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LSB Industries, Inc. Reports Results For The 2011 Third Quarter And Expects Strong Fourth Quarter

Stocks in this article: LXU

LSB Industries, Inc. (NYSE: LXU) announced today results for the third quarter ended September 30, 2011.

Third Quarter 2011 Financial Highlights Compared to Third Quarter 2010:

  • Sales were $176.8 million, a 27% increase from $138.9 million;
  • Operating income was $12.5 million compared to $8.5 million, an increase of $4.0 million;
  • Net income and net income applicable to common shareholders were $6.3 million compared to $3.8 million; and
  • Diluted earnings per common share were $0.27 compared to $0.17.

Discussion of Third Quarter of 2011:

Our third quarter results historically are lower than the other three quarters of the year due to planned maintenance events (“Turnarounds”) in our Chemical Business, which are scheduled during the third quarter when we are between our major fertilizer sales seasons. As such, the Chemical Business third quarter 2011 production, sales and profitability were much lower than in the first two quarters of 2011 due to seasonality and extensive maintenance downtime for planned Turnarounds performed at most of our plants, as well as unplanned maintenance in July and August. The downtime primarily affected production of ammonia and urea ammonium nitrate (“UAN”) fertilizer products, thereby reducing fixed overhead absorption and limiting sales volume. During September and October, production was back to normal and customer demand for ammonia and UAN continues to be strong .

The $37.9 million increase in consolidated sales includes a $30.2 million or 42% increase in Chemical Business sales and a $7.3 million or 11% increase in Climate Control Business sales. The Chemical Business sales include sales from the Pryor Facility to unrelated parties of $10.5 million compared to $1.8 million for the third quarter of 2010.

The $4.0 million increase in consolidated operating income includes a $5.9 million net increase by the Chemical Business and a $1.4 million decrease by the Climate Control Business.

  • Although the increase in the Chemical Business operating income reflects higher overall selling prices and volumes across all major product lines, the increase was primarily a result of greater sales volumes and margins on UAN produced at the Cherokee and Pryor facilities.
  • The decrease in the Climate Control Business operating income was primarily due to higher material costs, change in product mix, and an increase in selling expenses.

First Nine Months 2011 Financial Highlights Compared to First Nine Months 2010:

  • Sales were $589.9 million, a $152.1 million or 35% increase from $437.8 million;
  • Operating income was $94.8 million compared to $25.7 million;
  • Net income was $55.9 million compared to $11.5 million;
  • Net income applicable to common shareholders increased to $55.5 million from $11.2 million; and
  • Diluted earnings per common share were $2.39 compared to $0.52.

Through the first nine months of 2011, the $152.1 million increase in sales included a $116.0 million or 46% increase in Chemical Business sales and a $34.6 million or 19% increase for the Climate Control Business. The increase in consolidated operating income was the result of increases in the Chemical and Climate Control Businesses operating income of $66.6 million and $3.7 million, respectively, partially offset by increases in general corporate expense and other business operations, net of $1.2 million.

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