LSB cancels sale effort, posts $7M second-quarter loss
LSB Industries Inc. directors have canceled their efforts to sell the company after receiving no acceptable offers, the Oklahoma City-based chemicals company said Tuesday.
The effort was part of the company’s strategic review, but directors were not presented with a deal they felt was in the best interest of shareholders, the directors said in a statement Tuesday.
“The board always remains open and willing to be engaged in these types of discussions,” the company said. “While we are not sharing specific details of the process, we believe that, at this time, the current outlook in the nitrogen chemical industry is adversely affecting any potential transactions.”
The directors said they are continuing to work with outside advisers on evaluating other “strategic, financial and operational options.”
As part of the ongoing review, LSB’s directors and executives are working to improve overall plant reliability to average ammonia plant onstream rates of at least 95 percent, continuing to streamline corporate structure to reduce costs, reduce overall plant costs, expand into new markets with enhanced distribution and replace the company’s leverage with greater financial flexibility and improved capital structure.
Second-quarter loss
Also on Tuesday, LSB reported a second-quarter loss of $7 million, or 53 cents a share, compared to a profit of $15.1 million, or 20 cents a share, one year ago. LSB had a net loss from continuing operations of $7.69 million, or 70 cents a share, in the year-ago period.
Net sales increased to $123 million, up from almost $110 million in the year-ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization was $22.2 million, up from $11.1 million one year ago.
“Our financial performance benefited from the incremental output of our El Dorado ammonia plant, which has been ramping up since entering service in May of 2016, along with strong sales volume growth for our high-density ammonium nitrate (HDAN) resulting from our expanded distribution strategy,” CEO Daniel Greenwell said in a statement. “Partially offsetting these positive factors were headwinds caused by significant weakening in agricultural product pricing that began in June, as well as some downtime at two of our facilities.”
Demand for agricultural ammonia was held down in the second quarter as wet weather shortened the pre-plant application season, he said.
“The second half of 2017 looks more challenging than we anticipated earlier this year due to the current ammonia pricing environment, which is lower than pricing levels seen at this time in 2016, Greenwell said. “We do, however, remain highly confident in our ability to operate all our plants at onstream rates of approximately 95 percent or higher. Additionally, recent sales of noncore assets have strengthened our balance sheet and provided us with greater financial flexibility, which we plan to further enhance in the coming quarters.”
LSB shares gained 25 cents, or 2.4 percent, Tuesday to close at $10.63 on the New York Stock Exchange.