LSB Industries, Inc.

Greetings and welcome to the LSB Industries second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Fred Bonacore, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. Joining me today are Mark Behrman, our Chief Executive Officer, and Cheryl McGuire, 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. We're happy to have the opportunity to speak with you today about our 2023 second quarter results and our outlook for the third quarter and full year of 2023. I'd like to start by once again congratulating our team on their outstanding safety performance. For the first six months of this year, we've had zero recordable injuries and our trailing 12 months recordable injury rate as of June 30th, 2023 stands at 0.5. We are committed to ensuring that everything we do starts with safety. Looking at our 2023 second quarter summary on page three of the presentation, Our manufacturing and commercial teams performed very well during the quarter, which translated into a solid increase in both production and sales volume compared to Q2 2022. I'm pleased to say that our average ammonia on-stream rate for the second quarter and first half of 2023 indicates that we are making good progress towards our stated goal of operating our ammonia plants at a 95 percent on-stream rate, reflecting the processes and procedures we've implemented coupled with our reliability investments. We expect to see that rate continue to improve as we mature our new programs and get through next year's turnarounds. As anticipated, our financial results were lower compared to the second quarter of 2022. This was due to a decline in market prices for nitrogen products relative to last year's high pricing levels, resulting largely from the impact of lower natural gas prices in Europe and weaker industrial activity in Asia. Additionally, during the second quarter, Domestic UAN demand was below our expectations headed into the period as farmers opted to apply more urea to what had been a comparatively attractive pricing early this year for urea versus UAN. As we have generated significant free cash flow over the last 24 months and expect to continue to generate free cash flow even in a lower nitrogen pricing environment, we have worked to balance investments and growth with return of capital to our shareholders. Last year, we repurchased $175 million of common stock, and during the second quarter of this year, we repurchased $125 million of outstanding debt. Additionally, we repurchased $17 million of common stock under the $150 million stock repurchase program that our Board authorized in May. So, collectively, as of the 12-month period ended June 30, 2023, we've returned an excess of $317 million to shareholders. We will continue to balance the use of our free cash flow to maximize long-term shareholder value. Lastly, as I have mentioned previously, we submitted a capacity expansion project at our El Dorado site to the USDA for funding under their fertilizer production expansion program. Our project was selected for consideration for funding and is open for public comments until the end of this month. Assuming we continue through the process, the EPA will conduct a further environmental review. While we are excited about this project, we will continue to evaluate it, taking into consideration our markets, the global economy, the timing and sequence of the expansion, and internal resources. We would hope to decide on the next steps in this third quarter, subject to the USDA's timeline. On page four of our presentation, we provide an overview of our end markets. Corn prices remain above multi-year averages, reflecting solid demand trends, dry conditions throughout many U.S. corn growing regions, ongoing global uncertainties related to the war in the Ukraine, and ongoing tight stock-to-use ratios. Accordingly, we expect corn prices to remain at levels that would support strong fertilizer demand as we move towards the next planting season. In addition to strong corn prices, We believe that lower farm input costs relative to last year should further incentivize farmers to optimize fertilizer applications in the fourth quarter of 2023 and in the first half of 2024 as they seek to maximize yields for the next growing season. Demand for our industrial business remains steady. Nitric acid demand is stable as global producers shift production from international facilities to the U.S. operations in order to take advantage of lower U.S. input costs. Demand for ammonium nitrate in mining applications is strong as the increase in infrastructure projects increases demand for quarrying and aggregate production, and the growth in electric vehicles and other applications is increasing demand for metals in the U.S. Now I'll turn the call over to Cheryl, who will discuss our second quarter results and our outlook. Cheryl?