LXU LSB Industries Inc

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): March 5, 2024

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.)
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 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:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, Par Value $.10		LXU		New York Stock Exchange
Preferred Stock Purchase Rights		N/A		New York Stock Exchange

 

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. ☐

 

 

 

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Item 2.02.	Results of Operations and Financial Condition.

On March 5, 2024, LSB Industries, Inc. (the “Company”) issued a press release to report its financial results for the fourth quarter ended December 31, 2023. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On March 6, 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 fourth quarter ended December 31, 2023.

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.

Exhibit Number		Description
99.1		Press Release issued by LSB Industries, Inc. dated March 5, 2024, titled “LSB Industries, Inc. Reports Operating Results for the 2023 Fourth Quarter and Provides Product Sales Volume Outlook for 2024”.
104		Cover Page Interactive Data File (embedded within the XBRL document)

 

 

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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: March 5, 2024

LSB INDUSTRIES, INC.
By:		/s/ Cheryl A. Maguire
Name:		Cheryl A. Maguire
Title:		Executive Vice President and Chief Financial Officer

 

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LSB INDUSTRIES, INC. REPORTS OPERATING RESULTS FOR THE 2023 FOURTH QUARTER AND PROVIDES PRODUCT SALES VOLUME OUTLOOK FOR 2024

 

OKLAHOMA CITY, Oklahoma…March 5, 2024…LSB Industries, Inc. (NYSE: LXU) (“LSB” or the “Company”) today announced results for the fourth quarter ended December 31, 2023.

Fourth Quarter 2023 Results and Recent Highlights

 

Full Year 2023 Results and Highlights

 

“Our fourth quarter results were consistent with our expectations," stated Mark Behrman, LSB Industries’ President and CEO. "While we continued to experience a weaker pricing environment relative to 2022, pricing rebounded off of third quarter lows enabling us to generate a significant sequential top and bottom line improvement. Our fourth quarter results benefited from increased production and sales volumes of downstream products reflecting improved manufacturing operations.”

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"Our continued focus on safety resulted in a TRIR of 0.33 for the year representing 'world class' performance. I want to thank our team for all their efforts towards this accomplishment. We generated solid cash flow in 2023 in spite of the headwinds encountered throughout the year. As a result, we were able to further strengthen our balance sheet, positioning us to continue to invest in the reliability and safety of our facilities and return value to shareholders. In addition to the two Turnarounds we'll be conducting at our Pryor and Cherokee facilities during this year's third quarter, we also expect to complete multiple projects that we believe will deliver incremental EBITDA beginning in the second half of the year."

 

"We have elected to delay the expansion of the production capacity of our El Dorado facility. After reviewing numerous factors including current commodity market conditions and the other initiatives we have underway, we've determined that delaying the El Dorado expansion enables us to more effectively deploy resources to our other projects, while allowing us to maintain the strength of our balance sheet.”

 

"We made meaningful progress in 2023 in achieving our vision to be an industry leader in the energy transition. In October we announced our collaboration with INPEX, Air Liquide and Vopak Exolum Houston to develop a world-scale low-carbon ammonia production and export facility on the Houston Ship Channel. This project will be transformative to LSB’s growth profile given the anticipated demand for clean energy. In the fourth quarter of 2023 we achieved an important step in the project development process when we selected KBR to provide the technology licensing and proprietary engineering design for the ammonia loop portion of the plant. We also recently selected an engineering firm to perform the pre-FEED on our ammonia loop. We expect to complete the pre-FEED during this year's third quarter."

 

"We continue to make good progress in the advancement of our carbon capture and sequestration project with our partner, Lapis Energy, at our El Dorado facility. We are focused on completing that project in the first quarter of 2026, subject to the EPA’s approval of our application for a Class VI injection well permit. We’ve been pleased with our commercial team’s ability to leverage this project as part of our new business development efforts as we have been receiving strong expressions of interest in potential long-term off-take agreements for the low-carbon products we will be producing at El Dorado.”

 

 

 

Market Outlook

 

 

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Progress on Low-Carbon Ammonia Projects

 

 

 

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Fourth Quarter Results Overview

 

		Three Months Ended December 31,
Product Sales ($ in Thousands)		2023				2022				% Change
AN & Nitric Acid		$	47,959			$	81,576				(41	)%
Urea ammonium nitrate (UAN)			36,621				55,449				(34	)%
Ammonia			36,731				83,144				(56	)%
Other			11,302				13,485				(16	)%
Total Net Sales		$	132,613			$	233,654				(43	)%

 

Comparison of 2023 to 2022 quarterly periods:

 

The following tables provide key sales metrics for our products:

 

		Three Months Ended December 31,
Key Product Volumes (short tons sold)		2023				2022				% Change
AN & Nitric Acid			124,697				157,104				(21	)%
Urea ammonium nitrate (UAN)			125,966				102,912				22	%
Ammonia			95,447				84,100				13	%
			346,110				344,116				1	%

 

Average Selling Prices (price per short ton) (A)
AN & Nitric Acid		$	322			$	464				(31	)%
Urea ammonium nitrate (UAN)		$	253			$	522				(52	)%
Ammonia		$	368			$	978				(62	)%

 

(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 December 31,
		2023				2022				% Change
Average Benchmark Prices (price per ton)
Tampa Ammonia (MT) Benchmark		$	599			$	1,116				(46	)%
NOLA UAN		$	256			$	533				(52	)%
Input Costs
Average natural gas cost/MMBtu in cost of materials and other		$	3.75			$	7.05				(47	)%
Average natural gas cost/MMBtu used in production		$	3.99			$	6.95				(43	)%

 

 

Volume Outlook*

Estimated ammonia production and product sales volumes for the full year 2024 are as follows:

Products	2024E	2023A
Ammonia Production (tons):	780,000 – 800,000		816,000
Sales Volume (tons):		
AN & Nitric Acid	560,000 – 580,000		529,000
Urea Ammonium Nitrate (UAN)	560,000 – 580,000		483,000
Ammonia	280,000 – 300,000		375,000

*2024 ammonia production and product sales volumes forecast reflects Turnarounds at our Pryor and Cherokee facilities as compared to no Turnarounds in 2023

 

 

Conference Call

LSB’s management will host a conference call covering the fourth quarter results on Wednesday, March 6, 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 and Executive Vice President & Chief Financial Officer, Cheryl Maguire. 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.

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.

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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

 

 

Company Contact: Cheryl Maguire, Executive Vice President & CFO (405) 510-3524   Fred Buonocore, CFA, Vice President of Investor Relations (405) 510-3550 fbuonocore@lsbindustries.com

 

 

 

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LSB Industries, Inc.

Consolidated Statements of Operations

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2023				2022				2023				2022
		(In Thousands, Except Per Share Amounts)
Net sales		$	132,613			$	233,654			$	593,709			$	901,711
Cost of sales			120,604				141,070				507,449				553,344
Gross profit			12,009				92,584				86,260				348,367
Selling, general and administrative expense			8,765				9,717				36,580				39,428
Other (income) expense, net			(1	)			184				(2,097	)			561
Operating income			3,245				82,683				51,777				308,378
Interest expense, net			9,923				12,372				41,136				46,827
(Gain) loss on extinguishments of debt			—				—				(8,644	)			113
Non-operating other income, net			(3,682	)			(2,456	)			(14,611	)			(8,083	)
(Loss) income before benefit for income taxes			(2,996	)			72,767				33,896				269,521
Provision for income taxes			2,351				6,897				5,973				39,174
Net (loss) income		$	(5,347	)		$	65,870			$	27,923			$	230,347
Basic:
Net (loss) income		$	(0.07	)		$	0.84			$	0.37			$	2.72
Diluted:
Net (loss) income		$	(0.07	)		$	0.83			$	0.37			$	2.68

 

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LSB Industries, Inc.

Consolidated Balance Sheets

 

		December 31,
		2023				2022
		(In Thousands)
Assets
Current assets:
Cash and cash equivalents		$	98,500			$	63,769
Restricted cash			2,532				—
Short-term investments			207,434				330,553
Accounts receivable			40,749				75,494
Allowance for doubtful accounts			(364	)			(699	)
Accounts receivable, net			40,385				74,795
Inventories:
Finished goods			26,329				28,893
Raw materials			1,799				1,990
Total inventories			28,128				30,883
Supplies, prepaid items and other:
Prepaid insurance			14,846				17,429
Precious metals			12,094				13,323
Supplies			30,486				27,501
Other			2,337				8,346
Total supplies, prepaid items and other			59,763				66,599
Total current assets			436,742				566,599
Property, plant and equipment, net			835,298				848,661
Other assets:
Operating lease assets			24,852				22,682
Intangible and other assets, net			1,292				1,877
			26,144				24,559
		$	1,298,184			$	1,439,819

 

 

 

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LSB Industries, Inc.

Consolidated Balance Sheets (continued)

 

		December 31,
		2023				2022
		(In Thousands)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	68,323			$	78,182
Short-term financing			13,398				16,134
Accrued and other liabilities			30,961				38,470
Current portion of long-term debt			5,847				9,522
Total current liabilities			118,529				142,308
Long-term debt, net			575,874				702,733
Noncurrent operating lease liabilities			16,074				14,896
Other noncurrent accrued and other liabilities			523				522
Deferred income taxes			68,853				63,487
Commitments and contingencies
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			501,026				497,179
Retained earnings			227,015				199,092
			737,158				705,388
Less treasury stock, at cost:
Common stock, 18.1 million shares (14.9 million shares at    December 31, 2022)			218,827				189,515
Total stockholders' equity			518,331				515,873
		$	1,298,184			$	1,439,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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.

 

 

 

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Non-GAAP Reconciliations (continued)

 

LSB Consolidated ($ In Thousands)		Three Months Ended December 31,								Year Ended December 31,
		2023				2022				2023				2022
Net (loss) income		$	(5,347	)		$	65,870			$	27,923			$	230,347
Plus:
Interest expense and interest income, net			6,237				9,908				26,500				41,407
Net (gain) loss on extinguishment of debt			—				—				(8,644	)			113
Depreciation and amortization			18,667				17,117				68,922				68,019
Provision for income taxes			2,351				6,897				5,973				39,174
EBITDA		$	21,908			$	99,792			$	120,674			$	379,060
Stock-based compensation			1,389				936				5,353				4,025
Legal fees (Leidos)			119				200				594				1,114
Loss on disposal and impairment of assets			977				391				3,613				1,219
Turnaround costs			734				4,171				2,430				29,235
Adjusted EBITDA		$	25,127			$	105,490			$	132,664			$	414,653

 

 

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 December 31,
		2023				2022
		(In Thousands)
Ammonia, AN, Nitric Acid, UAN net sales		$	121,311			$	220,170
Less freight and other			14,137				11,344
Ammonia, AN, Nitric Acid, UAN netback sales		$	107,174			$	208,826

 

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v3.24.0.1

Document and Entity Information	Mar. 05, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 05, 2024
Entity Registrant Name	LSB INDUSTRIES, INC.
Entity Central Index Key	0000060714
Entity File Number	1-7677
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	73-1015226
Entity Address, Address Line One	3503 NW 63rd Street
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	Oklahoma City
Entity Address, State or Province	OK
Entity Address, Postal Zip Code	73116
City Area Code	(405)
Local Phone Number	235-4546
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document Information [Line Items]
Security 12b Title	Common Stock, Par Value $.10
Trading Symbol	LXU
Security Exchange Name	NYSE
Preferred Stock [Member]
Document Information [Line Items]
Security 12b Title	Preferred Stock Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NYSE

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