Lsb Industries Inc. (LXU)

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LSB Industries Inc., (LXU)

Q2 2008 Earnings Call Transcript

August 06, 2008 5:15 pm ET


Carol Oden - IR

Jack Golsen - Chairman and CEO

Tony Shelby - EVP of Finance and CFO

Barry Golsen - Vice Chairman, President and President of Climate Control Business


Eric Glover - Canaccord Adams

Richard Nelson - Jesup & Lamont

Brian Shore - Avondale Partners

Rick Haws - Roth Capital Partners

Cliff Borden - CIBC

Steve Conway - RS Research



Good day, everyone. Welcome to LSB Industries second quarter 2008 conference call. At this time, I would like to inform you this conference is being recorded and that all participants are currently in a listen-only mode. I'll now turn the call over to Ms. Oden. Please go ahead Ma'am.

Carol Oden

Welcome to the LSB Industries conference call. Today LSB's management participants are Jack Golsen, Chairman and Chief Executive Officer, Barry Golsen, President, and Tony Shelby, Chief Financial Officer.

This conference call is being broadcast live over the Internet and is also being recorded. An archive of the webcast will be available shortly after the call on our web site at and will be accessible for one month. After comments by management, a question-and-answer session will be held. Instructions for asking questions will be provided at that time. Information reported on this call speaks only as of today, August 06, 2008, and therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay.

Comments today may contain certain forward-looking statements. All statements other than statements of historical fact are forward-looking statements. Statements that include the words expect, intend, plan, believe, project, anticipate, estimate and similar statements of a future or forward-looking nature identify forward-looking statements, including, but not limited to, starting up our Oklahoma Chemical plant at tenure long-term uptake a grew for the production of the Pryor plant, production plans is Pryor plant, we are in strong position to finance operation as well as growth opportunities, Capital Expenditures for extension, optimistic about the long range potential for our geothermal products, demand for assets of ammonium nitrate, emphasized cost reduction while developing product and customer mix that will allow us to operate our Chemical plants at full rate, 2008 outlook for commercial construction, prospects to growing the Climate Control business and outlook for a strong Ag market.

The term EBITDA, as used in this presentation is net income plus interest expense, depreciation, amortization, income taxes, and certain non-cash charges unless otherwise described. EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to the GAAP measurement. We will post on our website a reconciliation of GAAP and EBITDA members discussed during this Conference Call. You should not rely on forward-looking statements because actual events or results may differ materially from those indicated by these forward-looking statements as a result of our number important of factors.

These factors include, they are not limited to decline in general economic conditions; interest rate changes, competitive pressures, costs to activate the Pryor plant, changes in working capital, price of our common stock, and the risk and uncertainties discussed under the heading Special Note Regarding Forward-Looking Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007. The Form 10-Q for the quarter ended March 31, 2008, and the reports we filed from time to time with the Securities and Exchange Commission. We do not intend to pay and undertake no duty to update the information contained in this press release.

Now, I'll turn the conference call over to Mr. Jack Golsen, the company's Board Chairman.

Jack Golsen

Thank you, Carol. Good afternoon, everybody and welcome to LSB second quarter 2008 conference call. Thanks for joining our conference call today.

Today, Tony Shelby, our Chief Financial Officer and Executive Vice President will go over our overall results and the pertinent numbers of our Climate Control and Chemical businesses. Then, Barry Golsen, our President and Chief Operating Officer will discuss both the Climate Control and Chemical company's operations. When they have completed their statements, Tony, Barry and I will be available to answer questions.

Today, we reported this year's second quarter fully diluted after-tax earnings of $0.75 per share. This compares to last year's second quarter diluted earnings per share of $0.58. For the first six months of 2008, we reported income of $1.21 per share compared to $0.87 per share last year. Please keep in mind that in 2007, we benefited from our net operating tax loss where this year we are reporting fully taxed earnings. Also included in 2008 second quarter results is a $7.6 million income from proceeds of a lawsuit.

During the second quarter of 2008, our Company was named by Business Week as Number 38 on the list of the 50 Hottest Growth Companies. Business Week stated that starting from a base of 10,000 publicly traded companies this rating considers return on invested capital, one in three year sales growth, one year earnings growth, latest 12 month profit, and current market value. This is the second consecutive year that we were recognized by Business Week in this group of companies.

We've announced that we were considering the feasibility of starting the prior Oklahoma chemical plant, which produces anhydrous ammonia and urea ammonium nitrate which you may know as UAN. I will update you on the status of that at this time.

Previously, we told you that we're looking for a long-term up-tick agreement for the entire plant production of the Pryor plant. We have identified several potential strategic industry customers who have indicated an interest in reaching an agreement with us. We are close to receiving our environmental permits to re-stock the plant. We've been told by the regulators that we should expect to receive the permits by early October of this year.

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