LSB Industries Inc Reports Operating Results (10-Q)
Lsb Industries, Inc. has a market cap of $714.9 million; its shares were traded at around $33.385 with a P/E ratio of 9.7 and P/S ratio of 0.9. Lsb Industries, Inc. had an annual average earning growth of 12.9% over the past 10 years.
Highlight of Business Operations:Climate Control Business Sales for the first half of 2012 were 7% lower than the same period in 2011, including a 9% decrease in geothermal and water source heat pump sales and an overall 4% decrease in hydronic fan coil and other HVAC sales. From a market sector perspective, the sales decline is due to a 14% decrease in residential product sales and a 6% decrease in sales of commercial/institutional products although we did experience a slight increase in sales of our custom air handlers. The decline in product sales generally reflects the continued softness in the markets we serve. For the first half of 2012, order levels of both our commercial/institutional and residential products decreased as compared to the same period of 2011 (2% and 15%, respectively), although fluctuations that occur in a particular period are not necessarily indicative of a developing trend. The latest information available from the Construction Market Forecasting Service provided by McGraw-Hill (CMFS) indicates that in 2012, the commercial/institutional construction sector we serve is expected to decrease modestly over 2011 levels and the single-family residential construction sector is expected to increase.
The remaining 45% of our Chemical Business sales were into industrial and mining markets of which approximately 55% 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 the first half of 2012, our sales volumes to industrial customers decreased 6% and sales volumes to mining customers decreased 23%, as compared to the same period in 2011. Sales dollars during the first half of 2012 decreased 4% to industrial customers and sales dollars to mining customers decreased 24% as compared to the same period in 2011. The decreased industrial sales were primarily due to the unplanned downtime at our El Dorado Facility as discussed below under Downtime at Pryor and El Dorado Facilities 2012. Mining sales were lower due to higher coal supply and lower coal demand due to the unseasonably warm winter in North America, the low cost of natural gas as an alternative feedstock for utility companies and the unplanned downtime at our El Dorado Facility. Customers of our Chemical Business that are subject to contractual obligations with the El Dorado Facility have been notified of this force majeure event pursuant to the terms of our contracts.
Our consolidated net sales for the second quarter of 2012 were $209.3 million compared to $235.6 million for the same period in 2011. The sales decrease of $26.3 million includes $9.6 million relating to our Climate Control Business and $17.5 million relating to our Chemical Business.
Our Climate Control sales for the second quarter of 2012 were $67.5 million, or $9.6 million below the same period in 2011, and includes a $6.5 million decrease in geothermal and water source heat pump sales, a $1.9 million decrease in hydronic fan coil sales, and a $1.2 million decrease in other HVAC sales. From a market sector perspective, the net decrease includes a $7.1 million decrease in commercial/institutional sales and a $2.5 million decrease in residential product sales. Generally, the overall decline can be attributed to the lower beginning backlog entering the second quarter as a result of a lower order intake during the first quarter of 2012 compared to the same period in 2011. Orders for our custom air handlers and hydronic fan coils increased while orders for our heat pumps and modular chillers declined.
Our Chemical Business sales for the second quarter of 2012 were $138.1 million, a decrease of $17.5 million compared to the same period in 2011, which includes a $6.6 million decrease in industrial acids and other products sales and a $12.6 million decrease in mining products sales partially offset by a $1.7 million increase in agricultural products sales.
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