LSB Industries, Inc., Reports Results for the First Quarter Ended March 31, 1999
18 May 1999
LSB Industries, Inc., Reports Results for the First Quarter Ended March 31, 1999
OKLAHOMA CITY, May 17 -- LSB Industries, Inc. ,
reported operating results for the three months ended March 31, 1999.
Net sales for the three months ended March 31, 1999 were $73.1 million,
compared to $78.0 million, for the same period in 1998, a decrease of 6.3%.
The Company reported a net loss for the three months ended March 31, 1999
of $3,810,000 (including a net loss of $970,000 on its Australian subsidiary
which it has agreed to sell in the second quarter of 1999) compared to net
income for the three months ended March 31, 1998, of $9,278,000 (including a
net loss of $563,000 on its Australian subsidiary and a net after tax gain of
$12.7 million on the sale of the Tower office building). After deducting
$818,000 for dividends on the Company's outstanding preferred stocks, the net
loss applicable to common stock for the three months ended March 31, 1999,
was $4,628,000 or $.39 basic and diluted earnings per share on 11.9 million
average common shares as compared to net income applicable to common stock for
the three months ended March 31, 1998 of $8,462,000 or $.66 basic earnings per
share, on 12.7 million average common shares ($.53 diluted earnings per share,
on 17.5 million average common shares).
On May 7, 1999, LSB entered into a definitive agreement for a sale of
assets of its wholly owned subsidiary, Total Energy Systems Limited ("TES") in
Australia, subject to certain conditions precedent being completed. It is
anticipated that the sell of TES will occur during the second quarter. The
accompanying financial highlights segregate the operations of TES which had a
net loss before provision for income taxes of $970,000 in the first quarter of
1999 compared to a net loss before provision for income taxes of $563,000 in
the first quarter of 1998.
Jack E. Golsen, chairman, indicated that the sale of TES is another step
in divesting of all non-core, non-earning and non-strategic assets. This
continues to be a high priority.
Commenting on the lower sales volume, Golsen said that sales of the
Australian subsidiary that is being sold were lower by $2.0 million and
although Climate Control's sales were lower by $3.0 million, the operating
profit was about the same. However, the order demand at Climate Control is
very strong and should result in increased sales as the year progresses.
Commenting on the current operating results, Golsen stated that the results of
the Chemical Business continued to be adversely affected by the prevailing low
market price of some of its nitrogen end products.
LSB recently mailed an advance copy of the Presidents' Letter to
Shareholders to be included in LSB's 1998 Annual Report to Shareholders, a
copy of which is available on the Company's web site at http://www.LSB-okc.com.
The Company is a manufacturing, marketing, and engineering company with
activities on a world wide basis. The Company's principal business activities
consist of the manufacture and sale of chemical products for the mining,
agricultural and industrial markets, the manufacture and sale of commercial
and residential climate control products, the provision of specialized
engineering services, and other activities. The Company's common stock and
Series 2 preferred stock are listed for trading on the New York Stock
Exchange.
This press release contains certain "Forward-Looking Statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. All
statements in this press release other than statements of historical facts
that address activities, events, or developments that the Company expects,
believes, or anticipates will or may occur in the future are Forward-Looking
Statements, including, but not limited to, the Forward-Looking Statement
relating to completion of the sale of TES and increase sales in the Climate
Control Business as the year progresses. While the Company believes these
expectations are reasonable, there are no assurances such expectations will be
achieved. There are a variety of factors which could cause future outcomes to
differ materially from those described in the letter, including, but not
limited to, (i) decline in general economic conditions, both domestic and
foreign, (ii) inability to complete the sale of our Australian subsidiary due
to the Australian government's failure to approve such or the potential
buyer's inability or refusal to complete the acquisition; (iii) increased
competitive pressures, or (iv) the loss of any significant customer. Given
these uncertainties, all parties are cautioned not to place undue reliance on
such Forward-Looking Statements. The Company disclaims any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the Forward-Looking Statements contained herein to reflect future
events or developments.
LSB Industries, Inc.
Financial Highlights (Notes)
Quarters Ended March 31, 1999 and 1998
(Unaudited)
(In thousands, except per share amounts)
1999 1998
Businesses continuing at March 31,
Revenues, excluding the gain on the
Tower in 1998 $69,979 $74,179
Pretax gain on sale of Tower --- 12,993
69,979 87,172
Costs and expenses:
Cost of sales 54,075 57,539
Selling, general and administrative 14,327 14,811
Interest 4,367 4,701
72,769 77,051
Income (loss) before subsidiary to be
disposed of during 1999 (2,790) 10,121
Subsidiary to be disposed of during
1999 (Note 1):
Revenues 2,766 4,779
Operating costs, expenses and interest 3,736 5,342
(970) (563)
Income (loss) before provision
for income taxes (3,760) 9,558
Provision for income taxes 50 280
Net income (loss) $(3,810) $9,278
Net income (loss) applicable to
common stock $(4,628) $8,462
Earnings (loss) per common share:
Basic $(0.39) $0.66
Diluted $(0.39) $0.53
Average common shares outstanding used
in computing earnings (loss) per
common share:
Basic 11,881 12,746
Diluted 11,881 17,539
LSB Industries, Inc.
Notes to Unaudited Financial Highlights
Quarters Ended March 31, 1999 and 1998
Note 1: On May 7, 1999, LSB entered into a definitive agreement for a
sale of assets of its wholly owned subsidiary, Total Energy
Systems Limited ("TES"), in Australia, subject to certain
conditions precedent. The operating results of TES have been
presented as a separate component of the results of continuing
operations before income taxes. Upon closing of the sale, the
Company will recognize a loss upon disposal which will include
the cumulative foreign currency translation loss at such time.
As of March 31, 1999, the cumulative foreign currency translation
loss was approximately $1.4 million.
Note 2: Basic earnings (loss) per common share is based upon the weighted
average number of common shares outstanding during each period
after giving appropriate effect to preferred stock dividends.
Diluted earnings (loss) per share is based on the weighted
average number of common shares and dilutive common equivalent
shares, if any, outstanding and the assumed conversion of
dilutive convertible securities outstanding, if any, after
appropriate adjustment for interest, net of related income tax
effects on convertible notes payable, as applicable.
Note 3: Information about the Company's operations in different industry
segments, segregating TES from the Chemical segment, for the
three months ended March 31, 1999 and 1998 is detailed below:
Three Months Ended March 31,
1999 1998
(in thousands)
(unaudited)
Sales:
Businesses continuing:
Chemical $30,745 $28,679
Climate Control 26,699 29,936
Automotive Products 10,105 10,490
Industrial Products 2,640 4,185
Subsidiary being disposed of:
Chemical 2,868 4,746
$73,057 $78,036
Gross profit (loss):
Businesses continuing:
Chemical $4,957 $4,426
Climate Control 8,321 8,336
Automotive Products 2,096 2,139
Industrial Products 740 849
Subsidiary being disposed of:
Chemical (158) 166
$15,956 $15,916
Operating profit (loss):
Businesses continuing:
Chemical $1,446 $1,557
Climate Control 2,707 2,812
Automotive Products 9 (407)
Industrial Products (411) (304)
Subsidiary being disposed of:
Chemical (845) (406)
2,906 3,252
General corporate expenses and other (2,174) (1,829)
Interest expense (4,492) (4,858)
Gain on sale of the Tower --- 12,993
Income (loss) before provision
for income taxes $(3,760) $9,558
Gross profit (loss) by industry segments represents net sales less cost of
sales. Operating profit (loss) by industry segments represents gross
profit less operating expense before deducting general corporate expenses,
interest expense and income taxes and, in 1998, before gain on sale of
Tower.