SEC Filing | LSB Industries

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10-Q

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 September 30, 2022

☐ 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.

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 81,996,835 shares as of October 28, 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.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	36

When we refer to "us", "we", "our", "Company" or "LSB" we are describing LSB Industries, Inc. and its subsidiaries.

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

LSB INDUSTRIES, INC.

CONDENSED 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

(Continued on following page)

LSB INDUSTRIES, INC.

CONDENSED 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 (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		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

See accompanying notes to condensed consolidated financial statements.

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	)

See accompanying notes to condensed consolidated financial statements.

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
Net income														2,312						2,312
Stock-based compensation											921									921
Purchase of common stock				(6,854	)												(86,648	)		(86,648	)
Balance at September 30, 2022		91,168		(9,171	)	$	—	$	9,117	$	496,251		$	133,222		$	(112,446	)	$	526,144

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	)