Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - LSB INDUSTRIES INC | d743642d8k.htm |
| EX-99.3 - EX-99.3 - LSB INDUSTRIES INC | d743642dex993.htm |
 LSB
Industries,
Inc.
June 2014
NYSE: LXU
Exhibit 99.5 |
 2
Safe
Harbor
Statement
The
comments
today
and
the
information
contained
in
the
presentation
materials
contain
certain
forward-looking
statements.
All
these
statements,
other
than
statements
of
historical
fact,
are
forward-looking
statements.
Statements
that
include
the
words
“expect,”
“intend,”
“plan,”
“believe,”
“project,”
“anticipate,”
“estimate”
and
similar
statements
of
the
future
or
of
a
forward-looking
nature
identify
forward-looking
statements,
including
but
not
limited
to,
all
statements
about
or
in
references
to
the
Architectural
Building
Index
or
any
McGraw
Hill
forecast,
any
references
to
projected
natural
gas
costs,
ammonia
costs,
and
fundamentals
of
the
chemical
or
climate
control
business.
The
forward-looking
statements
include
but
are
not
limited
to
the
following
statements:
For
Chemical
Business:
Major
investments
underway
to
reduce
costs
and
increase
facility
reliability;
Positioned
to
benefit
from
strong
agricultural
market
with
favorable
margins;
Strong
regional
market
positions
serving
the
Corn
Belt
and
South
Central
U.S.;
Product
balance
options;
Capital
expansion
projects
reduce
production
costs
significantly
vs.
purchased
ammonia;
Estimated
completion
Q4
2015/Start-up
Q1
2016
for
El
Dorado
ammonia
plant;
El
Dorado
nitric
acid
plant
and
concentrator
will
have
a
cost
of
$115
million
to
$125
million,
improves
operating
characteristics,
enhances
product
balance,
replaces
lost
acid
capacity
and
adds
capacity
for
a
total
of
375,000
TPY,
and
estimated
completion
and
start-up
of
Q2
2015;
Fundamentals
of
the
nitrogen
fertilizers
we
produce
remain
positive;
Gross
margins
remain
historically
strong;
LSB
Value
Drivers;
Pryor
facility
reliability
improvements;
capital
projects
at
El
Dorado;
Corn
pricing
remains
at
favorable
levels
for
growers;
Comprehensive
upgraded
Chemical
Business
safety
and
plant
reliability
systems
will
improve
plant
up-time
and
reduce
risks
of
unplanned
downtime.
For
Climate
Control
Business:
Market
and
technology
leader
for
geothermal
heat
pumps,
water
source
heat
pumps,
and
hydronic
fan
coils;
Poised
to
benefit
from
the
economic
recovery,
long-term
trend
toward
green
construction,
and
growth
of
emerging
products;
Construction
markets
are
poised
for
a
recovery
to
pre-recession
levels;
Climate
control’s
product
sales
should
outgrow
broader
markets;
Leading
indicators
point
to
solid
growth
over
the
next
three
years
in
commercial
and
institutional
construction,
as
well
as
residential
housing
starts;
Anticipate
an
improvement
in
all
the
major
sectors
that
we
serve,
especially
lodging,
multi-family
housing
and
education;
LEAN
operational
excellence
margins.
You
should
not
rely
on
the
forward-looking
statements
because
actual
events
or
results
may
differ
materially
from
those
indicated
by
these
forward-looking
statements
as
a
result
of
a
number
of
important
factors.
We
incorporate
the
risks
and
uncertainties
discussed
under
the
heading
Special
Note
Regarding
Forward-looking
Statements
in
our
annual
report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2013
and
Form
10-Q
for
the
period
ending
March
31,
2014.
We
undertake
no
duty
to
update
the
information
contained
in
this
conference
call.
The
term
EBITDA,
as
used
in
this
presentation,
is
net
income
plus
interest
expense,
depreciation,
amortization,
income
taxes,
and
certain
non-
cash
charges,
unless
otherwise
described.
EBITDA
is
not
a
measurement
of
financial
performance
under
GAAP
and
should
not
be
considered
as
an
alternative
to
GAAP
measurement.
The
reconciliation
of
GAAP
and
any
EBITDA
numbers
discussed
during
this
conference
call
are
included
on
the
Q1
2014
conference
call
presentation,
which
is
posted
on
our
website. |
 3
Company Overview |
 Business Overview
4
2013 Net Sales by Business Segment
2013 Consolidated EBITDA by Business Segment
Diversified industrial manufacturer of chemical and
HVAC products sold into a wide range of end markets
Founded in 1968 and headquartered in Oklahoma
City, OK; publicly traded (NYSE: LXU)
Chemical Business operates 4 production facilities
El Dorado Chemical Company (“EDC”) (Arkansas)
Cherokee Nitrogen LLC (Alabama)
Pryor Chemical Company (Oklahoma)
El Dorado Nitric LLC (“Baytown”) (Texas)
Climate Control Business operates 7 facilities located
in Oklahoma City (over 1 million square feet)
Financial Snapshot:
LTM 3/31/14 Net Sales of $707.1 million
LTM 3/31/14 Consolidated Adjusted EBITDA of
$161.2 million
LSB operates a well-diversified business with differentiated market
positions across two distinct business segments
Note: Excludes unallocated corporate expenses
|
 LSB’s Two Core Businesses
5
Consolidated Sales History
Chemical
Provides nitrogen based agricultural, mining
and industrial chemicals to North American
market
Leading merchant marketer of nitric acid in
the U.S.
Major investments underway to reduce costs
and increase facility reliability and capacity
Positioned to benefit from strong agricultural
market with favorable margins
Climate Control
Provides specialty HVAC products to
commercial, institutional and residential new
construction, renovation and replacement
markets, emphasis on green products
Market and technology leader for
geothermal heat pumps, water source heat
pumps, and hydronic fan coils
Poised to benefit from the economic
recovery, long-term trend toward green
construction, and growth of emerging
products
2013 Full Year Sales Mix |
 6
Business Segment
Overview |
 Attractive Industry Fundamentals –
Agro Chemicals
7
World Situation:
Growing populations
Developing economies
Changing dietary habits (from grain to
meat)
Worldwide grain stock-to-use ratios at
below historical levels
North American Situation:
World grain shortages positively
impact grain requirements in the U.S.
During last 3 years U.S. consumed
more grain than it produced.
U.S. grain stocks are below historical
levels.
Result:
High demand for grain expected in
2014 and beyond.
North America is Low Cost
Producer
of Nitrogen Fertilizers
Natural gas is the primary feedstock for
anhydrous ammonia and all nitrogen
fertilizers.
Due to large shale gas reserves, U.S. has very
low natural gas prices vs. most places
worldwide.
Natural gas is expected to average between
$4.50 and $5.00 per MMBtu in 2014.
U.S. Midwest Delivered
Ammonia
Cost
Forecast
($US/ton)
Source: Fertecon, Blue Johnson, PotashCorp (2013)
|
 Agro-
Chemical
(44% of sales)
Nitric Acid
Semi-conductor, nylon, polyurethane
intermediates, ammonium nitrate
CF Industries, PCS
Sulfuric Acid
Pulp and paper, alum, water treatment,
metals and vanadium processing
Cytec, Chemtrade Logistics
Anhydrous Ammonia
Power plant emissions abatement, water
treatment, refrigerants, metals processing
Various
Diesel Exhaust Fluid (DEF)
Exhaust stream additive to reduce NO
x
emissions from diesel vehicles
Various
Market
Products Uses
Competitors
Industrial
Acids,
Ammonia &
DEF
(37% of sales)
Urea Ammonium Nitrate
Solutions (UAN)
Fertilizer for corn and other crops
CF Industries, PCS,
Koch Industries, Rentec,
Coffeeville Resources, imports
Ammonium Nitrate
-
high density prills (AN)
Primary nitrogen component in NPK
fertilizer blends
CF Industries, imports
Anhydrous Ammonia
High nitrogen content fertilizer primarily
used for corn
Various
Chemical Markets and Products
8
Ammonium Nitrate –
low
density prills (AN) and AN
solutions
Specialty emulsions for mining
applications
CF Industries, PCS,
Dyno Nobel America
Specialty E2 Ammonium
Nitrate
Surface mining, quarries, construction
Imports
Mining
Products
(17% of sales) |
 Major
Chemical Customers 9
Bayer |
 Strategically Located Chemical Facilities,
Long-Standing Customers, Unique Business Model
10
Product offering applicable across a broad range of end markets
Nitric acid for
industrial uses
UAN, AN and
NH3 fertilizers
AN and AN solutions for
mining industry
Chemical End Markets
Strong Market Positions Across Footprint
Strong regional market positions serving
the Corn Belt and South Central U.S.
Multiple distribution channels
Located on major rail transport routes
(single haul rail and river access at
Cherokee)
Access to ammonia pipeline at EDC
Average relationship of over 15 years with
top 5 customers –
includes several blue-chip
customers
Reduced commodity exposure through cost
plus agreements (feedstock and production
costs plus profit component) |
 Operational Dynamics
Diversification Strategy with Product Balance Options
11
Sales by Market
Cost-Plus Agreements vs.
Spot Market Sales
A key strategy is to
OPTIMIZE SALES MIX:
industrial vs. agricultural.
Approximately half our sales
are
NON-SEASONAL
and priced pursuant to
COST-PLUS
agreements.
2013 Sales Mix |
       Chemical Facilities
12
El Dorado Nitric LLC
El Dorado Chemical Co.
Cherokee Nitrogen LLC
Pryor Chemical Co.
El Dorado
Chemical
Company
Cherokee
Nitrogen LLC
Pryor Chemical
Company
El Dorado
Nitric LLC
El Dorado, AR
Cherokee, AL
Pryor, OK
Baytown, TX
150
160
47
2
1400
1300
104
Bayer site
ammonia
natural gas
natural gas
ammonia
UAN
x
x
High Density AN
x
Ammonia
x
x
Urea
x
x
Nitric Acid
x
x
x
x
Concentraed
Nitric Acid
x
Sulfuric Acid
x
Mixed Acid
x
Carbon Dioxide
x
x
Ammonia
x
x
DEF
x
Low Density AN
x
AN solutions
x
x
truck, rail
truck, rail,
pipeline, barge
truck, rail
truck, pipeline
Transportation to Market
Facility
Location
Plant Area (acres)
Site Area (acres)
Feedstock |
          Annual
Production Capacity for Products Available for Sale (000’s of tons)
13
Red
Font
=
production
capacities
after
the
completion
of
the
ammonia
and
nitric
acid
expansion
projects at El Dorado
El Dorado
Chemical
Company
Cherokee
Nitrogen LLC
Pryor
Chemical
Company
El Dorado
Nitric LLC
ammonia
natural gas
natural gas
ammonia
UAN
215
300
High Density AN
110/300
Ammonia
125
30
85
Nitric Acid
45/200
30
410
DEF
15
Low Density AN
220
AN solutions
85
Facility
Feedstock |
 14
Capital Expansion Projects
El Dorado Ammonia Plant
•
Cost of $250 million -
$300 million
•
Reduces production costs significantly vs.
purchased ammonia
•
Enhanced product balance opportunities
•
Increases plant capacity:
-
Currently use ~220,000 tons per year (TPY)
-
Additional capacity ~155,000 TPY
-
Total capacity ~375,000 TPY
•
Estimated completion Q4 2015/start-up Q1 2016
•
Cost of $115 million -
$125 million
•
Improves operating characteristics
•
Enhanced product balance
•
Replaces lost acid capacity and adds additional
capacity for a total of 370,000 TPY
•
Estimated completion and start-up Q2 2015
El Dorado Nitric Acid Plant and Concentrator
•
Engineering, Procurement and Construction
(EPC) contractor secured
•
Installation of above ground structures
underway
•
Inspection and refurbish/rebuild of equipment
in process
Construction Process Well Underway
Ammonia Production Offers Attractive Economics
Cost to Produce
Cost to Produce
Cost to Produce
Cost to Produce
Cost to Produce
Cost to Produce
Average Difference (Produce vs. Purchase): $419 per ton
|
    15
Attractive Industry Fundamentals: Climate Control
Significant upside as industry drivers return to
levels at/near historical norms
Driven by high energy efficiency
Climate Control 2013 End Market Mix
Total
Commercial,
Institutional and
Multi-Family:
83%
Sources:
McGraw-Hill
Construction
Market
Forecasting
Service,
Q2
2014;
50
Year
Median
–
Census
Bureau
($ in Billions)
$35.0
$85.0
$204.0
$248.0
$0
$75
$150
$225
$300
2008A
2012A
2016P
Low-end
High-end
Source: 2013 Dodge Construction Green Outlook
(MM Square Feet)
Commercial / Institutional / Multi-Family Starts
1,749
1,100
1,544
1,710
2008
2012
2015E
2017E
39%
11%
(Starts in 000’s)
Single Family Residential Construction
1,626
516
910
1,090
2005
2012
2015E
2017E
76%
50-Year Median: 1,070
20%
Construction markets are poised for a
recovery to pre-recession levels
Green building market spending expected
to grow ~25%+ CAGR from ‘12 –
‘16E |
 Climate Control Market and Products
Geothermal &
Water Source
Heat Pumps
(64% of sales)
Hydronic Fan
Coils
Heating and cooling for commercial/institutional
new construction, renovation and replacements
Leading share in hydronic
fan coils
Hydronic Fan
Coils
(23% of sales)
Water Source
Heat Pumps
Heating and cooling for commercial/institutional
markets as well as single family residential new
construction renovation and replacements
Geothermal
Heat Pumps
Heating and cooling for commercial/institutional
markets as well as single family residential new
construction renovation and replacements
Leading share in water
source and geothermal
heat pumps
Large Custom
Air Handlers
Commercial, institutional and industrial uses
Modular
Chillers
Commercial, institutional and industrial uses
Make-up Air
Units
Commercial, institutional
and industrial uses
Other HVAC
Products
(13% of sales)
Market
Products Uses
16 |
 Significant Installed Base of Climate Control Products
Millennium Towers, NYC
Bellagio, Las Vegas
Statue of Liberty
MGM Grand, Las Vegas
Trump Tower, NYC
World Financial Center, NYC
Chicago Hilton and Towers
Wynn Resort, Las Vegas
Disney’s Grand Floridian, Orlando
Atlantis, Bahamas
Rowes Wharf, Boston
Alta Condos, Washington DC
Peninsula, Hong Kong
Ritz Carlton, Pasadena, CA
Rockefeller Center, NYC
17
Thousands of premier installations and over 4 million units
|
 18
Financial Overview |
   Summary
Statement of Operations 19
2013
2012
2011
2010
2014
2013
Sales
$679.3
$759.0
$805.3
$609.9
$178.5
$150.7
Sales Growth
(11)%
(6)%
32%
15%
19%
(21)%
Operating Income/(Loss)
$105.3
$95.7
$136.4
$55.9
$25.9
($0.2)
Net Income/(Loss)
$55.0
$58.6
$83.8
$29.6
$11.6
($0.1)
Diluted Earnings/(Loss) per Share
$2.33
$2.49
$3.58
$1.32
$0.49
($0.02)
EBITDA
$132.9
$117.3
$155.7
$74.3
$34.7
$6.5
EBITDA Margin
20%
15%
19%
12%
19%
4%
$ in millions except EPS
3 Mos. Ended March 31,
Calendar Year Ended Dec. 31,
*Free cash flow is defined as operating cash plus insurance proceeds
and debt and financing proceeds, less capital expenditures and
debt and financing payments |
 Segment Summary Statement of Operations
20
Chemical Business
3 Mos. Ended March 31,
$ in millions
2013
2012
2011
2010
2014
2013
Sales
$380.7
$477.8
$511.9
$351.1
$115.2
$77.5
Gross Profit
46.2
97.7
130.7
49.3
28.4
2.4
Gross Profit %
12.1%
20.4%
25.5%
14.0%
24.7%
3.1%
Operating Income/(Loss)
87.8
82.1
116.5
31.9
28.8
(3.8)
Segment EBITDA
$111.4
$98.5
$131.2
$45.0
$36.3
$1.6
Climate Control Business
$ in millions
2013
2012
2011
2010
2014
2013
Sales
$285.0
$266.2
$281.6
$250.5
$60.3
$70.3
Gross Profit
92.9
81.0
88.2
86.4
19.3
22.0
Gross Profit %
32.6%
30.4%
31.3%
34.5%
31.9%
31.3%
Operating Income
30.4
25.8
32.8
35.3
4.3
6.4
Segment EBITDA
$33.6
$29.0
$35.5
$38.8
$5.5
$7.2
3 Mos. Ended March 31,
Calendar Year Ended Dec. 31,
Calendar Year Ended Dec. 31, |
 Debt to Capital
Solid Financial Position
Strong Balance Sheet
21
Note: As of March 31, 2014, total debt consisted of $425
million 7.75% Senior Secured Notes due in 2019; a $28 million
Secured Promissory Note with final payment due in February
2016 and $9 million of equipment loans and capital leases. Our
$100 million working capital revolver is undrawn and
availability under this facility was approximately $80 million at
March 31, 2014.
March 31,
December 31,
2014
2013
Cash and Investments
$408.9
$434.7
Total Debt
$461.9
$463.0
Stockholders' Equity
$423.9
$411.7
Total Capitalization
$885.8
$874.7
$ in millions
EBITDA to Interest
Coverage*
* Calculated on a trailing twelve month basis using
total interest, including capitalized interest.
|
 Planned Capital Spending
22
Remainder of
2014
2015
Total
Chemical Business:
El Dorado Facility Expansion Projects
$200 - $235
$117 - $152
$317 - $387
Development of Natural Gas Leaseholds
8 - 10
11 - 13
19 - 23
Environmental Projects
9 - 11
5 - 6
14 - 17
Major Renewal and Improvement Projects
30 - 40
20 - 30
50 - 70
Other
18 - 20
19 - 22
37 - 42
Total Chemical
$265 - $316
$172 - $223
$437 - $539
Climate Control Business:
6 - 7
5 - 10
11 - 17
Corporate and Other:
6 - 7
7 - 9
13 - 16
Total Projects
$277 - $330
$184 - $242
$461 - $572
Capitalized
to Date
Remainder of
2014
2015
Project
Total
Ammonia Plant
$53
$100 - $125
$97 - $122
$250 - $300
Nitric Acid Plant and Concentrator
60
45 - 50
10 - 15
115 - 125
Other Support Infrastructure
-
55 - 60
10 - 15
65 - 75
Total El Dorado Projects
$113
$200 - $235
$117 - $152
$430 - $500
Planned Capital Expenditures
Planned Capital Expenditures
Total Projects (including El Dorado
below)
El Dorado
Expansion Projects
(as
of
March
31,
2014
-
$
in
millions) |
 Outlook
23
Chemical
Positive fundamentals remain for the nitrogen fertilizers we produce.
Gross margins remain historically strong although lower than
2013. 2013’s improved corn harvest resulted in a higher
stock-to-use ratio and lower forward corn prices,
however pricing remains at favorable levels for growers.
The 2014 planting seasons for both corn and wheat started slowly
due to weather
conditions, but have come back to historical levels.
Growth is forecasted for the next few years for the industrial markets
we serve. Climate Control
Leading indicators point to solid growth over the next three years in
commercial and institutional construction, as well as
residential housing starts. Rate of recovery in the commercial
and institutional sectors seems to be lagging behind the
recovery in the general single-family residential construction market.
Anticipate an improvement in all the major sectors that we serve,
especially lodging, multi-family housing and education.
LEAN operational excellence initiatives should result in
enhanced margins. |
 Key
LSB Value Drivers Comprehensive upgraded Chemical Business safety
and plant reliability systems –
intended to improve plant up-time and reduce risks of unplanned
downtime.
Pryor facility reliability improvements
-
including new senior management,
additional engineering support, extensive monitoring and control
equipment,
remanufacture of certain key pieces of equipment, and use of industry
expert consultants –
intended to improve plant up-time and reduce risks of unplanned
downtime.
Capital projects at El Dorado –
intended to reduce costs, increase capacity, and
enhance product balance capabilities.
Growth
in
Climate
Control
Business
within
existing
plant
footprints
as
construction
cycle
recovers
to
achieve
increased
profits
through
operating
leverage.
Operational
excellence
initiatives
(including
LEAN
manufacturing
techniques)
in
our
Climate
Control
Business
to
facilitate
improved
operational
metrics
leading to expanding margins.
24 |
 25
Appendix |
 EBITDA Reconciliations (in millions)
Reconciliation of Consolidated Net Income (Loss) and Segment Operating
Income (Loss) to Non-GAAP measurement EBITDA.
Management uses operating income by business segment for purposes of
making decisions that include resource allocations and performance
evaluations. Operating income by business segment represents
gross profit by business segment less selling, general and administrative
expenses
incurred
by
each
business
segment
plus
other
income
and
other
expense
earned/incurred
by
each
business
segment
before
general
corporate expenses.
26
LSB Industries, Inc. Consolidated
2014
2013
2014
2013
Net income (loss)
11.6
$
(0.1)
$
66.7
$
44.2
$
Plus:
Interest expense
6.7
0.7
20.0
3.8
Depreciation and
amortization 8.7
6.6
30.5
22.3
Provisions for income taxes
7.7
(0.7)
43.8
25.0
Loss from discontinued
operations -
-
0.2
0.2
EBITDA
34.7
$
6.5
$
161.2
$
95.5
$
Climate Control Business
Operating income
4.3
$
6.4
$
28.3
$
26.4
$
Plus:
Equity in earnings of affiliate
0.1
0.2
0.3
0.7
Depreciation and
amortization 1.1
0.6
3.3
2.5
Segment EBITDA
5.5
$
7.2
$
32.0
$
29.6
$
Chemical Business
Operating income (loss)
28.8
$
(3.8)
$
120.4
$
57.9
$
Plus:
Non-operating income
0.1
-
0.1
-
Depreciation and amortization 7.4
5.4
25.6
17.8
Segment EBITDA
36.3
$
1.6
$
146.1
$
75.7
$
Three months ended 3-31
Trailing Twelve months ended 3-31 |
 Chemical Business Operating Metrics
27
*Gross cost excluding any hedging activity
Three Months Ended March 31,
Agricultural:
2014
2013
% Change
Product
(tons
sold)
Urea ammonium nitrate (UAN)
83,516
32,419
158%
Ammonium nitrate (AN)
86,403
39,904
117%
Anhydrous ammonia
15,057
3,012
400%
Other
5,557
5,222
6%
190,533
80,557
137%
Average
Selling
Prices
(price
per
ton)
UAN
$261
$311
(16%)
AN
$308
$377
(18%)
Anhydrous ammonia
$416
$687
(39%)
Input Costs
Average purchased ammonia cost/ton
$419
$619
(32%)
Average natural gas cost/MMbtu*
$5.25
$3.78
39%
Industrial:
Product
(tons
sold)
Nitric acid
141,142
77,829
81%
AN and AN solution
40,981
27,961
47% |
 LSB’s Agricultural Distribution
28
Multiple distribution channels
Diverse geographic coverage
Longstanding customer relationships
Direct rail linkage to corn belt
Southern Plains,
South Central,
Midwest & West |
 What
Our Chemical Products Are Used For: 29
Agrochemical Products
Uses
Urea Ammonium Nitrate Solutions (UAN) 28-32% N
Manufactured nitrogen content fertilizer
High nitrogen content fertilizer for corn and other crops with high
nitrogen demand (wheat, milo, cotton)
E2 Ammonium Nitrate Prill (solid) 34% N
High nitrogen content fertilizer
Nitrogen consuming crops, forage areas and citrus. The primary
nitrogen component in NPK (nitrogen, phosphorus, potassium)
fertilizer blends Fertilizer Blends
Custom blends with purchased phosphates, potassium, sulfur,
micronutrients with produced ammonium nitrate
Special application for agri-business products to supply growers
balanced fertility
Anhydrous Ammonia 82% N
Gas injected application
High
nitrogen
content
fertilizer
with
highest
percentage
use
for
corn.
Industrial Acids, Ammonia, DEF
Uses:
Concentrated Nitric Acid
Aqueous solution up to 99% concentration
Production of specialty fibers, nitrocellulose, gaskets, crop
chemicals, mining products, metal treatment, nitric acid
commercial blends Nitric Acid Commercial Blends
Aqueous solution up to 89% concentration
Semi-conductor industry, manufacture of nylon and polyurethane
intermediates, potassium nitrate compounds, ammonium nitrate
production Anhydrous Ammonia
Commercial grade and high purity refrigeration, metallurgical
grade Air emission abatement in power plants, water treatment,
refrigerants, metals processing, and a wide variety of
industrial uses Mixed Acids
Blends of concentrated nitric acid and sulfuric acid/oleum
Diesel fuel additives, ordnance, herbicides and pharmaceutical grade
nitroglycerine
Sulfuric Acid
98% and 93% concentrations, standard and low-iron grades
Pulp and paper manufacturing, alum, water treatment, metals
processing, vanadium processing, other industrial uses
DEF (diesel exhaust fluid)
Exhaust
stream
additive
to
reduce
NO
X
emissions
from
diesel
vehicles
Industrial Mining Products
Uses:
Ammonium Nitrate Solutions
54% and 83% concentrations
Specialty
emulsions
for
mining
applications,
other
miscellaneous
uses
Low Density Ammonium Nitrate Prills (solids)
Solid pellets with good porosity and flowability
Surface mining, quarries, construction |
 Typical Facility Process Flow (Pryor)
30
Products are marketable at every intermediate and final stage of
production.
Pryor facility process flow is typical of plants with natural gas
feedstock. Pryor and Cherokee use natural gas feedstock.
El Dorado and Baytown use ammonia feedstock.
|
 Climate Control Sales & Marketing Data
31
Diversified End Markets
Commercial:
•
238 Commercial representative firms with
438 locations
•
2,200+ Sales Engineers
Residential (Geothermal):
•
600 Residential distributor locations (approx.)
•
4,000 Residential contractor-dealers (approx.)
Plus: OEM distribution channels
Distribution Channels (as of Q2
2014) Product & Market Sales Mix –
Various Perspectives
2013 Sales Mix Data |
 Focus
on Geothermal Heat Pumps How does a GHP system work?
32
The Earth absorbs approximately 50% of all solar energy
and
remains at nearly a constant temperature year round (below a few
feet
deep).
A GHP system
uses a
sealed in-ground heat exchanger (loop) filled
with fluid and a
GHP unit to exchange energy between the house or
building and the earth.
In
winter,
fluid
in
the
loop
absorbs
energy
from
the
earth
and
carries
it
to the GHP where it is converted (compressed) to a higher temperature
and sent as warm air into the house or building.
In
summer,
the
system
reverses,
transferring
heat
from
the
house
or
building into the earth.
GHP
systems
work
year
round,
in
all
climates,
in
both
individual
residences and large commercial buildings, providing both conditioned
air and domestic hot water
(as a “free”
by-product).
Typical
Residential
Geothermal
System
Geothermal Benefits:
Energy Cost Reduction & Positive
Cash Flow
–
the most energy efficient
HVAC technology available –
up to 80%
more
efficient than conventional systems.
Fed Tax Credits
-
30% residential & 10% business +
accelerated depreciation, + state/utility incentives
GHP’s are an Alternative form of Renewable Energy
Green Refrigerants -
non-ozone depleting
“Free”
Domestic Hot Water
Noise Free Operation –
no noisy condensing unit
Extremely
Long
Lived
vs.
conventional
systems
(50
year
loops)
Conventional System Geothermal System
Residential Energy Usage |
 33
Typical GHP Costs and Savings
For a GHP System in a 2,500 sq. ft. new house in St. Louis, MO (typical
middle America) Installed Cost of a 4 ton GHP System = $6,000 per
ton (12,000 Btu/ton). System Operating Cost Comparison
GHP vs. Conventional Systems
Note: System installed costs are different throughout the U.S due to
varying local conditions and labor costs. Savings vary due
to weather conditions, user preferences, and local utility
rates. Costs and savings in St. Louis are estimates and subject
to change.
Payback (GHP vs.
Hi-Eff Gas Furn+AC)
Installed cost of GHP
$24,000
Less: 30% Fed tax credit
(7,200)
GHP cost after credit
16,800
Cost for Hi-Eff Gas + AC
(12,000)
GHP premium cost
4,800
Annual Energy Savings
$1,248
Payback in Years
3.8
Positive Cash Flow
Annual Energy Savings
$1,248
Annual P&I on GHP
Premium (6% int. –
10 yrs.)
(636)
Annual Cash Savings
$612
This analysis
compares these
systems: |
 Notes:
34 |
 Notes:
35 |
 36
LSB Industries, Inc. is headquartered in
Oklahoma City and does business through
its subsidiaries, with seven HVAC manufacturing
and distribution facilities in Oklahoma City,
chemical plants in Texas, Arkansas, Alabama
and Oklahoma and an engineered products
distribution center in Oklahoma City.
Approximately 1,900 total employees.
Investor Relations:
Company
Contact
:
Mark Behrman
Phone: 405-235-4546
Email: mbehrman@lsbindustries.com
The Equity Group, Inc.
Fred Buonocore
Phone: 212-836-9607
Email: fbuonocore@equityny.com
Linda Latman
Phone: 212-836-9609
Email: llatman@equityny.com
Fax: 212-421-1278
Corporate Offices:
16 South Pennsylvania Avenue
Oklahoma City, Oklahoma USA
Phone: 405-235-4546
Fax: 405-235-5067
Email: info@lsbindustries.com
Website: www.lsbindustries.com
Common Stock:
NYSE ticker symbol LXU
Auditor:
Ernst & Young LLP |