LSB Industries Inc (LXU) filed Quarterly Report for the period ended 2009-09-30.
LSB Industries Inc. is a diversified holding company which is engagedthrough its subsidiaries in the manufacture and sale of chemical products for the explosives agricultural and industrial acids markets; the manufacture and sale of a broad range of hydronic fan coils and water source heat pumps as well as other products used in commercial and residential air conditioning systems; and the manufacture or purchase and sale of certain automotive and industrial products including automotive bearings and other automotive replacement parts. Lsb Industries Inc has a market cap of $257.6 million; its shares were traded at around $11.99 with a P/E ratio of 8.2 and P/S ratio of 0.4. Lsb Industries Inc had an annual average earning growth of 62.7% over the past 5 years.
Highlight of Business Operations:
Net sales for the third quarter of 2009 were $127.8 million compared to $210.9 million for the 2008 third quarter. The sales decrease of $83.1 million includes a decrease of $15.9 million in our Climate Control Business and a decrease of approximately $64.8 million in our Chemical Business. The Climate Control decrease is due primarily to lower customer orders received. The Chemical Business decrease is primarily due to steep declines in our raw material costs resulting in lower selling prices.
For the third quarter of 2009, our operating income was $4.3 million compared to $8.7 million for the same period in 2008. The decrease in operating income of $4.4 million was primarily the result of the $5.2 million decrease in our Chemical Business operating results including the following variances from 2008:
Net income was $1.1 million for the third quarter of 2009 compared to $4.2 million for the same period of 2008. The net decrease of $3.1 million includes, among other items, the variances relating to the Chemical Business of $5.2 million discussed above partially offset by an increase in Climate Control s operating income and changes in our provision for income taxes. However, our resulting effective income tax rate for the third quarter of 2009 was approximately 55%, which includes an additional provision relating to the adjustments reconciling the 2008 federal income tax return to the 2008 estimated tax provision and the impact of other taxable income limitations on the domestic manufacturer s deduction.
Orders received for all Climate Control products in the third quarter of 2009 were $49.1 million compared to $101.0 million in the third quarter of 2008 and compared to $54.7 million for the second quarter of 2009. Our backlog was $68.5 million at December 31, 2008, $49.5 million at June 30, 2009 and $39.4 million at September 30, 2009. The backlog consists of confirmed customer purchase orders for product to be shipped at a future date. We expect to ship substantially all of the orders in our backlog within the next twelve months. Through the fourth quarter and beyond, the potential sales level remains uncertain. For October 2009, our new orders received were approximately $18.8 million and our backlog was approximately $40.2 million at October 31, 2009.
Cash used for capital expenditures during the first nine months of 2009 was $22.2 million, including $3.2 million primarily for production equipment, and other upgrades for additional capacity in our Climate Control Business, and $18.6 million for our Chemical Business, primarily for process and reliability improvements of our operating facilities, including $6.6 million associated with the Pryor Facility. These capital expenditures were primarily funded from working capital and from secured financing totaling $8.6 million obtained by refinancing certain existing assets.
At September 30, 2009, we had committed capital expenditures of approximately $7.2 million for the remainder of 2009. The expenditures included $5.3 million for process and reliability improvements in our Chemical Business, including $2.2 million relating to the Pryor Facility (see discussion below regarding our expected costs to complete the activation of the Pryor Facility). In addition, our commitments included $1.9 million primarily for facilities expansion and upgrades and production equipment in our Climate Control Business. We plan to fund these expenditures from working capital, which may include utilizing our Working Capital Revolver Loan, and financing arrangements.
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