LSB Industries (NYSE:LXU) shares experienced substantial volatility in the second half of the last year. This was caused by several factors, including termination of sale processes and a fire in its Oklahoma plant. LXU shares traded in the range of $7 in the previous six months before today’s rally of 16% – which pushed its share price to $8.30.

LSB Industries Narrower than Expected Loss

Today’s rally was supported by a lower than expected loss for the fourth quarter. The company missed the revenue estimate by $7.73 million, while earnings per share of negative $0.30 exceeded the consensus estimate by $0.49 per share.

LSB Industries posted net sales of $88.9 million in the fourth quarter of 2017, representing a growth of 4% from $85.4 million in the year-ago period.

Sales from agricultural products remained flat compared to the past year quarter, higher pricing for HDAN products helped in offsetting lower ammonia volumes. The purchase of 32,955 tons of Urea ammonium nitrate from the third party also impacted its sales and margins.

However, demand for industrial ammonia grew during the fourth quarter, while demand for low-density ammonium nitrate (LDAN) also rose compared to the final quarter of last year.

Mr. Greenwell said, “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.”

>>Mining Stocks Are On The Rise

LSB Industries expects to generate higher sales volume from its industrial and mining operations in fiscal 2018, mainly from LDAN/HDAN and AN solution. However, agricultural products are likely to face pressure in 2018.

Debts Level Is High

The company’s debt level is substantially higher when compared to its cash position. At the end of the final quarter of fiscal 2017, LXB Industries had a cash total of $33.6 million with almost $41.2 million of borrowing available under its Working Capital Revolver. Its total long-term debt was at $409.4 million at the end of the latest quarter, and the company has to pay Interest expense of $9 million each quarter on its debt.

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