Revises Cost Estimate for El Dorado Facility
Expansion to $831 Million to $855 Million; $564 Million Invested as
of September 30, 2015
Announces Strategic Investment of $260
Million to Complete El Dorado Expansion
El Dorado Ammonia Plant Remains on Track to
be in Production Early in Second Quarter of 2016
Provides Chemical Business Product Volume
Guidance for 2015 Fourth Quarter
LSB Industries, Inc. (“LSB”) (NYSE:LXU) today announced results
for the third quarter ended September 30, 2015.
Financial Highlights of Third Quarter 2015 Compared to Third
Quarter 2014 (See Pages 14-15 for Non-GAAP Reconciliations)
- Net sales decreased 7.8% to $157.7
million compared to $171.0 million.
- Adjusted operating loss was $13.0
million compared to operating loss of $1.2 million.
- Adjusted EBITDA was a loss of $1.6
million compared to gain of $8.1 million. Adjusted net loss
applicable to common shareholders was $8.3 million, or $0.36 per
diluted share, compared to net loss applicable to common
shareholders of $3.8 million, or $0.17 per diluted share.
“Our ongoing engineering and construction review and analysis of
our El Dorado Facility Expansion recently determined that the
expected cost to complete the project is higher than we previously
estimated when we reported second quarter 2015 results in August,”
stated Daniel Greenwell, LSB’s Interim CEO. “The primary reason for
the further cost escalation relates to mechanical and piping labor
cost increases versus earlier estimates. Despite the increased cost
estimate to complete our expansion project, the new nitric acid
plant should be in production next week, and the ammonia plant
remains on track to be in production early in the second quarter of
2016, which we expect to dramatically increase the profitability of
the facility. Additionally, we are pleased to report that we have
signed a three-year offtake agreement with Koch Fertilizer for all
of the excess ammonia the new El Dorado ammonia plant is expected
to produce, above that consumed by that plant for upgrade into
other products. We’ve worked hard to secure the financing that
should allow us to complete the project with little impact to our
timeline, and expect that even with the increased costs, the new
ammonia and nitric acid facilities will provide a solid return and
significant incremental cash flow.”
Mr. Greenwell continued, “Turning to our third quarter financial
performance, as we previously announced, the results for our
Chemical Business were negatively impacted by an unplanned outage
at our Pryor Facility. Sales levels at our El Dorado Facility
relative to the 2014 third quarter continued to reflect the April
2015 expiration of our contract with Orica for low density ammonium
nitrate while operating losses at the facility were the result of
lower fixed cost absorption on the reduced volume and the ongoing
cost disadvantage resulting from the use of purchased ammonia.
While the issues at both Pryor and El Dorado have constrained our
financial performance for several quarters, we now expect increased
reliability and more consistent production levels at Pryor in the
quarters to come. Pryor may continue to have periodic outages
through the end of 2016 as we continue the plant modernization and
critical maintenance activities, but with the upgrades completed
since 2013, and the remaining improvements we have planned, we
expect this facility to operate more consistently and profitably.
This is evidenced by the fact that Pryor ran at full operational
rates for the month of October. We are also pleased that our
Cherokee Facility is running at improved rates, with a 100%
on-stream rate in the third quarter and over 95% in the last three
quarters.”
“Our Climate Control Business posted modest sales growth in the
third quarter as a result of continued strong demand for our
hydronic fan coils, large custom air handlers and engineering and
construction services offset by a decline in sales of heat pumps
for residential applications as the impact that sustained low
natural gas prices has been having on demand for our residential
geothermal HVAC systems. We continue to implement our operational
excellence initiatives in this business, including managerial
enhancements, new product development and cost reductions aimed at
driving increased sales and profitability.”
Mr. Greenwell concluded, “During the third quarter, I assumed
the role of LSB’s Interim CEO while fellow Board member, Richard
Sanders, was appointed Interim Executive Vice President of Chemical
Manufacturing. I believe LSB is in the midst of an important and
pivotal transition period, during which we are diligently
positioning the Company for significantly enhanced long-term
growth. Working with the existing leadership team, both Richard and
I are committed to advancing the strategic growth initiatives that
the Company has had underway, while instilling a performance
oriented, accountable culture throughout the organization, and
pursuing the previously disclosed strategic alternatives for both
of our businesses. During the third quarter, our primary focus was
to accurately revise the capital expenditure projections for the El
Dorado project, increase the reliability and production consistency
of our facilities, and secure the financing necessary to complete
our El Dorado Expansion. We believe these three objectives have
been met. Over the longer-term, our goal is to deliver
significantly improved value to our shareholders, while providing
excellent service to our customers, and a safe, motivating
environment for our employees.”
Chemical Business Third Quarter 2015 Compared to Third
Quarter 2014:
Three Months Ended September 30, 2015 2014
Change (In millions) Net sales $ 80.6 $ 94.8 $ (14.2 ) Operating
loss $ (55.0 ) $ (5.6 ) $ (49.4 )
Segment EBITDA
$ (5.5 ) $ 2.2
$
(7.7
)
Comparison of 2015 period to 2014 period:
- Net sales decreased as a 25-day
turnaround followed by an unplanned outage at the Pryor Facility,
coupled with lower selling prices, reduced sales of agricultural
products. These factors were partially offset by higher on-stream
rates at the Cherokee Facility, which underwent a bi-annual
turnaround in the third quarter of 2014 without a turnaround in
2015. Sales of mining products declined due to the expiration of
our take-or-pay contract with Orica in April 2015, and overall
softening in the coal markets. A decrease in sales of industrial
products was the result of lower ammonia prices passed through to
contractual customers, partially offset by higher volumes.
- Operating loss and EBITDA were
negatively impacted by the lower on-stream production rates at the
Pryor Facility, which translated into lost sales and reduced
absorption of fixed overhead costs. The El Dorado Facility also
experienced lower fixed cost absorption as a result of the
decreased production and sales of low density ammonium nitrate
attributable to the aforementioned Orica contract. Also included in
operating loss was an impairment expense of $39.7 million to write
down the carrying value of our working interest in natural gas
properties. Excluding this item, adjusted operating loss was $15.3
million.
- The El Dorado Facility produces
agricultural grade AN, nitric acid and industrial grade AN from
purchased ammonia, which is currently at a cost disadvantage
compared to products produced from natural gas. This cost
disadvantage, along with the impact from the loss of Orica and
certain additional expenses related to the El Dorado Expansion
projects, resulted in an operating loss for the facility during the
2015 period of approximately $15.0 million compared to an operating
loss of approximately $6.6 million in third quarter 2014.
Three Months Ended September 30, 2015 2014
(Dollars in millions)
Sales by Market
Sector
Sales
SectorMix
Sales
SectorMix
%Change
Agricultural $ 29.2 36 % $ 34.1 36 % (14) % Industrial, mining and
other 51.4 64 % 60.7 64 % (15) % $ 80.6 $ 94.8 (15) %
The following tables provide key operating metrics for the
Agricultural products of our Chemical Business.
Three Months Ended September 30,
Product (tons
sold)
2015 2014 % Change Urea ammonium nitrate (UAN) 63,355
44,949 41 % Ammonium nitrate (AN) 16,165 24,411 (34 ) % Ammonia
15,976 24,699 (35 ) % Other 3,514 4,522 (22 ) %
99,010 98,581
-
%
Average Selling
Prices (price per ton)
UAN $ 206 $ 233 (12 ) % AN $ 323 $ 360 (10 ) % Ammonia $ 465 $ 480
(3 ) %
With respect to sales of Industrial, Mining and Other Chemical
Products, the following table indicates the volumes sold of our
major products.
Three Months Ended September 30,
Product (tons
sold)
2015 2014 % Change Nitric acid 144,290 139,801 3 %
LDAN/HDAN 11,746
12,735
(A)
(8 ) % AN solution 28,771 23,790 21 % Ammonia 11,272 11,360 (1 ) %
(A) Under the Orica contract that expired in April 2015, Orica
paid for 60,000 tons of ammonium nitrate in Q3 2014, but actual
tons sold to Orica for the quarter were 11,022.
Input
Costs
Average purchased ammonia cost/ton $ 445 $ 513
(13 ) % Average natural gas cost/MMbtu $ 3.19 $ 4.13 (23 ) %
Climate Control Business Third Quarter 2015 Compared to Third
Quarter 2014:
Three Months Ended September 30, 2015 2014
Change (In millions) Net sales $ 75.1 $ 73.5 $ 1.6 Operating income
$ 7.2 $ 8.4 $ (1.2 ) Segment EBITDA $ 8.4 $ 9.7 $ (1.3 )
Comparison of 2015 period to 2014 period:
- Net sales increased largely due to
higher sales of hydronic fan coils resulting from stronger incoming
orders in the first quarter, an increase in average unit price and
favorable product mix. Sales of other HVAC products also rose, with
higher sales of custom air handlers reflecting increased order
levels in 2014, and higher engineering and construction services
resulting from a project award received earlier in the year that is
expected to be completed in the fourth quarter of 2015, partially
offset by a decline in sales of modular chillers due to the push
out of customer requested delivery dates. Heat pump sales were
lower, predominantly for residential markets and, to a lesser
extent, commercial/institutional markets reflecting the loss of the
water source heat pump contract with Carrier. Excluding Carrier
sales, water source heat pump sales for the
commercial/institutional markets increased 3%.
- Operating income and EBITDA were lower
compared to the prior year period as a result of unfavorable
product mix towards commercial/institutional products, which carry
lower margins than residential products coupled with higher
variable selling expenses primarily relating to warranty and
freight costs.
- New orders for Climate Control products
were $65.1 million in the third quarter of 2015, down 12% compared
to the third quarter of 2014, and down 7% from the second quarter
of 2015. New orders from the commercial end-markets were down 10%
from the third quarter of 2014, while residential product new
orders declined 23%. Backlog of $71.2 million as of September 30,
2015 declined approximately 3% from third quarter 2014 levels and
was 5% lower than backlog at June 30, 2015. As of October 31, 2015,
backlog was $71.8 million.
Three Months Ended September 30,
2015 2014 (Dollars in millions)
Sales by Market
Sector
Sales
SectorMix
Sales
SectorMix
%
Change
Commercial/Institutional $ 66.4 88 % $ 61.5 84 % 8 % Residential
8.7 12 % 12.0 16 % (28 ) % $ 75.1 $ 73.5 2 %
Sales by Product
Category
Sales
Product
Mix
Sales
Product
Mix
%
Change
Heat pumps $ 42.0 56 % $ 46.5 63 % (10 ) % Fan coils 19.0 25 % 16.5
23 % 15 % Other HVAC 14.1 19 % 10.5 14 % 34 % $ 75.1
$ 73.5 2 %
Financial Position and Capital Additions
As of September 30, 2015, total cash and investments were $39.0
million, including short-term investments.
Total long-term debt was $496.4 million at September 30, 2015
compared to $457.3 million at December 31, 2014 and the borrowings
on our $100 million Working Capital Revolver Loan were $13.3
million (borrowing availability, which is tied in to eligible
accounts receivable and inventories, was $57.6 million at September
30, 2015). Interest expense, net of capitalized interest, for the
third quarter of 2015 was $0.9 million compared to $5.1 million for
the same period in 2014.
Capital additions were $139.7 million in the third quarter of
2015, including $128.6 million relating to the expansion projects
at the El Dorado Facility. Planned capital additions, in the
aggregate, are estimated to range from $280 million to $310
million, including $267 million to $291 million remaining for the
El Dorado Expansion projects. An estimated $70 million to $75
million of the capital additions needed to complete the El Dorado
Expansion projects will occur in 2016.
Fourth Quarter 2015 Chemical Business Sales Volume
Outlook
The Company’s outlook for sales volume for the fourth quarter of
2015 in its Chemical Business is as follows:
Products
Sales
(tons)
Agriculture: UAN 100,000 – 110,000 HDAN
25,000 – 30,000 Ammonia 25,000 – 30,000
Industrial, Mining and Other: Nitric
acid 130,000 – 140,000 LDAN/HDAN 15,000 – 20,000 AN
solution 20,000 – 25,000 Ammonia 5,000 – 10,000
El Dorado Facility Expansion Update
Over the course of September and October, management in
conjunction with the owner’s representative, the engineering,
procurement and construction contractor and other consultants
determined that the total cost to complete the El Dorado Expansion
projects will exceed what we previously projected, due, in part, to
mechanical and piping labor cost increases compared to earlier
estimates. We have now determined that the total cost to complete
the El Dorado Expansion projects is estimated to be in the range of
$831 million to $855 million ($564 million spent as of September
30, 2015 and $197 million to $216 million to be spent in the fourth
quarter of 2015 and between $70 million to $75 million to be spent
in 2016).
It is expected that the new ammonia plant will be mechanically
complete by early February 2016 and should begin production early
in the second quarter of 2016. As it relates to the new nitric acid
plant and concentrator, the concentrator went into production in
June 2015 and the nitric acid plant is expected to be in production
beginning the week of November 9th.
New Financing to Complete El Dorado Project
On November 6, 2015, the Company executed a commitment for
financing for the purpose of completing its El Dorado Expansion
project. The commitment is from Security Benefit Corporation and
one or more of its affiliates (“Investor”) and provides for $260
million of capital in the form of debt and equity. The details are
as follows:
- $50 million in Senior Secured Notes
issued at par with a 12% annual interest rate, subject to certain
adjustments, maturity of August 2019, callable by the Company
beginning August 2016 at 106%, August 2017 at 103% after August
2018 at par.
- $210 million in cumulative redeemable
nonconvertible perpetual non-voting preferred stock (“Preferred
Stock”) with a 14% annual dividend rate and an economic
participation right equal to 2% of the outstanding common stock
before the transaction; Company will be entitled to redeem the
Preferred Stock at any time without premium or penalty at the
liquidation preference plus accrued and unpaid dividends plus the
value of the participating right .The Investor will have the option
to redeem the Preferred Stock beginning one day after the maturity
date of the Company’s existing Senior Secured Notes.
- Warrants to purchase 17.99% of the
Company with an exercise price of $0.01 per warrant and a ten year
term.
- Voting rights equal to 19.99% of the
outstanding common stock before the transaction.
- The right to appoint three nominees to
the Company’s Board as replacements for three existing independent
directors effective at the closing of the Preferred Stock.
- The Company will pay a commitment fee
of 2% on the full amount of the committed financing and a funding
fee of 2% upon issuance of each of the Senior Secured Notes and the
Preferred Stock.
- The Company will pay a fee of 3% of the
Preferred Stock commitment in the event that the Preferred Stock
and Warrants are not issued as a result of the Company obtaining
financing from a different entity or if the Preferred Stock and
Warrants are not issued as a result of the Company’s failure to
satisfy conditions precedent that are solely within its
control.
Timing and Conditions of Financing
- We expect to close the Senior Secured
Notes over the next few days. We expect to close the rest of the
financing prior to December 31st, subject to definitive agreements
and Hart-Scott-Rodino Act approval, if required.
Conference Call
LSB’s management will host a conference call covering the third
quarter results on Friday, November 6, 2015 at 10:00 am ET/9:00 am
CT to discuss these results and recent corporate developments.
Participating in the call will be Interim CEO, Dan Greenwell and
Executive Vice President and CFO, Mark Behrman. Interested parties
may participate in the call by dialing (201) 493-6739. 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 Investor Info tab.
To listen to a webcast of the call, please go to the Company’s
website at www.lsbindustries.com at least 15 minutes before the
conference call to download and install any necessary audio
software. The conference call webcast will be archived on the
Company’s website. LSB suggests that listeners use Microsoft
Explorer as their web browser.
LSB Industries, Inc.
LSB is a manufacturing and marketing company. LSB’s principal
business activities consist of the manufacture and sale of chemical
products for the agricultural, mining and industrial markets; and,
the manufacture and sale of commercial and residential climate
control products, such as water source and geothermal heat pumps,
hydronic fan coils, modular geothermal and other chillers and large
custom air handlers.
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Act of
1995. These forward-looking statements generally are identifiable
by use of the words “believe,” “expects,” “intends,” “plans to,”
“estimates,” “projects” or similar expressions, and include but not
limited to, our expectation that the closing of the sale of the
Senior Secured Notes, Preferred Stock and Warrants will occur;
belief that the following objectives have been met: accurately
revise the capital expenditure projections for the El Dorado
project, increase in the reliability and production consistency of
our facilities, and securing the financing necessary to complete
our El Dorado Expansion; outlook for commercial and residential
construction; planned capital additions for balance of 2015; cost
of El Dorado facility expansion and timing of completion and;
funding of capital expenditures and cash needs.
Investors are cautioned that such forward-looking statements are
not guarantees of future performance and involve risk and
uncertainties, and that actual results may differ materially from
the forward-looking statements as a result of various factors,
including, but not limited to, general economic conditions; weather
conditions; lack of growth in the commercial and residential
construction industry; acceptance by the market of our geothermal
heat pump products; acceptance of our technology; increased
competitive pressures, domestically and foreign; price increases
for raw materials; loss of significant customer; changes to federal
legislation or adverse regulations; available working capital;
ability to install necessary equipment and renovations at the El
Dorado Facility and the Pryor Facility in a timely manner; receipt
in a timely manner of production equipment; problems with
production equipment; and other factors set forth under “Risk
Factors” and “A Special Note Regarding Forward-Looking Statements”
in the Form 10-K for year ended December 31, 2014 and if
applicable, our Quarterly Reports on Form 10-Q and our Current
Reports on Form 8-K, which contain a discussion of a variety of
factors which could cause the future outcome to differ materially
from the forward-looking statements contained in this release. The
closings of the sale of Senior Secured Notes, Preferred Stock and
Warrants are subject to satisfaction of certain conditions,
including conditions that may be out of LSB’s control.
See Accompanying Tables
LSB Industries, Inc.
Financial Highlights
Three Months and Nine Months Ended
September 30,
Three Months Nine
Months 2015 2014 2015 2014 (In Thousands, Except Per
Share Amounts) Net sales $ 157,685 $ 171,046 $ 534,202 $
551,233 Cost of sales 144,406 146,660 443,682 429,256 Gross profit
13,279 24,386 90,520 121,977 Selling, general and
administrative expense 29,382 25,208 89,598 77,364 Provision for
(recovery of) losses on accounts receivable
(161)
70
352
(86)
Impairment of natural gas properties 39,670 - 39,670 - Property
insurance recoveries in excess of losses incurred - - - (5,147)
Other expense (income), net (725) 305 (996) 1,418 Operating income
(loss) (54,887) (1,197) (38,104) 48,428 Interest expense,
net 877 5,079 6,505 17,458 Non-operating other income, net (23)
(89) (107) (242) Income (loss) from continuing operations before
provision (benefit) for income taxes and equity in earnings of
affiliate (55,741) (6,187) (44,502) 31,212 Provision (benefit) for
income taxes (21,982) (2,415) (17,842) 12,286 Equity in earnings of
affiliate - - - (79) Income (loss) from continuing operations
(33,759) (3,772) (26,660) 19,005 Net loss from discontinued
operations 4 5 37 28 Net income (loss) (33,763) (3,777) (26,697)
18,977 Dividends on preferred stocks - - 300 300 Net income
(loss) applicable to common stock $ (33,763) $ (3,777) $ (26,997) $
18,677 Weighted-average common shares: Basic 22,799 22,596
22,741 22,558 Diluted 22,799 22,596 22,741 23,662
Income (loss) per common share: Basic $ (1.48) $ (0.17) $ (1.19) $
0.83 Diluted $ (1.48) $ (0.17) $ (1.19) $ 0.80
LSB Industries, Inc.
Financial Highlights
Three Months and Nine Months Ended
September 30,
Three Months Nine
Months 2015 2014 2015 2014 (In Thousands) Net sales:
Chemical $ 80,623 $ 94,767 $ 320,205 $ 345,744 Climate Control
75,050 73,485 207,090 196,585 Other 2,012 2,794 6,907 8,904 $
157,685 $ 171,046 $ 534,202 $ 551,233 Gross profit (loss): (1)
Chemical (2) $ (10,456) $ (521) $ 25,001 $ 57,161 Climate Control
22,978 23,862 63,021 61,628 Other 757 1,045 2,498 3,188 $ 13,279 $
24,386 $ 90,520 $ 121,977 Operating income (loss): (1) Chemical
(2)(3) $ (55,046) $ (5,587) $ (31,546) $ 46,815 Climate Control
7,163 8,452 15,479 17,396 Other 169 397 745 1,298 General corporate
expenses (4) (7,173) (4,459) (22,782) (17,081) (54,887) (1,197)
(38,104) 48,428 Interest expense, net (5) 877 5,079 6,505 17,458
Non-operating income, net: Chemical (16) (73) (77) (213) Climate
Control - - (4) - Corporate and other business operations (7) (16)
(26) (29) Provision (benefit) for income taxes (21,982) (2,415)
(17,842) 12,286 Equity in earnings of affiliate - Climate Control -
- - (79) Income (loss) from continuing operations $ (33,759) $
(3,772) $ (26,660) $ 19,005
(1) Gross profit (loss) by business segment represents net sales
less cost of sales. Gross profit classified as “Other” relates to
the sales of industrial machinery and related components. Operating
income (loss) by business segment represents gross profit (loss) by
business segment less selling, general and administrative expense
(“SG&A”) incurred by each business segment plus other income
and other expense earned/incurred by each business segment before
general corporate expenses.
(2) During the third quarter of 2015, a Turnaround was performed
at our Pryor Facility. Following the completion of a Turnaround at
our Pryor Facility we experienced unplanned downtime while
restarting the plant that negatively impacted production, sales and
operating results. During the first quarter of 2014, we recognized
business interruption and property insurance recoveries totaling
$28.0 million, of which approximately $22.9 million was recognized
as a reduction to cost of sales. During the third quarter of 2014,
a Turnaround was performed at our Cherokee Facility, which
negatively impacted production, sales and operating results.
LSB Industries, Inc.
Financial Highlights
Three Months and Nine Months Ended
September 30,
(3) During the third quarter of 2015, our
Chemical Business recognized an impairment charge of$39.7 million
relating to our working interest in natural gas properties.
(4) General corporate expenses consist of
the following:
Three Months Ended
Nine Months Ended September 30, September 30, 2015
2014 2015 2014 (In Thousands) Selling, general and
administrative: Personnel costs $ (4,428) $ (2,134) $ (11,118) $
(6,478) Fees and expenses relating to shareholders (A) (113) (230)
(4,447) (4,692) Professional fees (1,556) (1,185) (4,387) (3,333)
All other (1,058) (915) (2,829) (2,633) Total selling, general and
administrative (7,155) (4,464) (22,781) (17,136) Other income 4 19
73 69 Other expense (22) (14) (74) (14) Total general corporate
expenses $ (7,173) $ (4,459) $ (22,782) $ (17,081)
(A) These fees and expenses include costs
associated with evaluating and analyzing proposals received from
certain activist shareholders and dealing, negotiating and settling
with those shareholders in order to avoid proxy contests.
(5) During the three and nine months ended September 30, 2015,
interest expense is net of capitalized interest of $8.3 million and
$20.9 million, respectively. During the three and nine months ended
September 30, 2014, interest expense is net of capitalized interest
of $3.9 million and $9.2 million, respectively.
LSB Industries, Inc.
Consolidated Balance Sheets
September 30,
December 31, 2015 2014 (In Thousands)
Assets Current assets:
Cash and cash equivalents $ 23,958 $ 186,811 Restricted cash - 365
Short-term investments 15,000 14,500 Accounts receivable, net
90,064 88,074 Inventories: Finished goods 24,170 28,218 Work in
progress 2,743 2,763 Raw materials 26,782 25,605 Total inventories
53,695 56,586 Supplies, prepaid items and other: Prepaid insurance
2,611 13,752 Precious metals 14,398 12,838 Supplies 17,220 15,927
Prepaid and refundable income taxes 8,709 7,387 Other 4,175 5,438
Total supplies, prepaid items and other 47,113 55,342 Deferred
income taxes 20,385 17,204 Total current assets 250,215 418,882
Property, plant and equipment, net 874,575 619,205
Other assets: Noncurrent restricted cash and cash equivalents -
45,969 Noncurrent restricted investments - 25,000 Intangible and
other, net 32,204 27,949 Total other assets 32,204 98,918 $
1,156,994 $ 1,137,005
(Continued on following page)
LSB Industries, Inc.
Consolidated Balance Sheets
(continued)
September 30,
December 31, 2015 2014 (In Thousands)
Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $
$
110,950 $ 81,456 Short-term financing 1,204 11,955 Accrued and
other liabilities 46,317 51,166 Current portion of long-term debt
23,849 10,680 Total current liabilities 182,320 155,257
Long-term debt 472,599 446,638 Noncurrent accrued and other
liabilities 17,863 17,934 Deferred income taxes 73,182
83,128 Commitments and contingencies Stockholders'
equity: Series B 12% cumulative, convertible preferred stock, $100
par value; 20,000 shares issued and outstanding 2,000 2,000 Series
D 6% cumulative, convertible Class C preferred stock, no par value;
1,000,000 shares issued and outstanding 1,000 1,000 Common stock,
$.10 par value; 75,000,000 shares authorized, 27,131,724 shares
issued (26,968,212 at December 31, 2014) 2,713 2,697 Capital in
excess of par value 174,500 170,537 Retained earnings 259,191
286,188 439,404 462,422 Less treasury stock, at cost: Common stock,
4,320,462 shares 28,374 28,374 Total stockholders' equity 411,030
434,048
$
1,156,994 $ 1,137,005
LSB Industries, Inc.Non-GAAP
Reconciliation
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 Reconciliations
EBITDA is defined as net income plus interest expense,
depreciation, and depletion of property plant and equipment,
amortization of other assets, less interest included in
amortization, impairment on natural gas properties, plus provision
for income taxes plus loss from discontinued operations. 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. EBITDA has 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 may not be comparable to a similarly titled measure of other
companies. The following table provides a reconciliation of net
income (loss) or operating income (loss) to EBITDA for the periods
indicated.
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2015 2014 2015 2014 ($ in millions)
LSB
Consolidated
Net income (loss) $ (33.8) $ (3.8) $
(26.7) $ 19.0 Plus: Interest expense 0.9 5.1 6.5 17.5
Depreciation and amortization 11.3 9.2 31.1 26.6 Impairment on
natural gas properties 39.7 - 39.7 - Provision (benefit) for income
taxes (22.0) (2.4) (17.8) 12.3
EBITDA
$ (3.8) $ 8.1 $ 32.8 $ 75.4
Climate Control
Business
Operating income $ 7.2 $ 8.5 $ 15.5
$ 17.4 Plus: Equity in earnings - - - 0.1 Depreciation and
amortization 1.2 1.2 3.6 3.5
EBITDA $ 8.4 $
9.7 $ 19.1 $ 21.0
Chemical
Business
Operating income (loss) $ (55.0) $ (5.6) $
(31.5) $ 46.8 Plus: Non-operating income - 0.1 0.1 0.2
Depreciation and amortization 9.8 7.7 26.6 22.6 Impairment on
natural gas properties 39.7 - 39.7 -
EBITDA $ (5.5)
$ 2.2 $ 34.9 $ 69.6
LSB Industries, Inc.Non-GAAP
Reconciliation (continued)
Adjusted Operating Income (Loss),
EBITDA, Net Income (Loss) Applicable to Common Stock and Diluted
Earnings per Share
Adjusted operating income (loss), adjusted EBITDA, adjusted net
income (loss) applicable to common stock and adjusted income (loss)
per diluted share are reported to show the impact of the impairment
on natural gas properties and non-recurring general corporate
expense related to severance costs. We believe that the inclusion
of supplementary adjustments to operating income, EBITDA, net
income applicable to common stock and diluted income per common
share, are appropriate to provide additional information to
investors about certain unusual items. The following tables provide
reconciliations of operating income, EBITDA, net income applicable
to common stock and diluted income per common share excluding the
impairment expense and severance costs.
Three Months Ended
September 30,
2015 2014 ($ in millions)
LSB
Consolidated
Operating loss $ (54.9) $
(1.2) Less: Impairment on natural gas properties
(39.7) - Severance costs (2.2) -
Adjusted operating loss
$ (13.0) $ (1.2)
EBITDA $ (3.8) $ 8.1 Less:
Severance costs (2.2) -
Adjusted EBITDA $
(1.6) $ 8.1 Net loss
applicable to common stock $ (33.8) $
(3.8) Less: Impairment on natural gas properties (net of
tax) (24.2) - Severance costs (net of tax) (1.3) -
Adjusted net
loss applicable to common stock $ (8.3) $
(3.8) Weighted-average common shares (in thousands)
22,799 22,596
Adjusted loss per diluted share
$
(0.36)
$
(0.17)
Chemical
Business
Operating loss
$
(55.0)
$
(5.6)
Less:
Impairment on natural gas properties
(39.7)
-
Adjusted operating loss
$
(15.3)
$
(5.6)
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151106005280/en/
Company:LSB Industries, Inc.Mark Behrman,
405-235-4546Chief Financial OfficerorInvestor Relations:The
Equity Group Inc.Fred Buonocore, 212-836-9607orLinda Latman,
212-836-9609
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