LXU: It’s All About How Long Pricing Can Remain Strong

Analysts: JP Geygan, Rob McGuire

Target Price: $10.15

Publication Date: May 11, 2021

It’s All About How Long Pricing Can Remain Strong

  • FQ1 2021 revenues came in at $98.1 million, lower than our estimate of $108.2 million, primarily reflecting lower volumes caused by the “February Freeze” and lower price realization than expected.
  • FQ1 2021 adjusted EBITDA came in at $17.3 million, versus our estimate of $28.0 million. We reduce our 2021 EBITDA estimates from $120.0 million to $107.6 million to reflect foregone production in FQ1 2021 and lower FQ1 2021 price realization, partially offset by expectations for improved prices realization in FQ2 2021 versus our previous estimates.
  • Now that pricing has returned to and exceeded normalized historical levels, LSB has a more immediate path to refinance the balance sheet. By waiting until FQ2 2021 earnings are announced to refinance, LSB will provide investors with good visibility for both pricing and adjusted EBITDA in the second half of FY 2021.
  • LSB took the next step towards the long-term plan to produce blue-green ammonia by hiring Hector Miravete as Director of Clean Energy.

LSB Industries, Inc. Research Note – May 11, 2021