EX-99.1 2 d823926dex991.htm EX-99.1

LSB Industries, Inc. November 2014 NYSE: LXU Exhibit 99.1

2 Safe Harbor Statement The information contained in the presentation materials contain certain forward-looking statements. All these statements, other than statements of historical fact, are forward-looking statements. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “estimate” and similar statements of the future or of a forward-looking nature identify forward-looking statements, including but not limited to, all statements about or in references to the Architectural Building Index, Dodge Construction Green Outlook, or any McGraw Hill forecast, any references to future natural gas costs, ammonia costs, grain or corn demand or production, construction trends and demand, and the outlook for the chemical or climate control business. The forward-looking statements include but are not limited to the following statements: major investments to reduce costs and increase facility reliability; positioned to benefit from strong agricultural market and economic recovery; product balance options; production capacity; impact of capital expansion projects; estimated completion and start up dates for new chemical facilities and their cost and production capacity; planned capital spending; outlook for Chemical and Climate Control; turnaround at Cherokee; future maintenance activities; Pryor facility reliability; Climate Control’s product sales; sales growth Q4 2014 and 2015; LEAN impact; future outlook. You should not rely on the forward-looking statements because actual events or results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. We incorporate the risks and uncertainties discussed under the headings “Risk Factors” and “A Special Note Regarding Forward-looking Statements” in our Form 10-K for the fiscal year ended December 31, 2013 and Form 10-Q’s for the periods ending March 31, 2014, June 30, 2014, and September 30, 2014, which contain a discussion of a variety of factors which could cause the future outcome to differ materially from the forward-looking statements discussed in this investor presentation. We undertake no duty to update the information contained in this investor presentation. The term EBITDA, as used in this presentation, is net income plus interest expense, depreciation, amortization, income taxes, and certain non-cash charges, unless otherwise described. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to GAAP measurement. The reconciliation of GAAP and any EBITDA numbers discussed in this investor presentation are included in the appendix of this presentation.

3 Company Overview

Business Overview 4 Diversified industrial manufacturer of chemicals and HVAC products sold into a wide range of end markets Founded in 1968 and headquartered in Oklahoma City, OK; publicly traded (NYSE: LXU) Chemical Business operates 4 production facilities El Dorado Chemical Company (“EDC”) (Arkansas) Cherokee Nitrogen LLC (Alabama) Pryor Chemical Company (Oklahoma) El Dorado Nitric LLC (“Baytown”) (Texas) Climate Control Business operates 7 facilities located in Oklahoma City (over 1 million square feet) Financial Snapshot: LTM 9/30/14 Net Sales of $700.3 million LTM 9/30/14 Consolidated Adjusted EBITDA of $154.0 million Note: Excludes unallocated corporate expenses Note (1): Includes insurance proceeds of $104.2 million Climate Control, 38% Engineering and other, 2% Chemical 84% Climate Control, 16% EBITDA by Business Segment – LTM 9/30/14 LSB operates a well-diversified business with differentiated market positions across two distinct business segments (1) Net Sales by Business Segment – LTM 9/30/14 Chemical 60%

LSB’s Two Core Businesses 5 Consolidated Sales History ($’s in millions) Chemical Climate Control Provides specialty HVAC products to commercial, institutional and residential new construction, renovation and replacement markets, emphasis on green products Market and technology leader for water source and geothermal heat pumps, and hydronic fan coils Poised to benefit from the economic recovery, long-term trend toward green construction, and growth of emerging products 28% Agriculture 22% Industrial Acids & Ammonia 9% Mining 2% Natural Gas 6% Single-family Residential 31% Commercial & Institutional Buildings 2% Engineered Products & Other LTM 9/30/14 Sales Mix 492 586 749 532 610 805 759 679 700 $0 $300 $600 $900 2006 2007 2008 2009 2010 2011 2012 2013 LTM 9/30/14 Chemical 60% ($423 mil) Climate Control 38% ($264 mil) Positioned to benefit from strong agricultural market with favorable margins Major investments underway to reduce costs and increase facility reliability and capacity Leading merchant marketer of nitric acid in the U.S. Provides nitrogen based agricultural, mining and industrial chemicals to North American market

6 Business Segment Overview

Agro- Chemical (46% of sales) Nitric Acid Semi-conductor, nylon, polyurethane intermediates, ammonium nitrate CF Industries, PCS Sulfuric Acid Pulp and paper, alum, water treatment, metals and vanadium processing Cytec, Chemtrade Logistics Anhydrous Ammonia Power plant emissions abatement, water treatment, refrigerants, metals processing Various Diesel Exhaust Fluid (DEF) Exhaust stream additive to reduce NO x emissions from diesel vehicles Various Market Products Uses Competitors Industrial Acids, Ammonia & DEF (36% of sales) Urea Ammonium Nitrate Solutions (UAN) Fertilizer for corn and other crops CF Industries, PCS, Koch Industries, Rentec, Coffeeville Resources, imports Ammonium Nitrate - high density prills (AN) Primary nitrogen component in NPK fertilizer blends CF Industries, imports Anhydrous Ammonia High nitrogen content fertilizer primarily used for corn Various Chemical Markets and Products 7 density prills (AN) and AN solutions Specialty emulsions for mining applications CF Industries, PCS, Dyno Nobel America Specialty E2 Ammonium Nitrate Surface mining, quarries, construction Imports Mining Products (15% of sales) Ammonium Nitrate – low

U.S. Midwest Delivered Ammonia Cost Forecast Source: Fertecon, Blue Johnson, PotashCorp (2014F) Attractive Industry Fundamentals – Agro Chemicals 8 World Situation: North American Situation: Result: North America is Low Cost Producer of Nitrogen Fertilizers 0 100 200 300 400 500 600 700 Ukraine Port Russia - Yuzhnyy Trinidad Middle East US Gulf Producers US Midwest Producers Cash Costs Freight to US Freight & Handling to US Midwest Natural gas is the primary feedstock for anhydrous ammonia and all nitrogen fertilizers. Due to large shale gas reserves, U.S. has relatively low natural gas prices vs. most places worldwide. Natural gas is expected to average approximately $4.00 per MMBtu for the remainder of 2014 and 2015. Growing populations Developing economies Changing dietary habits (from grain to meat) Worldwide grain stock-to-use ratios at 10-year highs World grain shortages positively impact grain requirements in the U.S. During last 3 years U.S. consumed more grain than it produced. U.S. grain stocks are at 10-year highs leading to lower current and expected corn prices. High demand for grain expected in 2014 and 2015 despite low corn prices; between 86 to 88 million acres of corn expected to be planted in 2014/2015. ($US/ton)

LSB’s Agricultural Distribution 9 Multiple distribution channels Diverse geographic coverage Longstanding customer relationships Direct rail linkage to corn belt Southern Plains, South Central, Midwest & West Pryor, OK Cherokee, AL El Dorado, AR UAN UAN AN Koch Transammonia, The Andersons, CHS, Koch, et.al. Eastern Corn Belt Ag Centers - 30% Distributors & Dealers - 70% Southern Plains & Corn Belt

Operational Dynamics Diversification Strategy with Product Balance Options 10 Sales by Market Cost-Plus Agreements vs. Spot Market Sales A key strategy is to OPTIMIZE SALES MIX: industrial vs. agricultural. Approximately half our sales are NON-SEASONAL and priced pursuant to COST-PLUS agreements. LTM 9/30/14 Sales Mix Bayer Nitric Acid 16% Industrial Acids & Ammonia 20% Agricultural 46% Mining 15% Natural Gas 3% Cost Plus 50% Spot Market 50%

Major Chemical Customers 11 Bayer

Chemical Facilities 12 El Dorado Nitric LLC El Dorado Chemical Co. Cherokee Nitrogen LLC Pryor Chemical Co. El Dorado Chemical Company Cherokee Nitrogen LLC Pryor Chemical Company El Dorado Nitric LLC El Dorado, AR Cherokee, AL Pryor, OK Baytown, TX 1983 1999 2000 2000 Kellogg Kellogg Pritchard - 150 160 47 2 1,400 1,300 104 Bayer site ammonia natural gas natural gas ammonia UAN x x High Density AN x Ammonia x x Urea x x Nitric Acid x x x x Concentrated Nitric Acid x Sulfuric Acid x Mixed Acid x Carbon Dioxide x x Ammonia x x DEF x Low Density AN x AN solutions x x truck, rail truck, rail, pipeline, truck, rail truck, pipeline Year Acquired/Built Ammonia Design Transportation to Market Facility Location Plant Area (acres) Site Area (acres) Feedstock

Annual Production Capacity of Products Available for Sale (1,000’s of tons) 13 Red Font = production capacities after the completion of the ammonia and nitric acid expansion projects at El Dorado Note (1): Represents amount of ammonia currently purchased Note (2): Combined annual low density and high density AN production capacity is limited to 330,000/TPY due to the loss in 2012 of 90,000/TPY of nitric acid production capacity El Dorado Chemical Company Cherokee Nitrogen LLC Pryor Chemical Company El Dorado Nitric LLC Total ammonia natural gas natural gas ammonia 220 (1) /375 175 215 - 610/765 UAN 215 300 515 High Density AN (2) 110/300 110/300 Ammonia 125 30 85 115/240 Nitric Acid 45/200 30 410 485/640 DEF 15 15 Low Density AN (2) 220 220 AN solutions 85 85 Feedstock Ammonia Production Capacity Products Available for Sale Facility

• Cost of $275 million - $300 million • Reduces production costs significantly vs. purchased ammonia • Enhanced product balance opportunities • Increases plant capacity: - Currently use ~220,000 tons per year (TPY) - Additional capacity ~155,000 TPY - Total capacity ~375,000 TPY • Estimated completion Q4 2015/start-up Q1 2016 14 Capital Expansion Projects El Dorado Ammonia Plant • Cost of $125 million - $130 million • Improves operating characteristics • Enhanced product balance • Replaces lost acid capacity and adds additional capacity for a total of 370,000 TPY • Estimated completion and start-up Q2 2015 El Dorado Nitric Acid Plant and Concentrator • Engineering, Procurement and Construction (EPC) contractor secured • Installation of above ground structures underway • Inspection and refurbish/rebuild of equipment in process Construction Process Well Underway $545 $482 $220 $250 0 100 200 300 400 500 600 Approximate Cost to Produce Weighted Average Cost to Purchase Approximate Cost to Produce Weighted Average Cost to Purchase Produce vs. Purchase Spread at El Dorado Delivered Cost Natural Gas Cost Fixed Cost Other Variable Cost 2014 – 9 months Average 2013 Average Ammonia Production Offers Attractive Economics

Climate Control Market and Products Market Products Uses 15 Geothermal & Water Source Heat Pumps (65% of sales) Water Source Heat Pumps Heating and cooling for commercial/institutional as well as single family residential - new construction, renovation and replacements Geothermal Heat Pumps Heating and cooling for commercial/institutional as well as single family residential - new construction, renovation and replacements Leading share in water source and geothermal heat pumps Hydronic Fan Coils Heating and cooling for commercial/institutional new construction, renovation and replacements Leading share in hydronic fan coils Hydronic Fan Coils (23% of sales) Large Custom Air Handlers Commercial, institutional and industrial Modular Chillers Commercial, institutional and industrial Make-up Air Units Commercial, institutional and industrial Other HVAC Products (12% of sales)

16 Attractive Industry Fundamentals: Climate Control Significant upside as industry drivers return to levels at/near historical norms Driven by high energy efficiency Climate Control LTM 9/30/14 Market Mix Total Commercial, Institutional and Multi-Family: 83% ($ in Billions) $35.0 $85.0 $204.0 $248.0 $0 $75 $150 $225 $300 2008A 2012A 2016P Low-end High-end Source: 2013 Dodge Construction Green Outlook Construction markets are poised for a recovery to pre-recession levels Green building market spending expected to grow ~25%+ CAGR from ‘12 – ‘16E Commercial / Institutional / Multi-Family Starts (MM Square Feet) Single Family Residential Construction (Starts in 000’s) 1,750 1,278 1,487 1,711 2008 2013 2015E 2017E 16% 15% 1,626 624 700 1,025 2005 2013 2015E 2017E 12% 50-Year Median: 1,070 46% Education 19% Single Family Residential 17% Multi- Family 16% Lodging 11% Retail 8% Healthcare 6% Office 6% Industrial 2% Other 15% Sources: McGraw-Hill Construction Market Forecasting Service, Q4 2014; 50 Year Median – Census Bureau

Significant Installed Base of Climate Control Products Millennium Towers, NYC Bellagio, Las Vegas Statue of Liberty MGM Grand, Las Vegas Trump Tower, NYC World Financial Center, NYC Chicago Hilton and Towers Wynn Resort, Las Vegas Disney’s Grand Floridian, Orlando Atlantis, Bahamas Rowes Wharf, Boston Alta Condos, Washington DC Peninsula, Hong Kong Ritz Carlton, Pasadena, CA Rockefeller Center, NYC 17 Thousands of premier installations and over 4 million units

18 Financial Overview

Summary Statement of Operations 19 2013 2012 2011 2010 2014 2013 Sales $679.3 $759.0 $805.3 $609.9 $551.2 $530.3 Sales Growth (11)% (6)% 32% 15% 4% (9)% Operating Income/(Loss) $105.3 $95.7 $136.4 $55.9 $48.4 $35.1 Net Income/(Loss) $55.0 $58.6 $83.8 $29.6 $19.0 $17.6 Diluted Earnings/(Loss) per Share $2.33 $2.49 $3.58 $1.32 $0.80 $0.75 EBITDA $132.9 $117.3 $155.7 $74.3 $75.4 $54.4 EBITDA Margin 20% 15% 19% 12% 14% 10% $ in millions except EPS 9 Mos. Ended Sept. 30, Calendar Year Ended Dec. 31, *Free cash flow is defined as operating cash plus insurance proceeds and debt and financing proceeds, less capital expenditures and debt and financing payments

Segment Summary Statement of Operations 20 Chemical Business $ in millions 2013 2012 2011 2010 2014 2013 Sales $380.7 $477.8 $511.9 $351.1 $345.7 $303.0 Gross Profit 46.2 97.7 130.7 49.3 57.2 39.1 Gross Profit % 12.1% 20.4% 25.5% 14.0% 16.5% 12.9% Operating Income 87.8 82.1 116.5 31.9 46.8 20.3 Segment EBITDA $111.4 $98.5 $131.2 $45.0 $69.6 $36.9 Climate Control Business $ in millions 2013 2012 2011 2010 2014 2013 Sales $285.0 $266.2 $281.6 $250.5 $196.6 $217.5 Gross Profit 92.9 81.0 88.2 86.4 61.6 70.6 Gross Profit % 32.6% 30.4% 31.3% 34.5% 31.3% 32.4% Operating Income 30.4 25.8 32.8 35.3 17.4 24.4 Segment EBITDA $33.6 $29.0 $35.5 $38.8 $21.0 $26.9 9 Mos. Ended Sept. 30, Calendar Year Ended Dec. 31, Calendar Year Ended Dec. 31, 9 Mos. Ended Sept. 30,

Solid Financial Position Strong Balance Sheet 21 Note: As of September 30, 2014, total debt consisted of $425 million 7.75% Senior Secured Notes due in 2019; a $24.5 million Secured Promissory Note due in February 2016 and $9.9 million of equipment loans and capital leases. Our availability under the $100 million working capital revolver loan was $74.2 million at September 30, 2014. Sept. 30, Dec. 31, 2014 2013 Cash and Investments (including non-current) $311.1 $434.7 Total Debt $459.4 $463.0 Stockholders' Equity $432.4 $411.7 Total Capitalization $891.8 $874.7 $ in millions Debt to Capital EBITDA to Interest Coverage* * Calculated on a trailing twelve month basis using total interest, including capitalized interest. 23.0% 22.9% 55.5% 52.9% 52.1% 51.4% 51.5% 0% 10% 20% 30% 40% 50% 60% Mar. 31 2013 Jun. 30 2013 Sept. 30 2013 Dec. 31 2013 Mar. 31 2014 Jun. 30 2014 Sept. 30 2014 20.8x 14.6x 8.2x 7.4x 6.2x 5.2x 4.3x 0 5 10 15 20 25 Mar. 31 2013 Jun. 30 2013 Sept. 30 2013 Dec. 31 2013 Mar. 31 2014 Jun. 30 2014 Sept. 30 2014

Planned Capital Spending 22 Remainder of 2014 2015 Total Chemical Business: El Dorado Facility Expansion Projects $80 - $93 $200 - $222 $280 - $315 Development of Natural Gas Leaseholds 1 - 3 14 - 18 15 - 21 Environmental Projects 5 - 7 5 - 7 10 - 14 Major Renewal and Improvement Projects 14 - 18 34 - 40 48 - 58 Other 4 - 8 13 - 16 17 - 24 Total Chemical $104 - $129 $266 - $303 $370 - $432 Climate Control Business: 2 - 3 7 - 10 9 - 13 Corporate and Other: 2 - 3 7 - 10 9 - 13 Total Projects $108 - $135 $280 - $323 $388 - $458 Expenditures to Date Remainder of 2014 2015 Project Total Ammonia Plant $99 $50 - $60 $126 - $141 $275 - $300 Nitric Acid Plant and Concentrator 85 11 - 12 29 - 33 125 - 130 Other Support Infrastructure 21 19 - 21 45 - 48 85 - 90 Total El Dorado Projects $205 $80 - $93 $200 - $222 $485 - $520 Planned Capital Expenditures Planned Capital Expenditures Total Projects El Dorado Expansion Projects Note: The planned spending is presented as a range to provide for engineering estimates, the status of bidding, variable material costs, unplanned delays in construction and other contingencies. (as of September 30, 2014 - $ in millions)

Chemical Business Operating Metrics 23 (1) Gross cost excluding any hedging activity Nine Months Ended September 30, Agricultural: 2014 2013 % Change Product (tons sold) Urea ammonium nitrate (UAN) 231,153 200,549 15% Ammonium nitrate (AN) 184,450 124,070 49% Anhydrous ammonia 65,148 37,332 75% Other 23,478 21,714 8% 504,229 383,665 31% Average Selling Prices (price per ton) UAN $259 $273 (5%) AN $332 $377 (12%) Anhydrous ammonia $481 $543 (11%) Input Costs Average purchased ammonia cost/ton $482 $568 (15%) Average natural gas cost/Mmbtu (1) $4.91 $3.86 27% Industrial: Product (tons sold) Nitric acid 396,026 366,665 8% AN and AN solution 126,256 116,827 8%

Outlook 24 Chemical: Favorable indicators for agricultural market Expected 2014/2015 planting level of ~87 million acres of corn Current nitrogen fertilizer prices approximately equal to or higher than a year ago Natural gas feedstock cost relatively low historically Corn pricing lower than recent past but stabilized while yields per acre are increasing Continued high cost of ammonia is unfavorable for our business El Dorado currently purchases ammonia making the sale of HDAN uneconomical This is expected to continue until the new ammonia plant is on-line in 2016 Successful turnaround moves Cherokee to a 2-year turnaround cycle Translates into additional production days of between 10-15 days every 2 years Planned maintenance activity not expected in Q4 2014 El Dorado will cease production for approximately one week to facilitate “tie-ins” required for expansion projects Climate Control: Continued trend for increasing demand in the commercial and institutional sectors September ABI was positive for 5 th consecutive month, reaching 2007 levels Long-stalled projects are re-activating, indicating credit is easing and an increase in confidence in the economy Commercial and institutional sectors we serve expected to increase in 2015 per Dodge data Lodging (+17%), Retail (+11%), Office Buildings (+19%) and Education (+9%) $75.5 million backlog at 10/31/14 highest since 2008 translating to sales growth year-over- year in Q4 2014 and into 2015

Key LSB Value Drivers Comprehensive upgraded Chemical Business safety and plant reliability systems – intended to improve plant up-time and reduce risks of unplanned downtime. Pryor facility reliability improvements - including new senior management, additional engineering support, extensive monitoring and control equipment, remanufacture of certain key pieces of equipment, and use of industry expert consultants – intended to improve plant up-time and reduce risks of unplanned downtime. Expansion projects at El Dorado – intended to reduce costs, increase capacity, and enhance product balance capabilities. Growth in Climate Control Business within existing plant footprints as construction cycle recovers to achieve increased profits through operating leverage. LEAN / Operational Excellence initiatives in our Climate Control Business to facilitate improved operational metrics and reduce costs. 25

26 Appendix

27 EBITDA Reconciliations (in millions) Reconciliation of Consolidated Net Income and Segment Operating Income to Non-GAAP measurement EBITDA. Management uses operating income by business segment for purposes of making decisions that include resource allocations and performance evaluations. Operating income by business segment represents gross profit by business segment less selling, general and administrative expenses incurred by each business segment plus other income and other expense earned/incurred by each business segment before general corporate expenses. The term EBITDA, as used in this presentation, is net income plus interest expense, depreciation, amortization, income taxes, and certain non-cash charges, unless otherwise described. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to GAAP measurement. LSB Industries, Inc. Consolidated 2013 2012 2011 2010 2014 2013 Net income (loss) 55.0 $ 58.6 $ 83.8 $ 29.6 $ 19.0 $ 17.6 $ Plus: Interest expense 14.0 4.2 6.7 7.4 17.5 6.7 Depreciation and amortization 28.4 20.7 18.8 17.4 26.6 20.1 Provisions for income taxes 35.3 33.6 46.2 19.8 12.3 10.0 Loss from discontinued operations 0.2 0.2 0.2 0.1 - - EBITDA per conference call 132.9 $ 117.3 $ 155.7 $ 74.3 $ 75.4 $ 54.4 $ Climate Control Business Operating income (loss) 30.4 $ 25.8 $ 32.8 $ 35.3 $ 17.4 $ 24.4 $ Plus: Equity in earnings of affiliate 0.4 0.7 0.5 1.0 0.1 0.5 Depreciation and amortization 2.8 2.5 2.2 2.5 3.5 2.0 EBITDA per conference call 33.6 $ 29.0 $ 35.5 $ 38.8 $ 21.0 $ 26.9 $ Chemical Business Operating income (loss) 87.8 $ 82.1 $ 116.5 $ 31.9 $ 46.8 $ 20.3 $ Plus: Non-operating income - - - - 0.2 - Depreciation and amortization 23.6 16.4 14.7 13.1 22.6 16.6 EBITDA per conference call 111.4 $ 98.5 $ 131.2 $ 45.0 $ 69.6 $ 36.9 $ Nine months ended 9-30 Twelve months ended 12-31

What Our Chemical Products Are Used For: 28 Agrochemical Products Uses Urea Ammonium Nitrate Solutions (UAN) 28-32% N Manufactured nitrogen content fertilizer High nitrogen content fertilizer for corn and other crops with high nitrogen demand (wheat, milo, cotton) E2 Ammonium Nitrate Prill (solid) 34% N High nitrogen content fertilizer Nitrogen consuming crops, forage areas and citrus. The primary nitrogen component in NPK (nitrogen, phosphorus, potassium) fertilizer blends Fertilizer Blends Custom blends with purchased phosphates, potassium, sulfur, micronutrients with produced ammonium nitrate Special application for agri-business products to supply growers balanced fertility Anhydrous Ammonia 82% N Gas injected application High nitrogen content fertilizer with highest percentage use for corn. Industrial Acids, Ammonia, DEF Uses: Concentrated Nitric Acid Aqueous solution up to 99% concentration Production of specialty fibers, nitrocellulose, gaskets, crop chemicals, mining products, metal treatment, nitric acid commercial blends Nitric Acid Commercial Blends Aqueous solution up to 89% concentration Semi-conductor industry, manufacture of nylon and polyurethane intermediates, potassium nitrate compounds, ammonium nitrate production Anhydrous Ammonia Commercial grade and high purity refrigeration, metallurgical grade Air emission abatement in power plants, water treatment, refrigerants, metals processing, and a wide variety of industrial uses Mixed Acids Blends of concentrated nitric acid and sulfuric acid/oleum Diesel fuel additives, ordnance, herbicides and pharmaceutical grade nitroglycerine Sulfuric Acid 98% and 93% concentrations, standard and low-iron grades Pulp and paper manufacturing, alum, water treatment, metals processing, vanadium processing, other industrial uses DEF (diesel exhaust fluid) Exhaust stream additive to reduce NO X emissions from diesel vehicles Industrial Mining Products Uses: Ammonium Nitrate Solutions 54% and 83% concentrations Specialty emulsions for mining applications, other miscellaneous uses Low Density Ammonium Nitrate Prills (solids) Solid pellets with good porosity and flowability Surface mining, quarries, construction

Typical Facility Process Flow (Pryor) 29 Products are marketable at every intermediate and final stage of production. Pryor facility process flow is typical of plants with natural gas feedstock. Pryor and Cherokee use natural gas feedstock. El Dorado and Baytown use ammonia feedstock. AN Solution CO (storage, trucks) Nitric Acid Ammonia Plant UAN Urea CO Liquification Natural Gas (pipeline) UAN (storage, trucks, rail) NH (storage, trucks, rail) CO 3 2 2 2

Climate Control Sales & Marketing Data 30 Diversified End Markets Commercial: • • Residential (Geothermal): • • Plus: OEM distribution channels Distribution Channels Product & Market Sales Mix – Various Perspectives September 30, 2014 LTM Sales Mix Data 238 Commercial representative firms with 438 locations 2,200+ Sales Engineers 600 Residential distributor locations (approx.) 4,000 Residential contractor-dealers (approx.) 0% 25% 50% 75% 100% 2008 LTM 9/30/14 Retail Single Family Education Healthcare Multi Family Office Lodging Other Commercial & Institutional 78% Residential 17% Export 5% Heat Pumps 65% Fan Coils 23% Air Handlers 6% Chillers 4% Contracting 2% Direct 84% OEM 16%

Focus on Geothermal Heat Pumps How does a GHP system work? 31 The Earth absorbs approximately 50% of all solar energy and remains at nearly a constant temperature year round (below a few feet deep). A GHP system uses a sealed in-ground heat exchanger (loop) filled with fluid and a GHP unit to exchange energy between the house or building and the earth. In winter, fluid in the loop absorbs energy from the earth and carries it to the GHP where it is converted (compressed) to a higher temperature and sent as warm air into the house or building. In summer the system reverses, transferring heat from the house or building into the earth. GHP systems work year round in all climates, in both individual residence and large commercial buildings, providing both conditioned air and domestic hot water (as a “free” by-product). Typical Residential Geothermal System Geothermal Benefits: Energy Cost Reduction & Positive Cash Flow – the most energy efficient HVAC technology available – up to 80% more efficient than conventional systems. Fed Tax Credits - 30% residential & 10% business + accelerated depreciation, + state/utility incentives GHP’s are an Alternative form of Renewable Energy Green Refrigerants - non-ozone depleting “Free” Domestic Hot Water Noise Free Operation – no noisy condensing unit Extremely Long Lived vs. conventional systems (50 year loops) Residential Energy Usage Conventional System Geothermal System , ,

32 Typical GHP Costs and Savings For a GHP System in a 2,500 sq. ft. new house in St. Louis, MO (typical middle America) Installed Cost of a 4 ton GHP System = $6,000 per ton (12,000 Btu/ton). System Operating Cost Comparison GHP vs. Conventional Systems Note: System installed costs are different throughout the U.S due to varying local conditions and labor costs. Savings vary due to weather conditions, user preferences, and local utility rates. Costs and savings in St. Louis are estimates and subject to change. Payback (GHP vs. Hi-Eff Gas Furn+AC) Installed cost of GHP $24,000 Less: 30% Fed tax credit (7,200) GHP cost after credit 16,800 Cost for Hi-Eff Gas + AC (12,000) GHP premium cost 4,800 Annual Energy Savings $1,248 Payback in Years 3.8 Positive Cash Flow Annual Energy Savings $1,248 Annual P&I on GHP Premium (6% int. – 10 yrs.) (636) Annual Cash Savings $612 This analysis compares these systems: $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Geothermal Heat Pump 16 SEER Standard Heat Pump 10 SEER Standard Heat Pump 93% Efficient Natural Gas Furnace with 16 SEER A/C 80% Efficient 93% Efficient Natural Gas Furnace with 10 SEER A/C16 SEER A/C Propane Furnace with 80% Efficient 80% Efficient Propane Furnace with with 16 SEER with 10 SEER 10 SEER A/C Oil Furnace A/C 80% Efficient Oil Furnace A/C Lighting & Appliance Heating Cooling Hot Water

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36 LSB Industries, Inc. is headquartered in Oklahoma City and does business through its subsidiaries, with seven HVAC manufacturing and distribution facilities in Oklahoma City, chemical plants in Texas, Arkansas, Alabama and Oklahoma and an engineered products distribution center in Oklahoma City. Approximately 1,900 total employees. Investor Relations: Mark Behrman Phone: 405-235-4546 Email: mbehrman@lsbindustries.com The Equity Group, Inc. Fred Buonocore Phone: 212-836-9607 Email: fbuonocore@equityny.com Linda Latman Phone: 212-836-9609 Email: llatman@equityny.com Fax: 212-421-1278 Corporate Offices: 16 South Pennsylvania Avenue Oklahoma City, Oklahoma USA Phone: 405-235-4546 Fax: 405-235-5067 Email: info@lsbindustries.com Website: www.lsbindustries.com Common Stock: NYSE ticker symbol LXU Auditor: Ernst & Young LLP Company Contact :