LSB Industries (NYSE: LXU) reported Q4 EPS of ($0.75), versus ($0.26) reported last year. Revenue for the quarter came in at $94.73 million versus the consensus estimate of $79.78 million.

• Net sales of $94.7 million for the fourth quarter of 2018, compared to adjusted net sales(1) of $72.3 million for the fourth quarter of 2017 ($88.9 million was originally reported for the fourth quarter of 2017, which excludes $16.6 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).
• Net loss from continuing operations of $13.0 million for the fourth quarter of 2018, compared to net loss of continuing operations of $0.2 million for the fourth quarter of 2017.
• Adjusted EBITDA(1) of $23.3 million for the fourth quarter of 2018, compared to $1.0 million for the fourth quarter of 2017 ($0.3 million was originally reported for the fourth quarter of 2017 including $0.6 million of consulting costs and $0.1 million of turnaround).
  

“Our fourth quarter results were consistent with our expectations headed into the period and improved significantly relative to the 2017 fourth quarter,” stated Mark Behrman, LSB’s President and CEO. “Net sales and adjusted EBITDA increased as compared to last year driven by stronger pricing across our agricultural and industrial products and stronger overall sales volumes, partially offset by the impact of a spike in natural gas prices that occurred in the latter half of the quarter that impacted us by approximately $5 million.”

“We were pleased with the operating rates of all three of our facilities. Cherokee’s ammonia plant ran at a 93% on-stream rate for the quarter and 94% for the full year. Pryor’s ammonia plant delivered a 97% on-stream rate for the quarter and for the second half of 2018, and for the full year ran at 89%. This was Pryor’s best full year performance since LSB brought the facility online in 2010, which we view as an indication that the leadership changes and reliability investments we’ve made, coupled with the maintenance management systems, procedures, and preventative maintenance programs we’ve been implementing are yielding positive results. While we anticipate that Pryor may have periods of unscheduled downtime during 2019 as we continue to take actions to develop its long-term reliability, we expect these periods of downtime to be of less magnitude and frequency going forward. We believe we are on the right path towards achieving Pryor’s potential to generate a consistent mid-90s on-stream rate for its ammonia plant beginning in 2020. El Dorado’s ammonia plant also performed well, operating at a 98% on-stream rate in the fourth quarter and 88% for the full year, also showing continued operating improvement as compared to 2017.”

Mr. Behrman continued, “We realized year-over-year pricing improvement for all of our major agricultural product categories during the fourth quarter, with net pricing per ton for agricultural ammonia, UAN, and HDAN rising 47%, 45%, and 18% respectively, reflecting the continued absorption of new domestic production capacity along with reduced volumes of low-priced product being imported into the U.S.”

“Looking ahead to 2019, we expect continued year-over-year improvement in product pricing, albeit to a lesser degree than what we experienced in 2018. During the first two months of 2019, U.S. nitrogen prices have been trending downward due to weak demand for ammonia following a fall application season that was hampered by a delayed harvest and very wet weather across the corn belt. As a result, U.S. inventories of ammonia and related products are now quite high, leading to a price decline that has continued into the early part of 2019 as heavy snow and extreme cold temperatures have delayed pre-spring applications. Despite these weather-related headwinds, we expect that a slowing of U.S. capacity expansions that we experienced over the past two years, coupled with global demand for corn that continues to outpace supply, along with what we believe will be a heavy spring fertilizer application season, will lead to solid fundamentals for the U.S. nitrogen market for 2019 as a whole. That is supported by sales prices of product sold in the first quarter of 2019 and sales prices of forward sales that are above those in the first quarter of 2018. Selling prices and volumes for our industrial products during the 2018 fourth quarter were also higher than the prior year’s fourth quarter, reflecting the continued strength of the U.S. economy and our increased sales efforts. Sales prices for our mining products were flat in the fourth quarter of 2018 as compared to the fourth quarter of 2017, however, volumes improved as a result of our efforts to expand our customer relationships and strengthen our marketing activities in this sector.”

“Our overall outlook for 2019 calls for continued year-over-year increases in our net sales and adjusted EBITDA,” Mr. Behrman concluded. “While the favorable pricing trends that we experienced in 2018 have slowed, we still expect to see increased product pricing, further improvement in the operations of our facilities, and the key benefits of our sales and marketing efforts, leading to higher sales volumes and stronger profitability and cash flow for the year.”

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