LXU 8-K
Lsb Industries, Inc. (LXU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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(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:
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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 July 31, 2024, LSB Industries, Inc. (the “Company”) issued a press release to report its financial results for the second quarter ended June 30, 2024. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On August 1, 2024, 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 second quarter ended June 30, 2024.
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.
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Exhibit |
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Description |
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99.1 |
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104 |
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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: July 31, 2024
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LSB INDUSTRIES, INC. |
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By: |
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/s/ Cheryl A. Maguire |
Name: |
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Cheryl A. Maguire |
Title: |
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Executive Vice President and Chief Financial Officer |
3
Exhibit 99.1
LSB INDUSTRIES, INC. REPORTS OPERATING RESULTS FOR THE 2024 SECOND QUARTER
OKLAHOMA CITY, Oklahoma…July 31, 2024…LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today announced results for the second quarter ended June 30, 2024.
Second Quarter 2024 Results and Recent Highlights
“Our second quarter was highlighted by our landmark agreement to supply Freeport Minerals with low carbon ANS for use in their copper mining operations," stated Mark Behrman, LSB Industries' President and CEO. "This agreement validates our belief that industrial customers will identify low carbon nitrogen products as a critical pathway toward achieving their decarbonization initiatives."
"Our second quarter profitability improved sequentially due largely to improved pricing relative to the first quarter of this year. While selling prices were down compared to the second quarter of last year, the year-over-year pricing decline was much less significant than the declines experienced over the previous several quarters. We view this as indicative of a stabilization of our markets after a period of downward volatility following the spike in nitrogen prices experienced in 2022.”
"We generated solid cash flow in the second quarter, contributing to our ability to return value to shareholders through stock repurchases, while further de-risking our balance sheet by repurchasing bonds at a discount to their principal value. We continue to make investments in the reliability and safety of our facilities which we expect to lead to greater production volumes. We have recently commenced a Turnaround at our Pryor facility and plan to conduct a Turnaround at our Cherokee facility in the fourth
1
quarter. When combined with the multiple smaller projects we have underway, we expect these Turnarounds to lead to increased reliability and incremental EBITDA and cash flow."
"We continue to make progress on our two clean ammonia projects. The EPA is currently indicating a final decision next Spring on the Class VI permit application submitted by our partner, Lapis Energy, for our El Dorado carbon capture and sequestration project. This timeline would position us to begin producing low carbon ammonia by early 2026. Our contract with Freeport makes a strong statement about the demand by large U.S. industrial companies for low carbon ammonia and its derivative products. With respect to our Houston Ship Channel project, we are excited to complete our Pre-FEED study over the next few months and anticipate proceeding to a full FEED study, which we expect to provide us with a better sense of the economics for the project. Concurrently, we continue to have productive conversations with potential off-take parties for the low carbon product from this facility. We are encouraged by the positive developments with both of our projects and remain committed to our vision of becoming a leader in the global energy transition through the production of low carbon ammonia and downstream products over the next several years."
Market Outlook
2
Low-Carbon Ammonia Projects Summary
Second Quarter Results Overview
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Three Months Ended |
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June 30, |
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2024 |
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2023 |
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% Change |
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Product Sales ($ in Thousands) |
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AN & Nitric Acid |
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$ |
58,442 |
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$ |
69,561 |
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(16 |
)% |
Urea ammonium nitrate (UAN) |
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42,808 |
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40,905 |
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5 |
% |
Ammonia |
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28,448 |
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39,612 |
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(28 |
)% |
Other |
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10,375 |
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15,767 |
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(34 |
)% |
Total net sales |
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$ |
140,073 |
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$ |
165,845 |
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3
Comparison of 2024 to 2023 quarterly periods:
The following tables provide key sales metrics for our products:
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Three Months Ended |
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June 30, |
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Key Product Volumes (short tons sold) |
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2024 |
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2023 |
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% Change |
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AN & Nitric Acid |
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147,619 |
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161,987 |
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(9 |
)% |
Urea ammonium nitrate (UAN) |
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137,499 |
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126,010 |
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9 |
% |
Ammonia |
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72,294 |
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102,047 |
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(29 |
)% |
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357,412 |
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390,044 |
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(8 |
)% |
Average Selling Prices (price per short ton) (A) |
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AN & Nitric Acid |
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$ |
337 |
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$ |
381 |
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(12 |
)% |
Urea ammonium nitrate (UAN) |
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$ |
271 |
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$ |
285 |
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(5 |
)% |
Ammonia |
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$ |
368 |
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$ |
367 |
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0 |
% |
(A) Average selling prices represent “net back” prices which are calculated as sales less freight expenses divided by product sales volume in tons.
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Three Months Ended |
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2024 |
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2023 |
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% Change |
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Average Benchmark Prices (price per ton) |
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Tampa Ammonia (MT) Benchmark |
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$ |
440 |
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$ |
370 |
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19 |
% |
NOLA UAN |
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$ |
246 |
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$ |
251 |
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(2 |
)% |
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Input Costs |
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Average natural gas cost/MMBtu in cost of materials and other |
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$ |
1.70 |
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$ |
3.59 |
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(53 |
)% |
Average natural gas cost/MMBtu used in production |
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$ |
1.92 |
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$ |
3.39 |
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(43 |
)% |
Conference Call
LSB’s management will host a conference call covering the second quarter results on Thursday, August 1, 2024 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, Executive Vice President & Chief Financial Officer, Cheryl Maguire and Executive Vice President & Chief Commercial Officer, Damien Renwick. Interested parties may participate in the call by dialing (877) 407-6176 / (201) 689-8451. 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.
4
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, is committed to playing a leadership role in the energy transition through the production of low and no carbon products that build, feed and power the world. The LSB team is dedicated to building a culture of excellence in customer experiences as we currently deliver essential products across the agricultural, industrial, and mining end markets and, in the future, the energy markets. The company manufactures ammonia and ammonia-related products at facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma and operates a facility for a global chemical company in Baytown, Texas. Additional information about LSB can be found on our 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 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, market conditions and price volatility for our products and feedstocks, as well as global and regional economic downturns 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 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
5
Company Contact: Cheryl Maguire, Executive Vice President & CFO (405) 510-3524
Fred Buonocore, CFA, Vice President of Investor Relations (405) 510-3550
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6
LSB Industries, Inc.
Consolidated Statements of Operations
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(In Thousands, Except Per Share Amounts) |
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Net sales |
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$ |
140,073 |
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$ |
165,845 |
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$ |
278,277 |
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$ |
346,809 |
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Cost of sales |
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112,658 |
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129,813 |
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228,584 |
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269,172 |
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Gross profit |
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27,415 |
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36,032 |
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49,693 |
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77,637 |
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Selling, general and administrative expense |
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11,547 |
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9,436 |
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21,841 |
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19,303 |
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Other expense (income), net |
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1,465 |
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(900 |
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2,189 |
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303 |
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Operating income |
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14,403 |
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27,496 |
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25,663 |
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58,031 |
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Interest expense, net |
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8,385 |
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11,836 |
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18,114 |
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24,048 |
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Gain on extinguishment of debt |
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(1,879 |
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(8,644 |
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(3,013 |
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(8,644 |
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Non-operating other income, net |
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(2,908 |
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(3,764 |
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(6,469 |
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(7,240 |
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Income before provision for income taxes |
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10,805 |
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28,068 |
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17,031 |
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49,867 |
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Provision for income taxes |
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1,250 |
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2,973 |
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1,853 |
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8,871 |
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Net income |
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$ |
9,555 |
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$ |
25,095 |
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$ |
15,178 |
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$ |
40,996 |
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Income per common share: |
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Basic: |
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Net income |
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$ |
0.13 |
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$ |
0.33 |
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$ |
0.21 |
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$ |
0.54 |
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Diluted: |
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Net income |
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$ |
0.13 |
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$ |
0.33 |
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$ |
0.21 |
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$ |
0.54 |
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7
LSB Industries, Inc.
Consolidated Balance Sheets
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June 30, |
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December 31, |
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2024 |
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2023 |
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(In Thousands) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
216,257 |
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$ |
98,500 |
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Restricted cash |
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77 |
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2,532 |
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Short-term investments |
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— |
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207,434 |
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Accounts receivable |
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42,242 |
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40,749 |
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Allowance for doubtful accounts |
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(327 |
) |
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(364 |
) |
Accounts receivable, net |
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41,915 |
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40,385 |
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Inventories: |
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Finished goods |
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19,202 |
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26,329 |
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Raw materials |
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2,068 |
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1,799 |
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Total inventories |
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21,270 |
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28,128 |
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Supplies, prepaid items and other: |
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Prepaid insurance |
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6,153 |
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14,846 |
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Precious metals |
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12,447 |
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12,094 |
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Supplies |
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31,257 |
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30,486 |
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Other |
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2,627 |
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2,337 |
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Total supplies, prepaid items and other |
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52,484 |
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59,763 |
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Total current assets |
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332,003 |
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436,742 |
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Property, plant and equipment, net |
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830,077 |
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835,298 |
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Other assets: |
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Operating lease assets |
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25,602 |
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24,852 |
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Intangible and other assets, net |
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1,376 |
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1,292 |
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26,978 |
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26,144 |
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$ |
1,189,058 |
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$ |
1,298,184 |
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8
LSB Industries, Inc.
Consolidated Balance Sheets (continued)
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June 30, |
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December 31, |
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2024 |
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2023 |
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(In Thousands) |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
61,343 |
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$ |
68,323 |
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Short-term financing |
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4,551 |
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13,398 |
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Accrued and other liabilities |
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25,543 |
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30,961 |
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Current portion of long-term debt |
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5,871 |
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5,847 |
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Total current liabilities |
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97,308 |
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118,529 |
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Long-term debt, net |
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479,769 |
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575,874 |
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Noncurrent operating lease liabilities |
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17,491 |
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16,074 |
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Other noncurrent accrued and other liabilities |
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523 |
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523 |
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Deferred income taxes |
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71,174 |
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68,853 |
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Commitments and contingencies |
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Stockholders' equity: |
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Common stock, $.10 par value; 150 million shares authorized, 91.2 million |
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9,117 |
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9,117 |
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Capital in excess of par value |
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501,422 |
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501,026 |
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Retained earnings |
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242,193 |
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227,015 |
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752,732 |
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737,158 |
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Less treasury stock, at cost: |
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Common stock, 19.5 million shares (18.1 million shares at December 31, 2023) |
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229,939 |
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218,827 |
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Total stockholders' equity |
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522,793 |
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518,331 |
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$ |
1,189,058 |
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$ |
1,298,184 |
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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 and interest income, net, less gain 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.
10
Non-GAAP Reconciliations (continued)
LSB Consolidated ($ In Thousands) |
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Three Months Ended |
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|||||
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2024 |
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2023 |
|
||
Net income |
|
$ |
9,555 |
|
|
$ |
25,095 |
|
Plus: |
|
|
|
|
|
|
||
Interest expense and interest income, net |
|
|
5,445 |
|
|
|
8,065 |
|
Net (gain) on extinguishment of debt |
|
|
(1,879 |
) |
|
|
(8,644 |
) |
Depreciation and amortization |
|
|
18,784 |
|
|
|
17,103 |
|
Provision for income taxes |
|
|
1,250 |
|
|
|
2,973 |
|
EBITDA |
|
$ |
33,155 |
|
|
$ |
44,592 |
|
|
|
|
|
|
|
|
||
Stock-based compensation |
|
|
2,099 |
|
|
|
1,927 |
|
Legal fees (Leidos) |
|
|
479 |
|
|
|
91 |
|
Loss on disposal and impairment of assets |
|
|
1,489 |
|
|
|
550 |
|
Turnaround costs |
|
|
3,439 |
|
|
|
(39 |
) |
Growth Initiatives |
|
|
485 |
|
|
|
|
|
Adjusted EBITDA |
|
$ |
41,146 |
|
|
$ |
47,121 |
|
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 |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In Thousands) |
|
|||||
Ammonia, AN, Nitric Acid, UAN net sales |
|
$ |
129,698 |
|
|
$ |
150,079 |
|
|
|
|
|
|
|
|
||
Less freight and other |
|
|
16,074 |
|
|
|
14,881 |
|
|
|
|
|
|
|
|
||
Ammonia, AN, Nitric Acid, UAN netback sales |
|
$ |
113,624 |
|
|
$ |
135,198 |
|
11