LSB Q3 2026 Earnings: Product Mix Lifts Profit Despite Lower Volume

LSB Industries (NYSE: LXU) reported Q3 2026 net sales of $158.6 million, up approximately 2% year over year, while diluted EPS increased to $0.22 from $0.10 for the quarter ended September 30, 2026. Profit growth substantially outpaced revenue as higher pricing and a shift toward ammonium nitrate products offset lower total sales volume and the effects of the planned Pryor facility turnaround.

Core Earnings Data

Net income more than doubled to $16.3 million, while adjusted EBITDA increased 55% to $62.3 million. Cost of sales declined to $115.5 million from $129.9 million despite modest revenue growth, lifting gross margin by approximately 10.7 percentage points.

Average natural gas cost included in cost of materials and other declined 5% to $2.93 per MMBtu. Selling, general and administrative expense increased to $14.8 million from $10.3 million, but the gross profit expansion was sufficient to drive substantially higher operating income.

Adjusted EBITDA is a non-GAAP measure. The reconciliation included $6.3 million of turnaround costs, compared with $1.1 million a year earlier, as well as stock-based compensation, specific legal costs and asset disposal or write-down losses.

Pricing and Product Mix Offset Lower Volume

Total reported product volume declined 13% to 331,927 short tons. Nevertheless, net sales increased because LSB shifted some production from urea ammonium nitrate, or UAN, toward ammonium nitrate, or AN, in response to industrial demand, while ammonia pricing also increased substantially.

AN and nitric acid volume rose 23%, while the average netback selling price increased 19% to $365 per short ton. This combination made the category the principal source of sales growth.

UAN volume fell 59%, and its average netback price declined 5% to $316 per short ton. The production shift toward AN and the planned Pryor turnaround, which began in Q2 and was completed early in Q3, reduced available UAN volume. The turnaround also affected ammonia volume, which declined 7%, but a 32% increase in ammonia’s average netback price to $528 per short ton drove higher ammonia sales.

Profitability and Balance Sheet

The quarter’s earnings improvement was not solely a non-GAAP effect: GAAP gross profit, operating income and net income all increased materially. Still, the gap between EBITDA of $49.1 million and adjusted EBITDA of $62.3 million reflects approximately $13.2 million of adjustments, led by turnaround costs.

At September 30, 2026, LSB held $37.7 million of cash and cash equivalents and $165.8 million of short-term investments, for combined liquidity of approximately $203.5 million. Total debt was $442.2 million. Combined cash and short-term investments had increased from $148.5 million at December 31, 2025, while inventories rose to $20.9 million from $18.3 million.

El Dorado CCS Project Depends on EPA Approval

LSB assumed full ownership of the El Dorado carbon capture and sequestration project in May 2026. Completion and the start of carbon dioxide injections remain conditional on receiving a Class VI permit from the Environmental Protection Agency, whose technical review is ongoing. The EPA permit tracker indicates a potential operational date in the second half of 2027, although management believes an earlier date may be possible.

The company expects the project to capture and sequester 400,000 to 500,000 metric tons of carbon dioxide annually, reducing Scope 1 emissions by approximately 25% and supporting production of 305,000 to 380,000 metric tons of low-carbon ammonia per year. Subject to continued qualification for the $85-per-metric-ton Section 45Q credit, LSB estimates annual earnings of approximately $25 million to $30 million after CCS operating costs over the 12-year credit period.

Those estimates are prospective rather than current earnings. LSB also cautioned that cash receipts may not coincide with earnings recognition because the timing depends on how the tax credits are monetized.

Management Outlook

Management said industrial AN demand remains strong, supported by mining investment and capital spending related to data centers, power generation, electrification and other infrastructure. The company also said global nitrogen supply remains constrained, supporting ammonia and UAN market conditions despite some moderation in ammonia prices from first-half levels.

For agriculture, LSB cited the USDA’s projection of approximately 96.8 million planted corn acres for the 2026/27 marketing season and low global ending stocks. Based on those conditions, management anticipates robust nitrogen demand during the fall 2026 and spring 2027 application seasons.

Operationally, each of LSB’s three facilities set a new monthly production record during the first nine months of 2026. Management said the company remained on pace for record annual nitric acid and AN solution production.

Recent Insider Transactions

The supplied insider report showed 49,260 shares purchased across eight transactions and 49,554 shares sold across two transactions during the previous six months, resulting in a net sale of 294 shares. Total insider holdings were listed at approximately 13.45 million shares; the near-balanced activity does not by itself indicate insiders’ expectations for the business.

The latest ten reported transactions are shown below. All were classified as direct holdings, and prices and values are presented as reported in the supplied dataset, which did not specify a currency.

Risks Investors Need to Watch

• Reliance on pricing and product mix: Total product volume declined 13%, meaning the quarter’s revenue and profit growth depended heavily on higher AN and ammonia pricing and the shift toward industrial products.
• Production reliability: The Pryor turnaround reduced ammonia and UAN volume. Additional maintenance or unplanned facility disruptions could affect sales and margins.
• Commodity and feedstock volatility: Nitrogen selling prices can move with global supply conditions, while natural gas is a key production input. Lower natural gas cost helped this quarter, but the benefit may not persist.
• CCS permitting and tax-credit execution: The El Dorado project cannot begin injections without EPA approval, and its estimated earnings depend on capture volumes, continued 45Q qualification and the selected credit-monetization method.

Conclusion

LSB’s Q3 2026 results were defined by profit growth that substantially exceeded the increase in revenue. Higher AN volume, stronger ammonia pricing, a more favorable product mix and lower natural gas cost offset reduced total volume and the Pryor turnaround. Investors’ next areas of focus are production reliability, the durability of nitrogen pricing and industrial demand, and progress toward EPA approval for the El Dorado CCS project.

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