Shares in diversified conglomerate LSB Industries, Inc. (NYSE:LXU) faced a selloff Thursday and closed at $7.21, down 11.43%, after the company announced that it suffered unplanned downtime at its primary chemical facilities during the third quarter of 2016.
The company warned that the resultant fall in production will bring results “below our expectations for the period,” but said the net result of the turnaround activities and other operational issues “will yield improving on-stream rates, translating into greater revenue and EBITDA in the coming quarters.”
Oklahoma-headquartered LSB produces chemical products for the agricultural, mining, and industrial markets at facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma. It also operates a facility for a global chemical company in Baytown, Texas.
LSB Industries, Inc. (NYSE:LXU) EBITDA to be lower due to downtime
The company clarified in the operational update that the aforesaid downtime will impact both Q3 and Q4 EBITDA adversely as follows:
Q3: Cherokee, Alabama facility ($4.0 million – $4.5 million)
Pryor, Oklahoma chemical facility ($7.0 million – $7.5 million)
Eldorado facility ($14.0 million – $14.5 million)
Q4: Overall ($5.0 million – $5.5 million)
LSB Industries, Inc. (NYSE:LXU) EBITDA on the deleveraging path
In August the company sold off its climate control business for $364 million and approached the holders of its outstanding $425 million of 7.75% Senior Secured Notes (2019) for redemption.
The twin actions are expected to deleverage and strengthen LSB’s balance sheet.
For Q2, LBS reported EPS of $-0.73, which missed by $0.30 and revenue of $109.98 million, which was down 12.4% and missed estimates by $66.75 million.
Technically, the stock appears to be hammering out a bottom around $5.00 over the past year and that accumulation is under way.