LSB Industries' Q2 2025: Key Contradictions in UAN Strategy, Production Outlook, and Tariff Impacts

UAN production and pricing strategy, capital allocation and project priorities, UAN production and sales outlook, 2025 production and turnaround outlook, impact of tariffs on U.S. nitrogen prices are the key contradictions discussed in LSB Industries' latest 2025Q2 earnings call.



Sales and Production Growth:
- LSB Industries reported a 6% year-over-year increase in sales volumes, driven by solid improvement in sales volumes of AN and UAN.
- The growth was primarily due to higher ammonia production and better performance by their upgrading plants.

UAN and Ammonia Pricing Trends:
- UAN prices rose significantly, with the current NOLA UAN price at $350 per ton, more than 70% higher than last year.
- The Tampa ammonia price for August settled at $487 per ton, slightly above year-ago levels, reflecting reduced supply from the Middle East, North Africa, and Russia, and higher European production costs.

Cost Management and Debt Reduction:
- The company repurchased approximately $32 million of its Senior Secured Notes during the quarter and plans to reduce debt by an additional $5 million in the third quarter.
- These actions were part of the company's strategy to maintain a healthy liquidity position while continuing to invest in plant reliability and strategic projects.

Shift in Sales Mix:
- LSB Industries is transitioning from selling HDAN, a spot price fertilizer product, to ANS used in industrial and mining applications, aiming to improve stability and predictability in financial performance.
- This shift is expected to result in approximately 1/3 of sales under cost-plus contracts, further neutralizing volatility from natural gas and fertilizer price swings.

Low Carbon Project Progress:
- Lapis Carbon Solutions completed the drilling of a stratigraphic injection well for LSB's low carbon project at the El Dorado site in June.
- The project's progress is supported by the continued technical review of the Class VI permit application, with CO2 injections expected to begin by the end of next year.