LSB Industries, Inc. (LXU) Earnings Call Transcript & Summary

So thanks, everybody, for joining today. Glad everyone stuck around for day 2 of the UBS Materials conference here. Happy to be joined on stage with LSB Industries' CFO, Cheryl Maguire. We're going to go through a lot of different things around nitrogen but also around low-carbon optionality with the company. Very interesting place, what's going on with nitrogen, particularly in the U.S. today. Quickly on Cheryl's background, she's been with LXU since 2015. 20 years experience between fertilizers, pet chems and energy finance organizations. And also on stage with me is Suni, UBS Head of ESG Research for the Americas and I'm Josh Spector, UBS North Americas chemicals and packaging analyst. Before we get started, just as a research analyst need to disclose the nature of myself at UBS on any companies we express a view on the call today. Those are available at www.ubs.com/disclosures. Or you can e-mail me if you want to see those more materially. So first, welcome, Cheryl.

Thank you.

And I guess, to get started, before we go into a lot of details, maybe just start at a high-level overview, LSB Industries, who you are, what you do, your role in the space.

Absolutely. So we're a nitrogen chemical company headquartered in Oklahoma City. We have locations in El Dorado, Arkansas; Pryor, Oklahoma; and Cherokee, Alabama. We also have a facility that we operate on behalf of Covestro down in Baytown, Texas. We have 2 primary end markets that we serve. About 60% of our business is in the fertilizer space, primarily fertilizers applied to corn. And then the other 40% of the business that we are focused on is on the industrial side of the business, and that's more end markets like polyurethane, from nitric acid or ammonium nitrate solution for mining applications.

That's a good framing. So I want to go through some of the business conditions first, and then we'll dive deeper into the sustainability low carbon side of the business. So just, first, on nitrogen fertilizers. I think prices have been hanging in there stronger than anticipated given we're in the shoulder season. So how are you looking at the outlook here near term but also the setup for fourth quarter for nitrogen?

Sure. So yes, pricing is hanging in there for the third quarter, which, as you point out, is generally our seasonally weakest quarter being kind off season from a fertilizer perspective. Tampa Ammonia closed higher for September at $530 a metric ton. We think a lot of that is actually supply driven. There's lots of plants offline. Russian plants are offline, Saudi Arabia plants are offline, Trinidad plants are curtailed from a gas perspective. I think that's just leading to a bit more tightness. And so that's keeping supply -- or pricing for ammonia higher. UAN is also hanging in there. We -- that's basically coming from the urea side, everything with UAN trades off urea. So even though we don't sell urea, we do track urea repricing pretty closely. And with limitations on China exports, that's keeping some tightness in the urea, and we think that does stay that way for the balance of this year and into next year.

Okay. That's helpful. And I guess, just commented on your industrial mix. And I think on the demand side, mining chems demands in North America, at least has appeared stronger given the maybe more resilient fertilizer price outlook. How has that impacted sales into industrial customers, I guess, volumes, thinking about pricing as well?

Yes. I mean, a lot of those industrial contracts, those are cost-plus arrangements, take-or-pay. So we generally sign up for the industrial business for 3-, 5- and 7-year contracts. And so those remain pretty robust. We're definitely seeing strength in the mining and particularly copper mining as it is -- goes into EVs and also data centers and things like that. So although we're pretty highly contracted on the industrial side as new -- as contracts come up for renewal, we look to price up and increase the adders as we can.

Okay. And just thinking about trade tensions, countervailing duties, a lot of moving parts right now. I know some of that is already in place. But any moving parts from the election or otherwise that you're paying attention to that could impact you guys positively and negatively?

Yes. I think the one we're watching there is what happens with urea exports from China. We are seeing continued limitations on what they're exporting that's keeping our urea pricing and UAN pricing higher. And so as they do -- if they do continue or stay out of the market, we'll see that pricing stay higher. There could be some pressure on pricing if they do come back into the market.

Okay. I guess, stepping back a little bit. You guys had an Investor Day not too long ago. You talked about $200 million in run rate EBITDA. And you've been clear that there's some investments needed that's not entirely going to happen immediately there. You're going through some turnarounds later this year. So when we look at coming out of this year, and I should say the turnaround, you're making some investments, what else is needed to kind of close that gap beyond this year? Is it more investments? Is it operational kind of practice, skill improvement there? What's the drivers?

Yes. So when we talk about our pathway to $200 million, we like to frame that against 2023, okay? So 2023, Tampa Ammonia was around $500 a ton and UAN pricing was around $260 a ton. And so we see a pathway to $200 million. And the way we think about that is there's 3 primary buckets, okay? The first bucket is what we call margin enhancement projects. So these are projects that we actually have just completed in August of this year. So one is the urea expansion at Pryor where we're going to produce 75,000 more tons of UAN out of Pryor. And so that is in place of ammonia. So you upgrade the ammonia to get to UAN and that's better margins. And so generally, the more you upgrade, the better margin you get. So that project was completed in our turnaround in August, and so we should start to benefit from that here in the fourth quarter. We also just completed nitric acid storage at our El Dorado location. Nitric acid storage is highly important because nitric acid is generally our most profitable product. And we never want to have to turn down our nitric acid plant because we have nowhere to go with the product or because we're waiting for railcars to come in or whatnot. So what we're doing is just expanding storage, so that we can put more product in storage and sell it whenever we want. So that tank was also completed in August, and so we should start realizing the benefit of that here in the fourth quarter as well. So that's about $5 million to $7 million in terms of dollars of EBITDA that should be bankable now going forward. The next bucket is what we call our, internally, our drive to 55. It's our drive to $55 million. It's squarely focused on improving the manufacturing operations and getting every ton of ammonia out of the plant. And so we see a pathway to increase. Today, we're around 800,000 tons of ammonia production. We see a path to getting to 875,000 tons of ammonia production. But what's most impactful there is we don't want to just sell it as ammonia. We actually want to take that and upgrade it to nitric acid and urea UAN because the margins, as I've mentioned, are higher there. And the other side of that, and also included in that $55 million is historically, we've had situations where we've bought product to upgrade, like we've bought nitric acid to upgrade to UAN in the instance where we weren't getting full reliability out of our asset plans. And we all know it's much more impactful and better to the bottom line when you make your own product for upgrade instead of buying it for upgrades. And so if we think about the timing of all of that, so there's some key milestones. We should be well in -- on our way to capturing, call it, $20 million of that this year. The reason for that is -- I'll give you an example because it's super tactical. We've put in place a -- we call it a nitric acid SWAT team. This team lives and breathes every day, how do you get more tons out of your nitric acid plants. And so we've already started to see nitric acid production increasing as this team rolls out their plan. So we've started to see that. And in addition to that, we've stopped purchasing as much nitric acid to upgrade because we're making more nitric acid to upgrade. And so we've started to capture that already. The other key milestone is the Pryor turnaround. We just completed the Pryor turnaround and we should see improved UAN and urea UAN -- sorry, ammonia and UAN production coming out of that turnaround. We did some very key investments into the facility during the turnaround, and so we expect to see that coming out today. The next key turnaround is at our Cherokee facility, and that's in the fourth quarter. Same thing, we'll be making some key investments in -- during that turnaround, both from a capital perspective as well as technology, better data monitoring, better controls, that sort of thing. And then the next key turnaround is at El Dorado in the middle of next year. And same thing. We've got a pretty clear line of sight to some key projects that are going to help us improve the reliability.

So I guess, if you put that together, I mean, it sounds like by mid-late '26, you think you've made most of the investments operationally to get to that 95% utilization target?

Yes. And the other key part of that is it's not just all about the capital investment. It's about the maturity of the processes and the people and the systems that we've put in place. Like this has been a journey for us. We've been continually focused on, okay, things as simple as operating procedures, things as simple as making sure we're putting in the right data monitoring across all of our systems, making sure we're hiring the right talent. We're continually adding new talent that gets us a different perspective, better ways of doing things. And so it's the maturity of those procedures, it's the maturity of the talent, it's the maturity of the foundations that we've continued to build on. So it's not like you just wake up the next day and automatically, you're producing 75,000 more tons than you were yesterday. It's a gradual -- sometimes slower than we'd like to see, but a gradual movement upwards. So yes, by the 2026 marks that you laid out, I'd say that's a realistic time line.

Okay. And one quick follow-up. Just when you talked about the urea addition, you guys haven't produced that in the past. I guess, any risk from your view around starting that up? I mean, I know commodity probably have some experience in the organization and producing it. But I don't know, when you talk about that later this year, is that a risk? Or is that something you're pretty comfortable with?

I mean, we're in startup right now, Josh. So we feel like we're going to come up and be able to produce that additional -- those additional tons. So no reason to believe anything different at this point. We've got all of the technical talent there. We've got a really great team. They know what they're doing. And so, yes. feeling pretty good.

I'll ask you in a month. So let me loop [ Shnore ] in since we got about 15 minutes without him here. I guess, to maybe set the stage for some of the investments and changes you're doing around low carbon, probably if you just outline what you're doing at a couple of different sites and some of the investments that you're considering.

Yes. So we have 2 key projects that we're working on as we speak on the low-carbon ammonia side of things. So one is a partnership with Lapis Energy and that is -- they -- Lapis will own and operate the carbon capture equipment, which we'll put on our El Dorado facility. And so they'll make the capital investment. They'll get the 45Q tax credit. But what we benefit from is we will sell them CO2 that today we [ vend ], okay? So that is a path to, call it, $15 million to $20 million of EBITDA, which is key to our path to the $200 million that we just talked about. But in that is $15 million to $20 million from the sale of CO2. And so what's even more interesting to us than that is now we will have what we would call low-carbon ammonia and low-carbon downstream production of nitric acid and ammonium nitrate solution that we can actually now market differently as a low-carbon product. So that's very exciting to us. We actually just recently signed a new contract for low-carbon ammonium nitrate solution, and that contract starts next year. So that's a pretty exciting thing for us. The second project is a little bit further down the line. So this is a contract or an agreement that we've signed to partner with Air Liquide, who is one of the largest industrial gases companies globally; and Impax, who is the largest Japanese E&P trading company and also partially owned by the Japanese government. And so what we're looking to do is build a 1.1 million ton a year plant down in the Houston ship channel. So the reason that the partnership makes a lot of sense for us is that Air Liquide industrial gases, they'll supply us and they'll actually put on carbon capture equipment. So they'll supply us with low carbon hydrogen and nitrogen, which will feed the ammonia plant that we will own and operate because we know ammonia, ammonia on is what we do. So they'll see that the gases for our ammonia loop will produce low carbon ammonia. Where we will go or where we would hope to go with that low carbon ammonia is where Impax comes in, being the largest E&P trading company in Japan and also owned partially by the Japanese government. But that Asian market is really developing in terms of using low-carbon ammonia for power generation to ultimately replace coal. And so the Japanese government is looking at how they subsidize power companies to be able to bring in low carbon ammonia as an incentive to coal. So a lot of the strategic rationale behind the partners we choose is really how do we get line of sight to offtake in Asia. The other market that's really developing for us is the European market. As Europe now who used to very much be, we only want to look at no carbon has really come around and said, okay, this low carbon ammonia is actually interesting. And so we're also looking at potential offtake in Europe.

If I can ask you a quick question and just because you ended on Europe. CBAM comes into effect in a couple of years. Do you feel that, that will create enough room for a premium to emerge? Without giving specifics on your contracts, but does that sort of set the stage for a premium? Or do you feel that there's going to be a lot of low carbon ammonia out there that will negate that?

Yes. We absolutely do see a path to premium pricing in Europe because, I mean, ultimately, if they can bring our product in and willing to pay a bit of a higher cost but it's lower than the tax they would have to pay, those economics make a lot of sense.

Great. And maybe going back to the carbon capture arrangements you have, which is different than others have set it up and so forth. Is the tenor of the contract roughly about the 10 years that you sort of get the 45Q credit for? Does it then past -- does it require them to build a new unit to get a new set of credits after 10 years? And so how do we understand that it continues past the 10 years?

Yes. So there is the 10-year contract. That's what we've signed up for. But there's an option, obviously, to extend. And so yes, we've got line of sight to the 10 years. And then after that, we'll see what happens.

Josh?

Sure. So just coming back to the Eldorado plant. Can you talk about the time line for the Class 6 well? And that's Lapis or you guys that are actually getting that permit in the process.

Yes. So Lapis has filed for the Class 6 permit as being the owners of the carbon capture equipment. So if you look at the EPA website today, you can clearly see the Lapis project up there with EPA permit approval expected in May of 2025. So we are all -- signs point to go from our perspective. We think our project is pretty plain vanilla just simply because that CO2 doesn't have to be transported long distances. It's essentially the geology right around the site at El Dorado is very conducive to being able to capture and store the CO2. And so we think the permit process is a little bit -- is a little easier on our project. And so as that time line holds, we would expect to be injecting CO2 in early '26.

And can you remind me, who owns the land? So I guess, if there's more port space available for additional CO2, is that something that could be accretive to LXU at all? Or does that go to Lapis? How does that work?

Yes. So great question. So we actually own 1,400 acres around the plants, and we use about 250 acres today. So there's plenty of available land. So if we're looking at potentially expanding El Dorado, potentially doing some debottlenecking, which we've kind of put it on hold for right now, but that's certainly something that's still in our -- in the back of our mind is how do we expand ammonia at El Dorado. And then that would lead to incremental benefit for us on the CO2 sale.

I guess, would it be too far-fetched to think about a pipeline into the site from somebody else in the surrounding area that can then leverage that? Or is it too small? Or is that just not on the drawing board right now?

Well, it's not on the drawing board right now, but you never say never. Yes, exactly.

At the end of the day, you own the royalty rights for the 1,400 acres basically. So whatever happens on the expansion, if that would come to fruition, you can economically benefit.

Yes, that is correct.

Yes, that's interesting. So I guess, coming back more near term, I guess. When you think about when this comes online, 2026 time frame, where do you see a lot of those low carbon tons going? I mean, interesting with your mix of more industrial. I know some of your peers have maybe been a little bit more optimistic about some of the ag environment and interest in that. What's your thinking?

Yes. So we think the fertilizer markets are going to be a little bit slower to move. And so we are very much focused on the industrial side of the business and how do we engage with our current customer base for low-carbon downstream production. We hear a lot of people talking about low carbon ammonia. But what you've seen us do, especially just recently, is sign-up low-carbon ammonium nitrate solution. And so that's for the mining industry as a lot of companies that are in our industrial space have sustainability goals. They have -- focused on reducing footprint. And so we do see that as a good target market for us given we have those relationships today. And so we're going to go in on more of that low carbon ammonium nitrate, nitric acid, those types of potential offtake. Not saying that we won't look for low carbon ammonia, too. But right now, our focus is more on the upgrade side.

Okay. And I guess, I mean, you mentioned the contract with Freeport that you guys recently signed. I mean, I assume it layers in some premium for the product or some way to consider the low carbon intensity. Is there any way to frame how that's structured or maybe more broadly, how industrial customers in the U.S. will be thinking about valuing that?

Yes. So the way that our contracts are usually laid out is our industrial contracts are gas plus an adder for -- to pass through the cost of gas and so to protect against it's almost like a natural hedge against our feedstock. And then we add an adder that appropriately values the product and gives the appropriate return from an EBITDA perspective. So it's safe to say, I guess, that this contract, the way -- with the low carbon premium, is cost plus an adder plus a little bit more to provide value for the low-carbon aspect.

Yes. I guess, in North America, it's -- or the U.S. specifically, it's maybe a little bit tougher to think about what the ranges are that customers look at just because there's no carbon tax. I guess, are some of these buyers looking at it relative to a tax in Canada or the U.S.? Or I mean, really, you're benefiting and reduce Scope 3, which I have no idea how you put a value on what that is. So I don't know if you can shed any light on what you've experienced in conversations or any frameworks that's been used to at least dimensionalize some of this?

Yes. So our team is in discussions with 4 to 5 other larger companies in terms of thinking about the value of the low carbon. And in a lot of ways, I think low carbon is becoming -- it's a pay-to-play. So you -- it's almost expected that you're going to be low carbon. So you almost get a discount. If you -- you'd have to provide a discount if you didn't provide low-carbon ammonia. It's potentially where the industry may be going. But where we were able to differentiate just a little bit is actually a carve-out on $1 per ton to think about an appropriate value for that.

Okay. I think one interesting angle I've heard around some of this is, so at least within industrial nitrogen, there's a local aspect to it. I mean, your plants are 3 different places, some more inland than others. So if you have low carbon tons being taken by a customer, does that actually raise pricing for gray buyers because it needs to incentivize a ton to be shipped further to reach that? I don't know if there's any way to think about your mix and opportunities there at all.

Yes. I mean, the way we generally think about it is when these new contracts come up for renewal, because we're fully sold out right now, when those contracts come up for renewal, and we think about, okay, is there an angle to provide low carbon and provide value there. And it really comes down to what's that customer's next available option and how do they think about the value and what have they put out from sustainability that could add an opportunity for us to capitalize on the value. So it really just comes down to as new contracts come up, what's happening and what does the landscape look like in that particular open window of negotiation.

Has it attracted any new customers to you? Somebody who maybe would say, I'll pay to ship that 50, 100 miles because I want that low carbon material granted? This is a couple of years out, so maybe it's early, but have you seen that? Do you expect any of that?

Yes. I mean, we have actually had some interest from customers we've not previously engaged with. So that's interesting. So yes, in some of the contracts we are in negotiations with now are for potential new customers for us. So yes.

Okay.

If I can sort of follow up a little bit here. So everybody set sustainability objectives 2018, 2019, everybody kind of wanted to do this, and there's kind of been momentum on it and so forth. But over the last 2 years, it kind of feels like there's been a ruling industrial recession. I don't know if that's a popular term or not. But we've also experienced massive inflation everywhere. Has the appetite -- I know you said you've added a few more, but it could be that they're following the momentum of '21. But is the appetite still there to go after the low carbon? Or does the interest in going after the cheapest cost kind of overweigh at this point right now?

Yes. I mean, I think, certainly, there's always going to be the element of the cost and the cheapest cost. And that's going to come out. And like I mentioned earlier, what is that particular customer's next lowest cost option? Or what's their next available best option? And how far do they have to move from? Like where are they located? And how does that fit in from a logistics perspective because cost of freight is also very expensive. And so all of those pieces do play into how we ultimately land and if there's a value for low carbon. But ultimately, costs will always be a big aspect of it. Yes.

Just building on some of the decarbonization you're doing in El Dorado. Do you have the ability to do that at other sites? Or are they integrated enough where you actually use or consume that CO2 already?

Yes. So with -- okay, so with Pryor specifically, that's a big urea producer, urea UAN. So it uses and consumes a lot of the CO2. So that's different from, say, El Dorado, where that's more of an industrial plant. We don't produce urea and UAN today, so there's not a need for the CO2. And so therefore, we can sell the CO2 to Lapis as part of this capture -- carbon capture agreement. Also, Cherokee is a bit more of a fertilizer-based plant as well. They're pretty much a big urea UAN producer. So again, that's not exactly conducive to carbon capture. So there could be some other opportunities at those 2 facilities. But for right now, the biggest opportunities are the El Dorado and the Houston Ship Channel project.

Okay. That makes sense. I think -- and to follow up on the Houston ship channel projects, I apologize because I should know this. But what Air Liquide is doing, are they looking at doing an ATR for 95% capture or something else?

Yes.

Are you doing any work either with them or through yourselves about thinking about flue gas capture for some of the other emissions that are harder to capture?

Yes. I think at this time, the cost looks to be pretty high on that. So I wouldn't say that's something that we're immediately focused on at this moment.

Okay. And just thinking about the ship channel project, how you're approaching that. So you have a partner with Impax in terms of they would get the offtake or who's responsible for placing those tons? Or another way to ask it, in terms of what you expect to receive. Is it a tolling fee type setup, or do you expect to have more market exposure?

Yes. So that's a great question. So on the particular offtake side of it, I would say it's 50-50. We're also looking after our own potential opportunities and going after some offtake. I mean, we're looking at potentially focusing on Europe and Impax is focused on more of the Asian markets. And together, we would hope to get a substantial amount of the offtake secured in order to FID the project. But what we're looking to do ultimately in the construct of this whole setup would be, so Air Liquide is industrial gases. They're going to own the carbon capture equipment. They're going to supply us with low carbon hydrogen and nitrogen. And that would feed our ammonia plant, the ammonia loop, which is what we know is ammonia production. We would like to structure that agreement with Air Liquide back to gas. And then on the other side of that, we would like to structure the offtake similar to how we structure our industrial contracts today as being gas plus. So what you've effectively done is you've taken the price risk of gas out of the transaction, and you've also locked your selling price. So what you have -- what we would hope to effectively have is an annuity, whereas the price risk is taken out, both on the cost and the selling price side. And you've locked in your margin, which is typically what we like to do on the industrial business. And if we're successful to do that, then the only risk that really remains is the production risk of ammonia, which we handle ammonia, produce ammonia today and feel pretty good about that. And so generally, when we're thinking about a return on a capital investment, we're looking for a 15% hurdle rate on an -- from an IRR perspective. And usually, that 15% provides some cushion on any price risk and things like that. If we're able to secure this transaction and take some of that price risk out, we may consider doing something a bit smaller from a return perspective, still double digits, but we may be willing to take something a bit lower than the 15%.

Okay. No, that makes sense. And I think it's an interesting kind of debate here between long-term kind of secured contracts, kind of stable earnings stream versus being able to kind of monetize some of the volatility that's natural in nitrogen markets broadly. I guess, I haven't necessarily heard Europe discussed around as a cost plus long-term offtake. I thought about a little bit more market-based and maybe carbon. Are there conversations today that have indicated that maybe there is an interest in ammonia into Europe on a long-term offtake versus Asia and some of the other markets that have maybe been discussed more openly?

Yes. I mean, we're actually in some discussions today with potential offtakers for low-carbon ammonia that we would supply from that Houston ship channel project. So we think that, that market is very interesting and developing.

And since we talked about this a lot, I don't think we've talked about the time line explicitly. This is still a ways away. But can you talk about some of the maybe medium-term milestones you're looking at over the next couple of years?

Yes. So where the low carbon capture at El Dorado is kind of near term, we expect to be up and running there in '26. With the Houston ship channel project, we don't expect to get to FID until 2026. So between now and then, we're in pre-feed. Pre-feed is going to provide us an estimated cost plus 50%. It's not as exact. And then as you go into the feed study, which takes a year, then you further refine that and get a better estimate of what the cost is going to be and what it's going to take. That gives you enough information to run economics to see if you want to move forward with FID. Now not only in this time period are we focused on understanding the cost and getting more detailed on the designs and what it's going to take, but we're also very focused on securing offtake. And so for us to move forward to FID, not only will we have to have a good understanding of the cost, but we'll also have to make sure that we have that offtake signed up for before we FID, which would be in '26. And then you're looking at a 36-month build.

And I guess, thinking about this maybe more broadly. So you talked about the El Dorado expansion. You guys have put that on hold. Because when you think about investing in this project, which obviously is a bigger project than just you guys versus expanding your own facilities, how do you think about the relative returns and attractiveness of those? Obviously, you haven't made a decision on either yet, but was there a scenario where you would invest in El Dorado over this facility? Or how do you weigh those options?

Yes. So the reason that we put El Dorado on hold is simply because the timing of when we expand El Dorado is 100% in our control. And we know that we -- that will always be there and those debottlenecking opportunities will be there. Right now, the opportunity is with Air Liquide and Impax. And we think the returns there are game-changing for the company and game changing for the landscape of the company given that if we are successful there, we've effectively flipped 60% to 70% of our entire nitrogen or based industrials. So we're no longer a 60-40 split fertilizer industrial. We're a 70-30 split industrial, right? And so we think that there's a lot of value to being predictable, long term, lower risk from a price volatility perspective. So we want to see this one out. But we can't do all of it at the same time. We're a smaller company. We've got limited resources. And so we want to be very diligent in making sure that we're not biting off more than we can chew, so to speak. And so we'll see this one through and see if we can get through feed and get the offtake and then ammonia expansion at El Dorado and other expansion opportunities are still there and still extremely interesting, but just not right now. We have to just kind of parse it out a little bit. So yes, it is still something that we -- I think you'll see us potentially move forward on, maybe not the whole full expansion we've previously talked about with Eldorado, but maybe in pieces where we start with low-carbon ammonia first.

Okay. That's definitely interesting to have options on the table, definitely an interesting point on the mix of the business that could shift. I guess, maybe to wrap things up, just bringing it more high level in terms of free cash flow overall. I guess, how are you prioritizing everything now between debt paydown, buybacks and growth investments?

Yes. So I mean, if you look at us over the last 2 years, we've bought back $200 million of debt and $200 million of stock buyback. And so we've really prioritized reducing our leverage while also returning cash to shareholders. As we look forward over the next 12 to 18 months, I think you still may opportunistically see us buy some debt back. I mean -- and some equity as well given where we're trading today, we think we're a great buy. So you'll see us potentially do that. But right now, we're squarely focused also on getting the returns that we're looking for on the reliability, which is going to require some turnarounds and some investments from a capital perspective. But I still think our capital is going to remain -- our sustaining capital should still remain in that still $60 million to $80 million that you've seen us do this year.

Sounds good. I think we can wrap there. I appreciate, Cheryl and LSB taking time with us today and Suni for joining.

Thank you.

Everyone, have a good day.

Thank you so much.

Thank you.