LSB Industries Inc., reporting net income of $83.8 million ($3.58 per diluted share) on sales of $805.2 million, broke major performance records for the year ending Dec. 31, 2011. 2010 income was $29.6 million ($1.32 per share) on sales of $609.9 million. 2011 operating income was $136.4 million versus 2010’s $55.9 million, with an EBITDA of $131.4 million versus 2010’s $45 million.
“2011 was the best year in the history of the company in terms of sales, operating income, and earnings per share,” said Chairman and CEO Jack Golsen. “It also marks the first full year of operations of our Pryor facility in our Chemical business segment and the opening of our new modular chiller plant in our Climate Control business segment. These achievements were accomplished while further strengthening our balance sheet by reducing long-term debt, increasing LSB’s net worth, and building our capital position.”
“Our fourth quarter results were strong due to significant increases in our Chemical business sales and operating income,” said Golsen. “Sales in the Chemical segment increased 46 percent and operating income increased 91 percent, reflecting the strong demand for nitrogen fertilizer accompanied by lower natural gas prices and increases in industrial and mining products sales volumes. The first full year of production and sales in our Pryor facility had a significant impact on the top and bottom line results for the quarter and the year.”
Pryor operating income for 2011 was $52 million, compared to only $300,000 for 2010. Fourth-quarter income was $17 million versus the year-ago $11.4 million.
Golsen is upbeat for 2012. “Because grain stocks are low versus demand, we expect that the corn planted in the spring will reach an estimated 93-94 million acres and will require near-record levels of nitrogen fertilizer to optimize the yield. Despite the downward pressure on fertilizer prices during the winter months, we believe the agricultural outlook for 2012 is positive.”
2011 Chemical operating income was $116.5 million on sales of $511.8 million, up from 2010’s $31.9 million on sales of $351.1 million. Sales prices increased 30 percent and volume of tons sold increased 14 percent. Agricultural sales increased $96 million due to strong demand for UAN and ammonia and higher prices. Industrial chemical product sales increased $34.9 million and mining product sales by $29.8 million. Most of the increase in gross profit was attributed to higher margins on UAN and ammonia. LSB also recognized an $8.6 million business interruption insurance recovery in 2011, which was recorded as a reduction to cost of sales. In 2010, it recognized an insurance recovery of $7.3 million, which was included in other income.
LSB fourth-quarter net income was $28 million ($1.19 per share) on sales of $215.4 million, compared to the year-ago $18 million ($.79 per share) on sales of $172.1 million. Operating income was $41.6 million, up from $30.2 million. EBITDA was $41.5 million versus the year-ago $23 million.
Fourth-quarter Chemical operating income was $37.6 million on sales of $142 million, versus the year-ago $19.6 million on sales of $97.2 million. The improved income was attributed to higher UAN volumes and prices, primarily for product produced at Pryor and the Cherokee Nitrogen facility in Alabama. UAN volumes surged to over 130,000 st versus those of a year ago, which were just under 50,000 st. During the quarter, agricultural sales were up $27 million, or 65 percent. Mining and industrial sales were up $13.1 million and $4.9 million, respectively.
LSB told analysts that it sold about 42,000 st of UAN forward for shipment during first quarter 2012 that was priced much higher than the current market. It said it exited the year with $18-$19 million in forward UAN sales, with $14 million of that