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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 1-7677

 

LSB Industries, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

73-1015226

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. 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, former address and former fiscal year, if changed since last report.)

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

Preferred Stock Purchase Rights

 

LXU

N/A

 

New York Stock Exchange

New York Stock Exchange

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  Yes      No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

  Yes      No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

☐ 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

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. 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

  Yes      No

The number of shares outstanding of the Registrant's common stock was 88,851,277 shares as of July 22, 2022.

 

 

 


 

FORM 10-Q OF LSB INDUSTRIES, INC.

TABLE OF CONTENTS

 

 

 

PART I – Financial Information

 

Page

 

 

 

 

 

Item 1.

 

Financial Statements

 

3

 

 

 

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

19

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

31

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

31

 

 

 

 

 

 

 

PART II – Other Information

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

36

 

 

 

 

 

Item 1A.

 

Risk Factors

 

36

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

36

 

 

 

 

 

Item 4.

 

Mining Safety Disclosures

 

36

 

 

 

 

 

Item 5.

 

Other Information

 

36

 

 

 

 

 

Item 6.

 

Exhibits

 

36

 

 

2


 

PART I

FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Information at June 30, 2022 is unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(In Thousands)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

125,231

 

 

$

82,144

 

Short-term investments

 

 

325,566

 

 

 

 

Accounts receivable

 

 

97,406

 

 

 

86,902

 

Allowance for doubtful accounts

 

 

(652

)

 

 

(474

)

Accounts receivable, net

 

 

96,754

 

 

 

86,428

 

Inventories:

 

 

 

 

 

 

 

 

Finished goods

 

 

34,144

 

 

 

14,688

 

Raw materials

 

 

1,831

 

 

 

1,895

 

Total inventories

 

 

35,975

 

 

 

16,583

 

Supplies, prepaid items and other:

 

 

 

 

 

 

 

 

Prepaid insurance

 

 

6,174

 

 

 

14,244

 

Precious metals

 

 

13,929

 

 

 

14,945

 

Supplies

 

 

27,263

 

 

 

26,558

 

Other

 

 

7,134

 

 

 

2,234

 

Total supplies, prepaid items and other

 

 

54,500

 

 

 

57,981

 

Total current assets

 

 

638,026

 

 

 

243,136

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

839,411

 

 

 

858,480

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

Operating lease assets

 

 

27,056

 

 

 

27,317

 

Intangible and other assets, net

 

 

3,221

 

 

 

3,907

 

 

 

 

30,277

 

 

 

31,224

 

 

 

 

 

 

 

 

 

 

 

 

$

1,507,714

 

 

$

1,132,840

 

 

(Continued on following page)

3


LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(Information at June 30, 2022 is unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(In Thousands)

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

69,308

 

 

$

49,458

 

Short-term financing

 

 

5,682

 

 

 

12,716

 

Accrued and other liabilities

 

 

31,325

 

 

 

33,301

 

Current portion of long-term debt

 

 

10,977

 

 

 

9,454

 

Total current liabilities

 

 

117,292

 

 

 

104,929

 

 

 

 

 

 

 

 

 

 

Long-term debt, net

 

 

704,427

 

 

 

518,190

 

 

 

 

 

 

 

 

 

 

Noncurrent operating lease liabilities

 

 

18,681

 

 

 

19,568

 

 

 

 

 

 

 

 

 

 

Other noncurrent accrued and other liabilities

 

 

523

 

 

 

3,030

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

57,232

 

 

 

26,633

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

495,330

 

 

 

493,161

 

Retained earnings (accumulated deficit)

 

 

130,910

 

 

 

(31,255

)

 

 

 

635,357

 

 

 

471,023

 

Less treasury stock, at cost:

 

 

 

 

 

 

 

 

Common stock, 2.3 million shares (1.4 million shares at December 31, 2021)

 

 

25,798

 

 

 

10,533

 

Total stockholders' equity

 

 

609,559

 

 

 

460,490

 

 

 

$

1,507,714

 

 

$

1,132,840

 

 

 

See accompanying notes to condensed consolidated financial statements.

4


LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(In Thousands, Except Per Share Amounts)

 

Net sales

 

$

284,803

 

 

$

140,696

 

 

$

483,784

 

 

$

238,812

 

Cost of sales

 

 

141,879

 

 

 

105,688

 

 

 

250,130

 

 

 

195,744

 

Gross profit

 

 

142,924

 

 

 

35,008

 

 

 

233,654

 

 

 

43,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

 

9,638

 

 

 

8,545

 

 

 

20,573

 

 

 

17,338

 

Other expense (income), net

 

 

628

 

 

 

6

 

 

 

452

 

 

 

(257

)

Operating income

 

 

132,658

 

 

 

26,457

 

 

 

212,629

 

 

 

25,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

12,307

 

 

 

12,290

 

 

 

22,262

 

 

 

24,662

 

Loss (gain) on extinguishment of debt

 

 

 

 

 

(10,000

)

 

 

113

 

 

 

(10,000

)

Non-operating other expense (income), net

 

 

(3,430

)

 

 

745

 

 

 

(3,408

)

 

 

1,140

 

Income before provision (benefit) for income taxes

 

 

123,781

 

 

 

23,422

 

 

 

193,662

 

 

 

10,185

 

Provision (benefit) for income taxes

 

 

20,382

 

 

 

(248

)

 

 

31,497

 

 

 

(206

)

Net income

 

 

103,399

 

 

 

23,670

 

 

 

162,165

 

 

 

10,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on convertible preferred stocks

 

 

 

 

 

75

 

 

 

 

 

 

150

 

Dividends on Series E redeemable preferred stock

 

 

 

 

 

10,213

 

 

 

 

 

 

19,724

 

Accretion of Series E redeemable preferred stock

 

 

 

 

 

513

 

 

 

 

 

 

1,024

 

Net income attributable to participating securities

 

 

 

 

 

223

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

 

$

103,399

 

 

$

12,646

 

 

$

162,165

 

 

$

(10,507

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1.17

 

 

$

0.34

 

 

$

1.84

 

 

$

(0.28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1.15

 

 

$

0.32

 

 

$

1.81

 

 

$

(0.28

)

 

See accompanying notes to condensed consolidated financial statements.

5


LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

Common

Stock

Shares

 

 

Treasury

Stock-

Common

Shares

 

 

Non-

Redeemable

Preferred

Stock

 

 

Common

Stock

Par

Value

 

 

Capital in

Excess of

Par

Value

 

 

Retained Earnings (Accumulated Deficit)

 

 

Treasury

Stock-

Common

 

 

Total

 

 

 

(In Thousands)

 

Balance at December 31, 2021

 

 

91,168

 

 

 

(1,375

)

 

$

 

 

$

9,117

 

 

$

493,161

 

 

$

(31,255

)

 

$

(10,533

)

 

$

460,490

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,766

 

 

 

 

 

 

 

58,766

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

803

 

 

 

 

 

 

 

 

 

 

 

803

 

Other

 

 

 

 

 

 

(229

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,871

)

 

 

(1,871

)

Balance at March 31, 2022

 

 

91,168

 

 

 

(1,604

)

 

 

 

 

 

9,117

 

 

 

493,964

 

 

 

27,511

 

 

 

(12,404

)

 

 

518,188

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103,399

 

 

 

 

 

 

 

103,399

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,366

 

 

 

 

 

 

 

 

 

 

 

1,366

 

Purchase of common stock

 

 

 

 

 

 

(713

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,394

)

 

 

(13,394

)

Balance at June 30, 2022

 

 

91,168

 

 

 

(2,317

)

 

$

 

 

$

9,117

 

 

$

495,330

 

 

$

130,910

 

 

$

(25,798

)

 

$

609,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

39,926

 

 

 

(2,075

)

 

$

3,000

 

 

$

3,993

 

 

$

197,350

 

 

$

(41,487

)

 

$

(13,213

)

 

$

149,643

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,279

)

 

 

 

 

 

 

(13,279

)

Dividend accrued on redeemable

   preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,511

)

 

 

 

 

 

 

(9,511

)

Accretion of redeemable preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(511

)

 

 

 

 

 

 

(511

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

713

 

 

 

 

 

 

 

 

 

 

 

713

 

Issuance of restricted stock

 

 

250

 

 

 

835

 

 

 

 

 

 

 

25

 

 

 

(5,335

)

 

 

 

 

 

 

5,310

 

 

 

 

Other

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

(18

)

Balance at March 31, 2021

 

 

40,176

 

 

 

(1,245

)

 

 

3,000

 

 

 

4,018

 

 

 

192,728

 

 

 

(64,788

)

 

 

(7,921

)

 

 

127,037

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,670

 

 

 

 

 

 

 

23,670

 

Dividend accrued on redeemable

   preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,213

)

 

 

 

 

 

 

(10,213

)

Accretion of redeemable preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(513

)

 

 

 

 

 

 

(513

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,062

 

 

 

 

 

 

 

 

 

 

 

1,062

 

Issuance of unrestricted stock

 

 

80

 

 

 

267

 

 

 

 

 

 

 

8

 

 

 

(1,708

)

 

 

 

 

 

 

1,700

 

 

 

 

Other

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28

)

 

 

(28

)

Balance at June 30, 2021

 

 

40,256

 

 

 

(983

)

 

$

3,000

 

 

$

4,026

 

 

$

192,082

 

 

$

(51,844

)

 

$

(6,249

)

 

$

141,015

 

 

 

 

See accompanying notes condensed consolidated financial statements.

6


LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

 

(In Thousands)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

162,165

 

 

$

10,391

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

30,600

 

 

 

256

 

Loss (gain) on extinguishment of debt

 

 

113

 

 

 

(10,000

)

Depreciation and amortization of property, plant and equipment

 

 

33,883

 

 

 

33,725

 

Amortization of intangible and other assets

 

 

621

 

 

 

629

 

Other

 

 

1,318

 

 

 

1,749

 

Cash provided (used) by changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(8,631

)

 

 

(23,369

)

Inventories

 

 

(19,392

)

 

 

5,535

 

Prepaid insurance

 

 

8,070

 

 

 

6,633

 

Accounts payable

 

 

20,974

 

 

 

3,627

 

Accrued interest

 

 

(1,008

)

 

 

(20

)

Other assets and other liabilities