Lsb Industries (NYSE:LXU) reported higher second-quarter adjusted EBITDA despite planned turnarounds at its El Dorado and Pryor facilities, as stronger product pricing and product-mix optimization offset lower production volumes.
Adjusted EBITDA rose about 40% year over year to $53 million in the second quarter of 2026, compared with $38 million in the prior-year period, Chief Financial Officer Cheryl Maguire said. The company estimated that planned turnaround activity reduced quarterly adjusted EBITDA by $35 million to $40 million, with most of the impact tied to El Dorado.
Turnarounds completed at El Dorado and Pryor
Chairman and Chief Executive Officer Mark Behrman said the company completed an extensive turnaround at its El Dorado ammonia plant and related site infrastructure on time, on budget and without injuries. He said the plant has since recorded some of its highest daily production rates since it began operating in 2016.
LSB also moved much of its planned third-quarter turnaround work at Pryor into the second quarter. The decision shifted some anticipated production and earnings impacts into the second quarter while reducing expected downtime in the third quarter. Behrman said Pryor restarted late in the week before the call and was ramping toward full production.
At El Dorado, Behrman said the ammonia plant’s nameplate capacity is approximately 1,150 tons per day. The facility had generally operated at 1,250 to 1,300 tons per day in recent years, but was producing about 1,375 tons per day following the turnaround despite summer conditions. In cooler weather, he said the company could potentially reach 1,400 tons per day.
At Pryor, management expects the turnaround’s benefits to be reflected more in reliability and production consistency than in higher daily production rates. Behrman said higher output should lower costs on a per-ton basis, although inflation could offset some savings.
Market conditions support pricing
Chief Commercial Officer Damien Renwick said disruptions to shipping through the Strait of Hormuz and broader Middle East conflict were creating uncertainty in global fertilizer and industrial chemical markets. Shipping through the strait represents about 20% of global seaborne ammonia trade, 30% of global urea trade and 45% of global sulfur trade, he said.
Renwick said industrial demand for ammonium nitrate, or AN, remained strong, supported by mining-sector investment and producer outages. During the second quarter, LSB adjusted its production mix to maximize AN sales, including sales to customers whose supply had been disrupted, while taking advantage of elevated spot pricing.
The company also cited favorable agricultural demand conditions. Renwick said ammonia prices remained above historical averages despite a recent decline in Tampa pricing, while UAN prices had stabilized after the customary July summer price reset. LSB reported strong uptake in its ammonia and UAN summer-fill programs through June and July and said its order book retained flexibility for fall prepay and winter-fill programs.
Maguire said Tampa ammonia settled at $635 per metric ton for August, while New Orleans-area UAN was trading near $300 per ton. Natural gas costs had averaged approximately $3.20 per MMBtu in the third quarter through the date of the call.
Management said elevated European natural gas prices and limited global nitrogen supply could support pricing. Renwick pointed to European TTF gas prices that had recently exceeded $19 and $20 per MMBtu, raising European ammonia production costs to nearly $700 per metric ton.
Cash flow, CCS project and expansion plans
LSB ended the second quarter with approximately $220 million in cash and net leverage of 1.1 times, Maguire said. The company generated $59 million of operating cash flow and about $32 million of free cash flow after $27 million of sustaining capital expenditures. It also invested about $13 million in growth projects, including roughly $11 million related to its El Dorado carbon capture and sequestration, or CCS, project.
In May, LSB announced an agreement to assume full ownership of the El Dorado CCS project from Lapis Carbon Solutions. Behrman said the investment will be made in stages based on development, permitting and construction milestones, limiting the company’s upfront capital exposure.
LSB expects the project to begin operations in the first quarter of 2027. Once fully operational, management expects it to generate $25 million to $30 million of annual earnings and cash flow after CCS operating costs. Behrman said the CCS equipment is expected to require routine scheduled maintenance rather than major turnaround events and would generally be offline only when the associated ammonia plant is not producing carbon dioxide.
The company is also advancing a feasibility study for a potential ammonia expansion at El Dorado. LSB expects to complete a front-end engineering and design study and make a final investment decision in the second quarter of 2027. If approved, the project would be targeted for completion alongside El Dorado’s planned 2029 turnaround.
- Expected total expansion cost: $135 million to $150 million.
- Expected net cost after a USDA grant: $105 million to $120 million.
- Expected additional annual ammonia capacity: approximately 100,000 tons.
- Estimated incremental annual EBITDA: roughly $20 million, depending on ammonia pricing.
Behrman said the company expects to fund the project with cash on its balance sheet. He added that the quoted project cost includes infrastructure to support the expansion, while the company evaluates how to market the additional ammonia volumes for the strongest possible margins.
For the remainder of 2026, LSB said it expects higher operating rates following the completion of major turnaround work and believes it is on track to meet or exceed its annual production targets. Management also reiterated a previously outlined path to an additional $35 million of annual EBITDA from production targets, process improvements and cost optimization, with a substantial portion expected by the end of 2026 and the balance by the end of 2027.
About Lsb Industries (NYSE:LXU)
LSB Industries, Inc (NYSE: LXU) is an Oklahoma City–based manufacturer of chemical products serving the agricultural, industrial and defense markets. The company operates primarily through two segments: Fertilizer Solutions and Commodities Solutions. Through its Fertilizer Solutions segment, LSB produces primary nitrogen products—including anhydrous ammonia and technical-grade ammonium nitrate—that are sold to fertilizer distributors and agricultural retailers across North America. Its Commodities Solutions segment manufactures and sells nitric acid, sodium nitrate and other nitrate-based compounds for industrial applications such as mining, water treatment and specialty chemical production, as well as defense-related formulations used in munitions and pyrotechnics.
Incorporated in 1969, LSB Industries has grown from a single production site to multiple manufacturing facilities strategically located in the central United States.
