Investors interested in Chemical - Diversified stocks are likely familiar with LSB (LXU) and Air Liquide (AIQUY) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work t ...

Core Insights - LSB (LXU) reported quarterly earnings of $0.07 per share, exceeding the Zacks Consensus Estimate of a loss of $0.01 per share, and showing improvement from a loss of $0.03 per share a year ago, resulting in an earnings surprise of 800% [1] - The company achieved revenues of $134.91 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 23.62% and showing a slight increase from $132.61 million in the same quarter last year [2] - LSB has outperformed the S&P 500, gaining approximately 3.2% since the beginning of the year compared to the S&P 500's gain of 1.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $137 million, and for the current fiscal year, it is $0.41 on revenues of $525.92 million [7] - The estimate revisions trend for LSB is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Chemical - Diversified industry, to which LSB belongs, is currently ranked in the bottom 12% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Koppers (KOP), another company in the same industry, is expected to report quarterly earnings of $0.91 per share, reflecting a year-over-year increase of 35.8%, with revenues anticipated to be $497 million, down 3.2% from the previous year [9][10]

Core Viewpoint - Investors in the Diversified Operations sector may find LSB (LXU) more attractive than ITT (ITT) based on valuation metrics and earnings outlook [1] Valuation Metrics - LXU has a forward P/E ratio of 17.13, while ITT's forward P/E is 23.44 [5] - LXU's PEG ratio is 0.80, indicating a more favorable valuation compared to ITT's PEG ratio of 1.82 [5] - LXU's P/B ratio stands at 1.22, significantly lower than ITT's P/B ratio of 4.49, suggesting LXU is undervalued relative to its book value [6] Earnings Outlook - LXU is currently experiencing an improving earnings outlook, which is reflected in its Zacks Rank of 2 (Buy), compared to ITT's Zacks Rank of 3 (Hold) [3][7] - The positive revisions to LXU's earnings estimates indicate a stronger potential for value investors [3]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Lsb Industries (LXU) as a strong value stock based on various financial metrics [2][3][7] Company Metrics - Lsb Industries (LXU) has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [3] - The PEG ratio for LXU is 0.79, which is lower than the industry average of 0.85, suggesting it may be undervalued [4] - LXU's P/S ratio stands at 1.17, compared to the industry's average of 1.25, further indicating its potential undervaluation [5] - The P/CF ratio for LXU is 10.03, significantly lower than the industry average of 13.93, reinforcing the notion of LXU being undervalued based on cash flow [6] - Over the past 52 weeks, LXU's P/CF has fluctuated between 5.52 and 11.15, with a median of 7.33, showcasing its cash flow stability [6] Investment Outlook - The combination of LXU's strong earnings outlook and favorable valuation metrics positions it as an impressive value stock currently [7]

Investors interested in stocks from the Diversified Operations sector have probably already heard of LSB (LXU) and Honeywell International Inc. (HON) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy th ...

Core Viewpoint - The Zacks Rank system and Style Scores system are utilized to identify strong stocks, with a focus on value investing as a preferred strategy in various market conditions [1][2]. Group 1: Company Overview - Lsb Industries (LXU) is currently attracting investor attention, holding a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential in the value investing space [2]. - LXU's P/B ratio is 1.31, which is significantly lower than its industry's average P/B of 3.83, suggesting that the stock may be undervalued [3]. - The stock's P/S ratio stands at 1.26, which is comparable to the industry's average P/S of 1.3, indicating a solid performance relative to peers [4]. Group 2: Valuation Metrics - LXU has a P/CF ratio of 10.61, which is attractive compared to the industry's average P/CF of 13.38, further supporting the notion of undervaluation [5]. - Over the past year, LXU's P/CF has fluctuated between a high of 11.15 and a low of 5.52, with a median of 7.27, reflecting its cash flow performance [5]. - The combination of these valuation metrics suggests that Lsb Industries is likely undervalued, making it one of the strongest value stocks in the market based on its earnings outlook [6].

Group 1 - LSB Industries, Inc. (LXU) shares increased by 22.3% to $9.10, following a significant trading volume, contrasting with a 15.4% decline over the past four weeks [1] - The rally is attributed to optimism regarding the company's diversified portfolio in industrial and agricultural products, potential increases in agricultural commodity prices, and a strong balance sheet, alongside falling interest rates boosting demand for its products [2] - The upcoming quarterly earnings are projected at $0.13 per share, reflecting a year-over-year increase of 533.3%, while revenues are expected to be $109.13 million, a decrease of 17.7% from the previous year [3] Group 2 - The consensus EPS estimate for LSB has been revised 49% higher in the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [4] - LSB Industries holds a Zacks Rank of 3 (Hold), while Icahn Enterprises (IEP), another company in the same diversified operations industry, closed at $9.13 with a 0.9% decline [4] - Icahn Enterprises has an unchanged consensus EPS estimate of $0.18, representing a year-over-year change of 154.6%, and currently holds a Zacks Rank of 4 (Sell) [5]

Safety and Environmental Initiatives - Total Recordable Injury Rate improved to 0.33 in 2023, with a focus on achieving zero injuries in 2024[40] - The company plans to invest additional capital in 2024 to enhance safety programs across all facilities[40] - Collaboration with Air Liquide and INPEX aims to capture at least 95% of CO2 emissions from hydrogen production, with 1.6 million metric tons of CO2 expected to be captured annually[42] - The El Dorado facility's CO2 capture project is projected to sequester approximately 400,000 to 500,000 metric tons of CO2 annually, reducing LSB's scope 1 GHG emissions by about 25%[43] - The company expects to capture and sequester CO2 at a rate qualifying for federal tax credits of $85 per metric ton under Internal Revenue Code Section 45Q[43] - The company incurred $4.0 million in expenses related to environmental regulatory compliance for the first nine months of 2024, with expected additional expenses ranging from $0.8 million to $1.1 million for the remainder of the year[92] Low-Carbon Projects - A low-carbon ammonia project at the El Dorado facility is in collaboration with Lapis Energy, targeting future demand increases for low-carbon ammonia[41] - An agreement to supply up to 150,000 short tons per year of low carbon ammonium nitrate solution to Freeport Minerals Corporation starting January 1, 2025[42] - A large-scale low-carbon ammonia production project on the Houston Ship Channel aims to produce over 1.1 million metric tons per year by early 2029[42] - INPEX and LSB plan to sell low-carbon ammonia and finalize off-take agreements, with INPEX expected to be the largest investor across the entire value chain[43] Production and Capacity Expansion - The company is evaluating organic capacity expansion opportunities, particularly at the El Dorado facility, but has put expansion projects on hold for 2024[41] - Recent projects include additional AN solution storage and new rail loading capabilities at El Dorado to increase sales volume[41] - Expansion of urea capacity at the Pryor facility is expected to add approximately 75,000 tons of UAN per year[41] - Total ammonia production is targeted at approximately 770,000 to 790,000 tons for 2024[54] Financial Performance - Consolidated net sales for Q3 2024 were $109.2 million, a decrease of 4% from $114.3 million in Q3 2023[56] - Consolidated operating loss for Q3 2024 was $24.4 million, compared to a loss of $9.5 million in Q3 2023, representing a 157% increase in losses[61] - Gross loss for Q3 2024 was $7.9 million, compared to a gross loss of $3.4 million in Q3 2023, with a gross loss percentage of (7.3)%[65] - Adjusted gross profit increased to 22.9% in Q3 2024 from 12.1% in Q3 2023, reflecting improved pricing for ammonia[65] - Total net sales decreased by 16% to $387.5 million for the first nine months of 2024 compared to $461.1 million in the same period of 2023[72] - Gross profit for the first nine months of 2024 was $41.7 million, down from $74.3 million in 2023, representing a reduction of $32.6 million[75] - Adjusted gross profit percentage increased to 29.7% in 2024 from 27.3% in 2023[75] Costs and Expenses - The average cost of natural gas per MMBtu decreased from $3.61 in Q3 2023 to $2.17 in Q3 2024, benefiting production costs[51] - Transportation costs for nitrogen-based products are rising, potentially impacting margins if costs cannot be passed to customers[52] - SG&A expenses rose to $10.0 million in Q3 2024, an increase of $1.5 million compared to Q3 2023[66] - Interest expense for Q3 2024 was $8.1 million, up from $7.2 million in Q3 2023, primarily due to litigation-related reversals[67] - Impairments on assets recorded in Q3 2024 amounted to $5.4 million, compared to $0.2 million in Q3 2023[58] - Selling, general and administrative expenses rose to $31.9 million, an increase of $4.1 million compared to the same period in 2023[76] - Interest expense decreased to $26.3 million in 2024 from $31.2 million in 2023, primarily due to the repurchase of Senior Secured Notes[77] Cash Flow and Debt Management - Net cash provided by operating activities was $82.6 million for the first nine months of 2024, down from $120.5 million in 2023, a decrease of $37.9 million[82] - Net cash used by investing activities was $18.4 million in 2024, compared to net cash provided of $21.5 million in 2023, a change of $39.9 million[83] - Net cash used by financing activities was $123.0 million in 2024, compared to $159.0 million in 2023, a change of $36.0 million[84] - The company recognized a gain on extinguishment of debt of approximately $3.0 million in 2024, compared to $8.6 million in 2023[78] - As of September 30, 2024, total cash, cash equivalents, and short-term investments amounted to $199.4 million, a decrease of 34.8% from $305.9 million on December 31, 2023[86] - Long-term debt totaled $487.0 million as of September 30, 2024, down from $581.7 million on December 31, 2023, representing a reduction of 16.2%[86] - The company expects capital expenditures for the full year of 2024 to be approximately $65 million to $85 million, primarily for reliability and maintenance projects[86] - During the nine months ended September 30, 2024, the company repurchased approximately 1.5 million shares of common stock at an average cost of $8.13 per share, totaling approximately $12.1 million[91] - The remaining repurchase authority under the stock repurchase program was approximately $109 million as of September 30, 2024[91] - As of September 30, 2024, the Revolving Credit Facility was undrawn with approximately $34 million of availability[89] - The company has $478.4 million in Senior Secured Notes due 2028, with a 6.25% interest rate, maturing on October 15, 2028[88] - No trigger events had occurred for the financial covenants associated with the Revolving Credit Facility as of September 30, 2024[87] Market Conditions - Ammonia prices have increased due to tight supply-demand dynamics and geopolitical concerns, with expectations for moderation in Q4 2024 and into 2025[43] - The demand for nitric acid remains steady, reflecting strong U.S. economic conditions and consumer spending[48] - U.S. farmers planted approximately 90.7 million acres of corn in 2024, a decrease of 4.1% from 2023, with ending stocks estimated at 50.8 million metric tons, a 13.6% increase from 2023[47] - Average selling prices for ammonia increased, while UAN prices decreased by 16% compared to Q3 2023[56] - Total tons sold decreased by 11% to 291,104 tons in Q3 2024 from 326,589 tons in Q3 2023[62] Taxation - The effective tax rate for Q3 2024 was 15.0%, down from 40.5% in Q3 2023, primarily due to changes in valuation allowance[70] - The effective tax rate for the first nine months of 2024 was 20.5%, compared to 9.8% for the same period in 2023[81]

Financial Performance and Key Metrics - The company reported an adjusted EBITDA of $17 million for Q3 2024, a significant improvement from $9 million in Q3 2023, despite a major turnaround maintenance this year [25][27] - GAAP loss per share for Q3 2024 was $0.35, which included approximately $16 million in turnaround expenses and $6 million in non-cash charges [26] - Cash remains healthy at approximately $200 million with net leverage at about 2.5 times [29] Business Line Performance - The turnaround at the Pryor facility included an expansion of the urea plant, expected to produce an additional 75,000 tons per year of UAN, representing a 20% annual increase [8][32] - Sales volumes of products decreased in Q3 2024 compared to Q3 2023 due to the turnaround, but increased ammonium nitrate (AN) volume from the El Dorado facility partially offset this decline [28] Market Dynamics - The North American industrial market remains stable, with consistent demand from industrial customers, while Asian and European markets show more uncertainty [12][13] - The Tampa ammonia benchmark price has increased for four consecutive months due to global supply constraints and disruptions [17] - UAN prices have firmed recently due to tightening market fundamentals and healthy demand from India [18] Company Strategy and Industry Competition - The company aims to grow its industrial sales portion to create a more stable earnings stream, focusing on contracted volumes to mitigate volatility [10][11] - The El Dorado CCS project is on track for low-carbon ammonia production by 2026, pending necessary permits [34] - The company is exploring long-term offtake agreements for low-carbon products, which are critical for project financing and risk management [62] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the stability of the U.S. economy and consumer spending, expecting favorable conditions to persist into 2025 [12] - The company anticipates a solid year-over-year increase in sales volumes of UAN and AN, despite planned maintenance activities [32] - Management highlighted the importance of securing long-term contracts to mitigate risks associated with commodity pricing [62] Other Important Information - The company has been actively buying back senior secured notes and shares, totaling approximately $97 million and 2.7 million shares, respectively [29] - The company is participating in several upcoming industry conferences to enhance visibility and investor relations [41] Q&A Session Summary Question: Industrial demand trends and contracting - Management noted that industrial demand is currently stable, with potential for improvement due to economic activity and infrastructure development [45] Question: Outlook for production volumes in 2025 - Management indicated that production is expected to improve year-over-year, despite two planned turnarounds [50] Question: Impact of nitrogen market transactions on valuation - Management discussed the significance of net operating losses (NOLs) and the importance of access to capital markets [51][52] Question: Resource allocation for Houston Ship Channel project - Management explained that they are utilizing both internal and contracted resources to manage multiple projects without compromising existing operations [56] Question: Current purchasing behavior in the nitrogen market - Management observed a cautious approach from buyers, with some starting to take longer positions due to recent price strengthening [66] Question: Capital expenditures and turnaround costs - Management confirmed that capital expenditures were elevated due to the major turnaround at Pryor, with expectations for similar costs next year [67][76] Question: Low-carbon ammonia market potential - Management expressed that the market for low-carbon ammonia in fertilizer applications is still developing, with potential for future growth depending on legislative support [95]

LSB Q3 Earnings Presentation October 30, 2024 1 Forward-Looking Statements Statements in this presentation that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance including the effects of the COVID-19 pandemic and anticipated performance based on our g ...