Greetings, and welcome to the LSB Industries' First Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kristy Carver, Vice President and Treasurer for LSB Industries. Please go ahead, Kristy.

Thank you, Kevin. Good morning, everyone. Please note that today's call will include forward-looking statements, and because these 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 actual results to differ materially. As this call will include references to non-GAAP results, please reference 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 would like to go ahead and turn the call over to Dan for opening remarks.

Thank you, Kristy, and good morning, everyone. We're pleased to have you on our call and appreciate your time. Today, we'll discuss our 2018 first quarter results and share some early thoughts on both the second quarter and the second half of 2018. We'll also discuss our progress on improving our plan uptime. As we noted during our last quarter's call back in February, we are in full implementation mode of a new maintenance management system as well as overhauling our company-wide procurement processes. These activities are going well and I'm pleased with the Company's progress. Both John and Mark will provide further details during their discussions. In last quarter's call, we also discussed the engineering studies and review we had initiated on our prior plan. We'll provide an update on those activities during today's call. In summary, the outside engineering studies and review affirmed our internal assessments. We do as a follow-up work that we will undertake from those efforts. Lastly, we will provide a longer-term view on our strategic direction. We believe the nitrogen industry will further consolidate over time. During the first quarter of 2018, our revenues of $100.5 million were slightly lower than the first quarter of 2017 on a comparative basis. Our EBITDA increased by approximately $3.4 million on a comparative basis. In general, product pricing was higher with the exception of UAN. Mark will provide an analysis of the first quarter 2018 volume and pricing on UAN during his financial review. We believe our second quarter UAN prices will be much higher. Our current market pricing for UAN, ammonium nitrate and agricultural ammonia remain robust despite a slight softening in the Gulf urea market. To date, we have not seen the Gulf softness in our markets for UAN, ammonium nitrate or agricultural ammonia. We…

Thank you, Dan, and good morning. We continued to make progress on our reliability and operations improvement initiatives. The updated work order manager processes in place and training on its use has been completed. We have completed numerous deep dive analysis and critical equipment systems this has allowed us to improve our preventive maintenance programs on this equipment. We have added additional expertise and planning and scheduling a maintenance work, reducing the amount of emergency work on equipment. We expect the implementation phases of all the processes to be complete by midyear. We will however, continue to make improvements, including more deep dive analysis of equipment along with training and improving the skill of our people. Our maintenance departments are managing based on the data we collect, not based on a gut feel of how equipment is operating. I'm happy to say our El Dorado ammonia plant had 100% on-stream time for the first quarter, producing ammonia between 1,300 and 1,350 tons per day. Based on how well the plan has been running, the decision has been made to reduce the length of the upcoming September turnaround to 12 days. In doing this, we will be planning another turn around were approximate the same length in 2019 primarily focused on the required regulatory inspections. The Cherokee ammonia plant had 85% on-stream time during the first quarter. We took the ammonia plant down to make some needed repairs around the primary reformer and the ammonia synthesis area along with adding some instrumentation enhancements. We are planning a 35 day turnaround in late July. The extended link that is turnarounds for catalyst changes in major upgrades to the primary reformer. Our prior facility ammonia plant had 91% on-stream time during the quarter, downtime was to replace bearings and to ammonia plant compressors. In addition to the ROI implementation process, we have added maintenance, planning and scheduling expertise as well as in the process - we are in the process of hiring and experience reliability engineer. We have recently hired a new Plant Manager. He was previously the General Manager at CF Industries facilities in Woodward, Oklahoma and Yazoo City, Mississippi. The BD Energy Systems study on the front-end of the ammonia plant is nearing completion with a report and recommendations expected by midyear. This study includes a redesign and replacement of the main ammonia plant waste heat boiler. The Black & Veatch reliability risk assessment, draft report has been completed on the ammonia, urea, nitric acid plants, and electrical infrastructure. As we have just received a draft copy, we're still assessing. The study purposes identify reliability risk methods to reduce those risk and opportunities to upgrade a modernized - modernize all systems. I'm pleased to say there have been no surprises. This reaffirms our internal assessments. Now I will turn the call over to Mark to discuss the financial results for the first quarter.

Thanks, John and good morning to everyone. Page 11 of the presentation provides a consolidated summary statement of operations for the first quarter of 2018 as compared to the first quarter of 2017. Beginning in Q1, 2018, we adopted the new revenue recognition standards. We along with many public companies have chosen not to go back and restate a prior year financial statements for its impact. For us the biggest change from the implementation of the new revenue recognition standards is that sales and cost of sales from a daytime facility and no longer be grossed up on our income statement this has no impact to our EBITDA. As you know, we manage the Baytown facility for a third party and as such going forward revenues and costs will be recognized more in line with how we do this arrangement. From our perspective this is a good change as it represents the true economic earnings and margin of that business. In reviewing our continuing operations excluding the impact of new revenue recognition standards and revenue from businesses sold in the second and third quarter of 2017. Total net sales in Q1 2018 decreased 2% to $100.5 million from adjusted net sales of $102.1 million in Q1 2017. In our Ag business we experienced stronger average net selling prices for aged in ammonia as they increased 21% and 5% respectively quarter-over-quarter. However, as I mentioned last quarter our first quarter average net selling prices for UAN from our Pryor facility would be negatively impacted from fourth quarter 2017 downtime at that facility and carryover sales of low priced full fill orders that were planned to be sold during the fourth quarter of 2017. Therefore average net selling prices for UAN in the first quarter of 2018 and were $138 a ton…

Thanks Mark. Our second quarter of 2018 will be measurably stronger than the corresponding period of 2017. The fertilizer future markets indicate that values are $20 million to $25 million per ton higher on UAN and $30 million to $40 million higher for urea for the second half of this year. Our view of the second half of 2018 is that it will be stronger than the same period of 2017. We also believe the distribution channel for fertilizer products has gone through some significant changes during the past 12 months and it will continue to mature during the remaining portion of 2018. We believe the past habit of selling product at very low prices at or after the Southwest conference for fall fill tons will be moderated from past practices since the channel is being more highly served by core producers. We ask ourselves, why so a large portion of our production at low prices when the opportunity to enhance margin exists by developing strategies to better utilize storage facilities. Selling cheap and early dates has been a bad habit of the industry for numerous years. We see that activity starting to change and we support that. We also believe further industry consolidation should occur, significant synergies can be obtained and more diverse operations will have better operational flexibility and product diversity. Larger platforms will compete more effectively. We expect to participate in that consolidation. We will continue to upgrade our business and enhance our on-stream rates. We will drive better safety performance and broaden our distribution capabilities. We expect to sell more - we expect to sell our product more effectively to improve our overall margins on the products that we do so. Lastly, I just want to note that Mark will be attending the Goldman Sachs Leveraged Finance Conference in Los Angeles on May 10 and I'll be presenting at the BMO Farm to Market conference in New York on May 16. With that, it concludes our prepared remarks, and we will open it up for questions. Kevin?

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Karl Blunden from Goldman Sachs. Your line is now live.

Okay, thanks. It's actually [indiscernible] on for Karl today. Just quickly wanted to make sure to clarify the shift in El Dorado turnaround schedule, appreciate you're highlighting the CapEx adjustments for this year. Is it safe to sooner than that just I guess it's in addition to the 2019 CapEx expectation of roughly $35 million and do you see any additional impacts to 2019 on-stream rates for El Dorado because of that shift?

Well, it will obviously have the additional downtime during 2019 and the activities that we've really switched were primary the following. That's also require a certain inspection timeframes and those vessels are not yet due for inspection in 2018 and so the activities of the largely be done in 2019 really relate to regulatory inspection type of activity. So yes, the facility will be down additional days in 2019 that we hadn't originally planned, but it's a swap from 2018, the days that we had expected.

And as far as CapEx for 2019, we still are planning on $35 million - approximate $35 million. We will shift some CapEx around and potentially review some projects that maybe don't need to particularly get done in 2019.

Awesome, thanks for the color. And then I guess you'd still expect roughly two to three years until you have to revisit those turnaround times or I guess those turnaround schedule for El Dorado?

Three years after 2019 we would expect.

Yes. The Cherokee will do a turnaround this year and then the next one will be 2021. One of the shortened turnaround in the El Dorado this year, shortened turnaround - small turnaround next year, and then another turnaround until 2022.

Awesome. Thank you for that. Another quick one, you shared in the press release on the call, quarter to date on-stream rates for El Dorado and Cherokee. I was wondering if you could share quickly for Pryor if you have that just the on-stream rate quarter to date.

91%, we disclose that as well.

So I thought that was just for 1Q not 2Q.

We're operating up in Q2 to date. I mean we've only got about 26 days in Q3. We're operating well.

Great. That's great to hear. One last question. You mentioned in the release that mining volume should increase roughly 30% year-over-year as a result of new contracts. I was just wondering if you could help clarify whether your contracts have a volume commitment component to them. I mean if it do, is that all of your contracts are just a portion of them? Any color there would be helpful.

These are requirement contracts. There are no take or pay components of it, so there are requirements contracts. So they're not minimum volumes that have to be taken.

But remember these are all subject to contracts. We sell primarily almost exclusively to distributors. And those distributors have contracts with the mines themselves to provide our product for services. And those contracts run for a period of time. So it's not like they can just drop volumes up and down dramatically.

Great. Thanks for the time.

Our next question today is coming from Joe Mondillo from Sidoti & Company. Please proceed with your question.

Hi. Good morning, guys. I was wondering just regarding your pricing, your pricing seems to be doing better, trending better than sort of the Gulf pricing that I track. And generally historically that's been sort of mixed, so I'm just wondering what are some of the dynamics that's causing that, and do you expect that trend to continue relative to Gulf prices?

Well, historically we should get a little premium on Gulf pricing being inland and somewhat. So I think we attributed a lot of the - what I call a changing of the pricing situation as all these new plants were coming up. And as I talked about several times, the distribution channel needs to go through a maturation process and we think that is occurring. And as a result of that producers have to supply a lot more product to the channel. And I think producers are being more disciplined in their pricing in the way they approach the market. As I said in our prepared comments, we expect that to continue, and we expect that the historical practices of selling product cheaply to Southwest Conference or shortly thereafter, we think that bad habit will change, and it's starting to change. So I think you're seeing producers being more disciplined. I think people realize their strategies that they can employ to get a higher net back and we're certainly participating in that.

You mentioned in your press release regarding UAN prices, and I missed earlier in the call, so I apologize if you mentioned already. But it seems like the Gulf prices, the UAN prices that I track seemed to be turning over, but do you think there is potentially a dynamic given the late planting season that they could maybe stabilize and be a little supported for the next couple months as opposed to what we saw last year where at this point in time you saw the seasonal downturn from now until August, September?

I think our view and certainly what we talked about earlier was while there may be some softness in the Gulf, we're not seeing the softness in our current markets right now. So it's not hitting us up here in the market. It's been a wet cold spring. There's a lot of ammonia that didn't get put down up in the northern - mid to northern Corn Belt. So that would indicate that you're likely going to see more urea pick up here in the second quarter as a result of that. So we haven't seen softness in UAN or ammonium nitrate pricing or ammonia pricing for that matter in the ag markets that we serve. And so I think there might be some urea, ammonia switch to UAN as we go forward in the second quarter just due to the weather conditions quite frankly and did answer your question.

Yes. Regarding sort of one of the big topics in the markets right now is just sort of inflation. Just wondering if you're seeing any of your costs lines whether it's free or anything else that - you'll see a little bit of in place in on the cost side of your model?

Well, I think let's talk logistics in general. I think what we've seen certainly from the railroads is timeliness or the ability to turn cars. I think - not just our industry but everybody in the country has seen a deterioration of rail services and we've implemented some better rail tracking management things like that. But I think you'll see rail services still relatively poor right now. Although the costs are not - we're not seeing inflation on that. I think the trucking industry has seen a lack of drivers - you've seen a lack of drivers and with that traditional rates are probably moving up particular with electronic logs and it is hard to find drivers these days. So they keep in mind a lot of our product is sold out of the plant gate - at a gate price and the cost particularly our industrial contracts cost as freight is passed through. But yes, I would expect to see a little bit of increase in the trucking rates. But not anything material at this point time.

Okay. Okay I'll hope back in queue. Thank you.

[Operator Instructions] Okay. If no further questions, I'll turn the floor back for any further closing comments to Mr. Greenwell.

Great. Thank you. Well, thanks everyone for participating in our call this morning. I think we're making good progress on the operational enhanced ones and the reliability of our facilities certainly have done a lot of work and we feel good about where the company is headed on that. We also feel pretty good about where prices are shaping up for the second half. As we said we expect second half pricing, full season pricing to be higher than it was in 2017. So our view is fairly optimistic right now for the second quarter and then the second half of 2018. We appreciate your interest and look forward to speaking with you in July for our call. Thanks so much. Have a good day.

Thank you. Ladies and gentlemen, that does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.