LSB Industries, Inc. reported financial results for the quarter ended December 31, 2019 reflecting continued weak product pricing and low production attributable to both planned turnaround activity and unplanned downtime. Depressed product pricing that characterized much of 2019 extended through the end of the year as a late corn harvest led to an abbreviated fall fertilizer application. 59 days of downtime between two of LSB’s facilities further contributed to weak financial results. However, the company reported progress in commercial efforts in its industrial and mining segments and forecasted meaningfully improved FY 2020 production volumes. Considering that FY 2020 earnings will likely not reflect mid-cycle pricing, a valuation based on GVRC’s estimated FY 2020 EBITDA of $84.9 million is inconsistent with the long-term earnings profile of the business. Analysis of LSB’s financial characteristics in a normalized pricing environment suggests EBITDA of around $120 million is reasonable; this only accounts for pricing normalization and ignores opportunities for commercial growth as they cannot reliably be quantified. Therefore, GVRC revises its target price to $11.35, representing 9.0x normalized mid-cycle EBITDA of $120 million.