downtime at our El Dorado facility and, to a lesser extent, our Pryor facility. As a result, we had lower production volume of both our agricultural and industrial products resulting in reduced sales, lower fixed cost absorption and additional costs, which offset a material year-over-year improvement in pricing for our agricultural products along with lower natural gas feedstock costs and stronger sales volumes of our industrial and mining products.”

Mr. Greenwell continued, “We recognized year-over-year pricing improvement for all of our major agricultural product categories during the second quarter, with net pricing per ton for UAN, HDAN, and agricultural ammonia, rising 14%, 13%, and 10% respectively, reflecting a more favorable alignment of demand with market capacity for these products relative to last year. While the third quarter is typically our seasonally weakest quarter for agricultural products due to the conclusion of the spring fertilizer season, based on third quarter presales of UAN and ammonia, we expect a continued trend towards stronger pricing relative to 2017 for the balance of this year. Pricing for our industrial products was lower than the prior year’s second quarter as a result of the lower Tampa ammonia pricing quarter over quarter which averaged $265 a metric ton for the second quarter of 2018, as compared to $295 a metric ton for the second quarter of 2017. Our industrial ammonia sales volumes declined due to the aforementioned downtime at El Dorado, however, our nitric acid and other industrial products volumes increased 35% and 15% respectively driven by the continued strength of the U.S. economy. Favorable trends in our mining products business also continued, with our mining product volumes increasing 20% as compared to the second quarter of 2017 as we continue to gain momentum in these markets.”

“On the operations front, Cherokee’s ammonia plant once again ran at a 100% on-stream rate for the quarter, which was the sixth out of the last seven quarters of running at this level. After delivering a 100% on-stream rate in the first quarter, El Dorado’s ammonia plant ran at a 62% on-stream rate during the second quarter after a power outage resulted in tube failures in the ammonia plant’s boiler. While this disruption was an impediment to what would have otherwise been a very good quarter, it did provide us with the opportunity to pull forward maintenance work previously planned for the facility’s September 2018 Turnaround. As a result, we expect increased production volume and lower Turnaround expense at El Dorado in the third quarter. Pryor’s ammonia plant ran at a 65% on-stream rate for the second quarter, which included the impact of downtime to repair leaks to its waste heat boiler. In the second half of 2018, we expect on-stream rates to average approximately 94% across all facilities.”

For earnings history and earnings-related data on LSB Industries (LXU) click here.