LSB Industries Inc. (NYSE:LXU) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 10:00 am ET

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LSB Industries Inc. (NYSE:LXU) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. Thank you for standing by. Welcome to the LSB Industries 2Q '20 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] Please note, this conference is being recorded.

I will now turn the conference over to your host, Kristy Carver, Senior Vice President and Treasurer for LSB Industries. Thank you. You may begin.

Executive
Kristy Carver

Thank you, David, and good morning to everyone. Joining me on call today 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. I'd like to once again begin by thanking all of our employees for their efforts in enabling us to continue to run our business in the midst of the pandemic crisis. Their hard work and commitment enabled us to continue to deliver an improved safety performance and to sustain our operations with a high level of efficiency during the second quarter.

We continue to focus on improving our safety performance, which currently stands at a 1.7 recordable injury rate for the last 12 months. I'm extremely proud of our team for this accomplishment and their focus on continuous improvement in both safety and operating efficiency that's come to define LSB's corporate culture over the last several years. While the work never stops to reach our safety goal of zero and our targeted long-term ammonia onstream rates of 96%, we are well on our way.

Slide 3 summarizes the main takeaways for our second quarter. In short, while pricing on the ag side of our business was not cooperative, and as anticipated, demand for our industrial and mining products weakened due to the impacts of COVID-19, we did a good job of focusing on the aspects of our business within our control, particularly with respect to the performance of our manufacturing facilities, rationalizing our operating costs and maximizing our product balance.

In fact, had pricing been in line with the 2019 second quarter, which wasn't robust itself, and industrial demand been consistent with the pre-pandemic levels of just over four months ago, it would have resulted in an adjusted EBITDA that was approximately 10% higher than the second quarter of last year. This demonstrates the improvements that we are making in the business that will allow