LXU

• Turnaround Execution

  • Successfully completed a full, complex on-time, on-budget, injury-free turnaround of the El Dorado ammonia plant and site infrastructure in Q2 2026. Post-turnaround, El Dorado has achieved some of its highest daily production rates since 2016 startup.
  • Strategically pulled forward planned Pryor facility turnaround work from Q3 2026 to Q2 2026, shifting a portion of production and earnings impacts to Q2 and reducing expected Q3 2026 downtime. Pryor restarted in late Q2 and is ramping up to full production, with improved long-term reliability expected.

• CCS Project Update

  • LSB acquired full ownership of the El Dorado CCS project from joint venture partner Lapis Carbon Solutions. Investment is staged to key project milestones, limiting upfront capital exposure.
  • The project is on track to begin operations in Q1 2027. When fully operational, it is expected to generate $25-30 million in annual net earnings and cash flow after operating costs. LSB is pursuing low-carbon product premium opportunities and evaluating sales of generated environmental attributes.

• Growth Strategy

  • A feasibility study for a 100,000 ton per year ammonia capacity expansion at El Dorado is ongoing, with a final investment decision targeted for Q2 2027 and project completion aligned with the 2029 El Dorado planned turnaround.
  • Total projected expansion cost is $135-150 million; a USDA grant will cover 20% of costs, bringing net expected cost to $108-120 million, to be funded with existing cash. The expansion is expected to add ~$20 million in incremental annual EBITDA, with a per-ton capital cost far below current new build averages.
  • Management has laid out a path to an additional $35 million in annual EBITDA from production targets, process efficiencies, and cost optimization, with most of this expected to be realized by end-2026 and the remainder by end-2027.

• Commercial Performance

  • LSB leveraged production asset flexibility to optimize product mix during Q2, maximizing ammonium nitrate (AN) sales to customers with disrupted supply and capturing elevated spot AN prices.

• Full-year 2026: LSB expects to meet or exceed annual production targets, with a strong second half of 2026 driven by higher production rates after major turnarounds are complete.
• Ammonia pricing: Upward pricing pressure is expected through the duration of Strait of Hormuz disruption, supporting strong margins for U.S. producers that benefit from a structural cost advantage over global peers. There is strong potential for further price rebounds in Q4 2026.
• UAN demand: Strong demand is expected in H2 2026 ahead of the 2027 spring planting season, with current pricing already seeing a favorable rebound from mid-year lows.
• Long-term nitrogen demand: Lower global corn ending stocks (projected to hit a 10-year low) are expected to incentivize higher U.S. corn planted acres in 2027, driving strong nitrogen demand next year.
• CCS project: Operations are projected to begin in Q1 2027, with annual net earnings/cash flow of $25-30 million once fully operational.
• El Dorado ammonia expansion: Final investment decision targeted Q2 2027, project completion targeted 2029, with 100,000 tons of annual incremental capacity adding ~$20 million in annual incremental EBITDA.

No separate product segment financial results with absolute values and revenue contribution percentages were broken out in the transcript. Aggregate second quarter 2026 adjusted EBITDA was $53 million, a 40% increase from $38 million in Q2 2025. Planned turnaround activities at the El Dorado and Pryor facilities reduced adjusted EBITDA by an estimated $35 million to $40 million in the quarter; excluding this impact, illustrative adjusted EBITDA would have been approximately $90 million. Trailing 12-month adjusted EBITDA as of June 30, 2026 was $200 million. Operating cash flow for Q2 2026 was $59 million, sustaining capital expenditure was $27 million, resulting in $32 million of free cash flow. $13 million of additional growth capital was invested, $11 million of which went to the El Dorado carbon capture and sequestration (CCS) project. End-of-quarter cash was approximately $220 million, with a net leverage ratio of 1.1x.

• The ongoing conflict in the Middle East has created sustained, significant instability that disrupts global shipping through the Strait of Hormuz (which carries 20% of global seaborne ammonia trade, 30% of global urea trade, and 45% of global sulphur trade), creating ongoing risk to product pricing and supply chains. Elevated risk premiums for Middle Eastern energy and fertilizer products may become a permanent new market reality.
• Global supply of nitrogen remains uncertain, with unclear operating status and unclear timing of production restarts for Russian facilities damaged by drone attacks and Middle Eastern producers impacted by conflict.
• European natural gas prices are elevated, and European natural gas inventories are below five-year lows ahead of the winter season due to limited LNG supply, which could further increase global natural gas price volatility. While this creates a cost advantage for LSB, it also contributes to broader macro and market volatility.
• Persistent general inflation continues to put upward pressure on operating costs, partially offsetting cost per ton savings from higher production volumes.

Q: The proposed low-cost El Dorado ammonia expansion includes supporting infrastructure, but will LSB need to add logistics/distribution capacity to capture maximum margin for the incremental output, and where will the additional ammonia be sold? / A: The quoted expansion cost already includes supporting infrastructure buildout for the project. LSB currently sells ~200,000 tons of merchant ammonia annually and has existing options to add new volumes, but will evaluate all alternatives over the next three years to maximize margins from the incremental 100,000 tons, with no final destination decided yet. Higher production volumes from the recent turnarounds will also lower per-ton controllable costs, partially offsetting ongoing inflationary pressure.

Q: Current spot nitrogen prices are below the global production cost curve even as supply remains constrained by Middle East tensions; how do you see the market shaping up for fall 2026 and spring 2027? / A: If Strait of Hormuz disruption continues, global LNG markets will face additional pressure, which will keep European natural gas and ammonia production costs elevated. This will create strong market pricing pressure as we move into higher demand periods after Q3, and management is optimistic about future pricing. LSB’s inland position delivers a premium over NOLA benchmark prices, and UAN prices have already rebounded into the $300 per ton range, with the company retaining flexibility to sell as prices appreciate through fall and next spring.

Q: What post-turnaround performance is LSB seeing at El Dorado, and what improvements are expected at Pryor? / A: El Dorado has a nameplate capacity of 1,150 tons per day and previously ran 1250-1300 tons daily consistently. Post-turnaround, it is already running 1375 tons per day in summer heat, and management targets 1400 tons per day in cooler weather, a permanent increase of over 100 tons per day above pre-turnaround levels. At Pryor, the main expected improvement is greater production reliability and consistency rather than higher peak daily rates, leading to higher full-year production volumes.

Q: What maintenance and turnaround requirements exist for the full-owned El Dorado CCS project, and what tax credit upside can be expected from the project? / A: The CCS assets have no major standalone scheduled turnarounds, only routine ongoing maintenance. Any downtime will only occur when the adjacent El Dorado ammonia plant is shut down, as CCS operation is tied to ammonia production. The project will capture ~120,000 tons of CO2 annually; after covering operating expenses, LSB expects to net ~$60 per ton in 45Q tax credits, translating to $6.5-7.5 million in annual tax benefit from the project.