Jack Golsen - Executive Chairman Barry Golsen - President and CEO Tony Shelby - EVP and CFO Mark Behrman - SVP, Corporate Development Carol Oden - IR.

Dan Mannes - Avondale Partners Roger Smith - Bank of America Merrill Lynch Joseph Mondillo - Sidoti & Company Keith Maher - Singular Research Tyler Gately - Wells Fargo & Company Shannon Richter - Feltl & Company Gregg Hillman - First Wilshire Securities Dan Mannes - Avondale Chris Ryan - Bank of America Merrill Lynch.

Greetings. Welcome to the LSB Industries’ Incorporated Fourth Quarter 2014 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I’d now like to turn the conference over to your host, Carol Oden. Thank you. Ms. Oden, you may now begin..

Good morning. Welcome to LSB Industries, Inc. fourth quarter 2014 conference call. Today, LSB’s management participants are Barry Golsen, President and Chief Executive Officer; and Tony Shelby, Executive Vice President and Chief Financial Officer.

Jack Golsen, LSB’s Executive Chairman and Mark Behrman, LSB’s Senior Vice President for Corporate Development and designated successor to Tony Shelby as CFO, will also join the Q&A session after the prepared comments. This conference call is being broadcast live over the internet and is also being recorded.

An archive of the webcast will be available shortly after the call on our Web site at www.lsbindustries.com. After comments by management, a question-and-answer session will be held. Instructions for asking questions will be provided at that time. And now, I’ll turn the call over to Mr. Barry Golsen..

Good morning. Thank you for joining our conference call today. Please turn to Page 3 of the presentation. To start, let me provide some financial highlights from the fourth quarter and full-year 2014. For the fourth quarter of 2014, compared to the fourth quarter of 2013, net sales increased 21.7% to $181 million.

Net income applicable to common shareholders was $700,000 or $0.03 per diluted share compared to net income of $37.3 million or $1.58 per diluted share.

Excluding certain items, primarily insurance recoveries recognized in the fourth quarter of 2013, adjusted net income applicable to common shareholders was $2.1 million or $0.09 per diluted share compared to an adjusted net loss of $9.5 million or $0.42 loss per diluted share in 2013.

For full-year of 2014 compared to full-year of 2013, net sales increased 7.8% to $733 million. Net income applicable to common shareholders was $19.3 million or $0.83 per diluted share compared to $54.7 million or $2.33 per diluted share.

Again, excluding certain items, primarily insurance recoveries, adjusted net income applicable to common shareholders was $3 -- $3.4 million, excuse me, or $0.14 per diluted share in 2014 compared to an adjusted net loss of $3.4 million or $0.15 loss per diluted share in 2013.

Excluding the benefit of insurance recoveries in 2013 and 2014, our fourth quarter and full-year results showed year-over-year improvement.

Our chemical business delivered strong growth in sales and adjusted operating income for the full-year, reflecting the progress we're making to achieve higher on-stream rates at our Pryor, Cherokee, and El Dorado facilities, and the resulting improved overhead absorption that -- from those operations.

Our Pryor facility is in the best condition since we brought the facility online and produced almost twice as much ammonia in 2014 than 2013. With that said, our chemical business did experience various headwinds throughout the year.

In addition to lower selling prices for our agricultural products and higher overall feedstock costs, we did experience some unplanned downtime at our Pryor and Cherokee facilities. These maintenance issues have been resolved and both plants have been producing at targeted rates.

Additionally, profitability at our El Dorado facility has been depressed by the relatively high price of purchased ammonia, the primary feedstock for El Dorado’s end products rather than producing its own ammonia using natural gas as we do at our Pryor and Cherokee facilities.

We expect this cost disadvantage to continue through 2015 and to be eliminated once the construction of the ammonia plant at El Dorado is completed and starts production in 2016. The El Dorado ammonia plant expansion project is expected to substantially enhance the plant’s profitability, reduce costs, increase capacity, and improve product balance.

Importantly, this project along with the enhancement of the facility’s nitric acid capacity remains on budget and on schedule, and we expect significant incremental operating profit beginning in 2016 as a result of these investments.

Despite historically high stock to use ratios and the expectation that corn acres planted in 2015 will be slightly lower than last year, agricultural market fundamentals remain favorable, and the industrial chemical markets we serve should continue to benefit from the improving economy.

Turning to our climate control business, full-year of 2014 sales were essentially flat with 2013 excluding a reduction in sales related to the previously disclosed termination of our agreement with Carrier to supply them heat pumps.

Despite lower sales in the first half of 2014, resulting from severe weather throughout the U.S in early ’14, bookings for the full-year reached their highest level since 2008, 9% higher than 2013. These solid bookings reflect a significant increase in demand in the second half of 2014, primarily for large custom air handlers in hydronic fan coils.

We believe we have a strong opportunity here and are taking actions to enhance our position in this business.

This includes a strong backlog at year-end 2014, the recently announced change in leadership at ClimateMaster, which accounts for nearly two-thirds of our climate control business sales and upgrading and expanding our product offerings across the entire climate control portfolio, and the continued benefit from our lean operational excellence initiatives.

Taken together, we believe that these initiatives will enable us to capitalize on the positive outlook for growth in both the commercial institutional and residential markets that we serve and will position the climate control business to generate increased sales and profits in 2015 and future years.

Although our overall earnings during 2014 were certainly not at a level we’re satisfied with, we're putting strong emphasis on projects and initiatives that should greatly enhance our earnings and create value for shareholders in the years to come. I’ll cover those initiatives in greater detail later.

Finally, we see good momentum in each of our businesses and anticipate delivering improved results in 2015 with a substantial improvement expected in 2016. Now I'll turn this call over to Tony, who will go into more detail about our financial performance..

Thank you, Barry. As Barry indicated, excluding the benefit of insurance recoveries, we achieved year-over-year improvement in our fourth quarter and full-year 2014 results. This improvement is largely a result of improved on-stream rates in our chemical plants.

For a comparison of fourth quarter 2014 results compared to fourth quarter of 2013, please turn to Page 4 of the presentation. Consolidated net sales were $181 million, an increase of $32 million or 21.7%, driven primarily by our chemical business.

Gross profit was $31.4 million compared to $30.6 million or $24 million in the 2013 quarter, excluding business interruption insurance recoveries of $10.2 million. Incidentally, as a side note, during this review of our financial highlights, I will refer to adjusted results.

These -- there are financial tables on Pages 33 and 34 of the slides that reconcile all the reported results to adjusted results. Okay. Operating income was $4.9 million compared to operating income of $70.2 million in 2013.

Excluding insurance recoveries of $76.2 million in 2013, a $2.2 million unrealized loss on forward natural gas purchase commitments in 2014, adjusted operating income for 2014 quarter were $7 million compared to an adjusted operating loss of $6 million from the 2013 fourth quarter.

Interest expense for the quarter was $4.1 million net of $4.9 million capitalized interest compared to $7.3 million net of $1.8 million capitalized interest. After provision for income taxes, net income was $700,000 or $0.03 per share compared to net income of $37 million or $1.58 per share last year.

EBITDA for the quarter was $14 million compared to $79 million. Excluding the $2.2 million unrealized loss on gas commitments in 2014 and a $76.2 million insurance recoveries in 2013, adjusted EBITDA was $16.6 million, an increase of $14.3 million over 2013 adjusted EBITDA of $2.3 million.

The full-year of 2014 net sales were $733 million or $53 million higher than in 2013. Chemical sales increased $74 million and climate control sales were $20 million lower. However, climate control sales excluding Carrier heat pumps in 2013 were essentially flat primarily due to the weather related slow start to the first half of the year.

Operating income was $53 million including $28 million of insurance recoveries, a $2.1 million unrealized loss on forward natural gas commitments compared to $105 million last year, including $94 million of insurance recoveries.

Excluding those items, adjusted operating income was $28 million in 2014, an increase of $17 million over adjusted operating income of $11 million in 2013. Interest expense was $22 million, net of $14 million capitalized interest.

After provision for income taxes at an effective rate of 39%, net income applicable to common stock was $19 million or $0.83 per diluted share compared to $55 million or $2.33 per diluted share. EBITDA was $90 million versus $133 million in 2013.

Adjusted EBITDA for the same items as discussed for operating income, adjusted EBITDA was $64 million, an increase of $26 million over the adjusted EBITDA from 2013 of $38 million. On Page 5 is a brief summary of our capital structure at year-end 2014 compared to year-end 2013.

Cash and investments at December 31 totaled $273 million or $162 million lower than at year-end 2013, reflecting our investments in our chemical business operations particularly the expansion of the El Dorado facility. Total capitalization was $891 million and debt-to-capital was 51%.

This additional leverage is consistent with our long-term growth plan. We expect to reduce our debt level based upon our expectation of a significant increase in free cash flow after the expansion projects are complete and operational.

Including the discussion of our financial position, our $100 million working capital revolver remains undrawn with approximately $71 million of availability at year-end. On Page 6 is an analysis of cash flow for the 12 months ended December 31, 2014.

As shown, free cash flow consist of net cash provided by operations of $67 million, less capital expenditures of $220 million, other cash increase of $3.3 million, resulting in free cash flow of a negative $150 million after net payments from the current long-term debt of $12 million cash investments declined $162 million.

Reduction in cash investments is attributable to the planned capital spending of $220 in 2014. The total cash investments will continue to decline through 2015 as we complete construction of the El Dorado expansion projects. Moving to Page 7, this page is a summary of our estimated capital expenditures for 2015.

Total capital expenditures for this year will be between $283 million and $346 million, including capital expenditures for the El Dorado expansion projects of between $225 million and $260 million.

It also includes upgrades to our plants to maintain compliance with environmental requirements and guidelines as well as other anticipated renewal and improvement projects.

The planned capital spending is being funded by our cash investments as shown on the year-end balance sheet, internally generated cash flow and certain third-party financing for approximately $50 million.

With respect to the table reflect El Dorado expansion projects, the planned spending is presented as a range to provide for certain unplanned delays in its construction and other contingencies. As of this call, 93% of the planned scope of work is under contract.

The planned cash spending in 2015 as shown in this schedule is $25 million higher than was disclosed in the third quarter reports and conference call. This difference is due primarily to timing of payments during fourth quarter of 2014 versus our previous estimates.

Lower cash disbursements in the fourth quarter will move into 2015 resulting in no change of spending nor to the planned completion dates of the various components of the El Dorado expansion projects.

Turning to Page 8 for a review of chemicals fourth quarter of 2014 results compared to fourth quarter ’13, sales were $109 million, an increase of $31.5 million or 41%.

The increase in sales was due to higher agricultural product volumes as a result of higher on-stream rates at the Pryor facility offset by unplanned maintenance at the Cherokee facilities ammonia plant during late November and in December.

The facility was out of production for 33 days during the fourth quarter, returning to its full production rate on December 28. The outage resulted in a loss of 30,000 tons of saleable product.

The estimated cost of the Cherokee outage was approximately $8 million including loss contribution margin $6.6 million, maintenance cost $600,000 and costs related to product purchased to satisfy customer sales commitments $800,000.

For the fourth quarter, the chemical business reported operating income of $4.5 million compared to operating income of $67.5 million reported in the fourth quarter of 2013 or a loss of $8.7 million excluding insurance recoveries of $76.2 million in 2013.

The fourth quarter 2014 operating income of $4.5 million was negatively affected by the loss contribution margin and extra costs incurred during the 33 days loss production at the Cherokee facility and the $2.2 million of unrealized losses of forward natural gas purchase commitments.

Also affecting fourth quarter operating results was the negative effect of producing Ag grade ammonium nitrate from purchased ammonia at El Dorado, which leaves little or no contribution as compared to producing for natural gas. This disadvantage along with reduced nitric acid capacity will continue until we complete the El Dorado expansion projects.

On Page 9, the bar chart compares total chemical sales by quarter for 2013 and ’14. The full-year of 2014 sales at $455 million, and the fourth quarter sales are $109 million, where both higher than 2013. But as I mentioned earlier, sales were impacted by the extended plan and unplanned downtime in the third and fourth quarter of 2014.

The lower half of the page compares the sales mix for the quarter with full-year sales mix reflecting approximately the same mix in the fourth quarters compared to full-year. Turning to Page 10, for overall chemical sales by product.

Fourth quarter agricultural product sales increased due to improved on-stream rates at Pryor as well as increased demand in pricing for agricultural grade ammonium nitrate.

Industrial acids and mining product sales increased due to the increase in ammonia costs which are passed through to customers on contractual sales agreements based upon the amount of ammonia content in the product. Turning to Page 11 for agricultural sales by product line.

UAN and Ammonia sales increased in the fourth quarter of 2014 compared to 2013 due to improved on-stream rates at Pryor. Ammonium nitrate sales volumes and pricing increased due to improved agricultural market conditions. Industrial acids and mining sales are on Page 12.

Fourth quarter sales of nitric acid and industrial ammonium nitrate report increases in tons shipped at 7% and 4% respectively and a disproportionately higher increase in dollar sales due to the increase of purchased ammonia which is a pass-through in the pricing arrangements with customers.

The fourth quarter increase of tons of nitric acids sold is due to increased demand by Bayer MaterialScience at the Baytown facility. The increase in tons of industrial AN was attributable to an increase in tons shipped to Orica. Now turning to Page 13, for a review of climate control results for the fourth quarter of 2014 compared to 2013.

Climate controlled reported net sales of $69 million which is an increase of $1.3 million or 2%. Sales increased despite a $7 million decline in heat pump sales to Carrier compared to Q4 of 2013.

Offsetting the decline in heat pump sales were increases in sales of other product lines including fan coils and large custom air handlers and large retailers. This increase is driven by growth in the hospitality and multi-family residential markets for fan coils and healthcare and military markets for air handlers.

Gross profit and gross profit margins were $20.8 million and 30.2% margins compared to $22.4 million and 33.2% last year. The $1.6 million and three percentage point decline in gross margin was primarily due to product and customer mix as heat pump margins carry a half gross profit margin than the other products.

Operating income was $4.3 million or 6.3% of net sales compared to $6 million or 8.9% last year due primarily to product and customer mix. Fourth quarter EBITDA was $5.5 million as compared to $6.8 million in the fourth quarter of ’13. On Page 14 is a summary of climate control sales by market sector.

In both the quarter and year-to-date commercial institutional sales were 84% of total sales and single-family residential, which is all geothermal was 15% of total sales.

Turning to Page 15, fourth quarter of 2014 sales by product line compared to 2013 reflect increases in sales of fan coils and growth sales occurring the other categories which include custom air handlers, modular chillers, and our engineering and construction services business.

Reduction in heat pump sales resulted from the loss of the Carrier business in 2014 as we previously discussed. That complete -- concludes the financial review. We have addressed our results of operations and capital resources in greater detail in the 10-K filed this morning and suggests that you view that document for a more detailed analysis.

Thank you for your time. I’ll now turn it back to Barry to discuss the outlook for both our chemical, climate control businesses and the progress of our key initiatives..

Thanks, Tony. Now focusing on the chemical business, please turn to Page 16. During 2014, prices of natural gas and anhydrous ammonia were generally higher while the selling prices of urea, ammonium nitrate and ammonium nitrate fertilizer declined.

Since year-end, both natural gas and anhydrous ammonia prices have declined significantly, which benefits all of our production facilities except for those products which we sell on a cost plus basis.

Focusing on the general outlook for the agricultural markets we serve, Page 17 lists several indicators for our agricultural products many of which continue to be favorable. Even though grain stock to use ratios both worldwide and in the U.S are currently at or above 10-year averages.

Planting levels are expected to remain generally high although slightly lower than the recent past. Industry expectations are that approximately 88 million to 89 million acres of corn will be planted in the upcoming season, about 3% less than the previous season.

Weather shortened the fall ammonia application season and we expect that ammonia and UAN applications will now be strong for the upcoming planting season, as wholesalers look to increase their inventories. In addition, natural gas prices remain at relatively low levels.

Market prices for corn and wheat are slightly lower than a year-ago, but yields per acre are up. So planting continues to be profitable for farmers. To achieve higher yields, nitrogen fertilizers must be applied.

North American nitrogen fertilizer producers, including our chemical business, currently have the lowest delivered cost in North America relative to foreign producers. Therefore, we believe if there is less demand for nitrogen fertilizer in the upcoming season, it will affect importers, before it affects domestic producers.

At this time, weather conditions are generally favorable for the next planting season with better moisture conditions than a year-ago. While certain products of Texas, Oklahoma, and Western United States are in extreme drought conditions, the majority of the markets we serve appear to have good planning conditions.

Finally, although Chinese urea is subject to lower export tariffs, prices have currently stabilized. Chinese urea export rates accelerated through 2014 and imports of Chinese urea into North America are expected to continue in 2015 at a similar rates to 2014 as tariffs are expected to remain low.

Also there is the potential to see lower Chinese coal prices, a primary feedstock for Chinese urea. These factors could exert downward pressure on all nitrogen fertilizer products. Overall, we continue to be optimistic about the fundamentals of our agricultural business. Focusing on our industrial and mining products, please turn to Page 18.

Most indicators in this area forecast growth over the next few years. As we advised previously, our contract with Orica ends on October 9 -- April 9, 2015. Our strategy is to commence selling industrial grade AN directly to the explosive market at that time.

So far we are pleased to have signed agreements to supply approximately 140,000 tons per year over 60% of our annual production capacity of industrial grade AN volume, beginning on April 10, 2015. We are currently in negotiations with other potential customers of industrial grade AN for most of the balance of our production capacity.

Page 19 is an update on the status of each of our chemical facilities. Cherokee is currently operating at its historical rates of approximately 500 tons per day of ammonia. Pryor is operating at its targeted rate of approximately 650 tons per day of ammonia. And the Baytown operation is performing at targeted production levels.

At El Dorado, our focus remains on our expansion projects where we successfully completed a one-week outage in December to allow for tie-ins of certain items that will service the new ammonia and acid plants under construction.

With regard to planned maintenance at each of the facilities, we have a turnaround at Pryor scheduled for late June or July 2015.

In addition to enhancing our Pryor operation with new senior management, we’ve and are continuing to implement facility reliability improvements including engineering support, extensive monitoring and control equipment, remanufacture of certain key pieces of equipment and use of industry expert consultants.

We have also increased our capital spares at this location. The combination of these improvements is intended to improve plant on-stream rates by reducing the risk of unplanned downtime.

At Cherokee, as previously disclosed, the work completed in -- with the work completed in 2014, we are transitioning Cherokee to a two-year cycle for major turnarounds and don't expect to perform a turnaround at Cherokee in 2015.

The Cherokee facility has made continued progress toward improved reliability and resources have been committed to ensure that the reliability goals are met. Page 20 details the status of the El Dorado ammonia plant expansion project.

As we have stated in the past, this project will significantly reduce El Dorado’s cost of ammonia as the cost spread between purchased and manufactured ammonia is substantial. It will also produce additional ammonia that will be available for sale or which can be upgraded to other products for sale.

The engineering effort is now substantially complete and the project timeline is now driven by executing the construction process. Pilings and foundations are substantially complete. A large part of the underground piping and structural steel is complete and a majority of major equipment has been installed.

The cooling towers were also complete, while the piping installation is now underway. Whereas we have outlined the major milestones for this project in the past, we’ve changed the presentation of this slide to give more clarity to the timing of certain of these key events and milestones.

Turning to Page 21, we show a 3D CAD rendering of the ammonia plant on the top of the page and a current photo of the site below. You can see in the bottom picture that foundations, concrete pads and many large vessels have been installed. Structural steel and the cooling tower are also effectively complete, as is the demineralized water tank.

Work is progressing well on the primary former and we’ve installed one of three compressors with the other two compressors ready for delivery and installation. Most of the piping is on site inspected and being prepared for installation. Please turn to Page 22.

In addition to the ammonia plant being constructed at El Dorado, we are adding a 65% Weatherly nitric acid plant and concentrator to direct -- to replace the direct strong nitric acid plant that was destroyed in 2012, while also adding additional capacity.

At this time, the nitric acid concentrator is mechanically complete with control systems to be installed over the next several months and the nitric acid plant is progressing on schedule. On Page 23, you can see a recent photo of the 65% nitric acid plant and concentrator.

The equipment and building foundations for the nitric acid plant are complete and steel fabrication and erection is also almost complete. 100% of the equipment for this plant is on-site and most is installed including the absorber towers and compressor train. The cooling tower installation is complete.

Piping installation is underway as well as electrical systems. At this time, we expect the El Dorado expansion projects to be completed on time and on budget. Also at this time we have the cost for approximately 93% of the planned scope of work under contract.

We expect the acid plant and concentrator to be completed and to begin production in the third quarter of 2015 and the ammonia plant construction and commissioning to be completed by the end of 2015 with ammonia production start-up and ramp up during the first quarter of 2016.

Turning to our climate control business, on Page 24, you will note that incoming orders for the fourth quarter were slightly behind those of the prior year in both commercial and institutional and single-family residential sectors of our business.

However, in the aggregate, and excluding the lost Carrier heat pump business, which we discussed previously, incoming orders in the fourth quarter were 10.8% above those in 2013. For the full-year of 2014, commercial and institutional incoming orders were 12% above the prior year.

However, single-family residential incoming orders were 7% below the prior year. Again, excluding the lost Carrier heat pump business, incoming orders for 2014 for commercial, institutional and residential sectors were up 18% and 15% respectively over 2013. In addition, there was a dramatic increase in the ending backlog as of December 31, 2014.

The year-end backlog was $65 million, up 63% over the 2013 ending backlog. We are pleased that all of our climate control businesses had backlog increases year-over-year.

Moving on to the indicators related to commercial and institutional construction, on Page 25, we show the Dodge Data & Analytics expects our markets will continue to increase in the near-term. They most recently forecasted that the key commercial and institutional sectors we serve are expected to grow approximately 26% from 2014 to 2017.

During the -- during 2014, the Architectural Billings Index indicated growth in 10 out of 12 months, another strong indicator that business will continue to strengthen in the near-term. On Page 26, you can see the Dodge forecast for single-family residential construction starts. These are expected to increase 65% from 2014 to 2017.

In summary, the general consensus of most economists and construction and industry experts is that construction recovery will continue. This is a positive indicator for our climate control business.

Turning to our expectations for the chemical business, we have included a chart on Page 27, which contains a range of anticipated chemical product volumes for the first quarter of 2015. I’d like to switch focus now to the vision for LSB's future.

As we’ve described to you over the past several conference calls, we are focused on value drivers, projects, and initiatives that we have the potential to be transformative for the Company. We expect these initiatives to significantly increase our earnings and create substantial value for LSB's shareholders.

We have received many requests from shareholders and analysts to create a roadmap of what our targets are for the Company, following the completion of our chemical expansion projects and the implementation of reliability enhancements across all our chemical plants.

And given the multiple initiatives we have in our climate control business combined with the expected increase in commercial and institutional construction. We believe it is important for our shareholders to understand our targets regarding revenue and earnings growth and also to understand the key elements of our plan to achieve these targets.

Since our plan is a multi-year effort, on the following pages we have compared 2014 actual results to our targets for 2017. By 2017, we will have completed our chemical expansion projects and have a full-year of operation of those new plants.

At the same time, we will be further into the improved construction cycle, the primary driver for our climate control business. On Page 28, we’ve summarized our chemical and climate control key targets for 2017, which include financial metrics for both businesses annual chemical plant production, and key initiatives.

Regarding our chemical business, we're targeting EBITDA and operating margins of 30% and 20% respectively for 2017. That is an increase from adjusted EBITDA and operating margins of 12% and 6% in 2014. In our climate control business, the targets for EBITDA and operating margins are 15% and 14% respectively versus 10% and 8% that we achieved in 2014.

The next several slides will provide color on the drivers of growth for each of our businesses. Page 29 provides an EBITDA transition for our chemical business from 2014 actual to targeted 2017.

You will see that the three big drivers of an incremental EBITDA are first, the ammonia and nitric acid plants commencing production which allows us to reduce the cost of ammonia while providing additional ammonia to seller upgrade to other nitrogen products.

Second, improved on-stream rates primarily at Pryor, and third reduced expenses from less unplanned downtime. The chart on page 30, attempts to provide some color as to the chemical businesses EBITDA sensitivity to a change in natural gas prices, in ammonia prices based on our targets for 2017, with ammonia being a proxy for both UAN and AN pricing.

As the analysis points out, movements in our primary feedstock cost and in selling prices have a material effect on our financial results. Page 31, provides an EBITDA transition for our climate control business from 2014 actual to targeted 2017.

The three main drivers of growth in this business will be first, operating leverage for an increase in sales as we are currently covering our fixed overhead cost and can handle any anticipated growth in our existing manufacturing facilities with no significant capital investment.

Second, plant performance improvements in our custom air handler, modular chiller and construction services businesses all of which we report as other in our public filings as they gain increased scale. And finally, lean initiatives that we began implementing in 2013 which we expect to result in an increase in gross margins.

On page 32, are the key value drivers that we are focused on in which we expect will increase LSB’s value in the near and mid term. We’ve reviewed these with you in detail before, so they are here only for reference.

We expect all of these initiatives to drive the improved performance enhance profitability and share holder value creation that we have just discussed.

Summing up, we expect that our efforts over the past several years to strengthen our operations and expand our production capabilities will yield substantial improvement in sales and profits, and ultimately increase shareholder value. We look forward to reporting our progress to you.

Before we conclude the call, I want to switch gears briefly to discuss the press release we issued this morning regarding the strategic committees review and recommendation.

As you know the strategic committee which is comprised of four independent directors was established in accordance with the company’s April 2014 settlement agreement with Starboard Value one of our largest shareholders.

The strategic committee’s mandate included a thorough evaluation of potential strategic alternatives for the company with the assistance of independent financial, legal and tax advisors.

In particular the strategic committee considered separating the climate control business through a spin off, selling the climate control business, placing some or all of the company’s chemical business into a master limited partnership or MLP structure and continuing to execute the company’s strategic plan.

As announced this morning, the strategic committee and board of directors have unanimously determined that the continued execution of the company’s strategy to drive profitable growth and create sustainable shareholder value is in the best interest of LSB and its shareholders at this time.

The strategic committee and board also determine that a potential spin or sale of its climate control assets from the chemical business maybe a step for consideration once the expansion projects at the company’s chemical facilities are complete, and the strategic committee will continue to reevaluate this alternative over the next 12 to 18 months.

And coming to its recommendation, the strategic committee noted that LSB has been taking actions that should enhance the long-term liability and performance of the chemical business facilities.

The El Dorado expansion projects are on schedule and within budget and once complete should deliver substantial value to shareholders, and managements plan to grow the climate control business is expected to generate significant margin improvement over the next several years.

The strategic committee will now focus its near-term attention on providing over site and additional recommendations as appropriate to assist management in the execution of the company’s plan to lower production cost, improve manufacturing efficiency, drive sales growth and enhance profitability with a particular emphasis on completing the expansion projects at our El Dorado facility.

I encourage everyone to read the press release we issued this morning that goes into much more detail about the strategic committee’s process, considerations and ultimate recommendations.

On a final note, I’d like to mention that we will be presenting on March 16 in New York at the Sidoti Annual Equity Conference, and on March 18 in Boston at the BofA Smid Cap Conference. We hope to see some of you there. We will now go to Q&A.

Operator?.

Before opening up for questions, I’d like to thank you for listening today. I’d also like to ask that you limit yourself to no more than three questions, so that others may have an opportunity to ask questions. If you have more questions, you can get back in the queue to ask at a later time in the conference. Thank you.

With that, we will now begin the question-and-answer session. [Operator Instructions] Our first question is coming from the line of Dan Mannes with Avondale Partners. Please proceed with your questions..

Hi, good morning everyone..

Hi, Dan..

Hi, Dan..

Lot’s to go over. I’ll ask a couple of questions now, and then probably jump back in the queue.

First, just focusing on the quarter real quick, can you talk maybe a little bit about the pricing environment at chemical? I guess we were a little surprised by the realized pricing both in terms of what you received, you were a good deal below both industry markers and peers.

And then secondly, about your purchases, I mean the purchase of ammonia was dramatically higher than what you’re selling at. So, if you can walk us through maybe the pricing environment that will be helpful..

Dan, our UAN shipments out of Pryor and out of Cherokee are from the factory and we’re comparing our process to processes coming out of terminal location from our competitors and geographically located plants within the corn-belt.

With respect to, and also keep in mind now, the Pryor we have an offtake agreement which gives us a net lower price after the distribution fee. It also well provides us with the ability to ship during the off season without storage. So it’s an advantage, but it does give us a slightly lower price there.

With respect to ammonia, we’re purchasing ammonia off the pipeline at different times than we’re selling, and we’re also selling at a location same as UAN, we’re selling out of a factory location versus CF in Agrium that are shipping out of terminal locations, and if you net that difference out, we’re pretty close.

So the difference between the purchase and the sale are pretty much under laid, because we’re purchasing at different times and we’re shipping at different times during the period, and keep in mind what happened during the quarter where you had significantly increased Tampa metric at 650 and you had earlier ammonia shipments prior to the increase.

So, a lot of it’s timing.

So I wouldn’t say our prices are more comparable to Terra [ph]?.

Well even the CVR partners, I mean, I think you were below them and their Coffeyville is not too far away from you..

Right. Typically that we’re very comparable to, Terra..

Okay..

[Technical difficulty] versus terminals..

Okay. Then real quick on a similar note.

Can you talk at all about maybe your hedging plan going into the first and second quarter? How much, if at all, have you hedged either in terms of sale price or in terms of natural gas?.

We have -- for 2015, we have close to 80% of our gas hedged. We took a mark-to-market unrealized loss on four purchase commitments. So for our gas purchases for 2015, we’ve got about 80% of it hedged. We marked it to market based on future prices at the end of the year.

And as far as forward selling, there hasn’t been a significant amount of forward selling, but we do have some firm sales commitments at the end of the year. El Dorado has got about $15 million, and we have about $60 million in ammonia sales, but very little in the way of UAN sales on firm sales commitments..

Okay. Switching now real quick to climate, I think the thing that stuck out to us this quarter was clearly the margins. Now you highlighted obviously a greater mix to both fan coils and your other group from out of the heat pump business, and we understand there is a mix difference.

But number one, I mean the margin decline was pretty stark, and I guess I’m trying to understand I mean you announced a new President of ClimateMaster.

Is there a margin issue of ClimateMaster as well or I guess I’m just trying to understand the impact of the mix shift versus if there is anything else going on, because again the drop in margin was pretty notable..

Well it was related to mix, and I would say is there a margin problem at ClimateMaster in general, the answer is no. It was related to mix of other products versus lower sales of ClimateMaster relative to the total..

Okay..

I’d say there is one slight shift in the margin at ClimateMaster, and that relates to the fact that our residential products are lower as a percentage of its total sales than they have been historically, which we’ve been tracking in the last few quarters and taking about, and residential products tend to have significantly higher margin than our commercial products..

Okay. And then lastly, I want to touch on the financing plan, and then I’ll drop back in the queue. I think you noted you have what, $270 million; $280 million of cash and $70 million of availability under your revolver which is slightly above the high end of your guidance range in terms of capital spend.

Can you walk us through any other flexibility you may have, just as we’ve seen a couple of your competitors who were going through expansion, they have run into some cost overruns. And while I don’t anticipate that will happen for your guys, you obviously need to be prudent in planning..

Well we have got a pretty wide range there on the remaining spending. But according to our forward looked -- our forward projections, we have got adequate liquidity including internally generated cash flow to more than cover our spending.

And as we have also disclosed, we’re planning to finance three pieces of discrete equipment for in the range of $50 million to supplement what's already on the balance sheet..

Okay.

Any other flexibility in the capital plan including for instance the gas properties where I can imagine the economics are super compelling right now?.

They are not super compelling, that’s always an option..

Okay. Thanks..

Thanks, Dan.

Thank you. Our next question comes from the line of Roger Smith with Bank of America. Please go ahead with your question..

Thank you very much. Regarding your 2015 CapEx range, if all goes to plan of what you’d like to do, what would be the CapEx span within the spend, and what would be the pacing of the CapEx -- the 2015 CapEx within the year meaning is it evenly weighted over the four quarters, is it front-end loaded, back-end loaded? Thank you..

Its first six months loaded, more -- majority of its spending in the first six months of ’15 and to a lesser extend in the third quarter, and then to a lesser extend in the fourth quarter..

Okay.

And do you -- I mean if all goes to plan, would you be at the closer to the $346 million versus $283 million? I am also trying to understand why the band is still large just given where you are in that -- on those two timelines?.

Well we have continued to leave that contingency in there, although the ammonia plant is pretty much -- the costs there are pretty much fixed. But you still have some contracts that are time and material for the nitric acid and concentrator, and you have weather issues.

So we are keeping that range there although we fee like that we’ve got adequate contingencies there..

And can you give us some heads up on what 2016 CapEx might look like if everything goes to plan in 2015?.

I think we normally are looking, have suggested and looking forward at $40 million to $50 million of maintenance CapEx per year, the majority of that being chemical. I think climate control might be in the $3 million to $8 million range..

By that you mean that, if all goes to plan you will be completely finished with your CapEx for these new projects particularly El Dorado, and therefore in ’16 going forward I mean unless anything falls over into the new year, ’16 going forward you’re back to your $30 million to $50 million maintenance CapEx.

Did I understand that correctly?.

That’s correct, Roger..

Thank you. I’ll pass it on..

Our next question comes from the line of Joseph Mondillo with Sidoti & Company. Please go ahead with your questions..

Hi, everyone good morning..

Hi, Joe..

I had a question on 2017 targets that you’re suggesting. So there’s a lot of moving pieces here I know but, in terms of the 20% I guess plus operating margins that you’re sort of looking at.

Can you talk to us how you think about sort of, a worse case scenario or I mean you put 20% plus or how much upside is there if you’re running at utilizations higher than the 95% then is say -- I guess, you suggest and considering pricing where it is sort of today, is it right around 20% and is there more upside.

You put that plus sign in there so I’m just wondering regarding that target?.

Hi, Joe.

How are you?.

Good.

How are you doing?.

Good. So, look when we think about the five year plan that we put together which is really the basis for some of the targets that we put out there. I think we’re comfortable with the 20 plus percent operating margin.

I mean, I don’t think we’re going to sit here and speculate as to how much upside there is or if we’re in higher on-stream rates what that translates to. Clearly if the on-stream rates are higher that would translate to a higher operating margin..

Okay. I guess, one of the reasons why I bring it up was, in 2013 which I think pricing was a little bit more favorable back then. But I think at the back half of the year it was very comparable to the back half of 2014.

You guys excluded a lot of one time type stuff related to the downtime of the plans, and also I think there was some insurance involved in that. And if you exclude all that stuff I got to a 23% operating margin.

I guess, the reason why I’m just asking the question is I always thought that potentially even at the pricing where we’re at today that sort of that, the operating margin of the chemical segment would be higher than 20%..

Well, I would tell you that the spreads between selling prices and feedstock cost have compressed today versus 2013..

Okay. Another question, in terms of your ammonium nitrate high density capacity which is all coming from El Dorado. I believe in 2014 you guys sold upwards of, I have I think over 200,000 tons and the capacity that you’re showing on your investor presentations, recent ones show a little over 100,000 tons of ammonium nitrate.

Am I reading that wrong or?.

Yes, I think so. I think when we think about ammonium nitrate at El Dorado you have to add the low density and the high density.

When we think about ammonium nitrate we think about it as one product because it basically goes down the line as one product and then at the last minute really we can determine whether we want it to be high density or low density..

Okay.

So, in terms of the agriculture ammonium nitrate that you’re going to be selling, should it be higher this year than last year in terms of tonnage?.

I think we’re thinking that it should be slightly higher than last year..

Okay. And then just in terms of the climate control.

Just wondering if you could provide some more detail on these initiatives that you see as an opportunity over the next couple of years that’s going to expand the operating margin 250 to 300 basis points and how that sort of plays out over the next couple of years? Is it more sort of 2016 weighted in terms of the benefit from those or is it sort of evenly spread throughout or just anymore color on that, that would be great..

Well, as we described in the past what we’ve undertaken are lean operational excellence initiatives. And there is various basis of this type of endeavor, and there’s different ways and methodologies to approach it.

The methodology that we have chosen in the climate control business is to thoroughly train our entire management team and even down to operators at the floor level in the techniques and philosophy and culture involved around lean OpEx, which involves things like daily problem solving, root cause analysis, constant improvement, rapid improvement events, all these various things which are components.

The first year of an initiative which was 2013, we really started in mid 2013, and for the first 12 months or so you’re spending a lot of time and effort on training and you’re actually using outside consultants and you have increased cost in an operation during that period of time.

Then, what you’re also doing during that period of time is assessing the long-term potential of your operations, and by long-term I would say typically the horizon on a project like this is somewhere four to five years to achieving ultimate potential.

In year two, you start to do some implementation of various selected projects and in your three through four or five, you continue to implement and see benefits. So I would say it’s pretty evenly spread in years three to five is when you really see the benefits..

Okay, great. Thanks a lot. I’ll hop back in queue. Thanks..

Thanks, Joe..

Our next question comes from the line of Keith Maher with Singular Research. Please go ahead with your questions..

Good morning. I had a question also on the guidance but more on the growth -- the top line growth you’re guiding to.

I didn’t know if you can maybe provide a little more color as to how it breaks out over the next couple of years and what I mean is, on climate control you had a slight contraction this year, so to get to 10% compound annual growth over ’14 to ’16 you’re going to have to see faster than 2% growth, compound for at least the next two years.

Chemicals, you grew about 20% this year, so if we’re going to get to 20% over the next couple of compound then could you maybe break that out of it, is 2016 a little bit more higher growth than 2015 in the chemical business, just with the new plants coming online?.

Hey, Keith, so look, we’ve put out targets for ’17. Its certainly not guidance, these are things that we’re shooting for just to be clear. Second, I don’t think we’re going to sit here and break it out by year.

But what I would tell you on the chemical side is that clearly there’s going to be a faster increase in sales because we’re bringing on 155,000 tons of additional ammonia capacity with the new ammonia plant. So, we’re going to have a big bump in sales there whether it’s in upgraded products or ammonia itself.

And then we get to the climate control side, and I think that we, we have talked about some of the drivers of that business including the rebounding of commercial and institutional construction and some new product introductions, and I think just-- we’re going to get our fair share along with that.

So I think we feel pretty comfortable with the growth rates, but at this point we’re not going to speculate or certainly put out to the market place what ’15 and ’16 will look like..

Okay, all right. Thanks. A question just about the longer term goal of 95% on-stream rates by 2017, kind of in light of, I mean obviously you’ve had some issues in the past year or two with a number of your chemical plants.

How do you get to that rate? And just given the history, what are you doing and what are you putting in place so that happened?.

Well, I mean I’ll just give you sort of a top line view of it, and then Barry can go into some more detail on the specifics. But when we think about an overall 95% on-stream rate for ammonia lets take each of the plants in an non-turnaround year. Cherokee should run at 95% plus.

2017, is a non-turnaround year for that plant, and it’s been at that rate before. When it come to Pryor, we’ve continued to make improvements at that plant and as Barry mentioned earlier in his comments, ammonia production almost doubled from ‘13 to ‘14 and we expect that to continue into ’15.

So, we are targeting 95 plus percent for that facility as well. El Dorado, we just would have come online in ’16, so we should be performing again at those rates. Barry, you want to give a little bit more detail on ….

Well, what I could really do is, I think you’ve covered it in a nutshell. But I think to just put some color on that as to some of the steps we’ve taken.

Off the top of my head, we have increased the corporate staff to implement oversight in a more constant comprehensive overall reliability, policies and systems throughout the entire chemical business.

In addition to that we have increased staff at the various plants and most of those increases have been targeted towards, focused in the areas of risk and mechanical reliability. We have increased the technical staff to support risk and reliability measures at all of our plants, particularly Pryor in more prior than in the other ones.

We had new management at Pryor and as I said a second ago, new engineering staff which is focused on that.

We have added new monitoring equipment at Pryor and other places that let us know in advance when we should be watching the plant more carefully to avoid unplanned downtimes and we have also increased capital spares at many of our plants and we’ll continue to increase capital spares.

Which means that when there is a problem and they do occur from time to time we’ll be able to get back up and running much quicker. We have utilized various industry experts and consultants to review and make recommendations and we’ll continue to do that. And we currently have a task force as Cherokee that’s working on reliability there.

So, so were some of the things specifically that we’ve done to enhance reliability..

Okay. Thanks. That was really helpful, and one final question before I jump back in queue. With regard to the industrial grade AN, that’s used to sell at Orica or you’re still selling at that end shortly.

You mentioned, you’ve covered 60% of that with new contracts, I guess you have about five weeks or so to go and you’re hoping to cover the final bit, the 40%.

What would happen if you don’t get new contracts in place? What would you do with that, that product?.

Well, you have limited capacity for different products. We’ve got capacity there for 220,000, 240,000 tons. As Barry indicated we have got 60% of that placed. We have got a very aggressive marketing program in place in fill up the remaining 40%.

So, there is a lot of -- going forward almost we had the ammonia plant in ’16 we can sell the ammonia, but currently there’ll possibly be a gap from April 9, until we fill that other 40% in. So you’ll buy less ammonia and you’ll produce less product..

Okay. And those were all cost plus..

I think it’s important to stress that we are having significant dialogue with many potential customers and that we feel confident that we will continue to fill up that plant as we go forward..

Just not necessarily in April, not..

Yes..

Okay.

And those are cost plus contracts?.

Right..

Okay. Thank you..

The next question comes from the line of David Deterding with Wells Fargo. Please go ahead with your question..

Good morning, guys. It’s Tyler Gately on for David this morning..

Hi, how are you?.

I had most of my -- most of my questions answered here. But I just wanted to touch on the potential split of the business that you guys discussed earlier.

Can you talk about what your plans would be for the notes in that case?.

Well, I think that if you read the release that we put out in detail it discusses that and it discusses it in the context of the future not at this time. So, I think that’s one of the things that the strategic committee has taken into consideration..

Hey, Tyler, I think that at the end of the day Barry touched on it that it may make sense in the future, so I don’t think we’re in a position to comment on what we do with the notes now, since its not a definite whether we’d do it or not..

Understood. Great. Thanks guys..

Our next question is from the line of Brent Rystrom with Feltl and Company. Please go ahead with your question..

This is Shannon Richter on for Brent, just a couple of questions for him.

What exposure do you add to the mining and oil and gas industries from the industrial chemical businesses? And if any, are you seeing any changes in these businesses?.

What's the question?.

What exposure do we have to industrial and mining? And we’ve seen any changes in …?.

And oil and gas?.

Right..

I would -- this is Barry speaking. We do not have a lot of exposure to the oil and gas industry other than natural gas prices affecting as a feedstock, affecting our cost of our product. I assume -- I'm always assuming you're talking about on the sales side of our product..

Yes..

Of course, our AN product, explosive product is that is used to manufacture explosives is primarily used for mining and quarrying, but primarily coal mining, so we do have exposure on that side of the business..

Okay.

And are you seeing any changes in these?.

Well, obviously the coal business is on a lot of pressure with a strong dollar and cheap gas, but there is still a lot of demand out there for this product and we’ve talked about that in terms of how we expect to replace the Orica business and so we still are very confident that we have the product in the expertise in that area that we will continue to build -- we will continue to have the same volume in that business as we replace the Orica volume.

As far as industrial, we are having -- we are one of the few merchant marketers in nitric acid. That business is very strong and we have been increasing volume there based on our market share..

Okay, great. And then, fertilizer pricing in the Corn Belt it seems remarkably strong.

How is it holding up on your market?.

How is fertilizer pricing holding up? There is a lot of pressure on Ag grade ammonium nitrate due to the cheap imports from urea. But from the UAN standpoint, prices are firming up at 2.75, 2.80 range..

Perfect. Thank you so much..

Our next question is from the line of Gregg Hillman with First Wilshire Securities. Please go ahead with your question..

Yes, good morning gentlemen.

First of all, can you talk about the interest expense? I think it was $4 million in the quarter and where it will be like next year? And basically can you just walk me through the opportunities for refinancing and paying down the debt over the next 3 to 4 years?.

Well with respect to the interest rate, we will continue under GAAP. We are required to capitalize interest based upon the amount of construction in progress, on the expansion projects and a few other projects.

As soon as those construction projects process -- construction in progress, projects are turned over to full production, you will quit capitalizing interest.

So at the end of the construction period, rather than capitalizing the interest, you're going to -- we're going to be expensing the 7.75% on the 4.25% balance on our regular monthly, quarterly basis. So you see a significant difference in the presentation once we move these -- our construction progress into depreciable assets, operating assets.

Now with respect to financing, I might turn it to Mark, who will add to -- cover a brief overview.

Mark, what do you see in the market?.

I think as we sit here today, if we can get the plants up and running on time and on budget, we get some operating performance behind us. Our first call date is August of 16, so I think at that time we will review what the market conditions are and I think we will have multiple options to refinance, if that makes the most sense..

Is your intent to refinance or to pay down debt?.

We can’t pay down debt until our first call date, which is in August of 16. But clearly from a leveraged standpoint, one of the first things we would like to do with our free cash flow is to reduce our debt loads..

Okay, great.

And then, question of capacity in the United States for ammonia plant, Barry, maybe you could talk about the new capacity coming on in the United States planned and what you think will get done? Can you kind of shed some light on that please?.

Well, we know that we can start off with a general overview they’re somewhere between 20 million, 21 million tons of ammonia that are used a year in North America, that historically north of 40% have been imports. We know that there are about 5.5 million tons of capacity that is under construction at this time.

We also know that there are some -- been some discussion about and there has been announcements about some potentially other capacity that might be coming online.

We -- the general consensus in the industry is that with -- realistically that the cost that has escalated to bring on new capacity that probably what will happen will be a worst case scenario would be that we will displace the exports and that we will be -- the imports, excuse me, and that we could be slightly shy or about at the full level of capacity when this all shakes out..

Okay. Okay and then finally, question about the tax rate going forward.

Tony, could you comment upon that the go-forward tax rate for the company?.

The rate we’ve had in the last couple of years have been the 39%, 40% range. We have certain tax credit manufacturing credits and other credits we continue to pursue. So I wouldn't expect tax rate to change materially going forward as a percent of operating income -- taxable income, reported operating income, excuse me..

And what will be the magnitude of our tax credits, you're talking about?.

Well, it’s ….

Not significant enough to change the rate..

No..

Okay..

There are multiple credits, but some are much more significant, others like the manufacturer’s credit..

Okay..

We will see [multiple speakers] going forward also..

Okay. Okay. Thanks very much. I appreciate your comments. Also it was a very good presentation too and the slides were great..

Thank you..

Our next question is from the line of [indiscernible]. Please go ahead with your question..

Hi. I had a question on the Orica contract that’s kind of running off. It sounded like that was a very big off-take contract.

Does it make sense intuitively if we are splitting up that kind of same amount of business over customers that are taking smaller amounts that the cost plus type benefit to us is better than the previous contracts?.

I think at this point, all we could tell you is that the business we’re putting on this far would be comparable. Going forward it may or may not be a lot of dependent as Barry indicated, lot of its geared to the coal industry, which is under pressure right now. So I would expect to at least sustain that and look forward to possibly improving it.

But I couldn’t indicate that at this point..

Okay. And this one maybe a little bit further out, but I think a couple of years ago we had mentioned there was a handful or maybe one or two mothballed ammonia plants at Pryor. I know the engineering team is really focused on getting that plant running optimally.

They achieved that goal, is there any thought in looking out whether those mothballed units at Pryor are viable as a potential new project further down the road?.

I think that at this time, we brought a completely new management team and new technical team on board at Pryor.

And our current thinking is that in looking at the economic cost of bringing those up to an acceptable level of reliability and output versus spending the same amount of money on the base plant that we can probably get a net better result by focusing on the main plant. And at this time that's what they are doing.

It's possible that at some time in the future we will revisit that, but at this point in time we’ve tabled it, we don’t have any specific plans..

Right..

Okay. Thank you. That was helpful. And then my last question is just I think it was either the last quarter or the quarter before that we talked about using some rail to transport ammonia from Pryor to El Dorado.

Is that something we’re continuing to do or does that not make sense economically at this point in time?.

It doesn’t make a lot sense economically if you have a sale ford [ph] at the production -- at the factory location. From time to time we'll do that to make sure that we have adequate supply to fulfill our sales commitments. And for the most part it’s not a big part of the going forward program..

Okay. Thank you..

Our next question is coming from the line of Dan Mannes with Avondale. Please proceed with your question..

Thanks guys. Quick follow-up as it relates to El Dorado. I was looking at the chart were you talk about kind of the key items and it looks like you’ve already started staffing up there.

Can you talk about maybe the cost of the current staffing levels at El Dorado? Is that a capitalized or expense number? And can you give us an idea of how impactful that's been in the last few quarters and if that's going to ramp up or not or you already at kind of steady state?.

Dan, we’re not at steady state in the third or fourth quarter. That will start to increase during the first quarter of ’15, but we do have some fairly significant number in the fourth quarter, but I don't think this number that I have a -- prepared to disclose, but something in the range of $100,000, $200,000.

I don’t have a real number at this point, but that will not be capitalized if its cost that are currently on board that are not dedicated to the project more -- in other words you pick up people on training and a lot of support staff come in on consultants, that are training people, those are not capitalized with cost..

Yes, I’d just add that probably through 2015 the cost will be somewhat significant as we bring on the staff, way ahead of time and make sure they’re trained, so that there are no issues when we start up the plant..

That's correct. And we will try to -- we will consider on our next conference call to disclose that number..

Got it.

And then the one other question is in terms of your long-term targets on the climate business, can you talk at all about maybe the mix at that point? I mean, are you -- do you expect to be able to get the kind of margin expansion you targeted even with the current mix? Or do you need maybe more of a recovery towards a bigger contribution from ClimateMaster to be able to get to your target margins?.

Well, we have looked at -- I had a feeling that someone is going to ask me that question..

I’m glad to do it..

So I really -- I took a look at the mix in the fourth quarter and what we expect it to be and I think that on a longer horizon basis you're going to see the mix normal and the margin more normalized toward what our previous levels have been..

And I guess the one follow-on there is, especially since you said the single-family is of the highest margin piece, what impact if any, do you think about the potential roll-off of the 30% tax credit? Does that also play into that?.

Well, that will -- that could impact that definitely. But I'm looking at the expected margin expansion in some of our other products as we achieve more critical mass and more volume and get operating leverage.

So I think that taking everything into consideration, I would expect to see a margin that’s more in line with what we have historically achieved..

Okay. Got it. Thank you..

Thank you. Our next question is a follow-up from Rogers -- line of Rogers Smith with Bank of America. Please go ahead with your question..

Hi. This is Chris Ryan sitting in for Roger.

Just the first question, how quickly will the El Dorado nitric acid plant ramp to full run rate EBITDA when it started up in Q3, ’15 and is Q3, ’15 going to be lower from the expanse of the ramp up?.

Multipart question. How quickly we will ramp up? I think it will ramp up to full production in ’15 until we have the ammonia production capacity coming on. And as we continue to build up the industrial grade ammonium nitrate and industrial grade nitric acid capacity that was lost -- after we lost that [indiscernible]. So it'll take some time.

What was the second part of the question?.

Second part is just do you think Q3, ’15 EBITDA will be lower from the expanse of that -- of the ramp up?.

Yes, I mean, you could be carrying some expenses related to the ammonia plants that obviously we’re not producing out of that plant yet. So we’re going to incur expenses ahead of that plant. As we discussed earlier, it’s going to be people training things like that..

Okay.

And for the El Dorado ammonia plant how quickly can that ramp up? If its on schedule for Q1, ’16 start-up, will we likely see the three run rate quarters or just second half 2016?.

You saw the charge that market in there where we’re commissioning in the fourth quarter. So we should be at pretty much ready to be at full speed in early part of the first quarter..

Yes, I would say when we think about the start-up of that plant internally, we think that will have a full quarter of start-up and then we got three quarters of ’16 of fairly full production. Could it happen earlier than that? Possibly, but we are internally planning on a full quarter of start-up..

Okay.

And do you see much of a working capital outflow or maybe even an inflow from the El Dorado nitric acid and/or ammonia start-ups?.

No..

No, outflow?.

Right. No nothing significant..

Okay. And then just lastly, for relative to 2014 SG&A costs of $104 million.

How should we think about 2015 SG&A?.

As a consolidated -- you're talking about the consolidated SG&A?.

Yes, consolidated..

Let me take a look at that..

I think it would be fairly similar..

We’ve some variable SG&A obviously. So that will be consistent with sales and the fixed SG&A.

We have as you noticed in the corporate costs, we had some increases this year -- significant increases due to the advisors that we have where it continue to be advisory professional costs as we continue -- as the strategic committee continues rather than that the businesses should be pretty consistent with ’14..

Okay, thank you. Great. I’ll jump back in the queue. End of Q&A.

Thank you. At this time, I’d like to turn the floor back to management for closing comments..

Well, we’d like to -- this is Barry. We’d like to thank everyone for your interest -- continued interest and support. Hopefully we have answered all your questions today and giving you a little more insight about where we’re going in the future.

I’d like to turn it over to Carol Oden, who has some important comments to make about some of the statements that were made today.

Carol?.

cost due to advantages continue into 2015 as a result of purchasing ammonia and [indiscernible] producing such, impact of construction of other ammonia plant at El Dorado and production start dates, incremental operating profit beginning in 2016 as a result of these new investments, agricultural and industrial and mining market sentimental, market demand in 2015, outlook for growth in the climate control systems markets, increased sales and profits, improved results in 2015 and 2016, long-term growth plan and expect to reduce debt level, cash flow after completion and operation of expansion product -- projects, planned capital spending, planned cash investments, El Dorado expansion projects, fertilizer demand, China urea [indiscernible], optimistic about fundamentals of agricultural business, plant maintenance, of turnaround schedules, completion in production date, for acid plant concentrator and ammonia plant, cost of El Dorado expansion projects, construction recovery with continued vision for LSB’s future, expect initiatives to significantly increase our earning and create substantial value for the shareholders, targets regarding revenue and earnings growth, climate and chemical control key targets for 2017, targets for 2017, EBITDA targets, operating margin target, drivers of growth for businesses, EBITDA drivers continued execution of Company’s strategy, significant margin improvement over the next several years, activities of the strategic committee.

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 being 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, 2014, which contained a discussion of a variety of factors, which could cause the future outcome to differ materially from the forward-looking statements discussed in this conference call and contained in the presentation material.

We undertake no duty to update the information contained in this conference call or the presentation material. 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 the GAAP measurement. The reconciliation of GAAP and any EBITDA numbers discussed during this conference call are included on the Q4 2014 conference call presentation, which is posted on our Web site. Thank you.

And this concludes our conference call..

You may now disconnect your lines at this time. We thank you for your participation..