Project Remains on Schedule; Total Construction Cost Estimate Revised
Upward
Company Continues to Expect Facility will Generate Approximately $90
Million of Annual Incremental EBITDA
OKLAHOMA CITY, Okla.--(BUSINESS WIRE)--Jul. 14, 2015--
LSB Industries, Inc. (NYSE:LXU) (“LSB” or “the Company”), a producer of
chemical products for the agricultural, mining and industrial markets
and a leading manufacturer of commercial and residential climate control
products, today provided an update on the status of the expansion
project at its El Dorado, Arkansas facility (“EDC expansion”). The new
nitric acid plant and concentrator are on schedule to be completed and
operational by the end of the third quarter of 2015. The 375,000 ton per
year ammonia plant remains on schedule to be completed and operational
in the first quarter of 2016. The Company’s current cost estimate for
the EDC expansion is now in the range of $560 million to $575 million,
up from the previous estimate of $495 million to $520 million. Based on
management’s current project cost estimates and forecast for operating
cash flow, at this time LSB does not expect to require additional
financing to complete the EDC expansion other than the previously
announced financings related to the installation of the cogeneration
facility and the ammonia storage tank.
The Company recently updated its cost estimate to complete the EDC
expansion using refined estimates for specific quantities of
construction materials and labor-hours based upon information provided
by its engineering, procurement and construction contractor.
Contributing to the increased cost estimate to complete the EDC
expansion were productivity and quality issues with a subcontractor
responsible for the installation of piping in the ammonia plant.
“We are pleased to report that the timeline for completion of our El
Dorado facility expansion remains intact, although we are disappointed
that the total cost of the project is expected to exceed our initial
cost estimates,” stated Barry Golsen, LSB’s President and Chief
Executive Officer. “The safety, product quality, and operational
reliability of the El Dorado facility are our primary areas of focus as
we move forward toward the completion of the project. Even with the
anticipated higher costs, we believe that the project economics remain
compelling, with the new capacity expected to yield approximately $90
million of annual incremental EBITDA operating at full capacity.”
About LSB Industries, Inc.
LSB is a manufacturing and marketing company. LSB’s principal business
activities consist of the manufacture and sale of chemical products for
the agricultural, mining, and industrial markets, and the manufacture
and sale of commercial and residential climate control products, such as
water source and geothermal heat pumps, hydronic fan coils, modular
chillers, large custom air handlers and make-up air units.
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements generally are identified by use of the
words “believes”, “expects”, “intends”, “anticipates”, “plans to”,
“should”, “estimates”, “projects”, or similar expressions, including,
without limitation, the timeline for completion of the El Dorado
expansion and the incremental EBITDA expected to be yielded by the new
capacity.. Actual results may differ materially from the forward-looking
statements as a result of various future events, including without
limitation, weather conditions, ability to obtain raw materials and
equipment in a timely manner necessary to complete the EDC expansion;
occurrence of force majeure events which could delay completion of the
EDC expansion; general economic conditions; acceptance of our
technology; increased competitive pressures; price increases for raw
materials; labor conditions; loss of significant customers or customers’
failure to abide by conditional terms; problems with production
equipment; legislative or regulatory changes which could negatively
affect production at the EDC expansion; and the various factors
described in the “Special Note Regarding Forward-Looking Statements,”
and the “Risk Factors” contained in our most recent 10-K for the year
ended December 31, 2014, and Form 10-Q for quarter ended March 31,
2015. These forward looking statements speak only as of the date of
this press release, and LSB expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
LSB’s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
The term EBITDA, as used in this press release, 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 Company
believes that certain investors consider EBITDA a useful means of
measuring our ability to meet our debt service obligations and
evaluating our financial performance. EBITDA has limitations and
should not be considered in isolation or as a substitute for net income,
operating income, cash flow from operations or other cash flow data.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150714006665/en/
Source: LSB Industries, Inc.
Company:
Mark Behrman, 405-235-4546
Chief Financial
Officer
or
Investor Relations:
The Equity Group
Inc.
Fred Buonocore, 212-836-9607
or
Linda Latman,
212-836-9609
