LSB Industries, Inc. Q4 FY2025 earnings call

• Safety: 12 - month rolling total reportable incident rate was a record low of 0.40 incidents per 200,000 work hours, and three of four sites were injury - free in 2025.
• Operational progress: Enabled capitalizing on favorable pricing momentum, with record nitric acid and ammonium nitrate solution production. CCS project at El Dorado site was making good progress.
• Commercial: Industrial business optimized production balance, UAN pricing was up, strong ammonia sales in fall, and broader ag market dynamics supportive of nitrogen fertilizer demand.

In 2025, the company delivered significant year - over - year growth in net sales, adjusted EBITDA, and EPS. Full year 2025 adjusted EBITDA was $162 million compared to $130 million in 2024, a 25% increase. Q4 adjusted EBITDA grew 42% year - over - year from $38 million to $54 million. Nitric acid and ammonium nitrate solution production reached records in 2025. UAN pricing in Q4 averaged $320 per tonne on a NOLA basis, up 39% over Q4 2024. Ammonia prices were affected by reduced supply from the Middle East and Trinidad, and Europe's higher production costs. The industrial business was well - positioned with optimized production balance, strong demand for AN in mining and quarrying, and increased demand for nitric acid due to anti - dumping duties on MDI.

• 2026 expectations: Estimated ammonia production and sales volumes considering turnarounds. Target to get gross ammonia production to 875,000 - 880,000 tons without turnaround. Expect costs to trend down towards end of 2026. Effective tax rate expected to be ~25%, not a material cash taxpayer due to NOLs. CapEx in 2026 expected to be ~$75 million. First quarter expected strong selling prices roughly in line with Q4 2025, but gas prices impacted first quarter gas cost, and may shift production mix between UAN and AN. Ammonia sales volumes impacted by El Dorado turnaround in first quarter.
• Long - term: Focus on getting to upper quartile manufacturing with 95% capacity utilization, continuing maintenance and operating practice improvements, and capital investment. Also focus on commercial operations optimization and profit optimization through cost reduction.

Q: Just to talk about the gross ammonia production, how to think about ability to continue to lift productivity from here going forward and how it flows into remaining $35 million in production improvement initiatives?

A: Confident in path to get gross ammonia production to 875,000 - 880,000 tons without turnaround, and maybe 30 - 40% of $35 million is from higher ammonia production rates.

Q: Looking at non - gas cost assumptions for 2026, thoughts on inflation abating, cost keeping down and swing factors?

A: More efficiency in business, less maintenance costs as reliability improves, which should continue and be part of $35 million expense reduction.

Q: Thoughts on AN market responding to supply disruption from CF at Yazoo City?

A: Market is tight, players flexing production, optimizing to make more AN, pricing above typical contract rates, market tight through end of year, and AN market buoyant with demand from gold and copper miners.

Q: Thoughts on potential tailwind in demand from rising US coal production?

A: Coal production holding steady, but support for coal - fired power stations providing solid demand backdrop for AN.

Q: Demand evolution in 2027 for fertilizers, any demand destruction from elevated pricing?

A: Market tight, pricing reflecting that, possibly some demand destruction around edges, but corn acres forecast solid, supply and demand balance tight through end of year, global dynamics supportive.

Q: Main strategic priorities for 2026?

A: Continue momentum on manufacturing to be upper quartile manufacturer, aiming for 95% capacity utilization, improving maintenance and operating practices, capital investment, commercial operations optimization, and profit optimization through cost reduction. Also focus on growth, organic or through assets/companies.

Q: Willingness - to - pay for blue ammonia, customers willing to pay premium?

A: Market slow to pay premium, need to find right customers, niche opportunities, domestically large industrial business gives advantage, market may develop to pay premium over time but not as fast as expected.

Q: How much sales volume was under contract exiting in 2025 for AN, and if shift production to AN this year, will lock up under contract?

A: Base AM business under contract, small amount spot, tweaking product balance to produce more AN under spot, with conversations on longer - term arrangements.

Q: When expect Cherokee to take place in 2027 and ability to build inventory and continue downstream production during April turnaround at El Dorado?

A: Cherokee turnaround slated for third quarter 2027. Plan to build ammonia in first quarter for El Dorado turnaround to run most downstream plants through it.

Q: U.S. import volumes or buying patterns shifted since fertilizer tariffs lifted in fourth quarter?

A: Too early to tell, market short, some import tons to correct, but imports have always come in, not necessarily more from different locations due to tariffs lifted.

Q: View on farmer economics and impact on demand?

A: Farmer under stress, U.S. government payment package, need to create more demand for corn and soybeans, like through permanently going to E15 to increase ethanol demand for corn.