LSB Industries Q3 Adjusted EBITDA Rises 55% on Stronger Pricing

LSB Industries (NYSE: LXU) reported a roughly 55% year-over-year increase in third-quarter adjusted EBITDA as stronger selling prices and improved operational performance lifted profitability despite limited revenue growth. The nitrogen products producer also said it expects positive conditions in its industrial and fertilizer markets to continue into the first quarter of 2027.

Net sales for the quarter ended September 30 rose to $158.6 million from $155.4 million a year earlier. Adjusted EBITDA increased to $62.3 million from $40.1 million, while adjusted EBITDA margin expanded to 39% from 26%. Diluted earnings per share more than doubled to $0.22 from $0.10.

On a GAAP basis, net income rose to $16.3 million from $7.1 million. EBITDA increased to $49.1 million from $35.1 million. Adjusted EBITDA excluded items including $6.3 million of turnaround costs, $2.9 million of losses on asset disposals or write-downs, $2.5 million of stock-based compensation and $1.4 million of legal fees and settlements related to specific matters.

LSB attributed the improvement to better production performance, disciplined commercial execution and its ability to adjust product mix to market conditions. A company earnings bridge showed that selling prices contributed $24 million to the year-over-year increase in adjusted EBITDA. That benefit was partly offset by a $7 million impact from sales volume and product mix and a $3 million impact from variable costs, while other items contributed $8 million.

Trailing-12-month adjusted EBITDA reached $221.6 million as of September 30, up from $145 million a year earlier. The corresponding adjusted EBITDA margin was 34%, compared with 25%, as trailing-12-month net sales increased to $661.2 million from $585 million.

Industrial and Fertilizer Outlook

Management maintained a positive view of industrial demand, citing long-term electricity consumption growth and the resulting need for copper and other critical minerals. LSB said elevated copper and gold prices are encouraging existing mines to maximize production and supporting the advancement of new mining projects, which could sustain demand for ammonium nitrate used in explosives.

In fertilizer markets, the company pointed to an estimated European ammonia production cost of about $1,000 per metric ton. It also identified an estimated $350-per-metric-ton incentive for European producers to use imported ammonia rather than manufacture their own while TTF natural gas prices remain elevated, a dynamic LSB expects to support merchant ammonia demand and global ammonia pricing during the fourth quarter.

The company expects healthy nitrogen demand for the 2026-2027 planting season. Its presentation cited stronger corn prices and projections for global corn consumption to exceed production, with the global stocks-to-use ratio projected to decline to 21.2% in 2026-2027 from an estimated 23.3% in 2025-2026.

Cash Flow and Growth Projects

LSB generated $131.7 million of operating cash flow during the first nine months of 2026, up from $77.6 million in the comparable 2025 period. After $57.5 million of sustaining capital expenditures, non-GAAP free cash flow was $74.2 million, compared with $43.6 million a year earlier.

Cash and short-term investments totaled about $204 million at September 30, while total debt was $442.2 million. Net debt declined to $238.7 million from $296.4 million a year earlier, reducing net debt to trailing-12-month adjusted EBITDA to 1.1 times from 2.0 times.

Capital allocation remains focused on safety, reliability and growth initiatives. LSB spent $24.1 million on development of the El Dorado carbon capture and sequestration project during the first nine months of 2026, in addition to $6.9 million of investment capital expenditures.

Management estimates that operational improvements, the El Dorado CCS project and a potential El Dorado ammonia expansion could collectively create an annualized adjusted EBITDA run-rate opportunity of $95 million to $110 million or more by the end of 2029. The company said $20 million had already been delivered, with about 35% to 40% of the potential expected to be reflected in the run rate by the end of 2026. It described approximately 70% to 80% of the opportunity as in execution, including operational improvements and the CCS project, which is expected to begin operations by the end of 2027.

Those estimates are not forecasts for any specific fiscal year. Actual contributions will depend on project timing, execution and market conditions. LSB also identified commodity and feedstock price volatility, plant disruptions, raw-material availability, permitting requirements, tariffs, competitive pressure and the cost and timing of major projects and turnarounds as key uncertainties.