LSB Industries Inc (NYSE:LXU) filed Quarterly Report for the period ended 2010-03-31.
Lsb Industries Inc has a market cap of $377 million; its shares were traded at around $17.76 with a P/E ratio of 17 and P/S ratio of 0.7. Lsb Industries Inc had an annual average earning growth of 15.7% over the past 10 years.LXU is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:Our consolidated net sales for the first quarter of 2010 were $130.4 million compared to $150.2 million for the same period in 2009. The sales decrease of $19.8 million relates primarily to a decrease of $18.4 million in our Climate Control Business. The Climate Control Business decrease is due primarily to lower customer product orders received due to the economic downturn. Our Chemical Business sales for the first quarter of 2010 increased slightly compared to the same period in 2009, but the increase in volume of tons sold of our industrial products was partially offset by the decline in volume relating to our agricultural and mining products.
As discussed below under “Results of Operations”, our consolidated operating income was $4.4 million for the first quarter of 2010 compared to $19.4 million for the same period in 2009. The decrease in operating income of approximately $15.0 million was primarily the result of a $10.8 million decrease in our Chemical Business operating income and a decline of $3.5 million in our Climate Control Business operating income primarily due to lower sales. Our general corporate expense and other business operations net expenses increased approximately $0.8 million.
For the first quarter of 2010, the product order level was $54.2 million as compared to $54.9 million for the same period in 2009 and compared to $48.5 million for the fourth quarter of 2009. Our product order level consists of confirmed purchase orders from customers, those that have been accepted and received credit approval. Although the product order level was slightly lower in the first quarter 2010 as compared to the same period in 2009 due primarily to an 8% decrease in product orders for commercial products, we saw a 30% increase in product orders for residential GHPs.
Cash used for capital expenditures during the first quarter of 2010 was $6.5 million, including $0.4 million primarily for production equipment and other upgrades for additional capacity in our Climate Control Business and $6.1 million for our Chemical Business, primarily for process and reliability improvements of our operating facilities, including $1.8 million associated with the Pryor Facility and approximately $0.1 million to maintain compliance with environmental laws, regulations and guidelines. These capital expenditures were primarily funded from working capital. In addition, one of our 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 March 31, 2010, we had committed capital expenditures of approximately $4.4 million for the remainder of 2010. The committed expenditures included $4.3 million for process and reliability improvements in our Chemical Business, including $0.8 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 $0.1 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 insurance provides for general liability coverage with a $250,000 loss deductible and for business interruption coverage and for replacement cost coverage relating to property damage with a total $100,000 loss deductible. As of March 31, 2010, a recovery, if any, from our business interruption coverage has not been recognized. Because our replacement cost coverage for property damages is estimated to exceed 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 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 quarter of 2010, our insurance claim receivable increased by a net $40,000. The activity during the quarter 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. In addition, during the first quarter of 2010, we received additional partial payments totaling $968,000 ($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 $668,000 ($495,000 relates to PP&E) was classified as other income. Prior to March 31, 2010, our insurance carrier also agreed to an additional advance of $71,000, which was recognized and classified as other income. As a result, the balance of the insurance claim receivable relating to this event was $75,000 at March 31, 2010.
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