LSB Industries Inc (LXU, Financial) filed Quarterly Report for the period ended 2010-09-30.
Lsb Industries Inc has a market cap of $489.5 million; its shares were traded at around $23.28 with a P/E ratio of 42.9 and P/S ratio of 0.9. 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.
Our order backlog was $54.8 million at September 30, 2010 as compared to $48.2 million at June 30, 2010, $36.0 million at March 31, 2010, $32.2 million at December 31, 2009 and $39.4 million at September 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. For October 2010, our new orders received were approximately $19.4 million and our backlog was approximately $53.5 million at October 31, 2010.
Cash used for capital expenditures during the first nine months of 2010 was $26.1 million, including $1.7 million primarily for production equipment and other upgrades for additional capacity in our Climate Control Business and $24.1 million for our Chemical Business, primarily for process and reliability improvements of our operating facilities, including $12.7 million associated with the Pryor Facility, which includes replacing PP&E damaged by the fire. In addition, approximately $0.5 million is associated with maintaining compliance with environmental laws, regulations and guidelines. These capital expenditures were primarily funded from working capital and a portion of the payments received associated with our property insurance claims. In addition, one of our Climate Control Business subsidiaries exercised its option, pursuant to the terms of the underlying operating lease, to purchase its production facility for approximately $4.9 million, which was financed by a third party.
At September 30, 2010, we had committed capital expenditures of approximately $6.2 million for the remainder of 2010. The committed expenditures included $5.1 million for process and reliability improvements in our Chemical Business, including $2.0 million relating to the Pryor Facility and approximately $0.1 million to maintain compliance with environmental laws, regulations and guidelines. In addition, our commitments included $0.8 million primarily for facility upgrades and $0.3 million for 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.
Cherokee Facility – As previously reported, in February 2009, a small nitric acid plant located at the Cherokee Facility suffered damage due to a fire. Our property insurance policy provided for replacement cost coverage relating to property damage with a $1,000,000 property loss deductible. Because our replacement cost claim for property damages exceeded our property loss deductible and the net book value of the damaged property, we did not recognize a loss relating to property damage at the time of the fire but we recorded a property insurance claim receivable relating to this event. During the first nine months of 2010, our insurance claim receivable decreased by a net $1,175,000. The activity during the nine months of 2010 included the receipt of approximately $1,561,000 ($1,387,000 relates to property, plant and equipment (“PP&E”)) from our insurance carrier as a partial payment on our insurance claim, of which $1,347,000 was applied against our insurance claim receivable and the remaining balance of $214,000 (all of which relates to PP&E) was classified as other income. In addition, the activity included $172,000 relating to payables (approved by our insurance carrier) to unrelated third parties. As a result, there was no insurance claim receivable balance relating to this event at September 30, 2010. We used approximately $849,000 of the insurance proceeds to pay down the Secured Term Loan. Our property insurance carrier is considering our remaining property damage claims. Any additional insurance proceeds represent a gain contingency and will be recognized if, and when, realized or realizable and earned. There is no business interruption claim associated with this event.
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, resulting in the cessation of operations at this center, which is located in Bryan, Texas. Our general liability insurance policy provided for coverage against third party damages with a $250,000 loss deductible. Our property insurance policy provided 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 September 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 managing, processing and paying directly the third party general liability claims associated with this event. Because our replacement cost claim for property damages exceeded 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. 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 nine months of 2010, our insurance claim receivable decreased by a net $35,000. The activity during the nine months of 2010 included the receipt of additional payments totaling $1,315,000 ($564,000 related to PP&E) from our insurance carrier, of which $444,000 was applied against our insurance claim receivable and the remaining balance of $871,000 ($853,000 related to PP&E) was classified as other income. In addition, the activity included $409,000 relating to payables (approved by our insurance carrier) to unrelated third parties and to our insurance carrier associated with the general liability deductible. As a result, there was no insurance claim receivable balance relating to this event at September 30, 2010. Based on our current analysis, we do not have any remaining insurance claims associated with our property damage coverage or any insurance claims associated with our business interruption coverage relating to this event.
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Lsb Industries Inc has a market cap of $489.5 million; its shares were traded at around $23.28 with a P/E ratio of 42.9 and P/S ratio of 0.9. 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 third quarter of 2010 were $138.9 million compared to $127.8 million for the same period in 2009. The sales increase of approximately $11.1 million includes an increase of $12.9 million in our Chemical Business partially offset by a decrease of $2.9 million in our Climate Control Business. The increase in our Chemical Business sales was primarily a result of improved customer demand for mining products and an increase of selling prices of all products partially driven by higher raw material input costs. Although our Climate Control Business sales were $2.9 million lower for the third quarter of 2010, our order backlog increased by $6.6 million during the quarter compared to a decline of $10.1 million in the backlog during the third quarter of 2009.Our order backlog was $54.8 million at September 30, 2010 as compared to $48.2 million at June 30, 2010, $36.0 million at March 31, 2010, $32.2 million at December 31, 2009 and $39.4 million at September 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. For October 2010, our new orders received were approximately $19.4 million and our backlog was approximately $53.5 million at October 31, 2010.
Cash used for capital expenditures during the first nine months of 2010 was $26.1 million, including $1.7 million primarily for production equipment and other upgrades for additional capacity in our Climate Control Business and $24.1 million for our Chemical Business, primarily for process and reliability improvements of our operating facilities, including $12.7 million associated with the Pryor Facility, which includes replacing PP&E damaged by the fire. In addition, approximately $0.5 million is associated with maintaining compliance with environmental laws, regulations and guidelines. These capital expenditures were primarily funded from working capital and a portion of the payments received associated with our property insurance claims. In addition, one of our Climate Control Business subsidiaries exercised its option, pursuant to the terms of the underlying operating lease, to purchase its production facility for approximately $4.9 million, which was financed by a third party.
At September 30, 2010, we had committed capital expenditures of approximately $6.2 million for the remainder of 2010. The committed expenditures included $5.1 million for process and reliability improvements in our Chemical Business, including $2.0 million relating to the Pryor Facility and approximately $0.1 million to maintain compliance with environmental laws, regulations and guidelines. In addition, our commitments included $0.8 million primarily for facility upgrades and $0.3 million for 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.
Cherokee Facility – As previously reported, in February 2009, a small nitric acid plant located at the Cherokee Facility suffered damage due to a fire. Our property insurance policy provided for replacement cost coverage relating to property damage with a $1,000,000 property loss deductible. Because our replacement cost claim for property damages exceeded our property loss deductible and the net book value of the damaged property, we did not recognize a loss relating to property damage at the time of the fire but we recorded a property insurance claim receivable relating to this event. During the first nine months of 2010, our insurance claim receivable decreased by a net $1,175,000. The activity during the nine months of 2010 included the receipt of approximately $1,561,000 ($1,387,000 relates to property, plant and equipment (“PP&E”)) from our insurance carrier as a partial payment on our insurance claim, of which $1,347,000 was applied against our insurance claim receivable and the remaining balance of $214,000 (all of which relates to PP&E) was classified as other income. In addition, the activity included $172,000 relating to payables (approved by our insurance carrier) to unrelated third parties. As a result, there was no insurance claim receivable balance relating to this event at September 30, 2010. We used approximately $849,000 of the insurance proceeds to pay down the Secured Term Loan. Our property insurance carrier is considering our remaining property damage claims. Any additional insurance proceeds represent a gain contingency and will be recognized if, and when, realized or realizable and earned. There is no business interruption claim associated with this event.
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, resulting in the cessation of operations at this center, which is located in Bryan, Texas. Our general liability insurance policy provided for coverage against third party damages with a $250,000 loss deductible. Our property insurance policy provided 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 September 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 managing, processing and paying directly the third party general liability claims associated with this event. Because our replacement cost claim for property damages exceeded 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. 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 nine months of 2010, our insurance claim receivable decreased by a net $35,000. The activity during the nine months of 2010 included the receipt of additional payments totaling $1,315,000 ($564,000 related to PP&E) from our insurance carrier, of which $444,000 was applied against our insurance claim receivable and the remaining balance of $871,000 ($853,000 related to PP&E) was classified as other income. In addition, the activity included $409,000 relating to payables (approved by our insurance carrier) to unrelated third parties and to our insurance carrier associated with the general liability deductible. As a result, there was no insurance claim receivable balance relating to this event at September 30, 2010. Based on our current analysis, we do not have any remaining insurance claims associated with our property damage coverage or any insurance claims associated with our business interruption coverage relating to this event.
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