LSB Industries Inc Reports Operating Results (10-Q)
Lsb Industries Inc has a market cap of $327.5 million; its shares were traded at around $15.42 with a P/E ratio of 24.2 and P/S ratio of 0.6. Lsb Industries Inc had an annual average earning growth of 15.7% over the past 10 years.LXU is in the portfolios of Michael Price of MFP Investors LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:Our consolidated net sales for the second quarter of 2010 were $168.4 million compared to $138.6 million for the same period in 2009. The sales increase of $29.8 million includes an increase of $36.5 million in our Chemical Business partially offset by a decrease of $7.2 million in our Climate Control Business. The increase in our Chemical Business sales was primarily a result of improved customer demand for agricultural and industrial products and an increase of selling prices partially driven by higher raw material input costs. The decrease in our Climate Control Business sales is due primarily to a lower beginning backlog of customer product orders due to the economic downturn.
Our consolidated operating income was $12.8 million for the second quarter of 2010 compared to $14.5 million for the same period in 2009. The decrease in operating income of $1.7 million included a $5.2 million decrease in our Climate Control Business operating income partially offset by an increase of $3.0 million in our Chemical Business. Our general corporate expense and other business operations net expenses decreased $0.5 million.
For the second quarter of 2010, the product order intake level was $71.7 million as compared to $54.7 million for the same period in 2009 and compared to $54.2 million for the first quarter of 2010 and $48.5 million for the fourth quarter of 2009. Product orders for residential and commercial products increased 48% and 26%, respectively, as compared to the same period in 2009. Our product order level consists of confirmed purchase orders from customers that have been accepted and received credit approval.
Our order backlog was $48.2 million at June 30, 2010 as compared to $36.0 million at March 31, 2010, $32.2 million at December 31, 2009 and $49.5 at June 30, 2009. The backlog consists of confirmed customer orders for product to be shipped at a future date. Historically, we have not experienced significant cancellations relating to our backlog of confirmed customer product orders, and we expect to ship substantially all of these orders within the next twelve months; however, due to the current economic conditions in the markets we serve, it is possible that some of our customers could cancel a portion of our backlog or extend the shipment terms beyond
At June 30, 2010, we had committed capital expenditures of approximately $8.4 million for the remainder of 2010, excluding costs to rebuild the ammonia reformer at our Pryor Facility as discussed below. The committed expenditures included $7.8 million for process and reliability improvements in our Chemical Business, including $1.5 million relating to the Pryor Facility and approximately $0.2 million to maintain compliance with environmental laws, regulations and guidelines. In addition, our commitments included $0.6 million primarily for 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.
Bryan Distribution Center - As previously reported, in July 2009, one of our fifteen agricultural distribution centers operated by our Chemical Business was destroyed by fire, which is located in Bryan, Texas (“Bryan Center”). Our general liability insurance policy provides for coverage with a $250,000 loss deductible. Our property insurance policy provides for replacement cost coverage relating to property damage and for business interruption coverage for certain lost profits and extra expense with a total $100,000 loss deductible for both coverages. As of June 30, 2010, the third party general liability claims have exceeded our $250,000 deductible. We have recognized the $250,000 general liability deductible and the insurance company has been paying directly most of the third party general liability claims. Because our replacement cost claim for property damages exceeds our property loss deductible and the net book value of the damaged property, we did not recognize a loss relating to property damage from this fire but rather we recorded an insurance claim receivable relating to this event. A recovery, if any, from our business interruption coverage has not been recognized. During the fourth quarter of 2009, we received $545,000 from our insurance carrier as a partial payment on our insurance claim, which amount was applied against our insurance claim receivable. During the first six months of 2010, our insurance claim receivable decreased by a net $31,000. The activity during the six months of 2010 included the receipt of additional partial payments totaling $1,039,000 ($649,000 relates to PP&E) from our insurance carrier, of which $300,000 was applied against our insurance claim receivable and the remaining balance of $739,000 ($495,000 relates to PP&E) was classified as other income. In addition, the activity included payments of $148,000 relating to payables (approved by our insurance carrier) to unrelated third parties and payments of $121,000 to our insurance carrier associated with the general liability deductible. As a result, the balance of the insurance claim receivable relating to this event was $4,000 at June 30, 2010.
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