LSB Industries (NYSE:LXU) executives highlighted improved safety performance, record downstream production and stronger financial results during the company’s fourth-quarter and full-year 2025 earnings call, while outlining planned turnarounds and ongoing initiatives aimed at further boosting earnings power.
Operational progress and safety milestones
Chairman and CEO Mark Behrman said 2025 featured continued improvement in safety and operational discipline. The company’s 12-month rolling total reportable incident rate was 0.40 incidents per 200,000 work hours as of Dec. 31, 2025, which management called a record low, and three of four sites operated injury-free for the full year.
Market conditions: tight nitrogen and strong industrial demand
Chief Commercial Officer Damien Renwick described a supportive industrial environment and said the company optimized its production balance during the fourth quarter by reducing UAN volumes to maximize ammonium nitrate (AN) spot sales at above-typical market prices. Renwick said the move supported existing customers whose regular AN supply was constrained due to supplier issues.
Renwick said AN demand for explosives in mining remains strong across commodities, highlighting copper and gold miners maximizing production at record prices. He added that demand for quarrying and aggregate production tied to infrastructure remains steady, and coal production demand “remains resilient” as the U.S. generates more power from coal. Renwick also said preliminary antidumping duties on imported MDI, combined with tariffs, has increased U.S. production and led to “increasing demand for nitric acid.”
On fertilizers, Renwick said UAN pricing averaged $320 per ton in the fourth quarter, up 39% from the prior-year period, and noted prices dipped slightly in November and December before improving more recently. He attributed conditions to low domestic inventory, constrained supply and strengthening urea prices, adding the company began the 2026 fertilizer year with the lowest carry-out UAN inventory in several years. Management expects the tight domestic supply situation to continue through mid-year.
Renwick said ammonia prices remain above year-ago levels, reflecting reduced supply from the Middle East and Trinidad, higher production costs in Europe, and delays in new capacity. While LSB expects global ammonia pricing to trend back to “mid-cycle levels” as new production comes online during 2026, management said the market remains finely balanced and sensitive to production interruptions.
Financial results: higher EBITDA and cash flow, with timing impacts
CFO Cheryl Maguire said full-year 2025 adjusted EBITDA was $162 million, up from $130 million in 2024, representing a 25% year-over-year increase. Fourth-quarter adjusted EBITDA rose 42% to $54 million from $38 million a year earlier, driven by higher pricing as well as stronger volumes and product mix, partially offset by higher natural gas and other operating costs.
Maguire said operating costs were elevated due to timing of expenses and increased maintenance and contractor support as the company advances toward production targets. She said contractor-related costs are expected to decline toward the end of 2026 as work is completed.
On cash generation and the balance sheet, Maguire reported:
- Approximately $150 million in cash at year-end.
- Net leverage of 1.8x as of December 2025.
- 2025 operating cash flow of $96 million.
- Sustaining capital expenditures of $53 million, resulting in free cash flow of $44 million.
She noted an additional $25 million of capital spending related to discretionary growth investments, which was not included in free cash flow. Maguire said working capital increased by more than $30 million, driven by the rollover of certain 2024 payables paid early in 2025 and strong end-of-quarter sales flowing into receivables at year-end. Adjusting for timing, she said free cash flow generation was consistent with expectations.
Maguire also said the company repurchased about $40 million principal amount of its senior secured notes and repurchased roughly 300,000 shares during 2025.
2026 outlook: planned turnarounds, capex plans, and product mix flexibility
Looking ahead, Maguire said 2026 expectations reflect planned turnaround activity, including the previously communicated El Dorado turnaround scheduled for the second quarter. LSB is also accelerating a turnaround at its Pryor location—originally planned for 2027—to the third quarter of 2026 to proactively perform reliability work. Management expects the two turnarounds to result in lost production in 2026 of approximately 60,000 tons of ammonia and 50,000 tons of UAN.
Despite planned outages, Maguire said the company still expects strong underlying volume momentum due to operational improvements across facilities. For 2026 capital spending, LSB expects about $75 million of capex, including $55 million for annual environmental, health and safety and reliability spending and $20 million for investments including enhanced logistics and storage capabilities for the growing AN business.
For the first quarter, Maguire said LSB expects strong selling prices roughly in line with the fourth quarter. She noted Winter Storm Fern drove short-term natural gas volatility, with gas prices elevated for February settlements. With prices moderating back to around $3 per MMBtu, she expects much lower realized gas pricing in the second quarter. For the first quarter, she said average gas cost is expected to be about $5.50 per MMBtu.
Maguire added the company may opportunistically shift production toward ammonium nitrate solution where market conditions warrant, potentially lowering UAN volumes with a corresponding increase in AN volumes. Ahead of the El Dorado turnaround, LSB plans to build ammonia inventory to support downstream operations during most of the outage, which is expected to impact first-quarter ammonia sales volumes by about 15,000 tons. Overall, she said the company expects a “meaningful uplift” in first-quarter earnings compared with the first quarter of 2025, with earnings power mirroring the fourth quarter of 2025, adjusted for the temporary run-up in gas costs.
Value creation initiatives and carbon capture timeline
Maguire outlined the company’s longer-term improvement roadmap, saying LSB has captured approximately $20 million of annual EBITDA uplift since 2023, primarily driven by higher downstream production. She added the company expects about $15 million of annual EBITDA improvements beginning in early 2027 related to the carbon capture and sequestration (CCS) project at El Dorado.
In addition, management said it sees another $35 million of incremental annual EBITDA opportunity ahead, primarily from higher production rates, efficiency gains and cost optimization. In total, the company described a path to $70 million of annual EBITDA uplift, with $20 million already captured and $50 million planned and underway.
Behrman provided an update on the CCS project, saying LSB and its partners met with senior officials from the EPA’s Region 6 office in mid-December regarding the Class VI permit application. Based on that discussion and stated EPA support, management said it remains on track to begin sequestering CO2 by the end of 2026 or, at the latest, early 2027. The company expects the technical review of the permit to be completed in April 2026, followed by a permit to construct in August and a permit to inject CO2 by year-end.
On demand for low-carbon products, Behrman said the market has been slow to pay premiums, though LSB is pursuing “niche opportunities.” He and Renwick also cited potential export-related opportunities, including Europe and the potential impact of CBAM, while noting uncertainty remains.
During Q&A, management said it is targeting 875,000 to 880,000 tons of gross ammonia production without turnarounds and estimated that about 30% to 40% of the $35 million incremental EBITDA opportunity is tied to higher ammonia production rates. On the AN market, Renwick described it as tight and said pricing for spot sales has been above typical contract rates, with market intelligence suggesting tightness could persist through year-end.
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.
