LSB Industries, Inc. (LXU) research, news, and more from GeoInvesting

Company description

Fri, 23 Jan 2009 05:00:00 GMT

LSB is a manufacturing, marketing and engineering company. Through its subsidiaries, LSB’s principal business activities consist of the manufacture and sale of commercial and residential climate control products, such as geothermal and water source heat pumps, hydronic fan coils, large custom air handlers, the manufacture and sale of chemical products for the mining, agricultural and industrial markets, and the provision of specialized engineering services and other activities.

Comments & Business Outlook

Fri, 06 May 2011 04:00:00 GMT

First Quarter Results:

Net sales were $177.5 million, a 36% increase from $130.4 million.
Operating income was $34.0 million compared to $4.4 million.
Net income was $20.9 million compared to $1.7 million.
Net income applicable to common shareholders was $20.6 million compared to $1.4 million.
Diluted earnings per common share were $.90 compared to $.07

Jack Golsen, LSB’s Board Chairman and CEO stated, "As we said following the close of 2010, the outlook for our business is positive and we look forward to improvement in most of our markets in 2011. During the first quarter we got off to a good start with a $30 million comparable quarter improvement in operating income. Our performance in the first quarter, order rates in our Climate Control Business and positive trends in our Chemical Business should lead to overall improvement in 2011 compared to 2010."

Comments & Business Outlook

Fri, 04 Mar 2011 05:00:00 GMT

Fourth Quarter Highlights:

Net sales were $172.2 million, a 49.3% increase from $115.3 million;
Operating income was $30.2 million compared to $2.5 million;
Net income and income applicable to common shareholders was $18.0 million compared to $38,000;
Diluted earnings per common share were $.79 compared to less than $.01.

Jack Golsen, LSB’s Board Chairman and CEO stated: "Both our Chemical, including the Pryor Facility and Climate Control businesses performed well during the fourth quarter. At this time, the outlook for business is very positive. We are looking forward to improvement in most of our markets in 2011."

Research

Mon, 03 Jan 2011 05:00:00 GMT

Initiating a preliminary position in LXU @ $24.81:

Recent EPS history has been lumpy, but GPR is a solid 5.
Seeing strength in markets that will continue to improve with economic recovery.

Jack Golsen, LSB’s Board Chairman and CEO stated, “We are seeing positive signs in our Climate Control Business in sales, new orders and backlog. Our Climate Control backlog also continues to move in the right direction, with sequential quarterly improvement since year-end 2009. We are encouraged by the improvement in our commercial products order level and we believe our aggressive advertising and marketing campaign and the enactment of federal tax credits for geothermal heat pumps have had a positive impact on sales of those highly energy efficient and green products.”

Turning to LSB’s Chemical Business Mr. Golsen continued, “The current outlook points to positive supply and demand fundamentals for the types of nitrogen fertilizer products we produce and sell, although, during the third quarter, our agricultural product sales were impacted by weather conditions in certain of our markets. We are, of course, pleased that the Pryor Facility is producing ammonia and look forward to the contribution it will make in the years to come. We are also optimistic about improvement in the industrial and mining markets we serve as the economy continues to recover.”

Backlog is significantly up from prior year.
Appears pricey at a P/E of on 2010 EPS analyst estimates of $0.77 and 2011 EPS estimates of $1.70. However, the company crushed 2010 third quarter estimates and given 2011 estimated EPS growth rate of 121% we are willing to value shares at a P/E of 20 on 2011 EPS estimates.
Short-term price target based on a P/E of 20 on analyst 2011 EPS expectations of $1.70: $34.00.

Comments & Business Outlook

Fri, 06 Aug 2010 04:00:00 GMT

Second Quarter 2010 Financial Highlights Compared to Second Quarter 2009:

Net sales were $168.4 million, a 21.5% increase from $138.6 million;
Operating income was $12.8 million compared to $14.5 million;
Net income was $6.0 million compared to $8.7 million;
Net income applicable to common shareholders was $6.0 million compared to $8.7 million;
Diluted earnings per common share were $0.27 compared $0.38.

Mr. Golsen noted, “Our financial position remains strong. We closed the second quarter with a working capital ratio of 3.2 to 1 and a long-term debt to equity ratio of .65 to 1. During the second quarter, we purchased 177,100 shares of our common stock for an aggregate purchase price of $2.4 million. Also during the second quarter, we purchased $2.5 million face value of our Debentures that are due in 2012 at approximately face value, leaving $26.9 million outstanding at June 30, 2010. We closed the second quarter with over $65 million in cash and cash equivalents.”

The GeoTeam® will participate in the company's conference call. While the quarter exhibited no EPS growth:

The company exceeded analyst estimates of $0.24.
Per estimates, EPS is expected to increase at least 30% for the next six quarters. (Expected EPS growth in one of these quarters is 28.6%)

Conference Call Notes

Fri, 06 Aug 2010 04:00:00 GMT

The GeoTeam® listened to the LXU conference call this afternoon. The company is optimistic about its future.

Some of the climate control products the company produces play on the trend for businesses' and homeowners' desires to go green
Agriculture product segment outlook is positive
Management believes stock is undervalued
Government stimulus funds kicking in
Ample liquidity

However, the company commented that it is still somewhat cautious about the 2nd half of 2010, with respect to its residential and commercial business. On the bright said, they also said "it is not a matter of if things will turn, but when." If it is deemed that the company can hit analyst EPS targets of...

$0.87 for 2010
$1.47 for 2011

...then its quite possible that investors could bid shares up to $21.00 in the short-term. We are just not ready to code LXU as a GeoBargain or GeoSpecial due to a slight cloud of uncertainty. We will continue to track the story.