SEC Filing | LSB Industries

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

View:

Download DOC

Download PDF

Download XLS

Download XBRL

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 June 30, 2023

☐ 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 74,344,336 shares as of July 21, 2023.

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	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

	PART II – Other Information

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	36

Item 6.	Exhibits	37

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 June 30, 2023 is unaudited)


	June 30,			December 31,
	2023			2022
	(In Thousands)
Assets
Current assets:
Cash and cash equivalents	$	45,072		$	63,769
Short-term investments		268,762			330,553
Accounts receivable		51,431			75,494
Allowance for doubtful accounts		(692	)		(699	)
Accounts receivable, net		50,739			74,795
Inventories:
Finished goods		21,281			28,893
Raw materials		1,420			1,990
Total inventories		22,701			30,883
Supplies, prepaid items and other:
Prepaid insurance		7,084			17,429
Precious metals		13,100			13,323
Supplies		29,730			27,501
Other		2,904			8,346
Total supplies, prepaid items and other		52,818			66,599
Total current assets		440,092			566,599

Property, plant and equipment, net		835,423			848,661

Other assets:
Operating lease assets		25,050			22,682
Intangible and other assets, net		1,572			1,877
		26,622			24,559

	$	1,302,137		$	1,439,819

(Continued on following page)

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(Information at June 30, 2023 is unaudited)


	June 30,		December 31,
	2023		2022
	(In Thousands)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	54,524	$	78,182
Short-term financing		5,118		16,134
Accrued and other liabilities		31,210		38,470
Current portion of long-term debt		5,371		9,522
Total current liabilities		96,223		142,308

Long-term debt, net		578,214		702,733

Noncurrent operating lease liabilities		16,158		14,896

Other noncurrent accrued and other liabilities		522		522

Deferred income taxes		71,223		63,487

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		498,517		497,179
Retained earnings		240,088		199,092
		747,722		705,388
Less treasury stock, at cost:
Common stock, 16.8 million shares (14.9 million shares at December 31, 2022)		207,925		189,515
Total stockholders' equity		539,797		515,873
	$	1,302,137	$	1,439,819

See accompanying notes to condensed consolidated financial statements.

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	(In Thousands, Except Per Share Amounts)
Net sales	$	165,845		$	284,803		$	346,809		$	483,784
Cost of sales		129,813			141,879			269,172			250,130
Gross profit		36,032			142,924			77,637			233,654

Selling, general and administrative expense		9,436			9,638			19,303			20,573
Other expense (income), net		(900	)		628			303			452
Operating income		27,496			132,658			58,031			212,629

Interest expense, net		11,836			12,307			24,048			22,262
(Gain) loss on extinguishment of debt		(8,644	)		—			(8,644	)		113
Non-operating other income, net		(3,764	)		(3,430	)		(7,240	)		(3,408	)
Income before provision for income taxes		28,068			123,781			49,867			193,662
Provision for income taxes		2,973			20,382			8,871			31,497
Net income		25,095			103,399			40,996			162,165

Income per common share:
Basic:
Net income	$	0.33		$	1.17		$	0.54		$	1.84

Diluted:
Net income	$	0.33		$	1.15		$	0.54		$	1.81

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			Common Stock Par Value		Capital in Excess of Par Value			Retained Earnings (Accumulated Deficit)			Treasury Stock- Common			Total
	(In Thousands)
Balance at December 31, 2022		91,168		(14,888	)	$	9,117	$	497,179		$	199,092		$	(189,515	)	$	515,873
Net income												15,901						15,901
Stock-based compensation									719									719
Shares issued restricted stock units				53					(682	)					682			—
Shares withheld restricted stock and restricted stock units vesting				(204	)										(2,541	)		(2,541	)
Balance at March 31, 2023		91,168		(15,039	)		9,117		497,216			214,993			(191,374	)		529,952
Net income												25,095						25,095
Stock-based compensation									1,927									1,927
Purchase of common stock				(1,795	)										(17,218	)		(17,218	)
Shares issued restricted stock units and ESPP participants				58					(626	)					732			106
Shares withheld restricted stock units vesting				(7	)										(65	)		(65	)
Balance at June 30, 2023		91,168		(16,783	)	$	9,117	$	498,517		$	240,088		$	(207,925	)	$	539,797

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

See accompanying notes to condensed consolidated financial statements.

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	June 30,
	2023			2022
	(In Thousands)
Cash flows from operating activities
Net income	$	40,996		$	162,165
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		7,736			30,600
Loss (gain) on extinguishment of debt		(8,644	)		113
Depreciation and amortization of property, plant and equipment		34,416			33,883
Amortization of intangible and other assets		291			621
Stock-based compensation		2,646			2,168
Other		2,832			(850	)
Cash provided (used) by changes in assets and liabilities:
Accounts receivable		24,937			(8,631	)
Inventories		8,171			(19,392	)
Prepaid insurance		10,346			8,070
Supplies, prepaid items and other		2,192			(4,749	)
Accounts payable		(14,789	)		20,974
Accrued interest		(4,054	)		(1,008	)
Other assets and other liabilities		(4,127	)		(3,151	)
Net cash provided by operating activities		102,949			220,813

Cash flows from investing activities
Expenditures for property, plant and equipment		(32,263	)		(16,431	)
Proceeds from short-term investments		264,212			—
Purchases of short-term investments		(201,751	)		(325,566	)
Other investing activities		10			63
Net cash provided (used) by investing activities		30,208			(341,934	)

Cash flows from financing activities
Net proceeds from 6.25% senior secured notes		—			200,000
Repurchases of 6.25% senior secured notes		(114,320	)		—
Payments on other long-term debt		(6,800	)		(8,907	)
Payments on short-term financing		(11,016	)		(7,034	)
Acquisition of treasury stock, net		(19,718	)		(