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LSB Industries, Inc. Comments On 2012 Third Quarter

Stocks in this article: LXU

LSB Industries, Inc. (“LSB”) (NYSE: LXU) today provided an update to its previous announcements and disclosures related to certain ongoing issues at two of its facilities and their impact on 2012 third quarter results. The Company expects to report its results for the third quarter ended September 30, 2012 on or about November 6, 2012.

The Pryor Facility has had continual problems with the ammonia conversion process, as well as unplanned downtime at its main ammonia plant, which have caused fluctuating production levels, preventing it from reaching our targeted production rates of approximately 600 tons per day. Total ammonia production during the third quarter was approximately 28,000 tons, or 50% lower than our targeted rate. As a result, the Pryor Facility’s 2012 third quarter operating income was approximately $14 million lower than it would have been had ammonia production been at or near target levels, based upon the selling price of ammonia and UAN during the quarter.

As previously announced, we plan to replace six small ammonia converters at Pryor with one Kellogg converter. We have received our permit to install the Kellogg converter, the foundation for the converter is complete; and the converter is scheduled to be replaced during the fourth quarter 2012. Once the replacement converter is installed and in full operating mode, we should achieve our targeted production rates at Pryor.

The third quarter of 2012 was also adversely affected by lost profits and extra expenses at our El Dorado, Arkansas Facility following the May 15, 2012 explosion which destroyed the Direct Strong Nitric (DSN) acid plant and caused damage of varying degrees throughout the site. The El Dorado Facility has completed repairs to the three other nitric acid plants and most of the repairs to certain other equipment damaged by the explosion. Our insurance policy provides for Business Interruption coverage for certain lost profits and extra expenses which will be recognized as a reduction to cost of sales in the quarter received. We expect to begin receiving insurance recovery payments in the 2012 fourth quarter or shortly thereafter.

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