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): May 11,
2009
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.)
|
||
|
16 South Pennsylvania Avenue,
Oklahoma City, Oklahoma
(Address of principal executive offices) |
73107
(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):
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Section
2 – Financial Information
Item
2.02. Results of Operations and Financial Condition
On May
11, 2009, LSB Industries, Inc. (the “Company”) issued a press release to report
its unaudited financial results for the first quarter ended March 31,
2009. The press release is attached hereto as Exhibit
99.1.
The
information contained in this Item 2.02 of this Form 8-K and the Exhibit
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 in such
filing.
Item
9.01. Exhibits
The
information contained in the accompanying Exhibit 99.1 shall not be deemed filed
for purposes of Section 18 of the Exchange Act or incorporated by reference in
any filing under the Exchange Act or the Securities Act, except as shall be
expressly set forth by specific reference in such filing.
(d)
Exhibits.
Exhibit Description
99.1 Press Release
issued by LSB Industries, Inc., dated May 11, 2009.
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: May
11, 2009
LSB
INDUSTRIES, INC.
By: /s/ Tony M. Shelby
Name:
Tony M. Shelby
Title:
Executive
Vice President of Finance,
Chief
Financial Officer
|
COMPANY
CONTACT:
|
Investor
Relations Contact:
|
|
Tony
M. Shelby, Chief Financial Officer
|
Linda
Latman (212) 836-9609
|
|
(405)
235-4546
|
Lena
Cati (212) 836-9611
|
|
|
The
Equity Group Inc.
|
FOR IMMEDIATE
RELEASE
LSB INDUSTRIES, INC. REPORTS
RESULTS
FOR THE 2009 FIRST
QUARTER
OKLAHOMA
CITY, Oklahoma…May 11, 2009… LSB Industries, Inc. (NYSE: LXU) announced today
net income available to common shareholders for the first quarter of 2009 of
$11.4 million ($0.51 per diluted share), up from $10.6 million ($0.46 per
diluted share) in the same period in 2008.
First Quarter 2009 Financial
Highlights Compared to First Quarter 2008:
|
§
|
Net
sales were $150.2 million, a 6.4% decline from $160.5
million;
|
|
§
|
Operating
income was $19.4 million compared to $19.3
million;
|
|
§
|
Net
income rose 7.7% to $11.7 million from $10.9
million;
|
|
§
|
Net
income applicable to common shareholders increased 7.9% to $11.4 million
from $10.6 million;
|
|
§
|
Diluted
earnings per common share rose to $0.51 from
$0.46.
|
Items Affecting
Comparability of First Quarter 2009 Results to First Quarter
2008:
|
|
The
first quarter 2009 gross profit
includes:
|
|
·
|
Climate
Control Business gains on copper hedging contracts of $.5 million compared
to $2.6 million in the same quarter last
year;
|
|
·
|
$2.5
million profit margin on Chemical Business sales in excess of current
market prices due to firm sales price commitments made in 2008, when
prices were higher than in 2009;
|
|
·
|
$2.2
million from the recovery of precious metals used in the Chemical Business
as catalysts;
|
|
·
|
Chemical
Business losses on natural gas and ammonia hedge contracts of $1.6 million
compared to gains of $.6 million in the 2008
quarter.
|
Chemical
Business 2009 operating income below the gross profit line was reduced by
expenses of $2.0 million compared to $.4 million in the same period last year
associated with the start-up of the Pryor Facility.
Also
included in the 2009 pre-tax income, is a gain of $1.3 million from
extinguishment of debt, as a result of acquiring $5.7 million of our Debentures
Due 2012, below face value.
LSB
Industries, Inc. News
Release Page
2
May 11,
2009
Review of
First Quarter Results:
Climate
Control Business –
Net sales
for the Climate Control Business totaled $72.0 million, an 8.6% increase over
the first quarter of 2008 primarily due to increases in sales of geothermal and
water source heat pumps, offset by a decline in sales of hydronic fan coils and
other Climate Control products. The outstanding performer during the
quarter were residential geothermal heat pumps, with sales and new order
bookings that were higher than the first quarter of 2008.
The gross
margin of the Climate Control Business was 31.1%, down from 32.5% in the same
period last year. However, eliminating the copper hedge gains
discussed above from both periods, the gross profit increased in the first
quarter 2009 compared to the first quarter 2008. As noted above, the
gross margin benefit from gains on copper hedging contracts was $.5 million in
2009, compared to $2.6 million in 2008.
Segment
operating income declined 3.7% from the same period in 2008. Again,
the period-over period decline was due to higher copper hedging gains in the
2008 first quarter. Without those hedging gains in both periods, our
operating profit would have improved in the first quarter 2009 from the first
quarter of 2008.
In
addition to the difference in copper hedging gains in the two periods, during
the 2009 first quarter, sales expenses were higher than the first quarter of
2008 due to increased sales and marketing personnel, primarily focused on our
geothermal heat pumps.
Bookings
of new product orders during the first quarter were $54.9 million, a 22% decline
from the first quarter of 2008. Lower bookings were generally due to
the lower level of commercial construction activity, caused by the recession,
offset partially by increased order levels for residential geothermal heat
pumps.
At March
31, 2009, the backlog of product orders was $56.8 million compared to $68.5
million at December 31, 2008.
Chemical
Business –
Net sales
for the Chemical Business totaled $74.5 million, an 18.5% decline from the first
quarter of 2008. The decrease in sales was primarily due to decreases
in the selling prices of Chemical Business products, caused by the steep decline
in worldwide commodity prices, coupled with lower tons shipped of urea ammonium
nitrate (UAN) fertilizer and most industrial and mining products, offset
partially by higher tons shipped of ammonium nitrate (AN)
fertilizer.
Shipments
of UAN fertilizer were affected by high inventory levels in the distribution
chain left over from last year, less than optimum weather conditions in the
market areas we serve, and fewer acres of wheat planted than last
year. Lower shipments of industrial and mining products were due to
generally lower demand for industrial products caused by the economic
downturn.
LSB
Industries, Inc. News
Release Page
3
May 11,
2009
The gross
margin of the Chemical Business was 23%, up from 17% in the same period last
year. Eliminating the items discussed above that impacted gross
profit (gross profit in excess of current market prices, effects of natural gas
and ammonia hedge contracts and recovery of precious metals) from both periods,
the gross profit percentage increased in the first quarter of 2009 from the same
period in 2008.
Segment
operating income increased 4% from the same period in 2008. Part of
the period-over-period increase was due to the items discussed above partially
offset by the start-up costs related to the Pryor Facility. Without
those items in both periods, our operating income would have decreased
slightly.
During
the first quarter 2009, we were able to maintain profitability, despite lower
selling prices of the products we produce, because the primary raw material
feedstocks we use also declined in price compared to the first quarter of
2008.
CEO’s
Remarks:
Jack
Golsen, LSB’s Board Chairman and CEO stated: “LSB started the year on
an especially strong note considering the economic conditions. Both
our Chemical and Climate Control businesses turned in very respectable numbers
and they both are on track to achieve long-term growth. We just
signed an off-take agreement with Koch Nitrogen Company for substantially all of
the UAN production at our Pryor, Oklahoma plant, and production at that facility
is expected to start during third quarter, barring delays. We also
recently committed to construction on another 78,000 square foot addition to our
ClimateMaster geothermal and water source heat pump manufacturing
facility. We are continuing to increase our sales and marketing
efforts for those products. We believe that the recently enacted
federal tax credits for geothermal heat pumps will positively impact sales of
those highly energy-efficient and green products.
“During
the first quarter we continued to improve our balance sheet, by reducing
long-term debt, and increasing cash and stockholders’ equity. In
addition to profit from our operations, we were able to purchase $5.7 million of
our Debentures that are due in 2012 at a discount to face value.
“Although
we had a great first quarter, we see recession related softening of the
markets we serve. Construction activity is down and we expect sales
of our Climate Control Business products to be lower this year than in 2008,
with the possible exception of our geothermal heat pumps. Lower sales
prices of our Chemical Business products will also continue to impact our
revenues. Despite this, we continue to invest in the areas that we
believe have long-term strategic growth potential for LSB.”
LSB
Industries, Inc. News
Release Page
4
May 11,
2009
Conference
Call
LSB’s
management will host a conference call covering the first quarter results on
Monday, May 11, 2009 at 5:15 pm EDT/4:15 pm CDT to discuss these results and
recent corporate developments. Participating in the call will be CEO,
Jack E. Golsen; President and COO, Barry H. Golsen; Executive Vice President and
CFO, Tony M. Shelby. Interested parties may participate in the call by dialing
706-679-3079. Please call in ten minutes before the conference is
scheduled to begin and ask for the LSB conference call.
To listen
to a webcast of the call, please go to the Company’s website at www.lsb-okc.com at
least 15 minutes before 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 is a
manufacturing, marketing and engineering company. LSB’s principal
business activities consist of the manufacture and sale of commercial and
residential climate control products, such as geothermal and water source heat
pumps, hydronic fan coils, large custom air handlers, the manufacture and sale
of chemical products for the mining, agricultural and industrial markets, and
the provision of specialized engineering services and other
activities.
This
press release contains certain forward-looking statements within the meaning of
the Private Securities Litigation Act of 1995. These forward-looking
statements generally are identifiable by use of the words “believe,” “expects,”
“intends,” “anticipates,” “plans to,” “estimates,” “projects” or similar
expressions, and such forward-looking statements include, but are not limited
to, production at the new Pryor Chemical facility is expected to start during
the third quarter; increase our sales and marketing efforts for our
ClimateMaster geothermal and water source heat pump products; positive effects
on our sales of geothermal heat pumps due to recently enacted federal tax
credits for these products; effect of the recession on markets we serve; sales
of our Climate Control products to be lower this year than in 2008, with certain
possible exceptions; lower sales prices of our Chemical products will also
continue to impact our revenues; and investments in areas that have long-term
growth potential. Investors are cautioned that such forward-looking
statements are not guarantees of future performance and involve risk and
uncertainties, and that actual results may differ materially from the
forward-looking statements as a result of various factors, including, but not
limited to, general economic conditions, effect of the recession on the
construction industry, acceptance by the market of our geothermal heat pump
products, acceptance of our technology, changes to federal legislation or
adverse regulations, available working capital, ability to install necessary
equipment and renovations at the Pryor facility in a timely manner, ability to
finance our investments, and other factors set forth under “A Special Note
Regarding Forward-Looking Statements” contained in the Form 10-K for year ended
December 31, 2008 and Form 10-Q for quarter ended March 31, 2009 for a
discussion of a variety of factors which could cause the future outcome to
differ materially from the forward-looking statements contained in this
letter.
# #
#
See
Accompanying Tables
LSB
Industries, Inc. News
Release Page
5
May 11,
2009
LSB
Industries, Inc.
Unaudited
Financial Highlights
Three
Months Ended March 31, 2009 and 2008
(unaudited)
|
2009
|
2008
|
|
(In
Thousands, Except Per Share
Amounts)
|
|||||||
|
Net
sales
|
$
|
150,197
|
$
|
160,455
|
|||
|
Cost
of sales
|
109,469
|
122,698
|
|||||
|
Gross
profit
|
40,728
|
37,757
|
|||||
|
Selling,
general and administrative expense
|
21,375
|
18,764
|
|||||
|
Provisions
for losses on accounts receivable
|
52
|
90
|
|||||
|
Other
expense
|
43
|
181
|
|||||
|
Other
income
|
(162
|
)
|
(610
|
)
|
|||
|
Operating
income
|
19,420
|
19,332
|
|||||
|
Interest
expense
|
1,911
|
2,454
|
|||||
|
Gain
on extinguishment of debt
|
(1,322
|
)
|
-
|
||||
| Non-operating other income, net |
(23
|
) |
(517
|
) | |||
|
Income
from continuing operations before provisions for income
taxes and equity in earnings of affiliate
|
18,854
|
17,395
|
|||||
|
Provisions
for income taxes
|
7,349
|
6,720
|
|||||
|
Equity
in earnings of affiliate
|
(240
|
)
|
(232
|
)
|
|||
|
Income
from continuing operations
|
11,745
|
10,907
|
|||||
|
Net
loss from discontinued operations
|
2
|
-
|
|||||
|
Net
income
|
11,743
|
10,907
|
|||||
|
Dividends
on preferred stock
|
306
|
306
|
|||||
|
Net
income applicable to common stock
|
$
|
11,437
|
$
|
10,601
|
|||
|
Weighted
average common shares:
|
|||||||
|
Basic
|
21,110
|
21,057
|
|||||
|
Diluted
|
23,671
|
24,992
|
|||||
|
Income
per common share:
|
|||||||
|
Basic:
|
$
|
.54
|
$
|
.50
|
|||
|
Diluted:
|
$
|
.51
|
$
|
.46
|
|||
(See
accompanying notes)
LSB
Industries, Inc. News
Release Page
6
May 11,
2009
LSB
Industries, Inc.
Notes
to Unaudited Financial Highlights
Three
Months Ended March 31, 2009 and 2008
|
Note
1:
|
Net
income applicable to common stock is computed by adjusting net income by
the amount of preferred stock dividends. Basic income per
common share is based upon net income applicable to common stock and the
weighted average number of common shares outstanding during each
period. Diluted income per share is based on net income
applicable to common stock plus preferred stock dividends on preferred
stock assumed to be converted, if dilutive, and interest expense including
amortization of debt issuance costs, net of income taxes, on convertible
debt assumed to be converted, if dilutive, and the weighted average number
of common shares and dilutive common equivalent shares outstanding and the
assumed conversion of dilutive convertible securities
outstanding.
|
|
Note
2:
|
During
the first quarter of 2009, we acquired $5.7 million aggregate principal
amount of our 2007 Debentures for $4.2 million and recognized a gain on
extinguishment of debt of $1.3 million, after expensing $0.2 million of
the unamortized debt issuance costs associated with the 2007 Debentures
acquired.
|
|
Note
3
|
Information
about the Company’s operations in different industry segments for the
three months ended March 31, 2009 and 2008 is detailed on the following
page.
|
LSB
Industries, Inc. News
Release Page
7
May 11,
2009
LSB
INDUSTRIES, INC.
Notes
to Unaudited Financial Highlights (Continued)
Three
Months Ended March 31, 2009 and 2008
|
Three
Months Ended
March
31,
|
||
|
2009
|
2008
|
|
(In
Thousands)
|
|||||||
|
Net
sales:
|
|||||||
|
Climate
Control
|
$
|
72,048
|
$
|
66,323
|
|||
|
Chemical
|
74,478
|
91,330
|
|||||
|
Other
|
3,671
|
2,802
|
|||||
|
$
|
150,197
|
$
|
160,455
|
||||
|
Gross
profit (1):
|
|||||||
|
Climate
Control (2)
|
$
|
22,428
|
$
|
21,522
|
|||
|
Chemical
(3)
|
17,148
|
15,353
|
|||||
|
Other
|
1,152
|
882
|
|||||
|
$
|
40,728
|
$
|
37,757
|
||||
|
Operating
income (4):
|
|||||||
|
Climate
Control (2)
|
$
|
8,978
|
$
|
9,327
|
|||
|
Chemical
(3) (5)
|
12,638
|
12,125
|
|||||
|
General
corporate expenses and other business operations, net
|
(2,196
|
)
|
(2,120
|
)
|
|||
|
19,420
|
19,332
|
||||||
|
Interest
expense
|
(1,911
|
)
|
(2,454
|
)
|
|||
|
Gain
on extinguishment of debt Non-operating
other income, net:
|
1,322
|
-
|
|||||
|
Climate
Control
|
-
|
1
|
|||||
|
Chemical
|
3
|
4
|
|||||
|
Corporate
and other business operations
|
20
|
512
|
|||||
|
Provisions
for income taxes
|
(7,349
|
)
|
(6,720
|
)
|
|||
|
Equity
in earnings of affiliate-Climate Control
|
240
|
232
|
|||||
|
Income
from continuing operations
|
$
|
11,745
|
$
|
10,907
|
|
(1)
|
Gross
profit by industry segment represents net sales less cost of sales. Gross
profit classified as “Other” relates to the sales of industrial machinery
and related components.
|
|
(2)
|
During
the first quarters of 2009 and 2008, we recognized gains totaling $463,000
and $2,575,000, respectively, on our exchange-traded futures contracts for
copper. These gains contributed to an increase in gross profit and
operating income.
|
|
(3)
|
As
the result of entering into sales commitments with higher firm sales
prices during 2008, we recognized sales with a gross profit of
$2,500,000 higher than our comparable product sales made at lower market
prices available during the first quarter of 2009. In addition,
we recognized recoveries of precious metals totaling $2,213,000. These
transactions contributed to an increase in gross profit and operating
income for the first quarter of 2009. During the first quarter
of 2009, we recognized losses totaling $1,619,000 on our futures/forward
contracts for natural gas and ammonia compared to gains totaling $621,000
during the first quarter of 2008. These losses contributed to a decrease
(gains contributed to an increase) in gross profit and operating income
for each respective period.
|
|
(4)
|
Our
chief operating decision makers use operating income by industry segment
for purposes of making decisions which include resource allocations and
performance evaluations. Operating income by industry segment represents
gross profit by industry segment less selling, general and administration
expense (“SG&A”) incurred by each industry segment plus other income
and other expense earned/incurred by each industry segment before general
corporate expenses and other business operations, net. General corporate
expenses and other business operations, net, consist of unallocated
portions of gross profit, SG&A, other income and other
expense.
|
|
(5)
|
During
the first quarters of 2009 and 2008, we incurred expense of $1,996,000 and
$421,000, respectively, associated with our idle chemical facility located
in Pryor, Oklahoma that we are in the process of
activating.
|
LSB
Industries, Inc. News
Release Page
8
May 11,
2009
LSB
Industries, Inc.
Consolidated
Balance Sheets
(unaudited)
|
March
31,
2009
|
December
31,
2008
|
||||||||
|
(In
Thousands)
|
|||||||||
|
Assets
|
|||||||||
|
Current
assets:
|
|||||||||
|
Cash
and cash equivalents
|
$
|
52,308
|
$
|
46,204
|
|||||
|
Restricted
cash
|
745
|
893
|
|||||||
|
Accounts
receivable, net
|
75,856
|
78,846
|
|||||||
|
Inventories:
|
|||||||||
|
Finished
goods
|
32,041
|
30,679
|
|||||||
|
Work
in process
|
2,465
|
2,954
|
|||||||
|
Raw
materials
|
20,494
|
27,177
|
|||||||
|
Total
inventories
|
55,000
|
60,810
|
|||||||
|
Supplies,
prepaid items and other:
|
|||||||||
|
Prepaid
insurance
|
2,456
|
3,373
|
|||||||
|
Precious
metals
|
15,592
|
14,691
|
|||||||
|
Supplies
|
4,492
|
4,301
|
|||||||
|
Other
|
2,203
|
1,378
|
|||||||
|
Total
supplies, prepaid items and other
|
24,743
|
23,743
|
|||||||
|
Deferred
income taxes
|
10,273
|
11,417
|
|||||||
|
Total
current assets
|
218,925
|
221,913
|
|||||||
|
Property,
plant and equipment, net
|
105,946
|
104,292
|
|||||||
|
Other
assets:
|
|||||||||
|
Debt
issuance costs, net
|
2,229
|
2,607
|
|||||||
|
Investment
in affiliate
|
3,693
|
3,628
|
|||||||
|
Goodwill
|
1,724
|
1,724
|
|||||||
|
Other,
net
|
1,712
|
1,603
|
|||||||
|
Total
other assets
|
9,358
|
9,562
|
|||||||
|
$
|
334,229
|
$
|
335,767
|
||||||
(Continued
on following page)
LSB
Industries, Inc. News
Release Page
9
May 11,
2009
LSB
Industries, Inc.
Consolidated
Balance Sheets
(unaudited)
|
March
31,
2009
|
December
31,
2008
|
||||||
|
(In
Thousands)
|
|||||||
|
Liabilities
and Stockholders’ Equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
33,664
|
$
|
43,014
|
|||
|
Short-term
financing and drafts payable
|
1,340
|
2,228
|
|||||
|
Accrued
and other liabilities
|
39,111
|
39,236
|
|||||
|
Current
portion of long-term debt
|
1,980
|
1,560
|
|||||
|
Total
current liabilities
|
76,095
|
86,038
|
|||||
|
Long-term
debt
|
98,681
|
103,600
|
|||||
|
Noncurrent
accrued and other liabilities
|
10,300
|
9,631
|
|||||
|
Deferred
income taxes
|
7,260
|
6,454
|
|||||
|
Contingencies
|
|||||||
|
Stockholders'
equity:
|
|||||||
|
Series
B 12% cumulative, convertible preferred stock, $100 par value;
20,000 shares issued and outstanding
|
2,000
|
2,000
|
|||||
|
Series
D 6% cumulative, convertible Class C preferred stock, no par
value; 1,000,000 shares issued
|
1,000
|
1,000
|
|||||
|
Common
stock, $.10 par value; 75,000,000 shares authorized, 24,958,330
shares issued
|
2,496
|
2,496
|
|||||
|
Capital
in excess of par value
|
127,677
|
127,337
|
|||||
|
Accumulated
other comprehensive loss
|
(48
|
)
|
(120
|
)
|
|||
|
Retained
earnings
|
31,241
|
19,804
|
|||||
|
164,366
|
152,517
|
||||||
|
Less
treasury stock at cost:
|
|||||||
|
Common
stock, 3,848,518 shares
|
22,473
|
22,473
|
|||||
|
Total
stockholders' equity
|
141,893
|
130,044
|
|||||
|
$
|
334,229
|
$
|
335,767
|
||||