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LSB Industries Improved Operating Results Cause Shares to Soar

Jason BondJason Bond ·

LSB Industries Inc (NYSE: LXU) shares were up an astonishing 30.75% today, after the company announced its financial results for the first quarter of 2017. The company showed strong growth in net sales from continuing operations, and improved its net loss from continuing operations. Let’s look into the small-cap chemical manufacturing company’s first quarter 2017 financial results.

LSB Industries First Quarter Results

LSB Industries reported net sales from continuing operations of $123.3M for 1Q 2017, nearly a 25% increase from the first quarter of 2016. LSB’s sales growth was primarily driven by its agricultural product sales, due to increased sales volumes from ammonia, UAN and HDAN, which grew by 21%, 67% and 67%, respectively. Now, the growth in sales of UAN, HDAN and ammonia was primarily driven by the healthier demand environment, when compared to the first quarter of 2016 due to an excess in inventory and the declining price environment.

The company reported a net loss from continuing operations of $6M, which was an improvement of $9.8M from its loss of $15.8M for the same quarter in the previous fiscal year.

The company also reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations of $20M, just over a 140% increase from its adjusted EBITDA for the first quarter of 2016. Now, the company’s adjusted EBITDA rose due to the higher sales volume and lower plant costs.

Capital additions came in at approximately $8M for the first quarter of 2017. LSB Industries now expects planned capital additions for the second quarter of 2017 to come in around $12M. For the full year of 2017, total capital additions, which are related to maintaining and enhancing safety at the company’s facilities, are expected to come in between $30M and $35M.

Let’s move on to LXU’s recent performance and statistics.

LXU Performance and Statistics

According to finviz, LSB Industries currently has 28.24M shares outstanding, 21.08M shares floating and a short float of 31.93%. The company has a market cap of under $300M. Now, since the stock has a low float, LXU was able to experience this meteoric rise. When a stock has a low float, that means there are a low amount of shares available for trading, and consequently, if there is a high demand for the stock, it could move quickly. Moreover, LXU had a short float of over 30%, which could cause shorts to close out their positions, and cause a short squeeze.

Here’s a look at LXU’s recent performance on the daily chart:

Source: Investing.com

If you look at the annotation above LXU had a bullish reversal pattern, known as the morning star doji pattern, ahead of its earnings results. Now, the earnings release was the catalyst that sent shares higher.

Final Thoughts

LSB Industries rose significantly today, after the company announced its first quarter 2017 financial results. The company had improved operating results, and coupled with its low float, the stock was able to soar over 30% today.

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