LSB Industries(US:LXU)2025-04-30 20:38Financial Performance - Net sales for Q1 2025 were $143,432,000, an increase of 3.3% compared to $138,204,000 in Q1 2024[12]. - Gross profit decreased to $14,384,000 in Q1 2025, down 35.5% from $22,278,000 in Q1 2024[12]. - Operating income fell to $4,468,000 in Q1 2025, a decline of 60.3% from $11,260,000 in Q1 2024[12]. - The company reported a net loss of $1,640,000 in Q1 2025, compared to a net income of $5,623,000 in Q1 2024[12]. - Consolidated net sales for Q1 2025 were $143.4 million, a 1% increase from $138.2 million in Q1 2024, while operating income decreased to $4.5 million from $11.3 million[125]. - The net sales of AN & Nitric Acid increased to $57.6 million in Q1 2025 from $48.4 million in Q1 2024, representing a growth of 18.5%[84]. - Total tons sold increased by 4% to 372,499 in Q1 2025, with AN & Nitric Acid sales up 17% and UAN sales up 10%, while ammonia sales dropped by 23%[131]. - Adjusted gross profit for the first quarter of 2025 was $36.442 million, compared to $40.287 million in the first quarter of 2024[169]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $15,030,000 as of March 31, 2025, down from $20,230,000 at the end of 2024[10]. - Cash provided by operating activities was $6,836,000 in Q1 2025, a decrease of 71.6% from $24,107,000 in Q1 2024[17]. - Net cash flows from operating activities fell to $6.8 million in Q1 2025, a decrease of $17.3 million from $24.1 million in Q1 2024, primarily due to higher cost of sales[140]. - As of March 31, 2025, total cash, cash equivalents, and short-term investments amounted to $163.5 million, down from $184.2 million at the end of 2024[146]. - The company expects to fund its anticipated liquidity needs for the next twelve months through cash, short-term investments, and cash flow from operations[149]. - As of March 31, 2025, the company had approximately $40 million available under its undrawn Revolving Credit Facility[154]. Debt and Liabilities - Total liabilities decreased to $685,375,000 as of March 31, 2025, down from $688,253,000 at December 31, 2024[10]. - The company’s long-term debt increased slightly to $478,174,000 as of March 31, 2025, compared to $476,163,000 at December 31, 2024[10]. - The company has $478.4 million in Senior Secured Notes due 2028, with interest paid semiannually[151]. - The Senior Secured Notes due 2028 amount to $478.4 million, with an interest rate of 6.25%[4]. - The company incurred interest expense of $8,064,000 in Q1 2025, down from $9,729,000 in Q1 2024[12]. - The company is contingently liable for payments up to $10.3 million related to performance bonds as of March 31, 2025[160]. Environmental and Regulatory Compliance - The company incurred $0.9 million in expenses related to environmental regulatory compliance in the first quarter of 2025, with expected additional expenses ranging from $3.2 million to $3.4 million for the remainder of the year[158]. - The company is subject to various environmental laws and may incur significant compliance expenses and liabilities in the future[6]. - As of March 31, 2025, accrued liabilities for environmental matters totaled approximately $0.6 million[6]. Future Projects and Investments - The company plans to invest in low carbon ammonia production, with a project at the El Dorado Facility expected to be operational by the end of 2026[99]. - An agreement was announced to supply up to 150,000 short tons per year of low carbon ammonium nitrate solution to Freeport Minerals Corporation starting January 1, 2025[100]. - The company is pursuing a project to capture and sequester CO2 at the El Dorado Facility, expected to capture approximately 400,000 to 500,000 metric tons of CO2 per year once operational[102]. - The facility's ammonia production is expected to sequester approximately 400,000 to 500,000 metric tons of CO2 annually, reducing overall scope 1 GHG emissions by about 25%[104]. - The El Dorado Facility expansion projects are on hold for 2024, with plans to reevaluate in 2025 due to high costs and moderating selling prices[103]. Market Conditions and Risks - The company expects to face various risks including changes in commodity prices, interest rates, and competition in the market[171][180]. - The company is sensitive to adverse economic cycles, which could materially affect its business, financial condition, and cash flow[185]. - A prolonged deterioration of global market conditions may lead to increased bad debts and affect working capital due to customers' inability to fulfill purchase obligations[186]. - The international market for nitrogen fertilizer significantly influences the company's operating results, affected by U.S. currency value and foreign agricultural policies[187]. - Recent U.S. tariffs on agricultural products could impact selling prices and increase input costs for customers, potentially disrupting supply chains[188]. - The ultimate impact of changing trade policies on the company will depend on the magnitude and duration of tariffs, which may not be fully mitigated[189]. Stock and Shareholder Actions - The company has authorized a $150 million stock repurchase program aimed at maximizing stockholder value[156]. - No shares of common stock were repurchased during the three months ended March 31, 2025[157]. - The company has adopted Rule 10b5-1 trading plans for its executives, allowing the sale of up to 35,000 shares by the CFO and 21,641 shares by the Senior VP[191][192].