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

LSB Industries, Inc. (NYSE:LXU) (“LSB” or the “Company”) today announced
results for the third quarter ended September 30, 2017.

Third Quarter Highlights

• Net sales of $92.4 million for the third quarter of 2017, up from
  $80.3 million for the third quarter of 2016
• Net loss from continuing operations of $17.1 million for the third
  quarter of 2017, an improvement from a loss of $39.5 million for the
  third quarter of 2016
• Adjusted EBITDA⁽¹⁾ from continuing operations of $2.8
  million for the third quarter of 2017, an increase from an Adjusted
  EBITDA loss of $26.5 million for the third quarter of 2016

“Our sales and adjusted EBITDA increased significantly compared to the
third quarter of last year as a result of higher production levels at
all three of our facilities,” stated Daniel Greenwell, LSB’s President
and CEO. “The higher volumes were partially offset by continued softness
in pricing for our products.”

“Overall, we were encouraged by the performance of our plants during the
third quarter. Our Cherokee Facility ran at a 99% on-stream rate during
the period, representing its fourth consecutive quarter with an
on-stream rate in excess of 95%. El Dorado had an on-stream rate of
approximately 91% at its ammonia plant in the third quarter, up from 87%
in the second quarter of this year and 62% in the third quarter of last
year, and averaged approximately 1,320 tons per day, or 15% above
nameplate capacity. Earlier this month, we announced that the ammonia
plant at El Dorado was taken out of service to address mechanical issues
on a boiler and a heat exchanger. Those repairs were completed, and the
plant was returned to service on October 22^nd. At our Pryor
Facility, the third quarter onstream rate, following the completion of a
17-day turnaround on July 21^st, was 85%, up from 78% in the
second quarter of this year and 70% in the third quarter last year. As
we previously announced, Pryor was 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. Those repairs are
expected to be completed later this week. Additionally, the company
decided to replace the process gas pre-heat system that was originally
planned for the 2018 turnaround. We expect this work will be completed
by the third week of November. As a result of this additional work and
other work done during the outage, we do not anticipate having to
perform a turnaround at the Pryor facility in 2018.”

Mr. Greenwell concluded, “As previously disclosed, we expect our fourth
quarter results to have an adverse impact of approximately $7.0 million
to $8.0 million of EBITDA from the downtime at Pryor and El Dorado.
While we are disappointed by these recent operational issues, we
continue to believe that our goal to achieve and sustain on-stream rates
averaging approximately 95% at each of our three ammonia plants is
achievable. We are currently in the process of upgrading our maintenance
management system across all our facilities, which will provide us with
improved predictive and preventative capabilities in terms of our
ability to identify potential plant issues before they result in
unplanned downtime incidents. Our goal is to have the upgrades in place
by year end. We expect that higher on-stream rates, coupled with what we
anticipate will be a stronger pricing environment, should lead to
improved top and bottom line results for LSB in 2018, which should
enable us to further enhance our financial position throughout the year.”

Comparison of 2017 to 2016 periods:

• Net sales of all our agricultural products increased during the
  quarter relative to the prior year period. The increase in sales
  volume of UAN and ammonia reflect higher on-stream rates and the
  resultant higher production at our Cherokee and Pryor Facilities in
  the third quarter of 2017 related to improved plant reliability and no
  scheduled turnaround at Cherokee in 2017. HDAN sales increased
  materially due to the success of our focused marketing and
  distribution strategy resulting in increased sales volumes. Higher
  volumes were partially offset by lower average selling prices for UAN
  and agricultural ammonia, as indicated in the table below. Net sales
  of industrial ammonia increased as a result of higher plant on-stream
  rates at El Dorado. Continued focus on expanding nitric acid and low
  density ammonium nitrate (LDAN) mining volumes have also contributed
  to increased sales versus prior year. Sales of nitric acid from the
  Baytown Facility were impacted by Hurricane Harvey but with minimal
  financial impact for the quarter. Continued lower trends in the mining
  industry also impacted AN solution volume versus the prior year period.
• EBITDA from continuing operations increased compared to the prior year
  period primarily due to the aforementioned higher sales volumes along
  with lower plant and lower selling, general and administrative costs.
  These factors were partially offset by the previously discussed
  declines in sales prices across our key products and higher natural
  gas feedstock costs.

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

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

Financial Position and Capital Additions

As of September 30, 2017, our total cash position was $53.1 million.
Additionally, we had approximately $38.6 million of borrowing
availability under our Working Capital Revolver. There were no
borrowings under the Working Capital Revolver at September 30, 2017.

Total long-term debt, including the current portion, was $410.4 million
at September 30, 2017 compared to $420.2 million at December 31, 2016.
The aggregate liquidation value of the Series E Redeemable Preferred at
September 30, 2017, inclusive of accrued dividends of $39.3 million, was
$179.0 million.

Interest expense, net of capitalized interest, for the third quarter of
2017 was $9.3 million compared to $13.3 million for the same period in
2016. The third quarter of 2016 included $1.8 million relating to the
12% Senior Secured Notes repaid in October 2016 and $2.2 million debt
modification expense associated with a consent solicitation process
completed in the third quarter of 2016. For the full year of 2017, we
expect interest expense to be approximately $37 million.

Capital additions were approximately $9.8 million in the third quarter
of 2017. Planned capital additions for the fourth quarter of 2017 are
estimated to be approximately $10 million. For the full year of 2017,
total capital additions, which are related to maintaining and enhancing
safety and reliability at our facilities, are expected to be
approximately $35 million.

Revised Volume Outlook

Our outlook for sales volumes for the fourth quarter of 2017 are as
follows:

Conference Call

LSB’s management will host a conference call covering the first quarter
results on October 31, 2017 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 additions for 2017; 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, 2016 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 and 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.
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 of property plant and equipment
(which includes amortization of other assets and excludes interest
included in amortization), 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.

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.

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.

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