LSB Industries (NYSE: LXU) reported Q3 EPS of ($1.22), versus $0.00 reported last year. Revenue for the quarter came in at $79.8 million versus the consensus estimate of $107.31 million.

“We generated improved results relative to last year in our seasonally weakest third quarter,” stated Daniel Greenwell, LSB’s President and CEO. “Net sales and adjusted EBITDA increased as a result of stronger pricing across our agricultural and industrial products. Excluding the costs related to turnarounds performed at two of our facilities, third quarter adjusted EBITDA was $8.7 million, and if we account for the lost absorption and lost sales related to these turnarounds, our adjusted EBITDA would have been significantly higher versus the same period last year when we did not perform any turnaround activities.

“All three of our facilities operated well during the period. Cherokee’s ammonia plant ran at a 97% on-stream rate for the quarter after completing a turnaround at the end of August. With the completion of these maintenance activities, Cherokee will not need to undergo another turnaround until the third quarter of 2021, which we expect to enhance our financial performance in the interim years. El Dorado also completed a turnaround during the third quarter, after which its ammonia plant operated at an 89% on-stream rate. This was below our target mid-90% operating rate for El Dorado as we elected to take the ammonia plant down for a few days after the turnaround was completed to upgrade an air compressor steam turbine rotor that we believe will enhance performance over the longer term. We are planning a short turnaround at El Dorado in 2019 and then will not undergo another turnaround until 2022. Lastly, Pryor’s ammonia plant ran at a 98% on-stream rate during the third quarter, which reflects the positive impacts of the leadership changes and reliability investments we’ve made coupled with the initial benefits of the maintenance management systems, procedures, and preventative maintenance programs we’ve been implementing.”

Mr. Greenwell continued, “We recognized year-over-year pricing improvement for all of our major agricultural product categories during the third quarter, with net pricing per ton for agricultural ammonia, UAN, and HDAN rising 42%, 26%, and 15% respectively, reflecting a combination of factors including the continued absorption of domestic production capacity that came online in the middle of 2017 and reduced volumes of lower priced product entering the U.S. market from foreign producers, particularly China. We expect a continued trend towards stronger pricing relative to 2017 in the fourth quarter of 2018 and into the Spring of 2019. Selling prices for our industrial products also increased compared to the prior year’s third quarter reflecting a substantial year-over-year increase in the Tampa ammonia pricing along with healthy demand driven by the robust U.S. economy. Sales volumes and prices for our mining products were modestly lower this third quarter compared to the third quarter of 2017, however, we have seen a pickup in the fourth quarter of 2018 which we expect to persist for the remainder of the quarter.”

Mr. Greenwell concluded, “Looking forward to the fourth quarter, we anticipate continued higher overall pricing for the products we sell relative to 2017, and an average ammonia on-stream rate for all of our facilities of approximately 94%. As a result, we expect to generate adjusted EBITDA in the fourth quarter similar to the first quarter of 2018 which would be a significant increase as compared to the fourth quarter of last year. Looking out towards 2019, we believe it should be a year of substantial year-over-year performance improvement driven by ongoing investment in the reliability of our facilities as we continue to implement enhanced operating and maintenance processes and procedures at our facilities, coupled with stable market demand and pricing conditions.”

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