LSB Industries Inc. (NYSE:LXU) Q3 2018 Earnings Conference Call Transcript
Oct 25, 2018 • 10:00 am ET
Greetings and welcome to LSB Industries' Third Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) And as a reminder, this conference is being recorded.
I'd now like to turn the conference over to Kristy Carver, VP, and Treasurer. Thank you. Please go ahead.
(Forward-Looking Cautionary Statements) As this call will include references to non-GAAP results, please reference the press release in the Investors section of our website, lsbindustries.com, for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results.
At this time, I would like to go ahead and turn the call over to Dan for opening remarks.
We're glad that you could join call this morning and appreciate your interest in LSB Industries. Joining me on the call today are John Diesch, our EVP of Manufacturing, and Mark Behrman, our CFO.
Today we'll discuss our 2018 third quarter results and provide you with our outlook for the fourth quarter and will also share our initial thoughts on 2019. I'll begin with an overview of the third quarter. And then John will discuss our plant operations, followed by Mark, who will go into detail about our financial performance and capitalization. Then I'll return to provide you with our current views of markets and provide some commentary on our fourth quarter and 2019 expectations, after which we'll take your questions.
Our revenues for the third quarter of 2018 were $79.8 million, an 8% increase from the same quarter last year after adjusting for the adoption of ASC 606 accounting standards along with the sale of the machine tool business in 2017 third quarter, despite the lost production and sales from the turnarounds during the quarter. As a reminder, the calendar third quarter is typically our seasonally weakest period as a result of the lower out of season demand for our agricultural products that occurs between the spring and fall application seasons.
Our third quarter adjusted EBITDA was $8.7 million, which excludes the costs related to turnarounds performed at our El Dorado and Cherokee facilities. If we also exclude the lost fixed cost absorption and lost sales resulting from the turnarounds, our third quarter adjusted EBITDA would have been materially higher. This compares to $3.5 million of adjusted EBITDA in the third quarter of last year when we had minimal turnaround activity.
The substantial year-over-year increase can be attributed to a material improvement in pricing for agriculture ammonia, UAN, and high-density ammonium nitrate as well as stronger pricing for industrial ammonia coupled with lower natural gas prices. Mark will provide you with more detail on our financial results later in the call. We were generally pleased with the operating performance of our facilities during the third quarter, with ammonia plant on-stream rates at or near our targeted levels for all three facilities. This solid performance reflects the leadership changes and the reliability investments we've made, coupled with the initial benefits of the maintenance management