LSB Industries, Inc. Reports Operating Results for the 2017 Fourth Quarter

Provides Outlook for 2018 Product Volumes

OKLAHOMA CITY–(BUSINESS WIRE)–LSB Industries, Inc. (NYSE:LXU) (“LSB” or the “Company”) today announced
results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter Highlights

• Net sales of $88.9 million for the fourth quarter of 2017, up from
  $85.4 million for the fourth quarter of 2016
• Net loss from continuing operations of $0.2 million for the fourth
  quarter of 2017, compared to a loss of $25.2 million for the fourth
  quarter of 2016
• Adjusted EBITDA(1) from continuing operations of $0.3
  million for the fourth quarter of 2017, compared to Adjusted EBITDA of
  $2.8 million for the fourth quarter of 2016

“Our sales increased while adjusted EBITDA declined modestly relative to
the fourth quarter of last year as increased production from our El
Dorado facility, higher product pricing and improved demand for mining
products was offset by the impact of downtime at our Pryor facility,”
stated Daniel Greenwell, LSB’s President and CEO.

“With respect to the operating performance of our facilities, Cherokee’s
ammonia plant once again ran at a 99% on-stream rate for the quarter,
which was its fifth consecutive quarter of running at this level. El
Dorado had an ammonia plant on-stream rate of approximately 77% in the
fourth quarter, which was an improvement over the fourth quarter of the
previous year, but lower than the 90% rate it operated at through the
first three quarters 2017 as a result of nineteen days of downtime
necessary to address mechanical issues on a boiler and a heat exchanger
as discussed on our third quarter call. Since returning to service in
late October, El Dorado’s ammonia plant has been producing at a rate in
excess of 1,300 tons per day with an on-stream rate from that point to
date of 99%. As previously announced, Pryor resumed production in early
December after being taken out of service towards the end of September
to repair damage to electrical controls, wiring and piping that resulted
from a minor fire at its ammonia plant. In addition to those repairs, we
completed more extensive maintenance work during the downtime which we
expect to allow Pryor to forgo a full turnaround later in 2018 and
consistently operate at significantly higher on-stream rates, thus
enabling us to better capitalize on the improving pricing environment
for ammonia. While we were disappointed with how Pryor operated for the
fourth quarter, we believe that the significant work that we have done
during the third and fourth quarters of 2017 combined with the enhanced
maintenance programs we are implementing, will allow us to operate at
improved on-stream rates.”

Mr. Greenwell concluded, “So far in the first quarter of 2018, prices
for several of the products we produce and sell, particularly ammonia,
and high density ammonium nitrate (HDAN) have been strengthening and are
currently above their levels from the first quarter of last year.
Pricing in 2017 was negatively impacted by excess inventory in the
distribution channel from new capacity brought online by several of our
competitors. We believe the market has largely absorbed this excess
capacity at this point and do not anticipate product pricing to return
to the trough levels we experienced in the second half of 2017 that
depressed our full year 2017 results. Additionally, we are focused on
the significant technological enhancements we are making to our company
wide maintenance management system, which will improve our ability to
proactively address potential downtime causing issues and improve the
overall reliability of all our plants. We are on track to complete these
enhancements by the end of our 2018 second quarter and should start to
see the benefit in the second half of 2018. We expect that the improved
maintenance system and practices, coupled with the higher selling prices
for our products should result in materially improved financial results.”

(1)	This is a Non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

Three Months Ended December 31,
2017	2016
(Dollars in millions)
Sales by Market Sector	Sales	Sector Mix	Sales	Sector Mix	% Change
Agricultural	$	32.4	36	%	$	32.8	38	%	(1	) %
Industrial, Mining and Other	56.5	64	%	52.6	62	%	7	%
$	88.9	$	85.4	4	%

Comparison of 2017 to 2016 periods:

• Net sales of our agricultural products were essentially flat during
  the quarter relative to the prior year period. Stronger pricing for
  HDAN was offset by lower ammonia volumes resulting from downtime at
  our Pryor facility as well as weaker market pricing for ammonia. Urea
  ammonium nitrate (UAN) sales included approximately 32,955 tons
  purchased from third parties to meet customer obligations during the
  Pryor downtime. UAN selling prices were negatively impacted by forward
  orders taken during the summer months at lower selling prices. Net
  sales of industrial ammonia increased as a result of higher volumes
  from improved on-stream rates at El Dorado. Low density ammonium
  nitrate (LDAN) sales volumes for mining applications also increased as
  a result of our sales and marketing efforts and stronger overall
  demand from this market. Sales of nitric acid from the Baytown
  facility increased as a result of rising levels of industrial
  manufacturing throughout the U.S.
• Adjusted EBITDA from continuing operations was lower compared to the
  prior year period primarily due to the aforementioned downtime at the
  Pryor facility, partially offset by improved on-stream rates and lower
  fixed costs at El Dorado as compared to the fourth quarter of 2016.

The following tables provide key sales metrics for our Agricultural
products:

Three Months Ended December 31,
Product (tons sold)	2017	2016	% Change
UAN	97,852	87,662	12	%
HDAN	48,782	49,086	(1	) %
Ammonia	13,821	22,770	(39	) %
Other	4,801	4,264	13	%
165,256	163,782	1	%
Average Selling Prices (price per ton) (A)
UAN	$	124	$	135	(8	) %
HDAN	$	203	$	168	21	%
Ammonia	$	215	$	284	(24	) %

(A)	Average selling prices represent “net back” prices which are calculated as sales less freight expenses divided by product sales volume in tons.

The following table indicates the volumes sold of our major Industrial
and Other Chemical products:

Three Months Ended December 31,
Product (tons sold)	2017	2016	% Change
Nitric acid – Baytown	115,599	99,055	17	%
Nitric acid – All Other	25,375	27,399	(7	) %
AN solution	4,498	8,272	(46	) %
Ammonia	51,572	43,876	18	%
197,044	178,602	10	%

The following table indicates the volumes sold of our major Mining
products:

Three Months Ended December 31,
Product (tons sold)	2017	2016	% Change
LDAN/HDAN	35,074	31,095	13	%
AN solution	3,916	11,267	(65	) %
38,990	42,362	(8	) %
Input Costs
Average natural gas cost/MMBtu	$	3.00	$	3.01	–	%

Financial Position and Capital Expenditures

As of December 31, 2017, our total cash position was $33.6 million.
Additionally, we had approximately $41.2 million of borrowing
availability under our Working Capital Revolver. There were no
borrowings under the Working Capital Revolver at December 31, 2017.

Total long-term debt, including the current portion, was $409.4 million
at December 31, 2017 compared to $420.2 million at December 31, 2016.
The aggregate liquidation value of the Series E Redeemable Preferred at
December 31, 2017, inclusive of accrued dividends of $45.5 million, was
$185.2 million.

Interest expense, net of capitalized interest, for the fourth quarter of
2017 was $9.3 million compared to $9.8 million for the same period in
2016. For the full year of 2018, we expect interest expense to be
approximately $35 – $40 million.

Capital expenditures were approximately $10.3 million in the fourth
quarter of 2017. For the full year of 2018, total capital expenditures,
which are related to maintaining and enhancing safety and reliability at
our facilities, are expected to be approximately $35 million.

Volume Outlook

Our outlook for sales volumes for the full year 2018 (including lost
sales related to El Dorado and Cherokee turnarounds) and our actual
sales volumes for the full year 2017 are as follows:

Products	Full Year 2018 Sales (tons)	Full Year Actual 2017 Sales (tons)
Agriculture:
UAN	480,000 – 490,000	489,000
HDAN	290,000 – 310,000	280,000
Ammonia	115,000 – 125,000	94,000
Industrial, Mining and Other:
Ammonia	220,000 – 230,000	229,000
LDAN/HDAN and AN solution	180,000 – 190,000	166,000
Nitric Acid and Other Mixed Acids	90,000 – 100,000	101,000
Sulfuric Acid	120,000 – 130,000	133,000
DEF	15,000 – 20,000	15,000

Conference Call

LSB’s management will host a conference call covering the fourth quarter
results on February 27, 2018 at 10:00 a.m. ET/9:00 a.m. CT to discuss
these results and recent corporate developments. Participating in the
call will be President and CEO, Daniel Greenwell, Executive Vice
President and CFO, Mark Behrman and Executive Vice President, Chemical
Manufacturing, John Diesch. Interested parties may participate in the
call by dialing (201) 493-6739. Please call in 10 minutes before the
conference is scheduled to begin and ask for the LSB conference call. To
coincide with the conference call, LSB will post a slide presentation at www.lsbindustries.com
on the webcast section of the Investor tab of our website.

To listen to a webcast of the call, please go to the Company’s website
at www.lsbindustries.com
at least 15 minutes prior to the conference call to download and install
any necessary audio software. If you are unable to listen live, the
conference call webcast will be archived on the Company’s website. We
suggest listeners use Microsoft Explorer as their web browser.

LSB Industries, Inc.

LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma,
manufactures and sells chemical products for the agricultural, mining,
and industrial markets. The Company owns and operates facilities in
Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates
a facility for a global chemical company in Baytown, Texas. LSB’s
products are sold through distributors and directly to end customers
throughout the United States. Additional information about the Company
can be found on its website at www.lsbindustries.com.

Forward-Looking Statements

This press release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements generally are identifiable by use of
the words “may,” “believe,” “expect,” “intend,” “plan to,” “estimate,”
“project” or similar expressions, and include but are not limited to:
financial performance improvement; view on sales to mining customers;
estimates of consolidated depreciation and amortization and future
turnaround expenses; our expectation of production consistency and
enhanced reliability at our Facilities; our projections of trends in the
fertilizer market; improvement of our financial and operational
performance; our planned capital expenditures for 2018; reduction of
SG&A expenses; volume outlook and our ability to complete plant repairs
as anticipated.

Investors are cautioned that such forward-looking statements are not
guarantees of future performance and involve risk and uncertainties.
Though we believe that expectations reflected in such forward-looking
statements are reasonable, we can give no assurance that such
expectation will prove to be correct. Actual results may differ
materially from the forward-looking statements as a result of various
factors. These and other risk factors are discussed in the Company’s
filings with the Securities and Exchange Commission (SEC), including
those set forth under “Risk Factors” and “Special Note Regarding
Forward-Looking Statements” in our Form 10-K for the year ended December
31, 2017 and, if applicable, our Quarterly Reports on Form 10-Q and our
Current Reports on Form 8-K. All forward-looking statements included in
this press release are expressly qualified in their entirety by such
cautionary statements. We expressly disclaim any obligation to update,
amend or clarify any forward-looking statement to reflect events, new
information or circumstances occurring after the date of this press
release except as required by applicable law.

See Accompanying Tables

LSB Industries, Inc.
Financial Highlights
Three Months and Twelve Months Ended December 31,
Three Months Ended	Twelve Months Ended
2017	2016	2017	2016
(In Thousands, Except Per Share Amounts)
Net sales	$	88,917	$	85,369	$	427,504	$	374,585
Cost of sales	99,121	94,261	422,038	423,891
Gross profit (loss)	(10,204	)	(8,892	)	5,466	(49,306	)
Selling, general and administrative expense	8,238	8,438	34,990	40,168
Impairment of goodwill	—	1,621	—	1,621
Other expense (income), net	2,309	(852	)	4,567	(872	)
Operating loss	(20,751	)	(18,099	)	(34,091	)	(90,223	)
Interest expense, net	9,326	9,816	37,267	30,945
Loss on extinguishment of debt	—	8,703	—	8,703
Non-operating other expense (income), net	103	(219	)	(306	)	218
Loss from continuing operations before benefit for income taxes	(30,180	)	(36,399	)	(71,052	)	(130,089	)
Benefit for income taxes	(30,018	)	(11,209	)	(40,759	)	(41,956	)
Loss from continuing operations	(162)	(25,190	)	(30,293	)	(88,133	)
Income from discontinued operations, net of taxes	1,076	3,657	1,076	200,301
Net income (loss)	914	(21,533	)	(29,217	)	112,168
Dividends on convertible preferred stocks	75	75	300	300
Dividends on Series E redeemable preferred stock	6,195	5,410	23,443	27,761
Accretion of Series E redeemable preferred stock	1,635	1,636	6,487	18,256
Net income attributable to participating securities	—	—	—	1,091
Net income (loss) attributable to common stockholders	$	(6,991	)	$	(28,654	)	$	(59,447	)	$	64,760
Income (loss) per common share:
Basic:
Loss from continuing operations	$	(0.30)	$	(1.19	)	$	(2.22)	$	(5.28	)
Income from discontinued operations, net of taxes	0.04	0.13	0.04	7.82
Net income (loss)	$	(0.26)	$	(1.06	)	$	(2.18)	$	2.54
Diluted:
Loss from continuing operations	$	(0.30)	$	(1.19	)	$	(2.22)	$	(5.28	)
Income from discontinued operations, net of taxes	0.04	0.13	0.04	7.82
Net income (loss)	$	(0.26)	$	(1.06	)	$	(2.18)	$	2.54

LSB Industries, Inc.
Consolidated Balance Sheets
December 31,	December 31,
2017	2016
(In Thousands)
Assets
Current assets:
Cash and cash equivalents	$	33,619	$	60,017
Accounts receivable, net	59,570	51,299
Inventories	21,856	22,939
Supplies, prepaid items and other:
Prepaid insurance	10,535	11,217
Precious metals	7,411	8,648
Supplies	27,729	24,100
Prepaid and refundable income taxes	1,736	1,193
Other	1,284	1,733
Total supplies, prepaid items and other	48,695	46,891
Total current assets	163,740	181,146
Property, plant and equipment, net	1,014,038	1,078,958
Intangible and other assets, net	11,404	10,316
$	1,189,182	$	1,270,420

LSB Industries, Inc.
Consolidated Balance Sheets (continued)
December 31,	December 31,
2017	2016
(In Thousands)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	55,992	$	54,246
Short-term financing	8,585	8,218
Accrued and other liabilities	35,573	44,037
Current portion of long-term debt	9,146	13,745
Total current liabilities	109,296	120,246
Long-term debt, net	400,253	406,475
Noncurrent accrued and other liabilities	11,691	12,326
Deferred income taxes	54,787	93,831
Commitments and contingencies
Redeemable preferred stocks:
Series E 14% cumulative, redeemable Class C preferred stock, no par value, 210,000 shares issued; 139,768 outstanding; aggregate liquidation preference of $185,231,000 ($161,788,000 at December 31, 2016)	174,959	145,029
Series F redeemable Class C preferred stock, no par value, 1 share issued and outstanding; aggregate liquidation preference of $100	—	—
Stockholders' equity:
Series B 12% cumulative, convertible preferred stock, $100 par value; 20,000 shares issued and outstanding	2,000	2,000
Series D 6% cumulative, convertible Class C preferred stock, no par value; 1,000,000 shares issued and outstanding	1,000	1,000
Common stock, $.10 par value; 75,000,000 shares authorized, 31,280,685 shares issued	3,128	3,128
Capital in excess of par value	193,956	192,172
Retained earnings	256,214	314,301
456,298	512,601
Less treasury stock, at cost:
Common stock, 2,662,027 shares (3,004,855 shares at December 31, 2016)	18,102	20,088
Total stockholders' equity	438,196	492,513
$	1,189,182	$	1,270,420

LSB Industries, Inc.
Non-GAAP Reconciliation

This news release includes certain “non-GAAP financial measures” under
the rules of the Securities and Exchange Commission, including
Regulation G. These non-GAAP measures are calculated using GAAP amounts
in our consolidated financial statements.

EBITDA Reconciliation

EBITDA is defined as net income (loss) plus interest expense,
depreciation, depletion and amortization (DD&A) (which includes DD&A of
property, plant and equipment and amortization of intangible and other
assets), less benefit for income taxes and income from discontinued
operations, net of taxes. We believe 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
consolidated income or cash flow data prepared in accordance with GAAP.
Because not all companies use identical calculations, this presentation
of EBITDA may not be comparable to a similarly titled measure of other
companies. The following table provides a reconciliation of net income
(loss) to EBITDA for the periods indicated.

Three Months Ended December 31,	Twelve Months Ended December 31,
2017	2016	2017	2016
($ in millions)
LSB Consolidated
Net income (loss)	$	0.9	($21.5	)	($29.2	)	$	112.2
Plus:
Interest expense	9.3	9.8	37.3	30.9
Loss on extinguishment of debt	–	8.7	–	8.7
Provision for impairment	–	1.6	–	1.6
Depreciation, depletion and amortization	17.3	18.4	69.2	61.3
Benefit for income taxes	(30.0	)	(11.2	)	(40.8	)	(41.9	)
Income from discontinued operations	(1.1	)	(3.7	)	(1.1	)	(200.3	)
EBITDA	($3.6	)	$	2.1	$	35.4	($27.5	)

LSB Industries, Inc.
Non-GAAP Reconciliation (continued)

Adjusted EBITDA

Adjusted EBITDA is reported to show the impact of one time/non-cash
items such as, loss on sale of a business and other property and
equipment, one-time income or fees, start-up/commissioning costs,
certain fair market value adjustments, non-cash stock-based compensation
and severance costs. We believe that the inclusion of supplementary
adjustments to EBITDA is appropriate to provide additional information
to investors about certain items. The following tables provide
reconciliations of EBITDA excluding the impact of the supplementary
adjustments. Our policy is to adjust for non-cash or non-recurring items
that are greater than $0.5 million quarterly or cumulatively.

LSB Consolidated ($ in millions)	Three Months Ended December 31,	Twelve Months Ended December 31,
2017	2016	2017	2016
EBITDA:	($3.6	)	$	2.1	$	35.4	($27.5	)
Consulting fee – Negotiated property tax savings at El Dorado	–	–	–	12.1
Stock-based compensation	1.3	0.8	5.2	4.0
Start-up/Commissioning costs at El Dorado	–	–	–	5.1
Severance costs	–	0.2	–	0.9
Derecognition of death benefit accrual	–	–	(1.4	)	–
Loss on sale of a business and other property and equipment	2.6	(0.3	)	7.0	0.3
Fair market value adjustment on preferred stock embedded derivatives	–	–	–	1.0
Delaware unclaimed property liability	–	–	–	0.3
Life insurance recovery	–	–	–	(0.7	)
Adjusted EBITDA	$	0.3	$	2.8	$	46.2	($4.5	)

Agricultural Sales Price Reconciliation

The following table provides a reconciliation of total agricultural
sales as reported under GAAP in our consolidated financial statement
reconciled to “net” sales which is calculated as sales less freight
expenses. We believe this provides a relevant industry comparison among
our peer group.

Three Months Ended December 31,	Twelve Months Ended December 31,
2017	2016	2017	2016
Agricultural sales ($ in millions)	$	32.4	$	32.8	$	184.1	$	166.2
Less freight:	2.7	3.0	15.2	12.2
Net sales	$	29.7	29.8	$	168.9	$	154.0

Contacts

Company:
LSB Industries, Inc.
Mark Behrman,
(405) 235-4546
Chief Financial Officer
or
Investor
Relations:
The Equity Group Inc.
Fred Buonocore,
CFA, (212) 836-9607
or
Kevin Towle, (212) 836-9620