8-K
0000060714falsetrue0000060714us-gaap:CommonStockMember2022-11-012022-11-010000060714us-gaap:PreferredStockMember2022-11-012022-11-0100000607142022-11-012022-11-01

 

 

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): November 1, 2022

 

 

LSB INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

Delaware

 

1-7677

 

73-1015226

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

 

3503 NW 63rd Street, Suite 500, Oklahoma City, Oklahoma

 

73116

(Address of principal executive offices)

 

(Zip Code)

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):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $.10

 

LXU

 

New York Stock Exchange

Preferred Stock Purchase Rights

 

N/A

 

New York Stock Exchange

 

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.

 

 

 

 

 


 

 

Item 2.02.

Results of Operations and Financial Condition.

On November 1, 2022, LSB Industries, Inc. (the “Company”) issued a press release to report its financial results for the third quarter ended September 30, 2022. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On November 2, 2022, at 10:00 a.m. (Eastern time) / 9:00 a.m. (Central time), the Company will hold a conference call broadcast live over the Internet to discuss the financial results of the third quarter ended September 30, 2022.

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.

 

Item 9.01

Exhibits.

(d) Exhibits.

 

 

 

 

Exhibit
Number

 

Description

 

 

99.1

 

Press Release issued by LSB Industries, Inc. dated November 1, 2022, titled “LSB Industries, Inc. Reports Operating Results for the 2022 Third Quarter”.

104

 

Cover Page Interactive Data File (embedded within the XBRL document)

 

 

2

 


 

 

 

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: November 1, 2022

 

 

 

 

 

 

 

LSB INDUSTRIES, INC.

 

 

By:

 

/s/ Cheryl A. Maguire

Name:

 

Cheryl A. Maguire

Title:

 

Executive Vice President and Chief Financial Officer

 

 

 

3

 


EX-99.1

Exhibit 99.1

https://cdn.kscope.io/1fc0e9620504e4a647797d42e62191ac-img96032092_0.jpg  

LSB INDUSTRIES, INC. REPORTS OPERATING RESULTS

FOR THE 2022 THIRD QUARTER

Achieves Record Third Quarter Adjusted EBITDA

 

OKLAHOMA CITY, Oklahoma…November 1, 2022…LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today announced results for the third quarter ended September 30, 2022.

 

Third Quarter 2022 Highlights

Net sales of $184 million compared to $127 million in the third quarter of 2021
Adjusted EBITDA(1) of $50 million compared to $38 million in the third quarter of 2021
Adjusted EPS(1) of $0.27 compared to $0.07 in the third quarter of 2021
Cash Flow from Operations of $38 million and Capital Expenditures of $16 million
Total liquidity of approximately $450 million as of September 30, 2022
Successfully completed major turnarounds at two facilities during past three months
Repurchased approximately 7 million shares during the third quarter

 

“We delivered strong top and bottom line growth as compared to last year despite executing two turnarounds in this year's third quarter versus one in last year's third quarter," stated Mark Behrman, LSB’s President and CEO. “We continued to benefit from higher selling prices compared to last year, and our strategic commercial initiatives that enabled us to optimize our sales mix in the face of a rapidly changing market environment. Pricing remains well above year-ago levels and there are multiple supply and demand factors currently at play that we expect will continue to support strong pricing for the final two months of 2022 and for 2023, if not longer.”

 

“Even with the reduced volumes resulting from our third quarter scheduled maintenance activities at our Pryor and El Dorado facilities, we once again generated meaningful positive operating cash flow. Our increasingly strong balance sheet enabled us to complete a total of $100 million of share repurchases for a total of approximately 7.6 million shares since the program began in May. These repurchases included 5.5 million shares that we bought from our largest shareholder, efficiently returning capital to our shareholders while not diminishing the liquidity of our stock."

 

 

(1)
This is a Non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

 

1


 

 

Mr. Behrman continued, "Over the next several years, we believe we have an opportunity to continue to drive shareholder value through ongoing improvement of our operating rates, continued product optimization and potential debottlenecking projects. We believe these projects could materially increase the production capacities of our facilities, enhancing our profit margins as we capitalize on the operating leverage inherent in our business model. We expect to formalize and announce our debottlenecking plans in early 2023."

 

"In addition, we continue to advance our decarbonization activities. In April we announced our CO2 capture and sequestration or "blue" ammonia project at our El Dorado facility where we intend to initially capture approximately 450,000 tons of CO2 annually. We have made significant advancements on data collection necessary for a Class VI permit application and expect to file that application in the second quarter of 2023. Additionally, in May we announced a feasibility study for a zero-carbon or "green" ammonia project at our Pryor facility and we are in the final stages of completing that study. We will report on the results of the feasibility study when it is complete.”

 

Mr. Behrman concluded, "As we head into the final months of 2022 we are highly enthusiastic about our near and longer term prospects for profitable growth, free cash flow generation and increased shareholder value given the favorable outlook for our markets coupled with the company-specific initiatives we have underway. Supporting that belief, on Monday we announced an increase of $75 million to our share repurchase program bringing the total repurchase program to $175 million."

 

Third Quarter Results Overview

 

 

 

Three Months Ended
September 30,

 

Product (Gross Sales in $000's)

 

2022

 

 

2021

 

 

% Change

 

AN & Nitric Acid

 

$

66,161

 

 

$

47,453

 

 

 

39

%

Urea ammonium nitrate (UAN)

 

 

50,459

 

 

 

26,034

 

 

 

94

%

Ammonia

 

 

52,075

 

 

 

42,307

 

 

 

23

%

Other

 

 

15,578

 

 

 

11,405

 

 

 

37

%

 

 

$

184,273

 

 

$

127,199

 

 

 

45

%

 

Comparison of 2022 to 2021 quarterly periods:

Net sales increased during the quarter driven by stronger pricing for all of our products for sales made at both spot pricing as well as those related to a rise in the Tampa ammonia benchmark price, to which many of our contracts are tied. The benefit of stronger pricing was partially offset by lower sales volumes due largely to turnarounds at two of our facilities that took place in the third quarter of 2022 versus only one turnaround in the third quarter of 2021.

 

The year-over-year improvement in operating income and adjusted EBITDA primarily resulted from higher selling prices, partially offset by higher natural gas feedstock prices and lower sales volumes.

 

 

 

2


 

The following tables provide key sales metrics for our products:

 

 

 

Three Months Ended
September 30,

 

Key Product Volumes (short tons sold)

 

2022

 

 

2021

 

 

% Change

 

AN & Nitric Acid

 

 

125,446

 

 

 

135,279

 

 

 

(7

)%

Urea ammonium nitrate (UAN)

 

 

115,352

 

 

 

82,555

 

 

 

40

%

Ammonia

 

 

55,825

 

 

 

80,001

 

 

 

(30

)%

 

 

 

296,623

 

 

 

297,835

 

 

 

(0

)%

 

Average Selling Prices (price per short ton) (A)

 

 

 

 

 

 

 

 

 

AN & Nitric Acid

 

$

458

 

 

$

290

 

 

 

58

%

Urea ammonium nitrate (UAN)

 

$

417

 

 

$

305

 

 

 

37

%

Ammonia

 

$

906

 

 

$

515

 

 

 

76

%

 

(A) Average selling prices represent “net back” prices which are calculated as sales less freight expenses divided by product sales volume in tons.

 

 

 

Three Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

% Change

 

Average Benchmark Prices (price per ton)

 

 

 

 

 

 

 

 

 

Tampa Ammonia (MT) Benchmark

 

$

1,093

 

 

$

610

 

 

 

79

%

UAN Southern Plains

 

$

482

 

 

$

355

 

 

 

36

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Input Costs

 

 

 

 

 

 

 

 

 

Average natural gas cost/MMBtu

 

$

7.65

 

 

$

3.71

 

 

 

106

%

 

Financial Position and Capital Expenditures

As of September 30, 2022, our total liquidity was approximately $450 million, including $385 million in cash and short-term investments and approximately $65 million of borrowing availability under our Working Capital Revolver. Total long-term debt, including the $10 million current portion, was $714 million on September 30, 2022 compared to $528 million on December 31, 2021.

 

Interest expense for the third quarter of 2022 was $12 million as compared to $13 million in the third quarter of 2021.

 

During the third quarter we repurchased approximately $90 million of the Company’s stock at an average price of approximately $13 per share under the share repurchase plan that our Board of Directors increased from the $50 million originally authorized on May 16, 2022 to $100 million on August 8, 2022.

 

Capital expenditures were approximately $16.1 million for the third quarter of 2022. For the full year 2022, total capital expenditures are expected to be approximately $65 million.

 

 

 

3


 

Outlook

 

Market conditions remain intact to keep fertilizer prices above historical averages for the remainder of 2022 and full year 2023. Farmer economics continue to be very favorable as a result of strong global demand for corn in the face of constrained supply. Key factors include the impact on global corn supplies of dry conditions in South America, the Western U.S. and parts of Europe coupled with continued high demand for corn from China. As a result, corn prices remain above 10-year averages and farmer profitability is meaningfully positive despite inflation across their cost inputs. In order to maximize yield in 2023 to capitalize on these favorable economics, we expect demand for agricultural ammonia to be strong through November and into December as farmers seek to replenish the nitrogen in their soil in advance of the coming Spring planting season.

 

Natural gas costs in Europe continue to be a major driver of high fertilizer prices. While down from the peak levels reached in August, which caused operations at numerous European ammonia facilities to cease due to prohibitively high production costs, natural gas prices in Europe remain well above historical averages. Moving into the winter heating season it appears possible that European gas prices could rise again if temperatures are below average for periods of time as supply remains tight. This would limit or prevent many of the continent's ammonia facilities from resuming production, keeping nitrogen fertilizer prices high. Despite energy cost inflation in the U.S., domestic natural gas prices remain a fraction of those in Europe, giving U.S. ammonia producers a substantial cost advantage in the global market.

 

The impact of the Russian invasion of Ukraine and the ongoing conflict in the region has contributed to the constraints to both global grain and ammonia supplies, as well as an aggravating factor to Europe's high gas prices. Ukraine is one of the world’s largest exporters of corn while Russia is among the world’s largest exporters of wheat and ammonia and was historically a major supplier of gas to much of Europe. At this point, it seems likely that even if the current unstable geopolitical situation in the region were to be resolved soon, the global supply of these commodities would still be short to meet demand throughout the entirety of 2023 and beyond.

 

With respect to industrial markets, demand remains stable from domestic end-use markets, while orders from customers producing products largely for export to Europe and Asia have softened to a degree given weakening international economies. Importantly, in addition to our contractual agreements with industrial customers that specify minimum volumes, our product mix flexibility helps us mitigate the impact of a reduction in demand from certain end markets by shifting production to products with stronger demand. An example would be our ability to reduce our nitric acid volumes in favor of increased production of ammonium nitrate. Relative to this, we have been experiencing favorable trends in our mining business as rising global consumption of coal has strengthened demand and pricing for ammonium nitrate, a product we sell to mining services companies for use in aggregates and metals mining operations. Overall, despite growing global recessionary forces, our industrial and mining business remains stable as a whole.

 

 

 

 

 

 

 

4


 

Conference Call

LSB’s management will host a conference call covering the third quarter results on Wednesday, November 2, 2022 at 10:00 am ET / 9:00 am CT to discuss these results and recent corporate developments. Participating in the call will be President & Chief Executive Officer, Mark Behrman and Executive Vice President & Chief Financial Officer, Cheryl Maguire. Interested parties may participate in the call by dialing (888) 437-3179 / (862) 298-0702. 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.

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 primarily throughout the United States. Committed to improving the world by setting goals that will reduce our environmental impact on the planet and improve the quality of life for all of its people, the Company is well positioned to play a key role in the reduction of global carbon emissions through its planned carbon capture and sequestration, and zero carbon ammonia strategies. Additional information about LSB can be found on its website at www.lsbindustries.com.

Forward-Looking Statements

Statements in this release that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance including the effects of the COVID-19 pandemic and anticipated performance based on our growth and other strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or actual achievements to differ materially from the results, level of activity, performance or anticipated achievements expressed or implied by the forward-looking statements. Significant risks and uncertainties may relate to, but are not limited to, business and market disruptions related to the COVID-19 pandemic, market conditions and price volatility for our products and feedstocks, as well as global and regional economic downturns, including as a result of the COVID-19 pandemic, that adversely affect the demand for our end-use products; disruptions in production at our manufacturing facilities and other financial, economic, competitive, environmental, political, legal and regulatory factors. These and other risk factors are discussed in the Company’s filings with the Securities and Exchange Commission (SEC).

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or

 

5


 

achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether because of new information or future developments.

 

See Accompanying Tables

 

 

Company Contact:

Cheryl Maguire, Executive Vice President & CFO

(405) 510-3524

 

Fred Buonocore, CFA, Vice President of Investor Relations

(405) 510-3550

fbuonocore@lsbindustries.com

 

 

 

 

 

 

 

 

6


 

LSB Industries, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In Thousands, Except Per Share Amounts)

 

Net sales

 

$

184,273

 

 

$

127,199

 

 

$

668,057

 

 

$

366,011

 

Cost of sales

 

 

162,144

 

 

 

109,752

 

 

 

412,274

 

 

 

305,496

 

Gross profit

 

 

22,129

 

 

 

17,447

 

 

 

255,783

 

 

 

60,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

9,138

 

 

 

11,600

 

 

 

29,711

 

 

 

28,938

 

Other expense (income), net

 

 

(75

)

 

 

474

 

 

 

377

 

 

 

217

 

Operating income

 

 

13,066

 

 

 

5,373

 

 

 

225,695

 

 

 

31,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

12,193

 

 

 

12,956

 

 

 

34,455

 

 

 

37,618

 

Loss (gain) on extinguishment of debt

 

 

 

 

 

 

 

 

113

 

 

 

(10,000

)

Non-operating other expense (income), net

 

 

(2,219

)

 

 

1,326

 

 

 

(5,627

)

 

 

2,466

 

Income before provision (benefit) for income taxes

 

 

3,092

 

 

 

(8,909

)

 

 

196,754

 

 

 

1,276

 

Provision (benefit) for income taxes

 

 

780

 

 

 

19

 

 

 

32,277

 

 

 

(187

)

Net income (loss)

 

 

2,312

 

 

 

(8,928

)

 

 

164,477

 

 

 

1,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on convertible preferred stocks

 

 

 

 

 

75

 

 

 

 

 

 

225

 

Dividends on Series E redeemable preferred stock

 

 

 

 

 

10,190

 

 

 

 

 

 

29,914

 

Accretion of Series E redeemable preferred stock

 

 

 

 

 

499

 

 

 

 

 

 

1,523

 

Deemed dividend on Series E and Series F
   redeemable preferred stocks

 

 

 

 

 

231,812

 

 

 

 

 

 

231,812

 

Net income (loss) attributable to common stockholders

 

$

2,312

 

 

$

(251,504

)

 

$

164,477

 

 

$

(262,011

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.03

 

 

$

(6.39

)

 

$

1.89

 

 

$

(6.94

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.03

 

 

$

(6.39

)

 

$

1.86

 

 

$

(6.94

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income and Adjusted EPS(1)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) attributable to common
  stockholders, excluding Exchange Transaction

 

$

2,312

 

 

$

(9,003

)

 

$

164,477

 

 

$

1,238

 

Other adjustments

 

 

20,483

 

 

 

15,645

 

 

 

29,896

 

 

 

19,716

 

Adjusted net income (loss) attributable to common
  stockholders, excluding Exchange Transaction and
  other adjustments

 

$

22,795

 

 

$

6,642

 

 

$

194,373

 

 

$

20,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income per common share, excluding
  Exchange Transaction and other adjustments

 

$

0.27

 

 

$

0.07

 

 

$

2.20

 

 

$

0.24

 

 

(1)
This is a Non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

 

 

7


 

LSB Industries, Inc.

Consolidated Balance Sheets

(Information at September 30, 2022 is unaudited)

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(In Thousands)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,635

 

 

$

82,144

 

Short-term investments

 

 

365,573

 

 

 

 

Accounts receivable

 

 

107,847

 

 

 

86,902

 

Allowance for doubtful accounts

 

 

(620

)

 

 

(474

)

Accounts receivable, net

 

 

107,227

 

 

 

86,428

 

Inventories:

 

 

 

 

 

 

Finished goods

 

 

28,165

 

 

 

14,688

 

Raw materials

 

 

1,565

 

 

 

1,895

 

Total inventories

 

 

29,730

 

 

 

16,583

 

Supplies, prepaid items and other:

 

 

 

 

 

 

Prepaid insurance

 

 

1,758

 

 

 

14,244

 

Precious metals

 

 

14,843

 

 

 

14,945

 

Supplies

 

 

27,036

 

 

 

26,558

 

Other

 

 

5,250

 

 

 

2,234

 

Total supplies, prepaid items and other

 

 

48,887

 

 

 

57,981

 

Total current assets

 

 

571,052

 

 

 

243,136

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

853,939

 

 

 

858,480

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

Operating lease assets

 

 

24,885

 

 

 

27,317

 

Intangible and other assets, net

 

 

2,856

 

 

 

3,907

 

 

 

 

27,741

 

 

 

31,224

 

 

 

 

 

 

 

 

 

 

$

1,452,732

 

 

$

1,132,840

 

 

 

 

 

 

 

 

8


 

LSB Industries, Inc.

Consolidated Balance Sheets (continued)

(Information at September 30, 2022 is unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(In Thousands)

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

93,887

 

 

$

49,458

 

Short-term financing

 

 

1,425

 

 

 

12,716

 

Accrued and other liabilities

 

 

42,062

 

 

 

33,301

 

Current portion of long-term debt

 

 

10,269

 

 

 

9,454

 

Total current liabilities

 

 

147,643

 

 

 

104,929

 

 

 

 

 

 

 

 

Long-term debt, net

 

 

703,811

 

 

 

518,190

 

 

 

 

 

 

 

 

Noncurrent operating lease liabilities

 

 

16,768

 

 

 

19,568

 

 

 

 

 

 

 

 

Other noncurrent accrued and other liabilities

 

 

523

 

 

 

3,030

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

57,843

 

 

 

26,633

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $.10 par value; 150 million shares authorized, 91.2 million
   shares issued

 

 

9,117

 

 

 

9,117

 

Capital in excess of par value

 

 

496,251

 

 

 

493,161

 

Retained earnings (accumulated deficit)

 

 

133,222

 

 

 

(31,255

)

 

 

 

638,590

 

 

 

471,023

 

Less treasury stock, at cost:

 

 

 

 

 

 

Common stock, 9.2 million shares (1.4 million shares at December 31, 2021)

 

 

112,446

 

 

 

10,533

 

Total stockholders' equity

 

 

526,144

 

 

 

460,490

 

 

 

$

1,452,732

 

 

$

1,132,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9


 

Non-GAAP Reconciliations

 

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 and Adjusted EBITDA Reconciliation

EBITDA is defined as net income (loss) plus interest expense, less gain (loss) on extinguishment of debt, plus depreciation and amortization (D&A) (which includes D&A of property, plant and equipment and amortization of intangible and other assets), plus provision (benefit) for income taxes. Adjusted EBITDA is reported to show the impact of non-cash stock-based compensation, one time/non-cash or non-operating items-such as, one-time income or fees, loss (gain) on sale of a business and/or other property and equipment, certain fair market value (FMV) adjustments, and consulting costs associated with reliability and purchasing initiatives (Initiatives). We historically have performed Turnaround activities on an annual basis; however, we have moved 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.

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. In addition, we believe that certain investors consider adjusted EBITDA as more meaningful to further assess our performance. We believe that the inclusion of supplementary adjustments to EBITDA is appropriate to provide additional information to investors about certain items.

EBITDA and adjusted EBITDA have 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 and adjusted 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 and adjusted EBITDA for the periods indicated. Adjusted EBITDA margin is calculated by taking adjusted EBITDA divided by Net Sales.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per share have been adjusted for the impact of the closing of the Exchange Transaction on September 27, 2021 as well as the one time/non-cash or non-operating items referred to in the above section relating to Adjusted EBITDA.

 

 

10


 

LSB Industries, Inc.

Non-GAAP Reconciliations (continued)

 

LSB Consolidated ($ In Thousands)

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss), common shareholders

 

$

2,312

 

 

$

(8,928

)

 

$

164,477

 

 

$

1,463

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

9,960

 

 

 

12,956

 

 

 

31,499

 

 

 

37,618

 

Loss (gain) on extinguishment of debt

 

-

 

 

-

 

 

 

113

 

 

 

(10,000

)

Depreciation and amortization

 

 

16,398

 

 

 

17,970

 

 

 

50,902

 

 

 

52,324

 

Provision (benefit) for income taxes

 

 

780

 

 

 

19

 

 

 

32,277

 

 

 

(187

)

EBITDA

 

$

29,450

 

 

$

22,017

 

 

$

279,268

 

 

$

81,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

921

 

 

 

2,553

 

 

 

3,089

 

 

 

4,329

 

Change of Control

 

-

 

 

 

3,223

 

 

-

 

 

 

3,223

 

Noncash (gain) on natural gas contracts

 

-

 

 

-

 

 

-

 

 

 

(1,205

)

Legal fees (Leidos)

 

 

301

 

 

 

271

 

 

 

914

 

 

 

1,598

 

Loss on disposal of assets

 

 

22

 

 

 

516

 

 

 

828

 

 

 

690

 

Fair market value adjustment on preferred stock
    embedded derivatives

 

-

 

 

 

1,106

 

 

-

 

 

 

2,258

 

Turnaround costs

 

 

19,238

 

 

 

7,976

 

 

 

25,064

 

 

 

8,823

 

Adjusted EBITDA

 

$

49,932

 

 

$

37,662

 

 

$

309,163

 

 

$

100,934

 

 

 

11


 

LSB Industries, Inc.

Non-GAAP Reconciliations (continued)

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common
  stockholders

 

$

2,312

 

 

$

(251,504

)

 

$

164,477

 

 

$

(262,011

)

    Adjustments for Exchange Transaction:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend requirements on Series E
   Redeemable Preferred

 

 

-

 

 

 

10,190

 

 

 

-

 

 

 

29,914

 

 

Deemed dividend on Series E and Series F Redeemable Preferred

 

 

-

 

 

 

231,812

 

 

 

-

 

 

 

231,812

 

 

Accretion of Series E Redeemable Preferred

 

 

-

 

 

 

499

 

 

 

-

 

 

 

1,523

 

Adjusted net income (loss) attributable to
  common stockholders, excluding Exchange
  Transaction

 

 

2,312

 

 

 

(9,003

)

 

 

164,477

 

 

 

1,238

 

   Other Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

921

 

 

 

2,553

 

 

 

3,089

 

 

 

4,329

 

 

Change of control

 

 

-

 

 

 

3,223

 

 

 

-

 

 

 

3,223

 

 

Noncash gain on natural gas contracts

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,205

)

 

Legal fees (Leidos)

 

 

302

 

 

 

271

 

 

 

915

 

 

 

1,598

 

 

Loss on disposal of assets

 

 

22

 

 

 

516

 

 

 

828

 

 

 

690

 

 

FMV adjustment on preferred stock embedded
 derivative

 

 

-

 

 

 

1,106

 

 

 

-

 

 

 

2,258

 

 

Turnaround costs

 

 

19,238

 

 

 

7,976

 

 

 

25,064

 

 

 

8,823

 

Adjusted net income attributable to common
  stockholders, excluding Exchange
  Transaction and other adjustments

 

$

22,795

 

 

$

6,642

 

 

$

194,373

 

 

$

20,954

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted weighted-average shares for basic
  and diluted net income (loss) per share and
  for adjusted net income per share,
  excluding Exchange Transaction
(1)

 

 

84,187

 

 

 

39,352

 

 

 

86,929

 

 

 

37,752

 

    Adjustment:

 

 

 

 

 

 

 

 

 

 

 

 

 

Unweighted shares, including unvested restricted
  stock subject to forfeiture

 

 

1,224

 

 

 

49,473

 

 

 

1,380

 

 

 

51,072

 

Outstanding shares, net of treasury, at period
  end for adjusted net income per share,
  excluding Exchange Transaction and
  other adjustments

 

 

85,411

 

 

 

88,825

 

 

 

88,309

 

 

 

88,824

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per common share

 

$

0.03

 

 

$

(6.39

)

 

$

1.89

 

 

$

(6.94

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss) per common share,
  excluding Exchange Transaction

 

$

0.03

 

 

$

(0.23

)

 

$

1.89

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income per common share,
   excluding Exchange Transaction and other
   adjustments

 

$

0.27

 

 

$

0.07

 

 

$

2.20

 

 

$

0.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Excludes the weighted-average shares of unvested restricted stock that are subject to forfeiture

 

 

12


 

Ammonia, AN, Nitric Acid, UAN Sales Price Reconciliation

The following table provides a reconciliation of total identified net sales as reported under GAAP in our consolidated financial statements reconciled to netback sales which is calculated as net sales less freight and other non-netback costs. We believe this provides a relevant industry comparison among our peer group.

 

 

 

Three Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

 

(In Thousands)

 

Ammonia, AN, Nitric Acid, UAN Net sales

 

$

168,696

 

 

$

115,794

 

 

 

 

 

 

 

 

Less freight and other

 

 

12,514

 

 

 

10,080

 

 

 

 

 

 

 

 

Ammonia, AN, Nitric Acid, UAN netback sales

 

$

156,182

 

 

$

105,714

 

 

 

13