LSB INDUSTRIES, INC. Q1 FY2025 earnings call

• Global economy has uncertainties due to U.S. tariffs, but no big impact anticipated yet. - First quarter sales volumes improved 4% q-o-q, driven by ammonium nitrate and UAN. - Zero recordable injuries across the organization. - Progress with decarbonization project at El Dorado facility. - Achieved precertification status under The Fertilizer Institute's Verified Ammonia Carbon Intensity Program. - Partner Lapis Carbon Solutions completing drilling of stratigraphic injection well for El Dorado project. - Paused Houston Ship Channel project due to cost uncertainties and slower low-carbon ammonia demand ramp-up.

Overall sales volumes improved 4% quarter-over-quarter, driven by solid improvement in sales volumes for ammonium nitrate and UAN. Industrial products demand remains robust. UAN prices continue to increase significantly with current Nola UAN price at $350 per ton, 73% higher than the low price of full 2024. Urea prices have also strengthened considerably with Nola prices now above $500 per ton. Tampa Ammonia price has declined since the start of the year but remains attractive due to globally tight supply and demand balance. The spring 2025 planting season is shaping up strongly with significant increase in planted corn acres expected, driving strong fertilizer demand and pricing.

• Second quarter outlook: Tampa ammonia price at $435 a ton, Nola UAN pricing high, expect to capitalize on pricing strength. Natural gas costs trended downward. Expect meaningful increases in UAN and AN volumes, lower ammonia sales volumes. - Pushed El Dorado site turnaround into first half of 2026 due to equipment delivery delays, increased ammonia production outlook for 2025 by ~30,000 tons, lowered full year turnaround expense by ~$15 million.

• Uncertainty from U.S. tariffs on business, planned spending, and potential capital projects. - Impact of retaliatory tariffs from other countries on market exposure. - Pricing pressure from suppliers for imported parts, components, and equipment. - Uncertainty in global economic environment affecting project costs and demand for low-carbon ammonia.

Q: Could you give more color on LXU's realized pricing setup in the second quarter given diverging trends in UAN and ammonia?

A: We're well positioned to take advantage of UAN price increases, not fully sold out deliberately through end of second quarter to capitalize on pricing.

Q: Thoughts on updated capital allocation priorities after pausing Houston Ship Channel project?

A: Focus on improving reliability and EH&S of existing facilities (~$60 million to $65 million capital a year), then look at other projects, stock buyback, and debt reduction.

Q: Thoughts on deregulation's impact on permitting?

A: Minimal impact except with EPA, where more activity and conversations seen on El Dorado project.

Q: Color on pent-up demand for UAN related to higher corn acreages?

A: Higher corn acres forecast and insufficient imports into country are driving pent-up demand and straining logistics, rail, etc.

Q: Talk about potential upgrade capacity projects' CapEx and margin benefits?

A: Too early to talk about actual cost before engineering studies, but have capabilities to expand urea, ammonia, nitric acid, or AN capacity with potential margin benefits.

Q: Potential for revisiting Houston Ship Channel project?

A: Open to revisiting if economics make sense, but currently not comfortable due to capital cost uncertainty and buyer unwillingness to transact at supporting returns.

Q: View on China halting U.S. LNG purchases and impact on Europe's ammonia or LNG import decision?

A: European ammonia producers evaluate make vs buy based on natural gas purchases and pricing; similar for LNG.

Q: Risk to El Dorado carbon project from equipment delays?

A: No risk as partner Lapis has discussions on equipment delivery and on track to meet end of 2026 timeline.

Q: Assessment on cost-plus contracts targeting 35% by end of year and margin impact?

A: Aim for 50-50 mix over medium term, cost-plus contracts provide stability and downside protection, margins should be relatively similar over time but lose on huge fertilizer price spikes.