LSB Industries Inc. (NYSE:LXU) Q3 2019 Earnings Conference Call - Final Transcript

Oct 29, 2019 • 10:00 am ET

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LSB Industries Inc. (NYSE:LXU) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings and welcome to LSB Industries Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to turn the conference over to your host, Kristy Carver, Senior Vice President and Treasurer. Thank you. You may begin.

Executive
Kristy Carver

Thank you, Rob, and good morning, everyone. Joining me today on the call are Mark Behrman, our Chief Executive Officer; and Cheryl Maguire, our Chief Financial Officer. Please note that today's call will include forward-looking statements, and because these statements are based on the company's current intent, expectations and projections, they are not guarantees of future performance, and a variety of factors could cause actual results to differ materially. 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'd like to go ahead and turn the call over to Mark for opening remarks.

Executive
Mark T. Behrman

Thank you, Kristy, and good morning everyone. We're glad that you could participate in our call this morning and appreciate your interest in LSB Industries. Our financial results were in line with our expectations for the third quarter, which as a reminder, is typically our seasonally weakest quarter, given the fertilizer application season slows down after the second quarter, once all crop planting occurs.

Fertilizer manufacturers generally try to scheduled turnarounds during a seasonally slower time of the year and we follow suit. During the third quarter, as previously announced, we performed scheduled turnarounds on two of our facilities that we expect to yield meaningful pay-offs in the years to come. More on that in a moment.

Despite lower ammonia prices resulting from the weather issues we've had throughout the Midwest, our third quarter adjusted EBITDA increased from the same period last year, aided by higher selling prices for UAN and HDAN, higher production and lower natural gas prices.

During the third quarter, we began turnarounds at our El Dorado and Pryor facilities. El Dorado was successfully completed in September, and Pryor has completed all of its maintenance work and is in start-up. First, congratulations to both the El Dorado and Pryor teams for getting the work done safely. The safety of our employees and our contractors remains our number one priority. The turnaround at Pryor was the most extensive turnaround at that facility in our history. The good news is, we didn't have any major finds or discoveries that would have taken us out of production for an extended period of time. We did, however, find some unplanned repair work that needed to be done, since the goal of this turnaround was to ensure that we could materially improve the reliability of all the plants at this facility.

What's most important, is that we believe we have addressed the issues that we identified in support of Pryor's long-term reliability. The extra time we took to fix these issues, combined with