Good morning, everyone. Joining me today on the call are Mark Behrman, our Chief Executive Officer; and Cheryl Maguire, our Chief Financial Officer. Please note that today’s call will include forward-looking statements. And because the statements are based on the Company’s current intent, expectations, and projections, they are not guarantees of future performance, and a variety of factors could cause the actual results to differ materially. As this call will include references to non-GAAP results, please see the press release in the Investors section of our website, lsbindustries.com, for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. At this time, I’d like to go ahead and turn the call over to Mark.

Thank you, Fred, and welcome to the LSB team. We’re happy to have the opportunity to speak with you today about our 2021 third quarter, which combined with the first half of October, has included some of the most significant positive developments in our Company’s history. We posted record quarterly results for the second consecutive quarter as we continued to run our plants reliably, which enabled us to capitalize on the strong market environment for our products on both sides of our business. We also closed on the preferred stock exchange transaction that we discussed with you on our last call. As anticipated, the elimination of the preferred stock from our balance sheet led to credit upgrades on our debt by our major rating agencies. This enabled us to refinance our senior secured notes at a significant reduction in interest rate, which Cheryl will discuss later in the call. Collectively, these factors make us very optimistic about our prospects for the final quarter of 2021 and for the coming year. As it relates to our end markets, pricing strength on the agricultural side of our business and healthy demand on the industrial side combined to produce strong third quarter results as compared to those of our third quarter last year. On slide 3, we summarize the key drivers for our agricultural end markets. Commodity prices continue to sit well above year-ago levels. Most relevant to our business, the price of corn, while down from the highs of this past May, are up nearly 70% from 2020 lows and up more than 30% from this point last year, and continues to trade at near eight-year high levels. As we’ve discussed on previous calls, the strong pricing is the result of multiple factors, including a surge in exports led by increased demand…

Thanks, Mark, and good morning. Turning to page 5, you’ll see a summary of our results for the quarter. Our strong top and bottom line performance relative to the third quarter of 2020 reflects the increased pricing for our products across all our businesses. Our adjusted EBITDA of approximately $38 million is a company record for a third quarter, our seasonally weakest period. Adjusted EBITDA for the first nine months of 2020 was more than 45% higher than our full year adjusted EBITDA for 2020. And with the month of October in the books, we are very optimistic about our fourth quarter. Page 6 bridges our adjusted EBITDA for the second quarter 2021 of $37.7 million to adjusted EBITDA for the third quarter 2020 of $10.2 million. The light green bar illustrates a substantial impact selling price strength had on our results. The modest decline in sales volumes largely the effects reflects the successful turnaround we conducted at our Cherokee facility. As a reminder, last year we did not have turnarounds at any of our facilities. Partially offsetting the benefit of higher product selling prices was the continued increase in raw material costs, which are shown net in the $36.9 million price impact you see on page six, and represented a nearly $13 million headwind in the quarter. Energy costs, including natural gas, have risen substantially over the course of 2021, and we are actively managing our exposure through forward gas purchases. We currently have approximately 75% of our gas needs locked in through the end of the year, but to put the gas cost inflation in perspective, it takes approximately 32 MMBtus of gas to make 1 ton of ammonia. As you can see in the tables in our earnings release, in the third quarter of 2021, our cost…

Thank you, Cheryl. There is no question that the recent actions we’ve taken with respect to our balance sheet have dramatically changed the future potential of what LSB can become as a company and the potential value we can deliver to our shareholders. That, combined with the journey we began several years ago to improve the reliability and efficiency of our assets and to focus on optimizing the sales of our products, made the kind of results we delivered in the 2021 third quarter possible. Looking ahead, on slide 8, we’ve summarized our priorities for the next 12 months. The continued improvement of our facilities operating rates has been and remains at the top of our list of opportunities to organically make a significant incremental contribution to EBITDA. Since introducing the performance improvement initiatives we began implementing in 2016, along with the investments and maintenance and upgrades we’ve made over the past several years, our plants have collectively made tremendous progress with respect to the volumes they produce, thus increasing our sales and enhancing our margins, aided by the strong pricing environment. With that said, we still have a meaningful room to improve. And similar to football where the red zone yards can be the most difficult yards to achieve, we have a good amount of work to do to capture the remaining operational performance opportunity that we’ve identified at our facilities. But, we know it’s possible. It will take a lot of hard work and the continued additions to our team of talented, experienced professionals. But, we will roll up our sleeves and get it done. Given current market pricing, we believe that this opportunity potentially represents $25 million to $30 million of incremental EBITDA that we believe we could recognize over the next 24 months. Another important priority…

[Operator Instructions] Our first question is from Rob McGuire with Granite Research. Please proceed with your question.

Good morning, Mark, Cheryl and Fred. Congratulations on your quarter.

Thanks, Rob. How are you?

Good, good. Thank you. Hey. Can you help us understand your parameters around potential M&A?

Parameters, you mean financial parameters or kind of things that we’re looking -- we might be looking for?

Actually both would be great, if you’d be willing to comment.

Well, from a focus standpoint, I think, we have a number of different opportunities, directions that we can go in. Clearly acquiring facilities that are similar to the ones that we operate today would be right down the fairway for us and something that we would really be able to easily understand and operate. So, that would be good if we could find those kinds of facilities, maybe give us some geographic differentiation, maybe broaden the product portfolio so that we’ve got more variable -- variance of products when talking to our customers. We also own a small sulfuric acid plant down at El Dorado, and we’ve operated that for over 30 years. So, we know the sulfuric acid market, and we could really make that a more meaningful business through the acquisition of other assets. We would look to do that as well. And then lastly, we do have a big focus, as I said, in blue and green ammonia. So, I think looking at some assets that would really move us forward in those areas, could be something that we’d really take a look at and be attractive. From a financing standpoint, as I mentioned in my comments and Cheryl reiterated, we’ve been leveraged for a number of years, and we’ve worked really hard to delever the Company. So, we’re not looking to go back and leverage up for an M&A activity. We would consider going above the 4 times leverage, if we can see a clear line of sight that we can utilize free cash flow within 18 to 24 months after a closing on a transaction to get below 4 times, and of course, the balance would be a finance with equity. But, it would have to be a creative, would have to make a lot of sense for us. So, we’re not looking to get bigger just for bigger sake, and there’s no value to that. I hope that gave you some color.

Thank you. UAN, can you put some color around your UAN production in the quarter? And how we should think about UAN volumes going forward?

Sure, Rob. So, I mean, yes, UAN volumes were down this quarter versus the same quarter last year. From a sales perspective that was of course the turnaround at Cherokee, probably accounted for 30,000 to 35,000 tons of lower UAN production. And then, sales were also impacted this quarter compared to last quarter simply from timing. We sold more in the second quarter this year whereas last year, we kind of carried an additional 20,000 to 25,000 tons into the third quarter, and we were able to move that volume last year. We’re just running lower on inventory overall. A lot of that is still from that winter freeze, we had it in -- we’re carrying less inventory in the chain for some of that caught up with us in the third quarter. Looking forward to the fourth quarter, really thinking UAN sales volumes are probably going to be in line with last year.

Thank you. Our next question is from Steve Ferazani with Sidoti and Company. Please proceed with your question.

Good morning, Mark. Good morning, Cheryl. I wanted to ask about -- a little bit about the guidance, in terms of you have a pretty good -- I’m sure you have a pretty good handle on natural gas prices, given your hedging -- in terms of pre-selling ammonia and fertilizer volume, how much you’re doing that? And how tricky it is right now, given the fact that prices are going up dramatically, different from -- in past years wouldn’t expect prices moving as much this time either?

That’s a great question, and sort of the great struggle every day for us, right? How far to sell ahead versus hold back with prices moving so quickly? So, I would tell you that, we’re not selling as far ahead as we might have in the past, but particularly at this time of the year where a lot of sell forward happens. But, we still have to run facilities, right? And we still produce product and want to make sure that we can sell it. So, I think it’s a happy balance. Having said that, I think we’re trying to be prudent about moving prices up as the industry’s moving prices up. So, we’ll hold back on some quantities of sale that we might have historically sold at this point in the year and take advantage of maybe higher spot prices.

The flip side would be how far ahead our customers trying to buy?

Well, I think there was a -- if you go back two or three months, I think there was a little bit of a standoff where prices were moving up and customers were holding off on buying, expecting that prices would come back down to more normalized levels. With prices continuing to move up, we are seeing, a lot of customers now buying forward for the spring to try and lock in prices because I think they were a little nervous that we could see continued price appreciation throughout the rest of this year and the early part of next year. The other thing I would say is, when you look at nitrogen prices or nitrogen equivalent pricing in comparison to whether UAN, urea and ammonia, ammonia is trading at a 24% and 36% discount to UAN and urea. And so, I think what we’re seeing and starting to see is some pretty significant demand for full ammonia application, because if I’m a farmer, I probably, from a cost perspective, will put down more ammonia in the fall and get more nitrogen in the ground, given its lower competitive pricing in the hopes that maybe I can put a little less nitrogen in the spring. So, with the harvest on average more than 50% done -- the corn harvest more than 50% done, at this point, we are starting to see some real demand for full ammonia application.

In terms of the industrial contracts, obviously we’re seen the slow down on the automotive front, but certainly for this running season, we’re seeing a lot industries getting hit by the supply chain issues and we might see some production coming down. How much do your contracts protect you on the volume front? And does that mean the mix shifts over the next couple of quarters, knowing that we are going to not have excess supply and the strong ag command?

Well, the products -- I mean, the industrial contracts, generally are requirements contracts. They are not take-or-pay, although we do have some significant take-or-pay contracts. So, volume could shift. Having said all of that and despite auto pulling back a little bit, some of other of users of, let’s say nitric acid, have some really strong demand. So, I can tell you that we don’t have enough product to meet all the demand that we have. So, we’re not going to see a drop off in that market.

Great. And then, the last one for me, just on blue and green. Pretty quick timeline in terms of moving forward. I’m guessing you’ve already done a ton of work. In terms of moving forward, how much of that is a mix of what you are hearing from potential partners versus customers versus the D.C. climate?

Well, I mean, in my opinion, and I think our position as a company is, unlike a lot of previous green waves that have come and gone, this is really here to stay. There is a lot of momentum globally. There is a lot of government intervention and support. There is a lot of private capital that are involved in decarbonization. And of course, the consumer, most consumers understand the need to really reduce our carbon emissions around the globe. So, this is -- we don’t believe this is going away. And so, we’re very committed to it. We are -- have been working on this for a while. We tend to not announce -- we’ll put out announcements of who we’re talking to. And so, I think, we’ll put out an announcement when we have some meaningful movement on our position. But, we’re looking, as I mentioned, at both carbon capture and the production of green ammonia, because we think both are important in the efforts to decarbonize.

Great. Thanks a lot, Mark.

Yes.

Thank you. Our next question is for Richard Kus with Jefferies. Please proceed with your question.

Hey guys. Thanks for taking my questions. So, I’m just curious, do you have a sense of what percent of the industry is offline right now, as a result of some of the higher costs that they’re experiencing?

Well, most of the production offline that we’re talking about is throughout Europe. So, there’ve been a number of announcements. I mean, I don’t have a percent. I’ve heard as much as 4 million tons of ammonia production is offline.

Okay. And then, there’s obviously a lot of noise about some of the environmental policies that are taking place over in China. How do you think that ends up impacting nitrogen supply here over the medium term?

Well, I think China’s really tried to control their exports of product and use the product domestically. I think, a lot of that has to do with the fact that they’ve shut down some very costly and pollutive nitrogen manufacturing facilities. So, I think, the impact will be less product exported from China and therefore less supply in the marketplace.

Right. Okay. And then, just on some of this green, blue ammonia, do you guys have a sense of -- I know you’re very, very early in this process here, but like how do you think about the amount of capital that you would look to invest in that type of an opportunity over the medium term? Can you kind of maybe frame that up for us, give us some goalposts to think about?

Yes. So, I’ll talk about blue first, since I think it’s more immediate term. So, as I mentioned, there are -- there is currently a tax program called 45Q. You can get a tax credit of either $35 a ton for taking that CO2 and using it for enhanced oil recovery, which is done every day or you can earn as much as $50 a ton for permanently sequestering it in the ground. So, when you look at economics of investing capital, so for us, it’d be carbon capture equipment and of course there needs to be a pipeline -- to either a pipeline or direct to a well of course sequestering it. So, the investment of capital can go in a number of different ways. We can invest -- we potentially could invest no capital and just bring in a partner that wants to own the carbon capture, the pipeline and the well, and would pay us for the CO2 and leave us with blue ammonia to sell us blue ammonia or an upgraded product, a derivative of that, or we can invest some dollars in the carbon capture and own it with a partner or own the whole carbon capture ourselves. It’s really just an economic model and a return. And so, we’re not far enough along to determine which scenario we’d like to go down. I think, we’ll have a number of different options that we’ll be able to evaluate, and then make a decision. When it comes to green ammonia, there will be an investment of capital. We’ll have to retrofit the front end of our ammonia plant, whichever one we decide to put green ammonia in, we’ll have to buy electrolyzers. And then, there’s obviously engineering design to do that. But, I think in order for us to invest those dollars not only obviously we want to sign a long-term power purchase agreement for renewable energy at a cost effective rates, but we’d also like to underwrite the project by having at least 60% or 70% of the production spoken for with an offtake agreement. So, I think we’ll look to do that. And there’s been a lot of conversations with some really exciting partners that are really willing to partner with us, so that we can all point to an opportunity in a live situation where green ammonia is being produced. So, we’re really excited about a lot of the conversations that we’re having, because there’s really a lot of interest in partnering with us to really execute on either blue or green ammonia.

That’s great. And then, lastly, for me, big picture on Cherokee, how much expense negatively impacted EBITDA in the quarter? I saw the $8 million add-back to the adjusted EBITDA number. I’m curious, how much was not added back in terms of lost production?

Yes. I would say, probably close to $15 million.

Thank you. Our next question comes from Brian DiRubbio with Baird. Please proceed with your question.

Good morning. Do you have any sense of how much lower imports were, especially for UAN this year versus last year?

Brain, I could give you that in a follow-up call. I don’t have that in front of me now.

Okay. But, safe to say, it’s probably material for this year, correct?

Yes.

Okay, great. And just turnarounds for next year, are we looking at two or just one?

No, we’re looking at two. We have one at Pryor -- well, actually, we have one at El Dorado that’ll start mid to late summer, and then followed by Pryor, that will be late summer, kind of early fall.

And just remind me, are we still on, is it Pryor that’s still on a two-year schedule, or are you trying to move that to three? I forget, there was one of the three that was on a two-year schedule.

So, it had been on a two-year schedule. Having said that, we bypassed last year turnaround at Pryor during the pandemic or during the height of the pandemic, and pushed it off to this year. So, this will be three years. And we’ll have to make a determination as we’re doing the planning for this upcoming turnaround and we go into the plant and look at the condition of the plant because you always find some things, whether we think we can stay on a three-year or go back to a two year. The key at Pryor is, I want to make sure that we’re doing the right upgrades and the right maintenance and replacement of equipment or rebuild, so that we can really run reliably.

Got it. And then, just the -- Cheryl, almost $8 million add-back on turnaround to your adjusted EBITDA was that the actual cash cost on lost EBITDA, just trying to get -- if that was cash.

No, I mean, the lost EBITDA is the production that I just alluded to, which was $15 million, the $8 million is basically the maintenance costs, contractors, that sort of thing. So, yes, all-in cash, on just those two items you’re looking at over $20 million.

Okay, great. And then, just finally, Leidos lawsuit, just any updates there in terms of timing?

I wish I really had good news on that front. I mean, we still feel strongly that we’ve got a great case. I think, we’ve got some loose dates on the docket to get in front of the judge. So, for a couple of dates or blocks of time in 2022 and then early 2023. But, the judge has instructed all the parties to get really focused on finishing up all the depositions and all work. So, that’s a positive development there. So, focused on finishing it up and then, when we can, having the trial.

Very good. I appreciate the thoughts. Thank you.

Thanks.

Thank you. There are no further questions at this time. I would like to turn the floor back over to Mark Behrman for any closing comments.

Thank you everyone for your interest in LSB Industries, and hopefully you see that we continue to make good progress. If there is any follow-up questions, feel free to call Cheryl and myself. Thanks, and have a great day.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.