UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 24, 2018

LSB INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (405) 235-4546

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

On October 24, 2018, LSB Industries, Inc. (the “Company”) issued a press release to report its financial results for the third quarter ended September 30, 2018. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On October 25, 2018, at 10:00 a.m. (Eastern time) / 9:00 a.m. (Central time), the Company held a conference call broadcast live over the Internet to discuss the financial results of the third quarter ended September 30, 2018.

The information contained in this Item 2.02 of this Form 8-K and the Exhibit 99.1 attached hereto are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Act of 1934 (as amended), or otherwise subject to the liabilities of such section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 (as amended), except as shall be expressly set forth by specific reference to this Item 2.02 in such filing.

(d) Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 25, 2018

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Exhibit 99.1

LSB INDUSTRIES, INC. REPORTS OPERATING RESULTS

FOR THE 2018 THIRD QUARTER

OKLAHOMA CITY, Oklahoma…October 24, 2018… LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today announced results for the third quarter ended September 30, 2018.

Third Quarter Highlights

“We generated improved results relative to last year in our seasonally weakest third quarter,” stated Daniel Greenwell, LSB’s President and CEO. “Net sales and adjusted EBITDA increased as a result of stronger pricing across our agricultural and industrial products. Excluding the costs related to turnarounds performed at two of our facilities, third quarter adjusted EBITDA was $8.7 million, and if we account for the lost absorption and lost sales related to these turnarounds, our adjusted EBITDA would have been significantly higher versus the same period last year when we did not perform any turnaround activities.”

“All three of our facilities operated well during the period. Cherokee’s ammonia plant ran at a 97% on-stream rate for the quarter after completing a turnaround at the end of August. With the completion of these maintenance activities, Cherokee will not need to undergo another turnaround until the third quarter of 2021, which we expect to enhance our financial performance in the interim years. El Dorado also completed a turnaround during the third quarter, after which its ammonia plant operated at an 89% on-stream rate. This was below our target mid-90% operating rate for El Dorado as we elected to take the ammonia plant down for a few days after the turnaround was completed to upgrade an air compressor steam turbine rotor that we believe will enhance performance over the longer term. We are planning a short turnaround at El Dorado in 2019 and then will not undergo another turnaround until 2022. Lastly, Pryor’s ammonia plant ran at a 98% on-stream rate during the third quarter, which reflects the positive impacts of the leadership changes and reliability investments we’ve made coupled with the initial benefits of the maintenance management systems, procedures, and preventative maintenance programs we’ve been implementing.”

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Mr. Greenwell continued, “We recognized year-over-year pricing improvement for all of our major agricultural product categories during the third quarter, with net pricing per ton for agricultural ammonia, UAN, and HDAN rising 42%, 26%, and 15% respectively, reflecting a combination of factors including the continued absorption of domestic production capacity that came online in the middle of 2017 and reduced volumes of lower priced product entering the U.S. market from foreign producers, particularly China. We expect a continued trend towards stronger pricing relative to 2017 in the fourth quarter of 2018 and into the Spring of 2019. Selling prices for our industrial products also increased compared to the prior year’s third quarter reflecting a substantial year-over-year increase in the Tampa ammonia pricing along with healthy demand driven by the robust U.S. economy. Sales volumes and prices for our mining products were modestly lower this third quarter compared to the third quarter of 2017, however, we have seen a pickup in the fourth quarter of 2018 which we expect to persist for the remainder of the quarter.”

Mr. Greenwell concluded, “Looking forward to the fourth quarter, we anticipate continued higher overall pricing for the products we sell relative to 2017, and an average ammonia on-stream rate for all of our facilities of approximately 94%. As a result, we expect to generate adjusted EBITDA in the fourth quarter similar to the first quarter of 2018 which would be a significant increase as compared to the fourth quarter of last year. Looking out towards 2019, we believe it should be a year of substantial year-over-year performance improvement driven by ongoing investment in the reliability of our facilities as we continue to implement enhanced operating and maintenance processes and procedures at our facilities, coupled with stable market demand and pricing conditions.”

Comparison of 2018 to 2017 periods:

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The following tables provide key sales metrics for our Agricultural products:

The following table indicates the volumes sold of our major Industrial products:

The following table indicates the volumes sold of our major Mining products:

Financial Position and Capital Expenditures

As of September 30, 2018, our total cash position was $42.7 million. Additionally, we had approximately $39.1 million of borrowing availability under our Working Capital Revolver. There were no borrowings under the Working Capital Revolver at September 30, 2018.

Total long-term debt, including the current portion, was $415.7 million at September 30, 2018 compared to $409.4 million at December 31, 2017. The aggregate liquidation value of the Series E Redeemable Preferred at September 30, 2018, inclusive of accrued dividends of $65.2 million, was $205.0 million.

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Interest expense for the third quarter of 2018 was $11.0 million compared to $9.3 million for the same period in 2017. For the full year of 2018, we expect interest expense to be approximately $43.0 million.

Capital expenditures were approximately $11.8 million in the third quarter of 2018 and $27.2 million for the first nine months of 2018. For the full year of 2018, total capital expenditures, which are related to maintaining and enhancing safety and reliability at our facilities, are expected to be approximately $34 million.

Volume Outlook

The Company’s revised outlook for sales volumes for the fourth quarter of 2018 are as follows:

Conference Call

LSB’s management will host a conference call covering the third quarter results on October 25, 2018 at 10:00 a.m. ET/9:00 a.m. CT to discuss these results and recent corporate developments. Participating in the call will be President and CEO, Daniel Greenwell, Executive Vice President and CFO, Mark Behrman, and Executive Vice President, Chemical Manufacturing, John Diesch. Interested parties may participate in the call by dialing (201) 493-6739. Please call in 10 minutes before the conference is scheduled to begin and ask for the LSB conference call. To coincide with the conference call, LSB will post a slide presentation at www.lsbindustries.com on the webcast section of the Investor tab of our website.

To listen to a webcast of the call, please go to the Company’s website at www.lsbindustries.com at least 15 minutes prior to the conference call to download and install any necessary audio software. If you are unable to listen live, the conference call webcast will be archived on the Company’s website. We suggest listeners use Microsoft Explorer as their web browser.

LSB Industries, Inc.

LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma, manufactures and sells chemical products for the agricultural, mining, and industrial markets. The Company owns and operates facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates a facility for a global chemical company in Baytown, Texas. LSB’s products are sold through distributors and directly to end customers throughout the United States. Additional information about the Company can be found on its website at www.lsbindustries.com.

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Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identifiable by use of the words “may,” “believe,” “expect,” “intend,” “plan to,” “estimate,” “project” or similar expressions, and include but are not limited to: financial performance improvement; view on sales to mining customers; estimates of consolidated depreciation and amortization and future Turnaround expenses; our expectation of production consistency and enhanced reliability at our Facilities; our projections of trends in the fertilizer market; improvement of our financial and operational performance; our planned capital expenditures for 2018; reduction of SG&A expenses; volume outlook and our ability to complete plant repairs as anticipated.

Investors are cautioned that such forward-looking statements are not guarantees of future performance and involve risk and uncertainties. Though we believe that expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectation will prove to be correct. Actual results may differ materially from the forward-looking statements as a result of various factors. These and other risk factors are discussed in the Company’s filings with the Securities and Exchange Commission (SEC), including those set forth under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in our Form 10-K for the year ended December 31, 2017 and, if applicable, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. All forward-looking statements included in this press release are expressly qualified in their entirety by such cautionary statements. We expressly disclaim any obligation to update, amend or clarify any forward-looking statement to reflect events, new information or circumstances occurring after the date of this press release except as required by applicable law.

See Accompanying Tables

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LSB Industries, Inc.

Financial Highlights

Three and Nine Months Ended September 30,

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LSB Industries, Inc.

Consolidated Balance Sheets

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LSB Industries, Inc.

Consolidated Balance Sheets (continued)

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LSB Industries, Inc.

Non-GAAP Reconciliation

This news release includes certain “non-GAAP financial measures” under the rules of the Securities and Exchange Commission, including Regulation G. These non-GAAP measures are calculated using GAAP amounts in our consolidated financial statements.

EBITDA Reconciliation

EBITDA is defined as net income (loss) plus interest expense, plus loss on extinguishment of debt, plus depreciation, depletion and amortization (DD&A) (which includes DD&A of property, plant and equipment and amortization of intangible and other assets), plus provision for income taxes. We believe that certain investors consider EBITDA a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. EBITDA has limitations and should not be considered in isolation or as a substitute for net income, operating income, cash flow from operations or other consolidated income or cash flow data prepared in accordance with GAAP. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to EBITDA for the periods indicated.

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LSB Industries, Inc.

Non-GAAP Reconciliation (continued)

Adjusted EBITDA

Adjusted EBITDA is reported to show the impact of one time/non-cash or non-operating items-such as, loss (gain) on sale of a business and other property and equipment, one-time income or fees, certain fair market value adjustments, non-cash stock-based compensation, and consulting costs associated with our 2018 reliability and purchasing initiatives. For comparative purposes, 2017 is also adjusted to remove the impact of businesses sold during 2017. We historically have performed Turnaround activities on an annual basis, however we are moving towards extending Turnarounds to a two or three-year cycle. Rather than being capitalized and amortized over the period of benefit, our accounting policy is to recognize the costs as incurred. Given these Turnarounds are essentially investments that provide benefits over multiple years, they are not reflective of our operating performance in a given year. As a result, we believe it is more meaningful for investors to exclude them from our calculation of adjusted EBITDA used to assess our performance for comparative 2017 has also been adjusted to remove the impact of Turnaround maintenance costs. We believe that the inclusion of supplementary adjustments to EBITDA is appropriate to provide additional information to investors about certain items. The following tables provide reconciliations of EBITDA excluding the impact of the supplementary adjustments. Our policy is to adjust for non-cash, non-recurring, non-operating items that are greater than $0.5 million quarterly or cumulatively.

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Net Sales Reconciliation

Since we adopted ASC 606 using the “modified retrospective” method, the prior periods were not restated. As a result, we are presenting Adjusted Net Sales to show the impact of applying ASC 606 to certain arrangements for the first quarter of 2017 consistent with accounting treatment used for the same period in 2018. ASC had no net impact on operating income. Additionally, net sales are adjusted to remove revenue associated with businesses sold in 2017.

Agricultural Sales Price Reconciliation

The following table provides a reconciliation of total agricultural sales as reported under GAAP in our consolidated financial statement reconciled to “net” sales which is calculated as sales less freight expenses. We believe this provides a relevant industry comparison among our peer group.

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