Presentation 784.8 KB

Q3 2021 Earnings Presentation

November 2, 2021

Q3 2021 Overview

Executing on Our Strategy and Improving End-Market Fundamentals

• Net sales up 72% year over year driven by higher selling prices and continued strong plant operations
• Record Q3 Adjusted EBITDA of $37.7M - an increase of 268% year over year despite loss of approximately 40 production days from turnaround
• Robust market conditions and solid operating performance expected to continue for remainder of the year and into 2022
• Completed two key transactions that reduce cost of capital and enhanced financial flexibility:

✓Closed on exchange transaction, converting $310 million of preferred stock with a 14.5% dividend into common stock

✓Subsequent to end of the quarter, on 10/14/21, closed on issuance of $500 million of new senior notes carrying an interest rate of 6.25% which were used to redeem $435 million of outstanding 9.625% notes and enhance balance sheet liquidity

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Agricultural Market Overview

• Corn is currently trading over $5.60/bushel and is expected to remain at these levels for the balance of the year and throughout 2022
• Robust pricing for nitrogen products is expected to continue in
  Q4'21 and into 2022

• Tampa ammonia price for November settled at $825/mt, the highest level since Oct 2008 as global prices continue to increase
• Nola UAN benchmark pricing has increased from approximately $300/ton to over $500/ton over the last 90 days

• Many factors point to strong Q4'21 and 2022:

• Soaring European gas prices forcing producers to curtail nitrogen production, limiting supply, with analysts estimating that more than half of European ammonia production is being impacted
• Weather events throughout 2021, including the winter freeze earlier in the year and Hurricane Ida more recently, forced multiple facilities in the U.S. to shut down, and many of these facilities have had production issues after startup, limiting supply
• Greater number of turnarounds at ammonia production facilities this year

5 Year Corn Prices

$8 ~ $5.60 Oct

$6

$4

$2

$0

Jan-17Jan-18Jan-19Jan-20Jan-21

Sources: Yahoo! Finance, Food & Agricultural Policy Research Institute

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Strong Industrial and Mining Fundamentals

Industrial

• U.S. Federal Reserve data indicates that new housing starts reached levels not seen since 2006 earlier this year, and, while down recently due to shortages and risings costs for labor and materials, on a rolling twelve-month basis are at their highest in over ten years, driven by low interest rates and the strong economy.
• New U.S. light vehicle sales, while hitting levels not seen since 2005, although recently down due to the shortage of microprocessors which has constrained new auto production in the face of strong demand, at almost 12.2 million units in September, remain more than 40% above pandemic low levels.

Mining

• Production of construction aggregates has increased over the past decade driven by infrastructure repair, upgrade and expansion and increased commercial and residential development.
• Copper prices reached an all time high of $5.72 per pound in July and continued to sell at over $5.00 per pound in October as a result of rising demand from various end markets, including electric vehicle production. This should translate into increase copper mine production in the coming years.

US New Housing Starts

(thousands)

1800

1600

1400

1200

1000

800

600

400

Jan-12May-12Sep-12Jan-13May-13Sep-13Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16	May-16Sep-16Jan-17May-17Sep-17Jan-18May-18Sep-18Jan-19May-19Sep-19Jan-20May-20Sep-20Jan-21May-21Sep-21
		Monthly Starts			12-Month Rolling Avg.

Million Metric Tons

U.S. Crushed Stone Production

1600

1500

1400

1300

1200

1100

1000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e

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LSB Consolidated Financial Highlights

$ in millions, except per share amounts
	3Q 2021	3Q 2020
Sales	$127.2	$74.0

Adjusted Gross

▪	Sales up 72%: Driven by higher pricing
▪	Higher selling prices partially offset by lower

Profit 1

$43.1$16.3

	sales volumes and higher gas costs
▪	Operating profit increased in line with

Operating

$5.4($9.0)

Income/(Loss)

EBITDA2	$8.5
$22.0

Adjusted EBITDA2

$37.7

$10.2

	previously outlined factors that improved
	adjusted gross profit
▪	EBITDA increased in line with previously
	outlined factors that improved adjusted gross
	profit
▪	Primarily favorable pricing, see waterfall chart
	on subsequent slide for breakout

(1) Adjusted gross profit excludes depreciation, amortization and turnaround expenses. This is a non-GAAP measure. Refer to the Gross Profit Reconciliation page
within this presentation for reconciliation of adjusted gross profit to reported gross profit.	5

(2) This is a non-GAAP measure; refer to the EBITDA Reconciliation page within this presentation.