Lsb Industries NYSE: LXU reported stronger third-quarter 2026 earnings as demand remained firm across its industrial and agricultural businesses, while higher production of nitric acid and ammonium nitrate solution, favorable pricing and operational improvements supported profitability.
Chief Financial Officer Cheryl Maguire said adjusted EBITDA rose 55% from a year earlier to $62 million, compared with $40 million in the third quarter of 2025. Higher selling prices and lower costs more than offset lower sales volumes, which were primarily affected by a turnaround completed during the quarter, she said.
The company generated more than $220 million of adjusted EBITDA over the trailing 12 months ended Sept. 30. LSB also reported $132 million of operating cash flow through the first nine months of 2026 and approximately $74 million of free cash flow after $58 million of sustaining capital expenditures.
Market conditions support industrial and fertilizer demand
Chief Commercial Officer Damien Renwick said geopolitical conflicts in the Middle East and Black Sea region continued to constrain global nitrogen and energy supplies. European TTF natural-gas prices rose from roughly $18 to $30 per MMBtu over the prior three months, pushing European ammonia production costs above $1,000 per metric ton, according to Renwick.
European producers have curtailed output and increased reliance on imports, further tightening supplies ahead of winter, he said. LSB estimated that ammonia producers have curtailed between 20% and 25% of production, or as much as 2 million metric tons. Meanwhile, U.S. natural-gas prices remained near $3 per MMBtu, providing domestic producers with a cost advantage.
Renwick said industrial demand remains supported by infrastructure spending, AI-related investment, electrification, grid spending, manufacturing onshoring and road and highway activity. Rising copper prices and elevated gold prices are supporting mining activity in North America and demand for ammonium nitrate, or AN, he said.
LSB prioritized higher-margin AN production and sales during the third quarter and expects to continue favoring the product until sometime in the first half of 2027, when shuttered production is expected to return to the market.
On the agricultural side, Renwick said fertilizer market conditions remained firm amid supply uncertainty, trade disruptions and macroeconomic volatility. Tampa ammonia settled at $545 per metric ton for October, while global urea prices rose about $100 per metric ton during the third quarter and UAN pricing increased by $75 per short ton since early July.
The company said its fourth-quarter order book was approximately 70% sold, leaving some exposure to potential price gains. Renwick said LSB was “pretty bullish” on current pricing and its outlook, particularly with greater uncommitted volumes available for the first quarter.
Cost initiatives and production reliability
Chairman and Chief Executive Officer Mark Behrman said the company expects to reach approximately $35 million in cumulative annual run-rate EBITDA improvements by the end of 2026, compared with a $55 million target announced after 2023. LSB had previously achieved about $20 million of annual run-rate improvement by the end of 2025 and expects to add another $15 million this year.
The company expects to capture an additional $15 million to $20 million of annual EBITDA improvement by the end of 2027 through production gains, downstream product upgrades, cost optimization and process-efficiency initiatives.
Maguire said lower third-quarter costs were partly attributable to inventory building and precious-metals recoveries, which can fluctuate. She said roughly half of the cost improvements reflected in the quarter should be sustainable, excluding timing effects and metals recoveries, as the company advances maintenance, gas-efficiency and product-handling initiatives.
Behrman said the recently completed turnarounds positioned the company for improved operations. At El Dorado, the ammonia plant ran between 1,350 and 1,370 tons per day after the turnaround, versus a 1,150-ton-per-day nameplate capacity, with potential for higher production during cooler weather. Pryor was operating at roughly 675 to 700 tons per day, while Cherokee was running at about 520 to 530 tons per day. With no turnarounds and full operations, LSB estimated annual ammonia production capacity of approximately 875,000 to 900,000 tons.
Carbon capture project and capital allocation
LSB assumed full ownership of its El Dorado carbon capture and sequestration project from Lapis Carbon Solutions during the prior quarter. Construction of the capture facility is underway, and the company continues to work with the Environmental Protection Agency on a Class VI permit.
Behrman said the company believes an operational date earlier than the second half of 2027 may be possible, depending on the EPA’s review timeline. When fully operational, the project is expected to generate $25 million to $30 million of annual earnings, net of CCS operating costs, during the 12-year period for 45Q tax credits.
LSB is also evaluating an ammonia-capacity expansion at El Dorado. The company expects to complete a front-end engineering and design study and reach a final investment decision during the second quarter of 2027. If approved, the project could be completed alongside a planned 2029 turnaround, add about 100,000 tons of annual ammonia capacity and generate an estimated $20 million to $25 million of incremental annual EBITDA. Estimated net project cost is $105 million to $120 million, which LSB expects to fund with cash on hand.
At quarter-end, the company held more than $200 million in cash equivalents and short-term investments, with net leverage of approximately 1.1 times. Behrman said LSB intends to retain financial flexibility for potential growth opportunities but may also begin repurchasing shares under its existing board authorization when it considers buybacks appropriate.
LSB also said its trial against Leidos Engineering began during the week of the earnings call and was expected to last three to four weeks. Behrman said the company would not provide additional comment while the case is underway.
About Lsb Industries (NYSE:LXU)
LSB Industries, Inc is a chemical manufacturing company headquartered in Oklahoma City, Oklahoma. The company produces nitrogen-based fertilizers and industrial and mining chemicals for customers in the agricultural, industrial and explosives markets.
Its product portfolio includes ammonia, fertilizer-grade ammonium nitrate, urea ammonium nitrate and nitric acid, as well as industrial products such as sulfuric acid, carbon dioxide and diesel exhaust fluid. LSB also supplies ammonium nitrate and related products used in mining and other industrial applications.
LSB Industries operates manufacturing facilities in the United States, including locations in Alabama, Arkansas and Oklahoma, and serves customers primarily across North America.
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