LSB Industries Inc (LXU, Financial) filed Annual Report for the period ended 2011-12-31.
Lsb Inds Inc has a market cap of $794.9 million; its shares were traded at around $36.24 with a P/E ratio of 11.2 and P/S ratio of 1.3. Lsb Inds Inc had an annual average earning growth of 19.5% over the past 10 years.
Our Chemical Business sales for 2011 were $511.9 million, an increase of $160.8 million. Sales increased across all product lines due to both increased pricing and volume. Agricultural sales for 2011 were $231.6 million compared to $135.6 million for 2010. The increase of $96.0 million or 71% was primarily due to a substantial increase in sales volume of UAN as a result of additional volume resulting from the Pryor Facilitys first full year of production supported by strong demand and higher sales prices.
Sales of industrial acids and other products for 2011 were $161.8 million compared to approximately $126.9 million for 2010. Also sales of mining products for 2011 were $118.5 million compared to $88.6 million for 2010. The combined increase in sales of $64.8 million or 30% includes the impact from the increase in ammonia feedstock costs resulting in higher selling prices to certain industrial and mining customers that have contractual obligations allowing us to recover our costs plus a profit.
Accounts Receivable and Credit Risk Our accounts receivable are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on accounts receivable balances. Our estimate is based on historical experience and periodic assessment of outstanding accounts receivable, particularly those accounts that are past due (based upon the terms of the sale). Our periodic assessment of our accounts receivable is based on our best estimate of amounts that are not recoverable. In addition, our sales to contractors and independent sales representatives are generally subject to a mechanics lien or bond protection in the Climate Control Business. Sales to other customers are generally unsecured. Credit is extended to customers based on an evaluation of the customers financial condition and other factors. Concentrations of credit risk with respect to trade receivables are monitored and this risk is reduced due to the large number of customers comprising our customer bases and their dispersion across many different industries and geographic areas (primarily as it relates to the Climate Control Business) and payment terms of 15 days or less relating to most of our significant customers in the Chemical Business, however, thirteen customers (including their affiliates), primarily relating to the Chemical Business, account for approximately 41% of our total net receivables at December 31, 2011. We do not believe this concentration in these thirteen customers represents a significant credit risk due to the financial stability of these customers. At December 31, 2011 and 2010, our allowance for doubtful accounts of $955,000 and $636,000, respectively, were netted against our accounts receivable. For 2011, 2010, and 2009, our provision for losses on accounts receivable was $347,000, $145,000, and $90,000, respectively.
Precious Metals Precious metals are used as a catalyst in the Chemical Business manufacturing process. Precious metals are carried at cost, with cost being determined using the FIFO basis. As of December 31, 2011 and 2010, precious metals were $17.8 million and $12.0 million, respectively, and are included in supplies, prepaid items and other in the consolidated balance sheets. Because some of the catalyst consumed in the production process cannot be readily recovered and the amount and timing of recoveries are not predictable, we follow the practice of expensing precious metals as they are consumed. Occasionally, during major maintenance or capital projects, we may be able to perform procedures to recover precious metals (previously expensed) which have accumulated over time within the manufacturing equipment. Recoveries of precious metals are recognized at historical FIFO costs. When we accumulate precious metals in excess of our production requirements, we may sell a portion of the excess metals. For 2011, 2010, and 2009, the amounts expensed for precious metals, net of recoveries and gains, were approximately $1.9 million, $5.2 million and $3.3 million, respectively. These precious metals expenses, net, are included in cost of sales.
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Lsb Inds Inc has a market cap of $794.9 million; its shares were traded at around $36.24 with a P/E ratio of 11.2 and P/S ratio of 1.3. Lsb Inds Inc had an annual average earning growth of 19.5% over the past 10 years.
Highlight of Business Operations:
The remaining 55% of our Chemical Business sales were into industrial and mining markets of which approximately 57% of these sales are to customers that have contractual obligations to purchase a minimum quantity and allow us to recover our cost plus a profit, irrespective of the volume of product sold. During 2011, our sales volumes to industrial and mining customers increased 2% and 11%, respectively, as compared to 2010, while sales dollars increased 28% and 34%, respectively. For 2012, we expect slight growth in these markets based on projections from the American Chemistry Council and customer feedback.Our Chemical Business sales for 2011 were $511.9 million, an increase of $160.8 million. Sales increased across all product lines due to both increased pricing and volume. Agricultural sales for 2011 were $231.6 million compared to $135.6 million for 2010. The increase of $96.0 million or 71% was primarily due to a substantial increase in sales volume of UAN as a result of additional volume resulting from the Pryor Facilitys first full year of production supported by strong demand and higher sales prices.
Sales of industrial acids and other products for 2011 were $161.8 million compared to approximately $126.9 million for 2010. Also sales of mining products for 2011 were $118.5 million compared to $88.6 million for 2010. The combined increase in sales of $64.8 million or 30% includes the impact from the increase in ammonia feedstock costs resulting in higher selling prices to certain industrial and mining customers that have contractual obligations allowing us to recover our costs plus a profit.
Accounts Receivable and Credit Risk Our accounts receivable are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on accounts receivable balances. Our estimate is based on historical experience and periodic assessment of outstanding accounts receivable, particularly those accounts that are past due (based upon the terms of the sale). Our periodic assessment of our accounts receivable is based on our best estimate of amounts that are not recoverable. In addition, our sales to contractors and independent sales representatives are generally subject to a mechanics lien or bond protection in the Climate Control Business. Sales to other customers are generally unsecured. Credit is extended to customers based on an evaluation of the customers financial condition and other factors. Concentrations of credit risk with respect to trade receivables are monitored and this risk is reduced due to the large number of customers comprising our customer bases and their dispersion across many different industries and geographic areas (primarily as it relates to the Climate Control Business) and payment terms of 15 days or less relating to most of our significant customers in the Chemical Business, however, thirteen customers (including their affiliates), primarily relating to the Chemical Business, account for approximately 41% of our total net receivables at December 31, 2011. We do not believe this concentration in these thirteen customers represents a significant credit risk due to the financial stability of these customers. At December 31, 2011 and 2010, our allowance for doubtful accounts of $955,000 and $636,000, respectively, were netted against our accounts receivable. For 2011, 2010, and 2009, our provision for losses on accounts receivable was $347,000, $145,000, and $90,000, respectively.
Precious Metals Precious metals are used as a catalyst in the Chemical Business manufacturing process. Precious metals are carried at cost, with cost being determined using the FIFO basis. As of December 31, 2011 and 2010, precious metals were $17.8 million and $12.0 million, respectively, and are included in supplies, prepaid items and other in the consolidated balance sheets. Because some of the catalyst consumed in the production process cannot be readily recovered and the amount and timing of recoveries are not predictable, we follow the practice of expensing precious metals as they are consumed. Occasionally, during major maintenance or capital projects, we may be able to perform procedures to recover precious metals (previously expensed) which have accumulated over time within the manufacturing equipment. Recoveries of precious metals are recognized at historical FIFO costs. When we accumulate precious metals in excess of our production requirements, we may sell a portion of the excess metals. For 2011, 2010, and 2009, the amounts expensed for precious metals, net of recoveries and gains, were approximately $1.9 million, $5.2 million and $3.3 million, respectively. These precious metals expenses, net, are included in cost of sales.
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