10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-7677

LSB Industries, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	73-1015226
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3503 NW 63rd Street, Suite 500, Oklahoma City, Oklahoma	73116
(Address of principal executive offices)	(Zip Code)

(Registrant's telephone number, including area code) (405) 235-4546

Not applicable

(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $.10 Preferred Stock Purchase Rights	LXU N/A	New York Stock Exchange New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.☒ Yes ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).☒ Yes ☐ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).☐ Yes ☒ No

The number of shares outstanding of the Registrant's common stock was 76,129,079 shares as of April 28, 2023.

FORM 10-Q OF LSB INDUSTRIES, INC.

TABLE OF CONTENTS

	PART I – Financial Information	Page
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
	PART II – Other Information
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32

When we refer to "us", "we", "our", "Company" or "LSB" we are describing LSB Industries, Inc. and its subsidiaries.

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Information at March 31, 2023 is unaudited)

	March 31,			December 31,
	2023			2022
	(In Thousands)
Assets
Current assets:
Cash and cash equivalents	$	48,949		$	63,769
Short-term investments		376,882			330,553
Accounts receivable		60,251			75,494
Allowance for doubtful accounts		(693	)		(699	)
Accounts receivable, net		59,558			74,795
Inventories:
Finished goods		28,102			28,893
Raw materials		1,530			1,990
Total inventories		29,632			30,883
Supplies, prepaid items and other:
Prepaid insurance		12,271			17,429
Precious metals		14,474			13,323
Supplies		28,570			27,501
Other		9,491			8,346
Total supplies, prepaid items and other		64,806			66,599
Total current assets		579,827			566,599
Property, plant and equipment, net		842,925			848,661
Other assets:
Operating lease assets		21,321			22,682
Intangible and other assets, net		1,697			1,877
		23,018			24,559
	$	1,445,770		$	1,439,819

(Continued on following page)

3

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(Information at March 31, 2023 is unaudited)

	March 31,		December 31,
	2023		2022
	(In Thousands)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	68,341	$	78,182
Short-term financing		10,168		16,134
Accrued and other liabilities		43,617		38,470
Current portion of long-term debt		8,544		9,522
Total current liabilities		130,670		142,308
Long-term debt, net		702,071		702,733
Noncurrent operating lease liabilities		13,460		14,896
Other noncurrent accrued and other liabilities		522		522
Deferred income taxes		69,095		63,487
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $.10 par value; 150 million shares authorized, 91.2 million    shares issued		9,117		9,117
Capital in excess of par value		497,216		497,179
Retained earnings		214,993		199,092
		721,326		705,388
Less treasury stock, at cost:
Common stock, 15.0 million shares (14.9 million shares at December 31, 2022)		191,374		189,515
Total stockholders' equity		529,952		515,873
	$	1,445,770	$	1,439,819

See accompanying notes to condensed consolidated financial statements.

4

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	March 31,
	2023			2022
	(In Thousands, Except Per Share Amounts)
Net sales	$	180,964		$	198,981
Cost of sales		139,359			108,251
Gross profit		41,605			90,730
Selling, general and administrative expense		9,867			10,935
Other expense (income), net		1,203			(176	)
Operating income		30,535			79,971
Interest expense, net		12,212			9,955
Non-operating other expense (income), net		(3,476	)		135
Income before provision for income taxes		21,799			69,881
Provision for income taxes		5,898			11,115
Net income		15,901			58,766
Income per common share:
Basic:
Net income	$	0.21		$	0.66
Diluted:
Net income	$	0.21		$	0.65

See accompanying notes to condensed consolidated financial statements.

5

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock Shares		Treasury Stock- Common Shares			Common Stock Par Value		Capital in Excess of Par Value			Retained Earnings (Accumulated Deficit)			Treasury Stock- Common			Total
	(In Thousands)
Balance at December 31, 2022		91,168		(14,888	)	$	9,117	$	497,179		$	199,092		$	(189,515	)	$	515,873
Net income												15,901						15,901
Stock-based compensation									719									719
Shares issued restricted stock units				53					(682	)					682			—
Shares withheld restricted stock and   restricted stock units vesting				(204	)										(2,541	)		(2,541	)
Balance at March 31, 2023		91,168		(15,039	)	$	9,117	$	497,216		$	214,993		$	(191,374	)	$	529,952
Balance at December 31, 2021		91,168		(1,375	)	$	9,117	$	493,161		$	(31,255	)	$	(10,533	)	$	460,490
Net income												58,766						58,766
Stock-based compensation									803									803
Other				(229	)										(1,871	)		(1,871	)
Balance at March 31, 2022		91,168		(1,604	)	$	9,117	$	493,964		$	27,511		$	(12,404	)	$	518,188

See accompanying notes to condensed consolidated financial statements.

6

LSB INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 31,
	2023			2022
	(In Thousands)
Cash flows from operating activities
Net income	$	15,901		$	58,766
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		5,608			10,823
Depreciation and amortization of property, plant and equipment		17,439			17,197
Stock-based compensation		719			803
Other		1,223			946
Cash provided (used) by changes in assets and liabilities:
Accounts receivable		15,418			(11,707	)
Inventories		1,251			(10,817	)
Prepaid insurance		5,158			3,687
Supplies, prepaid items and other		(4,455	)		(6,253	)
Accounts payable		(4,861	)		10,003
Accrued interest		10,905			13,618
Other assets and other liabilities		(5,059	)		(1,574	)
Net cash provided by operating activities		59,247			85,492
Cash flows from investing activities
Expenditures for property, plant and equipment		(18,437	)		(8,254	)
Proceeds from short-term investments		88,707			—
Purchases of short-term investments		(133,660	)		(89,311	)
Other investing activities		11			51
Net cash used by investing activities		(63,379	)		(97,514	)
Cash flows from financing activities
Net proceeds from 6.25% senior secured notes		—			200,000
Payments on other long-term debt		(2,180	)		(6,912	)
Payments on short-term financing		(5,967	)		(2,805	)
Payments of debt-related costs, including    extinguishment costs		—			(4,102	)
Other financing activities		(2,541	)		(2,004	)
Net cash provided (used) by financing activities		(10,688	)		184,177
Net increase (decrease) in cash and cash equivalents		(14,820	)		172,155
Cash and cash equivalents at beginning of period		63,769			82,144
Cash and cash equivalents at end of period	$	48,949		$	254,299

See accompanying notes to condensed consolidated financial statements.

7

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of LSB have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in the Company’s Form 10-K for the year ended December 31, 2022 (our “2022 Form 10-K”), filed with the SEC on February 23, 2023. The accompanying unaudited interim financial statements in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s results of operations and cash flows for the three-month periods ended March 31, 2023 and 2022 and the Company’s financial position as of March 31, 2023.

Basis of Consolidation – LSB and its subsidiaries are consolidated in the accompanying condensed consolidated financial statements. LSB is a holding company with no significant operations or assets other than cash, cash equivalents, short-term investments and investments in its subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.

Nature of Business – We are engaged in the manufacture and sale of chemical products. The chemical products we primarily manufacture, market and sell are ammonia, fertilizer grade ammonium nitrate (“AN” and “HDAN”) and urea ammonium nitrate ("UAN") for agricultural applications, high purity and commercial grade ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, carbon dioxide and diesel exhaust fluid for industrial applications and industrial grade AN (“LDAN”) and solutions for the mining industry. We manufacture and distribute our products in four facilities; three of which we own and are located in El Dorado, Arkansas (the “El Dorado Facility”); Cherokee, Alabama (the “Cherokee Facility”); and Pryor, Oklahoma (the “Pryor Facility”); and one of which we operate on behalf of Covestro in Baytown, Texas.

Sales to customers include farmers, ranchers, fertilizer dealers and distributors primarily in the ranch land and grain production markets in the United States (“U.S.”); industrial users of acids throughout the U.S. and parts of Canada; and explosive manufacturers in the U.S. and parts of Mexico, Canada and the Caribbean.

These interim results are not necessarily indicative of results for a full year due, in part, to the seasonality of our sales of agricultural products and the timing of performing our major plant maintenance activities. Our selling seasons for agricultural products are primarily during the spring and fall planting seasons, which typically extend from March through June and from September through November.

Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Short-Term Investments - Investments, which consist of U.S. treasury bills with an original maturity up to and less than 52 weeks, are considered short-term investments and are classified as Level 1. We plan to hold these investments to maturity and have a history of holding investments to maturity. These investments are carried at cost which approximated fair value for the period ended March 31, 2023. Due to the nature of these investments, as U.S. treasury securities, no impairment is anticipated. Our estimate of expected losses is incorporated into the review of the investments' fair value quarterly.

Accounts Receivable – Our accounts receivable are presented at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any estimate of expected loss anticipated on accounts receivable balances. Our estimate is based on historical experience and periodic assessment of outstanding accounts receivable, particularly those accounts that are past due (based upon the terms of the sale). Our periodic assessment is based on our best estimate of amounts that are not recoverable which includes a present collectability review and forward looking assessment, where applicable.

Equity Awards – Equity award transactions with employees are measured based on the estimated fair value of the equity awards issued. For equity awards with service conditions that have a graded vesting period, we recognize compensation cost on a straight-line basis over the requisite service period for the entire award. Forfeitures are accounted for as they occur. We may issue new shares of common stock or may use treasury shares associated with the equity awards.

In January 2023, the compensation committee of our Board of Directors (“Board”) approved the grant of 171,641 shares of time-based restricted stock units and 171,641 shares of performance-based restricted stock units to certain executives and employees under our 2016 Long Term Incentive Plan (as Amended and Restated on March 4, 2021). The time-based restricted stock units will vest at the end of each one-year period at the rate of one-third per year for three years. The performance-based restricted stock units will vest on the third anniversary of the grant date subject to the achievement of a market metric established by the Board as set out in the grant. Upon the third anniversary the grants may be modified in a range between 0% and 200% based upon achievement of the market metric. The

8

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

unvested restricted units carry dividend and voting rights contingent upon the vesting and lapsing of restriction. Sales of these units are restricted prior to the date of vesting. Pursuant to the terms of the underlying restricted stock unit agreements, unvested restricted shares will immediately vest upon the occurrence of a change in control (as defined by agreement), or a certain portion will immediately vest upon termination without cause or death.

Contingencies – Certain conditions may exist which may result in a loss, but which will only be resolved when future events occur. We and our legal counsel assess such contingent liabilities and such assessment inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, we would accrue for such contingent losses when such losses can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Loss contingency liabilities are included in current and noncurrent accrued and other liabilities and are based on current estimates that may be revised in the near term. In addition, we recognize contingent gains when such gains are realized or when the contingencies have been resolved (generally at the time a settlement has been reached).

Derivatives, Hedges and Financial Instruments – Derivatives are recognized in the balance sheet and measured at fair value. Changes in fair value of derivatives are recorded in results of operations unless the normal purchase or sale exceptions apply, or hedge accounting is elected.

The fair value amounts recognized for our derivative contracts executed with the same counterparty under a master netting arrangement may be offset. We have the choice to offset or not, but that choice must be applied consistently. A master netting arrangement exists if the reporting entity has multiple contracts with a single counterparty that are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract. Offsetting the fair values recognized for the derivative contracts outstanding with a single counterparty results in the net fair value of the transactions reported as an asset or a liability in the balance sheet. When applicable, we present the fair values of our derivative contracts under master netting agreements using a gross fair value presentation.

Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 - Valuations of contracts classified as Level 1 are based on quoted prices in active markets for identical contracts.

Level 2 - Valuations of contracts classified as Level 2 are based on quoted prices for similar contracts and valuation inputs other than quoted prices that are observable for these contracts.

Level 3 - Valuations of assets and liabilities classified as Level 3 are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Recently Issued Accounting Pronouncements

Changes to U.S. GAAP are established by the FASB in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs issued and outstanding or that became effective since January 1, 2023 through the date of these financial statements were assessed and determined not to be applicable or are expected to have minimal impact on our condensed consolidated financial position and results of operations.

9

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Income Per Common Share

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands, Except Per Share Amounts)
Numerator:
Net income	$	15,901	$	58,766
Numerator for basic and diluted net income   per common share	$	15,901	$	58,766
Denominator:
Denominator for basic net income per common    share - adjusted weighted-average shares (1)		75,807		88,421
Effect of dilutive securities:
Unvested restricted stock and stock units		504		1,345
Dilutive potential common shares		504		1,345
Denominator for diluted net income per    common share - adjusted weighted-average    shares		76,311		89,766
Basic net income per common share	$	0.21	$	0.66
Diluted net income per common share	$	0.21	$	0.65

(1)Excludes the weighted-average shares of unvested restricted stock that are contingently issuable.

The following weighted-average shares of securities were not included in the computation of diluted net income per common share as their effect would have been antidilutive:

	Three Months Ended
	March 31,
	2023		2022
Restricted stock and stock units		395,301		—
Stock options		13,000		13,000
		408,301		13,000

3. Current and Noncurrent Accrued and Other Liabilities

	March 31,		December 31,
	2023		2022
	(In Thousands)
Accrued interest	$	22,212	$	11,196
Current portion of operating lease liabilities		7,869		7,259
Accrued payroll and benefits		4,468		12,440
Other		9,590		8,097
		44,139		38,992
Less noncurrent portion		522		522
Current portion of accrued and other liabilities	$	43,617	$	38,470

10

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Long-Term Debt

Our long-term debt consists of the following:

	March 31,			December 31,
	2023			2022
	(In Thousands)
Working Capital Revolver Loan, with a current interest    rate of 8.50% (A)	$	—		$	—
Senior Secured Notes due 2028, with an interest    rate of 6.25% (B)		700,000			700,000
Secured Financing due 2023, with an interest    rate of 8.32% (C)		3,292			4,161
Secured Financing due 2025, with an interest    rate of 8.75% (D)		18,023			19,277
Other		1,080			1,138
Unamortized debt issuance costs		(11,780	)		(12,321	)
		710,615			712,255
Less current portion of long-term debt		8,544			9,522
Long-term debt due after one year, net	$	702,071		$	702,733

(A)Our revolving credit facility, as amended (the “Working Capital Revolver Loan”), provides for advances up to $65 million (the “Maximum Revolver Amount”), based on specific percentages of eligible accounts receivable and inventories and up to $10 million of letters of credit, the outstanding amount as of March 31, 2023, was $0.9 million, which reduces the amount available for borrowing under the Working Capital Revolver Loan. At March 31, 2023, our available borrowings under our Working Capital Revolver Loan were approximately $62.3 million, based on our eligible collateral, less outstanding letters of credit and loan balance. The maturity date of the Working Capital Revolver Loan is on the earlier of (i) the date that is 90 days prior to the earliest stated maturity date of the Senior Secured Notes (unless refinanced or repaid) and (ii) February 26, 2024. Subject to certain conditions and subject to lender approval, the Maximum Revolver Amount may increase up to an additional $10 million. The Working Capital Revolver Loan also provides for a springing financial covenant (the “Financial Covenant”), which requires that, if the borrowing availability is less than 10.0% of the total revolver commitments, then the borrowers must maintain a minimum fixed charge coverage ratio of not less than 1.00 to 1.00. The Financial Covenant, if triggered, is tested monthly.

(B)On October 14, 2021, LSB completed the issuance and sale of $500 million aggregate principal amount of the Notes of its 6.25% Senior Secured Notes due 2028 (the “Notes”), pursuant to an indenture (the “Indenture”), dated as of October 14, 2021. The Notes were issued at a price equal to 100% of their face value.

On March 8, 2022, LSB completed the issuance and sale of an additional $200 million aggregate principal amount of the Notes (the “New Notes”), which were issued pursuant to the Indenture (the Notes together with the New Notes, the “Senior Secured Notes”). The New Notes were issued at a price equal to 100% of their face value, plus accrued interest from October 14, 2021 to March 7, 2022.

The Senior Secured Notes mature on October 15, 2028. Interest is to be paid in arrears on May 15 and October 15.

(C)El Dorado Chemical Company (“EDC”), one of our subsidiaries, is party to a secured financing arrangement with an affiliate of Eldridge. Principal and interest are payable in 48 equal monthly installments with a final balloon payment of approximately $3 million due in June 2023. The final balloon payment was repaid in April 2023.

(D)In August 2020, El Dorado Ammonia L.L.C. (“EDA”), one of our subsidiaries, entered into a $30 million secured financing arrangement with an affiliate of Eldridge. Beginning in September 2020, principal and interest is payable in 60 equal monthly installments with a final balloon payment of approximately $5 million due in August 2025. This financing arrangement is secured by an ammonia storage tank and is guaranteed by LSB.

11

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. Commitments and Contingencies

Outstanding Natural Gas Purchase Commitments – At March 31, 2023, certain of our natural gas contracts qualify as normal purchases under GAAP and thus are not mark-to-market. These contracts included volume purchase commitments with fixed costs of approximately 21.1 million MMBtus of natural gas. Further, the natural gas contracts extend through December 2023 at a weighted-average cost of $3.60 per MMBtu ($75.9 million) and a weighted-average market value of $2.52 per MMBtu ($53.1 million).

Legal Matters - Following is a summary of certain legal matters involving the Company:

A. Environmental Matters

Our facilities and operations are subject to numerous federal, state and local environmental laws and to other laws regarding health and safety matters (collectively, the “Environmental and Health Laws”), many of which provide for certain performance obligations, substantial fines and criminal sanctions for violations. Certain Environmental and Health Laws impose strict liability as well as joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We may be required to remediate contaminated properties currently or formerly owned or operated by us or facilities of third parties that received waste generated by our operations regardless of whether such contamination resulted from the conduct of others or from consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken.

In addition, claims for damages to persons or property, including natural resources, may result from the environmental, health and safety effects of our operations.

There can be no assurance that we will not incur material costs or liabilities in complying with such laws or in paying fines or penalties for violation of such laws. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. The Environmental and Health Laws and related enforcement policies have in the past resulted and could in the future result, in significant compliance expenses, cleanup costs (for our sites or third-party sites where our wastes were disposed of), penalties or other liabilities relating to the handling, manufacture, use, emission, discharge or disposal of hazardous or toxic materials at or from our facilities or the use or disposal of certain of its chemical products. Further, a number of our facilities are dependent on environmental permits to operate, the loss or modification of which could have a material adverse effect on their operations and our financial condition.

Historically, significant capital expenditures have been incurred by our subsidiaries in order to comply with the Environmental and Health Laws and significant capital expenditures are expected to be incurred in the future. We will also be obligated to manage certain discharge water outlets and monitor groundwater contaminants at our facilities should we discontinue the operations of a facility.

As of March 31, 2023, our accrued liabilities for environmental matters totaled approximately $0.5 million relating primarily to the matters discussed below. Estimates of the most likely costs for our environmental matters are generally based on preliminary or completed assessment studies, preliminary results of studies, or our experience with other similar matters. It is reasonably possible that a change in the estimate of our liability could occur in the near term.

1. Discharge Water Matters

Each of our manufacturing facilities generates process wastewater, which may include cooling tower and boiler water quality control streams, contact storm water and miscellaneous spills and leaks from process equipment. The process water discharge, storm-water runoff and miscellaneous spills and leaks are governed by various permits generally issued by the respective state environmental agencies as authorized and overseen by the U.S. Environmental Protection Agency. These permits limit the type and volume of effluents that can be discharged and control the method of such discharge.

In 2017, the PCC filed a Permit Renewal Application for its Non-Hazardous Injection Well Permit at the Pryor Facility. Although the Injection Well Permit expired in 2018, PCC continues to operate the injection well pending the Oklahoma Department of Environmental Quality (“ODEQ”) action on the Permit Renewal Application. Since that time, PCC and ODEQ engaged in ongoing discussions related to the renewal of the injection well to address the wastewater stream. In 2022, ODEQ responded to the application in the form of an information request. PCC has submitted a formal response to the information request and is currently evaluating wastewater treatment alternatives.

In 2006, the El Dorado Facility entered into a Consent Administrative Order (“CAO”) that recognizes the presence of nitrate contamination in the shallow groundwater. The CAO required EDC to perform semi-annual groundwater monitoring, continue operation of a groundwater recovery system, submit a human health and ecological risk assessment and submit a remedial action plan.

The risk assessment was submitted in 2007. In 2015, the Arkansas Department of Environmental Quality (“ADEQ”) stated that El Dorado Chemical was meeting the requirements of the CAO and should continue semi-annual monitoring. A CAO was signed in 2018,

12

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

which required an Evaluation Report of the data and effectiveness of the groundwater remedy for nitrate contamination. During 2019, the Evaluation Report was submitted to the ADEQ and the ADEQ approved the report. No liability has been established as of March 31, 2023, in connection with this ADEQ matter.

2. Other Environmental Matters

In 2002, certain of our subsidiaries sold substantially all of their operating assets relating to a Kansas chemical facility (the “Hallowell Facility”) but retained ownership of the real property where the facility is located. Our subsidiary retained the obligation to be responsible for and perform the activities under, a previously executed consent order to investigate the surface and subsurface contamination at the real property, develop a corrective action strategy based on the investigation and implement such strategy. In addition, certain of our subsidiaries agreed to indemnify the buyer of such assets for these environmental matters.

As the successor to a prior owner of the Hallowell Facility, Chevron Environmental Management Company (“Chevron”) has agreed in writing, within certain limitations, to pay and has been paying one-half of the costs of the investigation and interim measures relating to this matter as approved by the Kansas Department of Health and Environment (the “KDHE”), subject to reallocation.

During this process, our subsidiary and Chevron retained an environmental consultant that prepared and performed a corrective action study work plan as to the appropriate method to remediate the Hallowell Facility. During 2020, the KDHE selected a remedy of annual monitoring and the implementation of an Environmental Use Control (“EUC”). This remedy primarily relates to long-term surface and groundwater monitoring to track the natural decline in contamination and is subject to a 5-year re-evaluation with the KDHE.

The final remedy, including the EUC, the finalization of the cost estimates and any required financial assurances remains under discussion with the KDHE. Pending the results from our discussions regarding the final remedy, we continue to accrue our allocable portion of costs primarily for the additional testing, monitoring and risk assessments that could be reasonably estimated, which amount is included in our accrued liabilities for environmental matters discussed above. The estimated amount is not discounted to its present value. As more information becomes available, our estimated accrual will be refined, as necessary.

B. Other Pending, Threatened or Settled Litigation

In 2013, an explosion and fire occurred at the West Fertilizer Co. (“West Fertilizer”) located in West, Texas, causing death, bodily injury and substantial property damage. West Fertilizer is not owned or controlled by us, but West Fertilizer was a customer of EDC and purchased AN from EDC from time to time. LSB and EDC received letters from counsel purporting to represent subrogated insurance carriers, personal injury claimants and persons who suffered property damages informing LSB and EDC that their clients are conducting investigations into the cause of the explosion and fire to determine, among other things, whether AN manufactured by EDC and supplied to West Fertilizer was stored at West Fertilizer at the time of the explosion and, if so, whether such AN may have been one of the contributing factors of the explosion. Initial lawsuits filed named West Fertilizer and another supplier of AN as defendants.

In 2014, EDC and LSB were named as defendants, together with other AN manufacturers and brokers that arranged the transport and delivery of AN to West Fertilizer, in the case styled City of West, Texas vs. CF Industries, Inc., et al., in the District Court of McLennan County, Texas. The plaintiffs allege, among other things, that LSB and EDC were negligent in the production and marketing of fertilizer products sold to West Fertilizer, resulting in death, personal injury and property damage. EDC retained a firm specializing in cause and origin investigations with particular experience with fertilizer facilities, to assist EDC in its own investigation. LSB and EDC placed its liability insurance carrier on notice and the carrier is handling the defense for LSB and EDC concerning this matter.

Our product liability insurance policies have aggregate limits of general liability totaling $100 million, with a self-insured retention of $250,000, which retention limit has been met relating to the West Fertilizer matter. In August 2015, the trial court dismissed plaintiff’s negligence claims against us and EDC based on a duty to inspect but allowed the plaintiffs to proceed on claims for design defect and failure to warn.

Subsequently, we and EDC have entered into confidential settlement agreements (with approval of our insurance carriers) with several plaintiffs that had claimed wrongful death and bodily injury and insurance companies asserting subrogation claims for damages from the explosion. While these settlements resolve the claims of a number of the claimants in this matter, we continue to be party to litigation related to the explosion. We continue to defend these lawsuits vigorously and we are unable to estimate a possible range of loss at this time if there is an adverse outcome in this matter. As of March 31, 2023, no liability reserve has been established in connection with this matter.

In 2015, we and EDA received formal written notice from Global Industrial, Inc. (“Global”) of Global’s intention to assert mechanic liens for labor, service, or materials furnished under certain subcontract agreements for the improvement of the new ammonia plant (“Ammonia Plant”) at our El Dorado Facility. Global was a subcontractor of Leidos Constructors, LLC (“Leidos”), the general contractor for EDA for the construction for the Ammonia Plant. Leidos terminated the services of Global with respect to their work performed at our El Dorado Facility.

13

LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

LSB and EDA are pursuing the recovery of any damage or loss caused by Global’s work performed through their contract with Leidos at our El Dorado Facility. In March 2016, EDC and LSB were served a summons in a case styled Global Industrial, Inc. d/b/a Global Turnaround vs. Leidos Constructors, LLC et al., in the Circuit court of Union County, Arkansas, wherein Global sought damages under breach of contract and other claims. At the time of the summons, our accounts payable included invoices totaling approximately $3.5 million related to the claims asserted by Global, but such invoices were not approved by Leidos for payment. We have requested indemnification from Leidos under the terms of our contracts, which they have denied. As a result, we are seeking reimbursement of legal expenses from Leidos under our contracts. We also seek damages from Leidos for their wrongdoing during the expansion, including breach of contract, fraud, professional negligence and gross negligence.

During 2018, the court bifurcated the case into: (1) Global’s claims against Leidos and LSB and (2) the cross-claims between Leidos and LSB. Part (1) of the case was tried in the court. In March 2020, the court rendered an interim judgment and issued its final judgment in April 2020. In summary, the judgment awarded Global (i) approximately $7.4 million (including the $3.5 million discussed above) for labor, service and materials furnished relating to the Ammonia Plant, (ii) approximately $1.3 million for prejudgment interest and (iii) a claim of lien on certain property and the foreclosure of the lien to satisfy these obligations. In addition, post-judgment interest will accrue at the annual rate of 4.25% until paid. This judgement was accrued for at the time of the ruling, and we continue to accrue post-judgement interest.

We have filed a notice of intent to appeal and the court entered a stay of the judgment pending appeal. LSB intends to vigorously prosecute its claims against Leidos and vigorously contest the cross-claims in Part (2) of the matter. Due to the impact from the COVID-19 pandemic, the trial date for Part (2) of the matter has been delayed and we are awaiting a new trial date.

No liability was established at March 31, 2023 or December 31, 2022, in connection with the cross-claims in Part (2) of the matter, except for certain invoices held in accounts payable. We are also involved in various other claims and legal actions (including matters involving gain contingencies). It is possible that the actual future development of claims could be different from our estimates but, after consultation with legal counsel, we believe that changes in our estimates will not have a material effect on our business, financial condition, results of operations or cash flows.

6. Derivatives, Hedges and Financial Instruments

Natural Gas Contracts

Periodically, we entered into certain forward natural gas contracts, which are accounted for on a mark-to-market basis. We are utilizing these natural gas contracts as economic hedges for risk management purposes but are not designated as hedging instruments. At March 31, 2023 and December 31, 2022, we had no outstanding natural gas contracts accounted for on a mark-to-market basis. When present the valuations of the natural gas contracts are classified as Level 2.

Financial Instruments

At March 31, 2023 and December 31, 2022, we did not have any financial instruments with fair values materially different from their carrying amounts (which excludes issuance costs, if applicable) except for our Senior Secured Notes included in the table below. The carrying value of our Senior Secured Notes approximates fair value and is classified as a Level 2 fair value measurement. The fair value of financial instruments is not indicative of the overall fair value of our assets and liabilities since financial instruments do not include all assets, including intangibles and all liabilities.

	March 31, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
	(In Millions)
Senior Secured Notes (1)	$	700	$	618	$	700	$	637

1.Based on a quoted price of 88.25 at March 31, 2023 and 91.00 at December 31, 2022.

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LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. Income Taxes

Provision for income taxes is as follows:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Current:
Federal	$	—	$	—
State		290		292
Total Current	$	290	$	292
Deferred:
Federal	$	4,622	$	11,385
State		986		(562	)
Total Deferred	$	5,608	$	10,823
Provision for income taxes	$	5,898	$	11,115

The tax provision for the three months ended March 31, 2023, was $5.9 million (27.1% provision on pre-tax income). The tax provision for the three months ended March 31, 2022, was $11.1 million (15.9% provision on pre-tax income). For 2023, the effective tax rate is higher than the statutory tax rate primarily due to state taxes, including state valuation allowances on certain newly generated state tax attributes. For 2022, the effective tax rate was less than the statutory tax rate primarily due to the impact of the valuation allowances.

We considered both positive and negative evidence in our determination of the need for valuation allowances for deferred tax assets. Information evaluated includes our financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. Valuation allowances are reflective of our quarterly analysis of the four sources of taxable income, including the calculation of the reversal of existing tax assets and liabilities, the impact of financing activities and our quarterly results. Based on our analysis, we have determined that it is more-likely-than-not that all of our federal deferred tax assets and a portion of our state deferred tax assets will be utilized. We estimate an approximately $1.7 million increase in the related valuation allowance associated with these state deferred tax assets will be recorded during the year as part of the estimated annual effective tax rate applied to ordinary income.

We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.

LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the 2019-2022 years remain open for all purposes of examination by the U.S. Internal Revenue Service (“IRS”) and other major tax jurisdictions. Additionally, the 2013-2018 years remain subject to examination for determining the amount of net operating loss and other carryforwards.

8. Net Sales

Disaggregated Net Sales

We primarily derive our revenues from the sales of various chemical products. The Company’s net sales disaggregation is consistent with other financial information utilized or provided outside of our condensed consolidated financial statements. With our continued focus on optimizing our commercial strategy and product mix going forward we will report revenue by product as opposed to the end market. Accordingly, this approach is reflected in disaggregated net sales, mirroring how the Company manages its net sales by product through contracts with customers.

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LSB INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents our net sales disaggregated by our principal product types:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Net sales:
AN & Nitric Acid	$	58,272	$	71,800
Urea ammonium nitrate (UAN)		46,590		56,569
Ammonia		63,415		59,342
Other		12,687		11,270
Total net sales	$	180,964	$	198,981

Other Information

Although most of our contracts have an original expected duration of one year or less, for our contracts with a duration greater than one year at contract inception, the average remaining expected duration was approximately 30 months at March 31, 2023.

Liabilities associated with contracts with customers (contract liabilities) primarily relate to deferred revenue and customer deposits associated with cash payments received in advance from customers for volume shortfall charges and product shipments. We had approximately $3.8 million, $2.0 million and $1.6 million of contract liabilities as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively. For the three months ended March 31, 2023 and 2022, revenues of $0.6 million and $1.4 million, respectively, were recognized and included in the balance at the beginning of the respective period. We had approximately $86.9 million of accounts receivable as of December 31, 2021.

For most of our contracts with customers, the transaction price from the inception of a contract is constrained to a short period of time (generally one month) as these contracts contain terms with variable consideration related to both price and quantity. At March 31, 2023, we have remaining performance obligations with certain customer contracts, excluding contracts with original durations of less than one year and for service contracts for which we have elected the practical expedient for consideration recognized in revenue as invoiced. The remaining performance obligations totals approximately $92.1 million, of which approximately 60% of this amount relates to 2023 through 2025, approximately 26% relates to 2026 through 2027, with the remainder thereafter.

9. Related Party Transactions

As of March 31, 2023, we have two separate outstanding financing arrangements by an affiliate of Eldridge as discussed in footnotes (C) and (D) of Note 4. An affiliate of Eldridge holds $30 million of the New Notes.

10. Supplemental Cash Flow Information

The following provides additional information relating to cash flow activities:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Cash payments (refunds) for:
Income taxes, net	$	20	$	—
Noncash investing and financing activities:
Accounts receivable, supplies, other assets, accounts     payable and accrued liabilities associated with additions     of property, plant and equipment	$	21,761	$	17,295
Accounts payable associated with debt-related costs	$	—	$	741

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with a review of the other Items included in this Form 10-Q and our March 31, 2023 condensed consolidated financial statements included elsewhere in this report. A reference to a “Note” relates to a note in the accompanying notes to the condensed consolidated financial statements. This MD&A reflects our operating results, unless otherwise noted. Certain statements contained in this MD&A may be deemed to be forward-looking statements. See “Special Note Regarding Forward-Looking Statements.”

Overview

General

LSB is headquartered in Oklahoma City, Oklahoma and through our subsidiaries, we manufacture and sell chemical products for the agricultural, mining and industrial markets. We own and operate facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma and operate a facility on behalf of Covestro in Baytown, Texas. Our products are sold through distributors and directly to end customers primarily throughout the U.S. and parts of Mexico, Canada and the Caribbean.

Key Operating Initiatives for 2023

We expect our future results of operations and financial condition to benefit from the following key initiatives:

•Investing to improve Environmental, Health & Safety and Reliability at our Facilities while Supplying our Customers with Products of the Highest Quality.

▪We believe that our operational progress over the past several years represents proof that high safety standards not only enable us to protect what matters, which is the well-being of our employees, but also translates into improved plant performance. In 2023 we remain focused on our efforts to further the progress we have made with our safety programs to move closer to attaining zero injuries. We plan to continue to invest additional capital at all three of our facilities during 2023 to build upon the success we have had in implementing enhanced safety programs during the last several years.

▪We have multiple initiatives currently underway focused on continuing to improve the reliability of our plants as we advance towards our 95% on-stream operating rate goal. Progress towards this goal would enable us to produce greater volumes of product for sale while lowering our unit cost of production thereby increasing our overall profitability. Additionally, our product quality program continues to focus on providing products to our customers that meet our quality standards.

•Continue Broadening the Distribution and Optimization of our Product Mix. Over the course of 2022, we were successful in improving upon the production capacity of our plants, particularly through Turnarounds at two of our facilities. We plan to continue to expand the distribution of our products by partnering with customers to take product into different markets, while also focusing on opportunities to upgrade our margins through the optimization of our product mix. In January of 2023, we took over direct distribution of our Pryor facility’s UAN production following several years of working with a third party to sell the product. We believe that this, combined with continued expansion of our customer relationships and the robust market analysis capabilities we have developed, will make us more effective in identifying and capitalizing on the most profitable distribution opportunities for our products. Additionally, we will continue to progress several capital improvement projects during 2023 that are related to our storage and distribution capabilities which we believe will assist us in improving our overall margins.

•Development and Implementation of a Strategy to Capitalize on Low Carbon Ammonia and Clean Energy Opportunities. The reduction of greenhouse gas emissions, particularly related to carbon dioxide, has been and we expect will increasingly become a global environmental priority as part of efforts to stem the harmful effects of climate change. Ammonia has continued to emerge as one of the more viable alternatives to serve as a hydrogen-based energy source for a variety of applications due to its higher energy density and ease of storage relative to hydrogen gas. Blue and green ammonia can be used as zero carbon fuel in the maritime sector, as a carbon free fertilizer and as a coal substitute in power generation. If ammonia were to be adopted for these and other energy needs globally, some studies have indicated that future demand could increase significantly from current levels of global annual production of ammonia.

As a result, we are currently evaluating and developing projects that could enable us to become a producer and marketer of blue and green ammonia and other derivative products. Blue ammonia is produced using natural gas and conventional processes but includes an additional stage where the carbon dioxide emissions are captured and permanently stored in deep underground rock formations. The resulting low carbon emission product, we believe, can be sold at a premium to agricultural, industrial, mining, power generation and marine customers seeking to reduce their carbon footprint and potentially capitalize on government incentives. Green ammonia is ammonia produced using renewable energy to power electrolyzers that extract hydrogen from water, resulting in zero-carbon production of ammonia, which we believe can also be sold at a premium to a variety of customers and industries around the world.

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We believe we are well-positioned to capitalize on this opportunity and become a market leader given our potential to retrofit our existing plants rather than needing to invest entirely in greenfield projects, which we believe can reduce our time to market for this product and also reduce the upfront capital expenditures necessary to enable us to produce this product, thereby enhancing the economic attractiveness for us to such investments.

•Evaluate and Pursue Organic Capacity Expansion. We are evaluating opportunities across all our facilities to increase production capacity through the implementation of several potential debottlenecking projects. Our initial calculations suggest that these projects could potentially represent significant incremental annual profitability using an assumed mid-market pricing for Tampa Ammonia, UAN and natural gas. We have engaged third party engineering firms to conduct feasibility studies on several potential projects at our El Dorado site. We expect to receive the results of these studies by mid-year 2023. If the proposed projects meet our return criteria, we would expect to make recommendations to our Board to move forward and engage an engineering firm to conduct the front end engineering design ("FEED") process. We estimate the FEED process will take nine to twelve months to complete. Upon completion of the FEED process, we expect to again review the projects in relation to the outlook for our product end markets and the overall economy and make a decision as to which products to pursue.

•Pursue Acquisitions of Strategic Assets or Companies. We are continuously evaluating opportunities to acquire strategic assets or companies where we believe those acquisitions will enhance the value of the Company and provide attractive returns. We evaluate assets and companies that can provide us with geographic expansion, extend an existing product line, add one or more new product lines, leverage our existing ammonia production capabilities, or complement our existing business lines, among other accretive opportunities.

Recent Business Developments

Signed Agreements for Low and No Carbon Ammonia Projects

In April 2022 we entered into an agreement with Lapis Energy to develop a project to capture and permanently sequester CO2 at our El Dorado, Arkansas facility. Lapis, backed by Cresta Fund Management, a Dallas-based middle-market infrastructure investment firm, will make 100% of the capital investment required for the project development. The project is expected to be completed by 2025, subject to the approval of a Class VI permit, at which time CO2 injections are expected to begin. Once operational, the project at the El Dorado site will initially capture and permanently sequester more than 450,000 metric tons of CO2 per year in underground saline aquifers, with the potential to increase this quantity based on a potential debottlenecking project at the facility. The permanently sequestered CO2 generated from the facility’s ammonia production is expected to qualify for federal tax credits under Internal Revenue Code Section 45Q, which are $85 per metric ton of CO2 captured beginning in 2026. Once in operation, the sequestered CO2 is expected to reduce LSB’s scope 1 GHG emissions by approximately 25% from current levels. In addition, sequestering more than 450,000 metric tons of CO2 annually is expected to enable LSB to produce over 375,000 metric tons of blue ammonia annually, a product that could potentially be sold at higher price levels than conventional ammonia. In February 2023, we achieved a key milestone in the advancement of our blue ammonia project at El Dorado by filing a pre-construction Class VI permit application with the U.S. Environmental Protection Agency (the “EPA”). The EPA accepted our application in March 2023.

In May 2022 we entered into agreements with Thyssenkrupp Uhde USA, LLC and Bloom Energy Corporation, (NYSE:BE) to develop a project to produce approximately 30,000 metric tons of zero-carbon or “green” ammonia per year at our Pryor, Oklahoma facility. Thyssenkrupp Uhde completed a feasibility study to convert a small portion of Pryor’s existing conventional or “grey” ammonia capacity into green ammonia. We continue to work with several engineering, procurement and construction firms for other designs and cost estimates. Once a project design is selected and Board approval is granted, the project will move forward into the FEED, detailed engineering and construction. Bloom will operate and maintain the solid oxide electrolyzer. The green hydrogen produced from the electrolyzers is expected to qualify for federal incentive programs such as the production and tax credit under Internal Revenue Code Section 45V, which are up to $3 per kilogram of clean hydrogen beginning in 2023.

Lower Product Selling Prices Partially Offset by Stronger Sales Volume

Sales volumes of our products increased in the first quarter of 2023 as compared to the same quarter of 2022. This was driven largely by stronger ammonia production at our facilities, reflecting investments we have made in plant reliability over the past several years. With respect to our first quarter 2023 profitability, higher sales volumes were more than offset by the impact of lower selling prices relative to the first quarter of 2022.

A key factor in the decline in nitrogen fertilizer prices over the past eight months is the decline in natural gas costs in Europe. Natural gas is the primary feedstock for the production of ammonia. Natural gas prices in Europe have dropped due to a reduction in demand primarily related to warmer than expected temperatures throughout Europe this past winter and a reduction in industrial demand. The lower natural gas costs have enabled numerous European ammonia facilities to resume operations, increasing global supply for nitrogen products. With that said, natural gas costs in Europe remain significantly higher than those in the U.S. and European operators remain the high cost, or marginal producers, with production costs substantially higher than those in the U.S.

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In addition to the lower production costs for European producers as compared to a year ago, the decline in fertilizer prices reflects the impact of a delayed spring fertilizer application in many corn growing regions of the U.S. due to cold and wet weather. Nitrogen prices have also been pressured by lower demand for ammonia from Asian industrial markets as well as from phosphate producers.

Despite these factors, nitrogen pricing remains at attractive levels and appears to have stabilized with potential for improvement as 2023 progresses, given an increasingly favorable demand outlook.

We expect favorable U.S. corn market dynamics to continue to provide support for stronger fertilizer pricing as 2023 progresses. Current U.S. corn stock/use ratios sit near multi-year lows due, in part, to the impact of dry conditions in South America, the Western U.S. and parts of Europe on global corn supplies. As a result, corn prices remain significantly above 10-year averages which, combined with lower input costs relative to last year, should incentivize farmers to plant additional acres and maximize yield through the current planting season. Recent U.S. Department of Agriculture (“USDA”) reports indicate that U.S. corn acreage planted in the 2022-2023 planting season was approximately 88.6 million acres, lower than the 2021-2022 estimated plantings of 93.3 million acres. As a result of the reduction in acres planted for the 2022-2023 season and the impact on global corn stocks which remain below usage levels, we believe that acres planted for the 2023-2024 season could increase to approximately 92 million acres, which we expect to drive increased demand for fertilizers.

Our industrial business has been robust and demand for our products is steady. Nitric acid demand is stable as the demand impacts of high inflation in the U.S. has been offset by global producers shifting production from international facilities to their U.S. operations in order to take advantage of lower domestic input costs. Demand for AN for use in mining applications is robust due to attractive market fundamentals for quarrying and aggregate production and U.S. metals. While economic concerns persist for 2023, we believe that we have a meaningful degree of downside protection from the potential impacts of a recession given the nature of our contracts and our ability to shift our production mix to products where demand and pricing are strongest.

Key Industry Factors

Supply and Demand

Fertilizer

The price at which our agricultural products are ultimately sold depends on numerous factors, including the supply and demand for nitrogen fertilizers which, in turn, depends upon world grain demand and production levels, the cost and availability of transportation and storage, weather conditions, competitive pricing and the availability of imports. Additionally, expansions or upgrades of competitors’ facilities and international and domestic political and economic developments continue to play an important role in the global nitrogen fertilizer industry economics, including the impact from the Phase 1 trade agreement between the U.S. and China. These factors can affect, in addition to selling prices, the level of inventories in the market which can cause price volatility and affect product margins.

From a farmer’s perspective, the demand for fertilizer is affected by the aggregate crop planting decisions and fertilizer application rate decisions of individual farmers. Individual farmers make planting decisions based largely on prospective profitability of a harvest, while the specific varieties and amounts of fertilizer they apply depend on factors such as their financial resources, soil conditions, weather patterns and the types of crops planted.

Additionally, changes in corn prices, as well as soybean, cotton and wheat prices, can affect the number of acres of corn planted in a given year and the number of acres planted will drive the level of nitrogen fertilizer consumption, likely affecting prices.

According to the April Report, farmers planted approximately 88.6 million acres of corn in 2022, down 5% compared to the 2021 planting season. In addition, the USDA estimates the U.S. ending stocks for the 2022 Harvest will be approximately 34 million metric tons, a 2.6% decrease from the 2021 Harvest. The USDA also lowered the expected yield for the 2022 Harvest, down approximately 2% from a year ago.

The following April 2023 estimates are associated with the corn market:

	2023 Crop		2022 Crop					2021 Crop
	(2022 Harvest)		(2021 Harvest)		Percentage			(2020 Harvest)		Percentage
	April Report (1)		April Report (1)		Change (2)			April Report (1)		Change (3)
U.S. Area Planted (Million acres)		88.6		93.3		(5.0	%)		90.7		(2.3	%)
U.S. Yield per Acre (Bushels)		173.3		176.7		(1.9	%)		171.4		1.1	%
U.S. Production (Million bushels)		13,730		15,074		(8.9	%)		14,111		(2.7	%)
U.S. Ending Stocks (Million metric tons)		34.1		35.0		(2.6	%)		31.4		8.6	%
World Ending Stocks (Million metric tons)		295.3		306.9		(3.8	%)		292.8		0.9	%

1.Information obtained from WASDE report dated April 11, 2023 (“April Report”) for the 2022/2023 (“2023 Crop”), 2021/2022 (“2022 Crop”) and 2020/2021 (“2021 Crop”) corn marketing years. The marketing year is the twelve-month period during

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which a crop normally is marketed. For example, the marketing year for the current corn crop is from September 1 of the current year to August 31 of the next year. The year begins at the harvest and continues until just before harvest of the following year.

2.Represents the percentage change between the 2023 Crop amounts compared to the 2022 Crop amounts.

3.Represents the percentage change between the 2023 Crop amounts compared to the 2021 Crop amounts.

The current USDA corn outlook for the U.S. is for reductions to imports and food, seed, and industrial (FSI) use, with unchanged ending stocks. Corn imports were lowered 10 million bushels and feed and residual use was left unchanged. FSI was lowered 10 million bushels reflecting cuts to corn used for glucose and dextrose and starch. With supply and use falling by the same amount, ending stocks are unchanged. From a demand perspective, corn prices remain well above historical 5-year averages and remain significantly higher than $4 per bushel, the level that we believe represents a key threshold as it relates to favorable farmer economics.

Industrial and Mining Products

Our industrial products sales volumes are dependent upon general economic conditions, primarily in the housing, automotive and paper industries. Demand for our industrial products has remained steady. Nitric acid demand is stable as the demand impacts of high inflation in the U.S. has been offset by global producers shifting production from international facilities to their U.S. operations in order to take advantage of lower domestic input costs. Our sales prices generally vary with the market price of ammonia or natural gas, as applicable, in our pricing arrangements with customers.

Our mining products are LDAN and AN solution, which are primarily used as AN fuel oil and specialty emulsions for usage in the quarry and the construction industries, for metals mining and to a lesser extent, for coal. Demand for AN for use in mining applications is solid due to attractive market fundamentals for quarrying and aggregate production and U.S. metals.

While economic concerns persist for 2023, we believe that for both our industrial and mining products we have a meaningful degree of downside protection from the potential impacts of a recession given the nature of our contracts and our ability to shift our production mix to products where demand and pricing are strongest.

Natural Gas Prices

Natural gas is the primary feedstock used to produce nitrogen fertilizers at our manufacturing facilities. In recent years, U.S. natural gas reserves have increased significantly due to, among other factors, advances in extracting shale gas, which has reduced and stabilized natural gas prices, providing North America with a cost advantage over certain imports. As a result, our competitive position and that of other North American nitrogen fertilizer producers has been positively affected.

We historically have purchased natural gas either on the spot market, through forward purchase contracts, or a combination of both and have used forward purchase contracts to lock in pricing for a portion of our natural gas requirements. These forward purchase contracts are generally either fixed-price or index-price, short-term in nature and for a fixed supply quantity. We are able to purchase natural gas at competitive prices due to our connections to large distribution systems and their proximity to interstate pipeline systems.

The following table shows the volume of natural gas we purchased and the average cost per MMBtu:

	Three Months Ended
	March 31,
	2023		2022
Natural gas volumes (MMBtu in millions)		7.4		7.2
Natural gas average cost per MMBtu	$	5.66	$	4.74

Transportation Costs

Costs for transporting nitrogen-based products can be significant relative to their selling price. We continue to evaluate the recent rising costs of freight domestically. As a result of increases in demand for available rail, truck and barge options to transport product, primarily during the spring and fall planting seasons, higher transportation costs have and could continue to impact our margins if we are unable to fully pass through these costs to our customers. Additionally, continued truck driver shortages could impact our ability to fulfill customer demand. As a result, we continue to evaluate supply chain efficiencies to reduce or counter the impact of higher logistics costs.

Key Operational Factors

Facility Reliability

Consistent, reliable and safe operations at our chemical plants are critical to our financial performance and results of operations. The financial effects of planned downtime at our plants, including Turnarounds is mitigated through a diligent planning process that considers the availability of resources to perform the needed maintenance and other factors. Unplanned downtime of our plants typically results in lost contribution margin from lost sales of our products, lost fixed cost absorption from lower production of our products and increased costs related to repairs and maintenance. All Turnarounds result in lost contribution margin from lost sales of our products, lost fixed

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cost absorption from lower production of our products and increased costs related to repairs and maintenance, which repair and maintenance costs are expensed as incurred.

Our Cherokee Facility is currently on a three-year ammonia plant Turnaround cycle completing with the next ammonia plant Turnaround planned in the third quarter of 2024.

Our El Dorado Facility completed its scheduled ammonia plant Turnaround during the third quarter of 2022. Our Pryor Facility completed its scheduled ammonia plant Turnaround during the fourth quarter of 2022. Our El Dorado Facility and our Pryor Facility are now on a three-year and two-year ammonia plant Turnaround cycle, respectively.

Ammonia Production

Ammonia is the basic product used to produce all of our upgraded products. The ammonia production rates of our plants affect the total cost per ton of each product produced and the overall sales of our products. For 2023, we are targeting total ammonia production of approximately 830,000 tons to 850,000 tons.

Forward Sales Contracts

We use forward sales of our fertilizer products to optimize our asset utilization, planning process and production scheduling. These sales are made by offering customers the opportunity to purchase product on a forward basis at prices and delivery dates that are agreed upon, with dates typically occurring within 12 months. We use this program to varying degrees during the year depending on market conditions and our view of changing price environments. Fixing the selling prices of our products months in advance of their ultimate delivery to customers typically causes our reported selling prices and margins to differ from spot market prices and margins available at the time of shipment.

Consolidated Results of the First Quarter of 2023

Our consolidated net sales for the first quarter of 2023 were $181.0 million compared to $199.0 million for the same period in 2022. Our consolidated operating income for the first quarter of 2023 was $30.5 million compared to $80.0 million for the same period in 2022. The items impacting our operating results are discussed in more detail below and under “Results of Operations.”

Items Affecting Comparability of Results of the First Quarter

Selling Prices

For the first quarter of 2023, average selling prices for our key products decreased compared to the first quarter of 2022. As discussed above under “Recent Business Developments,” declining European natural gas prices resulting in ammonia production costs in Europe declining substantially, translating into lower selling prices for ammonia and ammonia derivative fertilizers.

For the first quarter of 2023, average industrial selling prices for most of our products were also lower compared to the same period of 2022, primarily driven by the $478 per metric ton decrease in the Tampa Ammonia benchmark price, as many of our industrial contracts are indexed to the Tampa Ammonia benchmark price.

Results of Operations

The following Results of Operations should be read in conjunction with our condensed consolidated financial statements for the three months ended March 31, 2023 and 2022 and accompanying notes and the discussions under “Overview” and “Liquidity and Capital Resources” included in this MD&A.

We present the following information about our results of operations. Net sales to unaffiliated customers are reported in the condensed consolidated financial statements and gross profit represents net sales less cost of sales. Net sales are reported on a gross basis with the cost of freight being recorded in cost of sales.

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Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The following table contains certain financial information:

	Three Months Ended
	March 31,									Percentage
	2023			2022			Change			Change
	(Dollars In Thousands)
Net sales:
AN & Nitric Acid	$	58,272		$	71,800		$	(13,528	)		(19	)%
Urea ammonium nitrate (UAN)		46,590			56,569			(9,979	)		(18	)%
Ammonia		63,415			59,342			4,073			7	%
Other		12,687			11,270			1,417			13	%
Total net sales	$	180,964		$	198,981		$	(18,017	)		(9	)%
Gross profit:
Adjusted gross profit (1)	$	59,015		$	110,418		$	(51,403	)		(47	)%
Depreciation and amortization (2)		(17,416	)		(17,157	)		(259	)		2	%
Turnaround expense		6			(2,531	)		2,537			(100	)%
Total gross profit		41,605			90,730			(49,125	)		(54	)%
Selling, general and administrative expense		9,867			10,935			(1,068	)		(10	%)
Other expense (income), net		1,203			(176	)		1,379
Operating income		30,535			79,971			(49,436	)		(62	)%
Interest expense, net		12,212			9,955			2,257			23	%
Non-operating other expense (income), net		(3,476	)		135			(3,611	)
Provision for income taxes		5,898			11,115			(5,217	)		(47	)%
Net income	$	15,901		$	58,766		$	(42,865	)		73	%
Other information:
Gross profit percentage (3)		23.0	%		45.6	%		(22.6	)%
Adjusted gross profit percentage (3)		32.6	%		55.5	%		(22.9	)%
Property, plant and equipment expenditures	$	18,437		$	8,254		$	10,183

(1)Represents a non-GAAP measure since the amount excludes unallocated depreciation, amortization and Turnaround expenses.

(2)Represents amount classified as cost of sales.

(3)As a percentage of the total net sales.

The following tables provide key operating metrics for the fertilizer and major industrial and mining products:

	Three Months Ended
	March 31,							Percentage
Product (tons sold)	2023		2022		Change			Change
AN & Nitric Acid		122,745		144,517		(21,772	)		(15	)%
Urea ammonium nitrate (UAN)		113,026		100,153		12,873			13	%
Ammonia		88,997		60,725		28,272			47	%
Total		324,768		305,395		19,373			6	%

	Three Months Ended
	March 31,							Percentage
Gross Average Selling Prices (price per ton)	2023		2022		Change			Change
AN & Nitric Acid	$	475	$	497	$	(22	)		(4	)%
Urea ammonium nitrate (UAN)	$	412	$	565	$	(153	)		(27	)%
Ammonia	$	713	$	977	$	(264	)		(27	)%

	Three Months Ended
	March 31,							Percentage
Average Benchmark Prices (price per ton)	2023		2022		Change			Change
Tampa Ammonia Benchmark	$	728	$	1,206	$	(478	)		(40	)%
NOLA UAN	$	318	$	569	$	(251	)		(44	)%

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Net Sales

Net sales of our primary products decreased during the first quarter of 2023 compared to the prior year period driven by the impact of lower selling prices relative to the first quarter of 2022 for all of our products. Partially offsetting weaker pricing was an increase in sales volume of ammonia driven largely by stronger production at our facilities, reflecting the investments made in plant reliability over the past several years.

Demand for our industrial and mining products remains strong despite growing global recessionary forces. Our contractual agreements with industrial customers that specify minimum volumes and our product mix flexibility helps us mitigate the impact of a reduction in demand from certain end markets by shifting production to products with stronger demand.

Gross Profit

As noted in the table above, we recognized a gross profit of $41.6 million for the first quarter of 2023 compared to $90.7 million for the same period in 2022, or a $49.1 million reduction. Overall, our gross profit percentage was 23.0% compared to 45.6% for the same period in 2022. Our adjusted gross profit percentage decreased to 32.6% for the first quarter of 2023 from 55.5% for the first quarter of 2022.

The decrease in gross profit was primarily driven by lower sales prices for our products partially offset by higher sales volumes of our ammonia and UAN products. Gross profit was also negatively impacted by higher overall average natural gas costs, both in our beginning inventory and inventory produced during the first quarter of 2023 which averaged $5.66 per MMBtu for 2023 as compared to $4.74 per MMBtu for 2022.

Selling, General and Administrative

Our SG&A expenses were $9.9 million for the first quarter of 2023, a decrease of $1.1 million compared to the same period in 2022. The net decrease was primarily driven by approximately $2.4 million of expense relating to nonrecurring transaction fees incurred and other professional fees during the first quarter of 2022 partially offset by a $1.3 million increase in payroll related expense for the first quarter of 2023.

Other Expense (Income), net

Other expense incurred during the first quarter of 2023 primarily relates to losses incurred on the disposal of assets.

Interest Expense

Interest expense for the first quarter of 2023 was $12.2 million compared to $10.0 million for the same period of 2022. The increase relates to the issuance of $200 million of 6.25% Senior Secured Notes during March of 2022 which were outstanding during the entire first quarter of 2023.

Non-operating Other Expense (Income), net

Non-operating other income for the first quarter of 2023 was $3.5 million primarily relating to interest income from our short-term investments. Non-operating other expense was minimal for the first quarter of 2022.

Provision for Income Taxes

The provision for income taxes for the first quarter of 2023 was $5.9 million compared to $11.1 million for the same period of 2022. The resulting effective tax rate for the first quarter of 2023 was 27.1% compared to 15.9% for the same period of 2022. For the first quarter of 2023, the effective tax rate is greater than the statutory rate primarily due to the impact of state taxes including state valuation allowances on certain newly generated state tax attributes. For the first quarter of 2022 the effective tax rate was lower than the statutory rate primarily due to the impact of the valuation allowances. See discussion in Note 7.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes our cash flow activities for the three months ended March 31:

	2023			2022			Change
	(In Thousands)
Net cash flows from operating activities	$	59,247		$	85,492		$	(26,245	)
Net cash flows from investing activities	$	(63,379	)	$	(97,514	)	$	34,135
Net cash flows from financing activities	$	(10,688	)	$	184,177		$	(194,865	)

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Net Cash Flow from Operating Activities

Net cash provided by operating activities was $59.2 million for the first three months of 2023 compared to $85.5 million for the same period of 2022, a change of $26.2 million.

For the first three months of 2023, the net cash provided is the result of net income of $15.9 million plus adjustments of $17.4 million for depreciation and amortization of PP&E, $5.6 million for deferred taxes, other adjustments of $1.9 million and cash provided of $18.4 million primarily from our working capital.

For the first quarter of 2022, the net cash provided is the result of net income of $58.8 million plus adjustments of $17.2 million for depreciation and amortization of PP&E, $10.8 million for deferred taxes and other adjustments of $1.7 million and net cash used of $3.0 million primarily from our working capital.

Net Cash Flow from Investing Activities

Net cash used by investing activities was $63.4 million for the first three months of 2023 compared to $97.5 million for the same period of 2022, a change of $34.1 million.

For the first three months of 2023, the net cash used primarily relates purchases of short-term investments of $133.7 million and expenditures for PP&E of $18.4 million, partially offset by proceeds from short-term investments of $88.7 million.

For the first quarter of 2022, the net cash used primarily relates purchases of short-term investments of $89.3 million and expenditures for PP&E.

Net Cash Flow from Financing Activities

Net cash used by financing activities was $10.7 million for the first three months of 2023 compared to net cash provided of $184.2 million for the same period of 2022, a change of $194.9 million.

For the first three months of 2023, the net cash used primarily consists of payments on other long-term debt and short-term financing of $8.2 million and payments of $2.5 million for other financing activities.

For the first quarter of 2022, the net cash provided primarily consists of proceeds of $200 million from the New Notes partially offset by payments on other long-term debt and short-term financing of $9.7 million, payments of $4.1 million for equity and debt-related cost and $2.0 million for other financing activities.

Capitalization

The following is our total current cash, short-term investments, long-term debt and stockholders’ equity:

	March 31,			December 31,
	2023			2022
	(In Millions)
Cash and cash equivalents	$	48.9		$	63.8
Short-term investments		376.9			330.6
Total cash, cash equivalents and short-term investments	$	425.8		$	394.4
Long-term debt:
Working Capital Revolver Loan	$	—		$	—
Senior Secured Notes due 2028 (1)		700.0			700.0
Secured Financing due 2023		3.3			4.2
Secured Financing due 2025		18.0			19.3
Other		1.1			1.1
Unamortized debt issuance costs		(11.8	)		(12.3	)
Total long-term debt, including current portion, net	$	710.6		$	712.3
Total stockholders' equity	$	530.0		$	515.9

(1)See discussion contained in Note 4.

We currently have a revolving credit facility, our Working Capital Revolver Loan, with a borrowing base of $65 million. As of March 31, 2023, our Working Capital Revolver Loan was undrawn and had approximately $62.3 million of availability.

For the full year of 2023, we expect capital expenditures to be approximately $60 million to $80 million. This capital spending is primarily planned for reliability and maintenance capital projects.

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From time to time, when the Company exceeds the funding threshold in our natural gas purchase commitments the Company is required to fund cash collateral to our counterparty.

We believe that the combination of our cash on hand, short-term investments, the availability on our revolving credit facility and our cash flow from operations will be sufficient to fund our anticipated liquidity needs for the next twelve months.

As of March 31, 2023, we have approximately $426 million of cash and short-term investments. From time to time, we may seek to deploy capital through additional share repurchases or the retirement or purchase of outstanding debt. Such repurchases may be made in open market purchases, privately negotiated transactions or otherwise and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Compliance with Long - Term Debt Covenants

As discussed in Note 4, the Working Capital Revolver Loan requires, among other things, that we meet certain financial covenants. The Working Capital Revolver Loan does not include financial covenant requirements unless a defined covenant trigger event has occurred and is continuing. As of March 31, 2023, no trigger event had occurred.

Loan Agreements

Senior Secured Notes due 2028 – LSB has $700 million aggregate principal amount of the 6.25% Senior Secured Notes currently outstanding. Interest is to be paid semiannually in arrears on May 15th and October 15th, maturing October 15, 2028.

Secured Financing due 2023 – EDC is party to a secured financing arrangement with an affiliate of Eldridge. Principal and interest are payable in 48 equal monthly installments with a final balloon payment of approximately $3 million due in June 2023. The final balloon payment was repaid in April 2023.

Secured Financing due 2025 – EDA is party to a $30 million secured financing arrangement with an affiliate of Eldridge. Principal and interest are payable in 60 equal monthly installments with a final balloon payment of approximately $5 million due in August 2025.

Working Capital Revolver Loan – At March 31, 2023, our Working Capital Revolver Loan was undrawn and had approximately $62.3 million of availability, based on our eligible collateral, less outstanding letters of credit as of that date. Also see discussion above under “Compliance with Long-Term Debt Covenants.”

Capital Expenditures – First Quarter 2023

For the first quarter of 2023, capital expenditures relating to PP&E were $18.4 million. The capital expenditures were funded primarily from cash and working capital.

See discussion above under “Capitalization” for our expected capital expenditures.

Expenses Associated with Environmental Regulatory Compliance

We are subject to specific federal and state environmental compliance laws, regulations and guidelines. As a result, our expenses were $1.1 million for the first quarter of 2023 in connection with environmental projects. For the remainder of 2023, we expect to incur expenses ranging from $3.1 million to $3.5 million in connection with additional environmental projects. However, it is possible that the actual costs could be significantly different than our estimates.

Seasonality

We believe fertilizer products sold to the fertilizer industry are seasonal, while sales into the industrial and mining sectors generally are less susceptible to seasonal fluctuations. The selling seasons for fertilizer products are primarily during the spring and fall planting seasons, which typically extend from March through June and from September through November in the geographical markets where we distribute the majority of our fertilizer products. As a result, we typically increase our inventory of fertilizer products prior to the beginning of each planting season in order to meet the demand for our products. In addition, the amount and timing of sales to the fertilizer markets depend upon weather conditions and other circumstances beyond our control.

Performance and Payment Bonds

We are contingently liable to sureties in respect of insurance bonds issued by the sureties in connection with certain contracts entered into by subsidiaries in the normal course of business. These insurance bonds primarily represent guarantees of future performance of our subsidiaries. As of March 31, 2023, we have agreed to indemnify the sureties for payments, up to $9.7 million, made by them in respect of such bonds. These insurance bonds are expected to expire or be renewed later in 2023-2024.

New Accounting Pronouncements

Refer to Note 1 for recently issued accounting standards.

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Critical Accounting Policies and Estimates

See “Critical Accounting Policies and Estimates,” Item 7 of our 2022 Form 10-K. In addition, the preparation of financial statements requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosures of contingencies and fair values, including, but not limited to, various environmental and legal matters, including matters discussed under footnote A of Note 5.

Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. We establish valuation allowances if we believe it is more-likely-than-not that some or all of deferred tax assets will not be realized. Significant judgment is applied in evaluating the need for and the magnitude of appropriate valuation allowances against deferred tax assets.

It is also reasonably possible that the estimates and assumptions utilized as of March 31, 2023 could change in the near term. Actual results could differ materially from these estimates and judgments, as additional information becomes known.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K under the Exchange Act.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

General

Our results of operations and operating cash flows are impacted by changes in market prices of ammonia and natural gas and changes in market interest rates.

Forward Sales Commitments Risk

Periodically, we enter into forward firm sales commitments for products to be delivered in future periods. As a result, we could be exposed to embedded losses should our product costs exceed the firm sales prices at the end of a reporting period. At March 31, 2023, we had no embedded losses associated with sales commitments with firm sales prices.

Commodity Price Risk

A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Since we are exposed to commodity price risk, we periodically enter into contracts to purchase natural gas for anticipated production needs to manage risk related to changes in prices of natural gas commodities. Generally, these contracts are considered normal purchases because they provide for the purchase of natural gas that will be delivered in quantities expected to be used over a reasonable period of time in the normal course of business, these contracts are exempt from the accounting and reporting requirements relating to derivatives. At March 31, 2023, we had no outstanding natural gas contracts which are accounted for on a mark-to-market basis.

Interest Rate Risk

Generally, we are exposed to variable interest rate risk with respect to our revolving credit facility. As of March 31, 2023, we had no outstanding borrowings on this credit facility and no other variable rate borrowings. We currently do not hedge our interest rate risk associated with our variable interest loan.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures as defined in Rule 13a-15 under the Exchange Act designed to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of March 31, 2023. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023, at the reasonable assurance level. There were no changes to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained within this report may be deemed “Forward-Looking Statements” within the meaning of Section 27A of the Securities Act of 1933 (as amended, the “Securities Act”) and Section 21E of the Securities Exchange Act. All statements in this report other than statements of historical fact are Forward-Looking Statements that are subject to known and unknown risks, uncertainties and other factors which could cause actual results and performance of the Company to differ materially from such statements. The words “believe,” “expect,” “anticipate,” “intend,” “plan,” “may,” “could” and similar expressions identify Forward-Looking Statements. Forward-Looking Statements contained herein include, but are not limited to, the following:

•our ability to invest in projects that will generate the best returns for our stockholders;

•our future liquidity outlook;

•the outlook of our chemical products and related markets;

•the amount, timing and effect on the nitrogen market from current nitrogen expansion projects;

•the effect from the lack of non-seasonal volume;

•our belief that competition is based upon service, price, location of production and distribution sites and product quality and performance;

•our outlook for the industrial and mining industries;

•the availability of raw materials;

•our ability to broaden the distribution of our products, including our ability to leverage our nitric acid production capacity at our El Dorado Facility;

•the result of our product and market diversification strategy;

•changes in domestic fertilizer production;

•the increasing output and capacity of our existing production facilities;

•on-stream rates at our production facilities;

•our ability to moderate risk inherent in agricultural markets;

•the sources to fund our cash needs and how this cash will be used;

•the ability to enter into the additional borrowings;

•the anticipated cost and timing of our capital projects;

•certain costs covered under warranty provisions;

•our ability to pass to our customers cost increases in the form of higher prices;

•our belief as to whether we have sufficient sources for materials and components;

•annual natural gas requirements;

•compliance by our facilities with the terms of our permits;

•the costs of compliance with environmental laws, health laws, security regulations and transportation regulations;

•our belief as to when Turnarounds will be performed and completed;

•expenses in connection with environmental projects;

•the effect of litigation and other contingencies;

•the increase in interest expense;

•our ability to comply with debt servicing and covenants;

•our ability to meet debt maturities or redemption obligations when due;

•the effects of the ongoing COVID-19 pandemic and related response; and

•our beliefs as to whether we can meet all required covenant tests for the next twelve months.

While we believe the expectations reflected in such Forward-Looking Statements are reasonable, we can give no assurance such expectations will prove to have been correct. There are a variety of factors which could cause future outcomes to differ materially from those described in this report, including, but not limited to, the following:

•changes in general economic conditions, both domestic and foreign;

•material reductions in revenues;

•material changes in interest rates;

•our ability to collect in a timely manner a material amount of receivables;

•increased competitive pressures;

•adverse effects of increases in prices of raw materials;

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•changes in federal, state and local laws and regulations, or in the interpretation of such laws and regulations;

•changes in laws, regulations or other issues related to climate change;

•releases of pollutants into the environment exceeding our permitted limits;

•material increases in equipment, maintenance, operating or labor costs not presently anticipated by us;

•the requirement to use internally generated funds for purposes not presently anticipated;

•the inability to secure additional financing for planned capital expenditures or financing obligations due in the near future;

•our substantial existing indebtedness;

•material changes in the cost of natural gas and certain precious metals;

•limitations due to financial covenants;

•changes in competition;

•the loss of any significant customer;

•increases in cost to maintain internal controls over financial reporting;

•changes in operating strategy or development plans;

•an inability to fund the working capital and expansion of our businesses;

•changes in the production efficiency of our facilities;

•adverse results in our contingencies including pending litigation;

•unplanned downtime at one or more of our chemical facilities;

•changes in production rates at any of our chemical plants;

•an inability to obtain necessary raw materials and purchased components;

•material increases in cost of raw materials;

•material changes in our accounting estimates;

•significant problems within our production equipment;

•fire or natural disasters;

•an inability to obtain or retain our insurance coverage;

•difficulty obtaining necessary permits;

•difficulty obtaining third-party financing;

•risks associated with proxy contests initiated by dissident stockholders;

•changes in fertilizer production;

•reduction in acres planted for crops requiring fertilizer;

•decreases in duties for products we sell resulting in an increase in imported products into the U.S.;

•adverse effects from regulatory policies, including tariffs;

•volatility of natural gas prices;

•price increases resulting from increased inflation;

•weather conditions, including the effects of climate change;

•increases in imported agricultural products;

•global supply chain disruptions;

•other factors described in the MD&A contained in this report; and

•other factors described in “Risk Factors” in our Form 10-K for the year ended December 31, 2022.

Given these uncertainties, all parties are cautioned not to place undue reliance on such Forward-Looking Statements. We disclaim 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.

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The following is a list of terms used in this report.

ADEQ	-	The Arkansas Department of Environmental Quality.
AN	-	Ammonium nitrate.
ASU	-	Accounting Standard Update.
CAO	-	A consent administrative order.
Cherokee Facility	-	Our chemical production facility located in Cherokee, Alabama.
Chevron	-	Chevron Environmental Management Company.
COVID-19	-	The novel coronavirus disease of 2019.
EDA	-	El Dorado Ammonia L.L.C.
EDC	-	El Dorado Chemical Company.
El Dorado Facility	-	Our chemical production facility located in El Dorado, Arkansas.
Eldridge	-	Eldridge Industries, L.L.C.
Environmental and Health Laws	-	Numerous federal, state and local environmental, health and safety laws.
EUC	-	Environmental Use Control.
FASB	-	Financial Accounting Standards Board.
Financial Covenant	-	Certain springing financial covenants associated with the working capital revolver loan.
Global	-	Global Industrial, Inc., a subcontractor asserting mechanics liens for work rendered to LSB and EDC.
Hallowell Facility	-	A chemical facility previously owned by two of our subsidiaries located in Kansas.
HDAN	-	High density ammonium nitrate prills used in the agricultural industry.
Indenture	-	The agreement governing the 6.25% senior secured notes.
IRS	-	Internal Revenue Service.
KDHE	-	The Kansas Department of Health and Environment.
LDAN	-	Low density ammonium nitrate prills used in the mining industry.
Leidos	-	Leidos Constructors L.L.C.
LSB	-	LSB Industries, Inc.
Maximum Revolver Amount	-	The maximum amount of outstanding advances available under our Working Capital Revolver Loan.
MD&A	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
New Notes	-	The senior secured notes issued March 8, 2022 with an interest rate of 6.25%, which mature in October 2028.
Note	-	A note in the accompanying notes to the condensed consolidated financial statements.
Notes	-	The senior secured notes issued on October 14, 2021 with an interest rate of 6.25%, which mature in October 2028.
ODEQ	-	The Oklahoma Department of Environmental Quality.
PCC	-	Pryor Chemical Company.
PP&E	-	Plant, property and equipment.
Pryor Facility	-	Our chemical production facility located in Pryor, Oklahoma.
SEC	-	The U.S. Securities and Exchange Commission.
Secured Financing due 2023	-	A secured financing arrangement between EDC and an affiliate of Eldridge which matures in June 2023.
Secured Financing due 2025	-	A secured financing arrangement between EDA and an affiliate of Eldridge which matures in August 2025.
Senior Secured Notes	-	The Notes and New Notes, taken together due on October 15, 2028 with a stated interest rate of 6.25%.
SG&A	-	Selling, general and administrative expense.
Ton	-	A unit of weight equal to 2,000 pounds.
Turnaround	-	A planned major maintenance activity.
UAN	-	Urea ammonium nitrate.
U.S.	-	United States.

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U.S. GAAP	-	U.S. Generally Accepted Accounting Principles.
USDA	-	United States Department of Agriculture.
WASDE	-	World Agricultural Supply and Demand Estimates Report.
West Fertilizer	-	West Fertilizer Company.
Working Capital Revolver Loan	-	Our secured revolving credit facility.
2021 Crop	-	Corn crop marketing year (September 1 - August 31), which began in 2020 and ended in 2021 and primarily relates to corn planted and harvested in 2020.
2022 Crop	-	Corn crop marketing year (September 1 - August 31), which began in 2021 and will end in 2022 and primarily relates to corn planted and harvested in 2021.
2023 Crop	-	Corn crop marketing year (September 1 - August 31), which began in 2022 and will end in 2023 and primarily relates to corn planted and harvested in 2022.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Other Litigation

We are from time to time subject to various legal proceedings and claims arising in the ordinary course of business, including, but not limited to, examinations by the Internal Revenue Service. For further discussion of our legal matters, see “Note 5—Commitments and Contingencies—Legal Matters” in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Item 1A. Risk Factors

Reference is made to Item 1A of our Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023. There are no material changes from the risk factors disclosed in our 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

See “Index to Exhibits” on page 33.

32

Index to Exhibits Item 6.

Exhibit Number	Exhibit Title	Incorporated by Reference to the Following
3(i).1	Restated Certificate of Incorporation of LSB Industries, Inc., dated January 21, 1977, as amended August 27, 1987	Exhibit 3(i).1 to the Company’s Form 10-K filed on February 28, 2013
3(i).2	Certificate of Amendment to the Restated Certificate of Incorporation of LSB Industries, dated September 23, 2021	Exhibit 3(i).2 to the Company’s Registration Statement on Form S-3 filed on November 16, 2021
3(ii)	Second Amended and Restated Bylaws of LSB Industries, Inc., dated July 19, 2021	Exhibit 3.1 to the Company’s Form 8-K filed July 20, 2021
31.1(a)	Certification of Mark T. Behrman, Chief Executive Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302
31.2(a)	Certification of Cheryl A. Maguire, Chief Financial Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302
32.1(a)	Certification of Mark T. Behrman, Chief Executive Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906
32.2(a)	Certification of Cheryl A. Maguire, Chief Financial Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906
101.INS(a)	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH(a)	Inline XBRL Taxonomy Extension Schema Document
101.CAL(a)	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF(a)	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB(a)	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE(a)	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104(a)	Cover Page Interactive Data File (embedded within the Inline XBRL document)

(a)Filed herewith or furnished herewith.

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has caused the undersigned, duly authorized, to sign this report on its behalf on this 3rd day of May 2023.

LSB INDUSTRIES, INC.

/s/ Cheryl A. Maguire

Cheryl A. Maguire

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

34

EX-31

Exhibit 31.1

CERTIFICATION

I, Mark T. Behrman, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of LSB Industries, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in this case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2023

/s/ Mark T. Behrman

Mark T. Behrman

President, Chief Executive Officer

and Director

EX-31

Exhibit 31.2

CERTIFICATION

I, Cheryl A. Maguire, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of LSB Industries, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in this case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2023

/s/ Cheryl A. Maguire

Cheryl A. Maguire

Executive Vice President

and Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LSB Industries, Inc. (“LSB”) on Form 10-Q for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”). I, Mark T. Behrman, President and Chief Executive Officer of LSB, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LSB.

/s/ Mark T. Behrman

Mark T. Behrman

President, Chief Executive Officer

(Principal Executive Officer) and

Director

May 3, 2023

This certification is furnished to the Securities and Exchange Commission solely for purpose of 18 U.S.C. §1350 subject to the knowledge standard contained therein, and not for any other purpose.

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LSB Industries, Inc. (“LSB”) on Form 10-Q for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cheryl A. Maguire, Senior Vice President and Chief Financial Officer of LSB, certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LSB.

/s/ Cheryl A. Maguire

Cheryl A. Maguire

Executive Vice President

and Chief Financial Officer

(Principal Financial Officer)

May 3, 2023

This certification is furnished to the Securities and Exchange Commission solely for purpose of 18 U.S.C. §1350 subject to the knowledge standard contained therein and not for any other purpose.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	Apr. 28, 2023
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Registrant Name	LSB Industries, Inc.
Entity Central Index Key	0000060714
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity File Number	1-7677
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	73-1015226
Entity Address, Address Line One	3503 NW 63rd Street
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	Oklahoma City
Entity Address, State or Province	OK
Entity Address, Postal Zip Code	73116
City Area Code	405
Local Phone Number	235-4546
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding		76,129,079
Common Stock [Member]
Document Information [Line Items]
Trading Symbol	LXU
Title of 12(b) Security	Common Stock, Par Value $.10
Security Exchange Name	NYSE
Preferred Stock [Member]
Document Information [Line Items]
No Trading Symbol Flag	true
Title of 12(b) Security	Preferred Stock Purchase Rights
Security Exchange Name	NYSE

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 48,949	$ 63,769
Short-term investments	376,882	330,553
Accounts receivable	60,251	75,494
Allowance for doubtful accounts	(693)	(699)
Accounts receivable, net	59,558	74,795
Inventories:
Finished goods	28,102	28,893
Raw materials	1,530	1,990
Total inventories	29,632	30,883
Supplies, prepaid items and other:
Prepaid insurance	12,271	17,429
Precious metals	14,474	13,323
Supplies	28,570	27,501
Other	9,491	8,346
Total supplies, prepaid items and other	64,806	66,599
Total current assets	579,827	566,599
Property, plant and equipment, net	842,925	848,661
Other assets:
Operating lease assets	21,321	22,682
Intangible and other assets, net	1,697	1,877
Total other assets	23,018	24,559
Total assets	1,445,770	1,439,819
Current liabilities:
Accounts payable	68,341	78,182
Short-term financing	10,168	16,134
Accrued and other liabilities	43,617	38,470
Current portion of long-term debt	8,544	9,522
Total current liabilities	130,670	142,308
Long-term debt, net	702,071	702,733
Noncurrent operating lease liabilities	13,460	14,896
Other noncurrent accrued and other liabilities	522	522
Deferred income taxes	69,095	63,487
Commitments and contingencies (Note 5)
Stockholders' equity:
Common stock, $.10 par value; 150 million shares authorized, 91.2 million shares issued	9,117	9,117
Capital in excess of par value	497,216	497,179
Retained earnings	214,993	199,092
Stockholders equity including treasury stock	721,326	705,388
Less treasury stock, at cost:
Common stock, 15.0 million shares (14.9 million shares at December 31, 2022)	191,374	189,515
Total stockholders' equity	529,952	515,873
Total Liabilities and Stockholders' equity	$ 1,445,770	$ 1,439,819

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	91,200,000	91,200,000
Treasury stock, common shares	15,000,000.0	14,900,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net sales	$ 180,964	$ 198,981
Cost of sales	139,359	108,251
Gross profit	41,605	90,730
Selling, general and administrative expense	9,867	10,935
Other expense (income), net	1,203	(176)
Operating income	30,535	79,971
Interest expense, net	12,212	9,955
Non-operating other expense (income), net	(3,476)	135
Income before provision for income taxes	21,799	69,881
Provision for income taxes	5,898	11,115
Net income	$ 15,901	$ 58,766
Basic:
Net income	$ 0.21	$ 0.66
Diluted:
Net income	$ 0.21	$ 0.65

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Treasury Stock-Common [Member]	Capital in Excess of Par Value [Member]	Retained Earnings (Accumulated Deficit) [Member]
Balance at Dec. 31, 2021	$ 460,490	$ 9,117	$ (10,533)	$ 493,161	$ (31,255)
Balance, shares at Dec. 31, 2021		91,168	(1,375)
Net income	58,766				58,766
Stock-based compensation	803			803
Other	(1,871)		$ (1,871)
Other, Shares			(229)
Balance at Mar. 31, 2022	518,188	$ 9,117	$ (12,404)	493,964	27,511
Balance, shares at Mar. 31, 2022		91,168	(1,604)
Balance at Dec. 31, 2022	515,873	$ 9,117	$ (189,515)	497,179	199,092
Balance, shares at Dec. 31, 2022		91,168	(14,888)
Net income	15,901				15,901
Stock-based compensation	719			719
Shares issued restricted stock units			$ 682	(682)
Shares issued restricted stock units, shares			53
Shares withheld restricted stock and restricted stock units vesting	(2,541)		$ (2,541)
Shares withheld restricted stock and restricted stock units vesting, shares			(204)
Balance at Mar. 31, 2023	$ 529,952	$ 9,117	$ (191,374)	$ 497,216	$ 214,993
Balance, shares at Mar. 31, 2023		91,168	(15,039)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net income	$ 15,901	$ 58,766
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	5,608	10,823
Depreciation and amortization of property, plant and equipment	17,439	17,197
Stock-based compensation	719	803
Other	1,223	946
Cash provided (used) by changes in assets and liabilities:
Accounts receivable	15,418	(11,707)
Inventories	1,251	(10,817)
Prepaid insurance	5,158	3,687
Supplies, prepaid items and other	(4,455)	(6,253)
Accounts payable	(4,861)	10,003
Accrued interest	10,905	13,618
Other assets and other liabilities	(5,059)	(1,574)
Net cash provided by operating activities	59,247	85,492
Cash flows from investing activities
Expenditures for property, plant and equipment	(18,437)	(8,254)
Proceeds from short-term investments	88,707
Purchases of short-term investments	(133,660)	(89,311)
Other investing activities	11	51
Net cash used by investing activities	(63,379)	(97,514)
Cash flows from financing activities
Net proceeds from 6.25% senior secured notes		200,000
Payments on other long-term debt	(2,180)	(6,912)
Payments on short-term financing	(5,967)	(2,805)
Payments of debt-related costs, including extinguishment costs		(4,102)
Other financing activities	(2,541)	(2,004)
Net cash provided (used) by financing activities	(10,688)	184,177
Net increase (decrease) in cash and cash equivalents	(14,820)	172,155
Cash and cash equivalents at beginning of period	63,769	82,144
Cash and cash equivalents at end of period	$ 48,949	$ 254,299

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (Unaudited)	Mar. 31, 2023
6.25% Senior Secured Notes due 2028 [Member]
Debt instrument, interest rate	6.25%

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

The accompanying unaudited interim financial statements and notes of LSB have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in the Company’s Form 10-K for the year ended December 31, 2022 (our “2022 Form 10-K”), filed with the SEC on February 23, 2023. The accompanying unaudited interim financial statements in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s results of operations and cash flows for the three-month periods ended March 31, 2023 and 2022 and the Company’s financial position as of March 31, 2023.

Basis of Consolidation – LSB and its subsidiaries are consolidated in the accompanying condensed consolidated financial statements. LSB is a holding company with no significant operations or assets other than cash, cash equivalents, short-term investments and investments in its subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.

Nature of Business – We are engaged in the manufacture and sale of chemical products. The chemical products we primarily manufacture, market and sell are ammonia, fertilizer grade ammonium nitrate (“AN” and “HDAN”) and urea ammonium nitrate ("UAN") for agricultural applications, high purity and commercial grade ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, carbon dioxide and diesel exhaust fluid for industrial applications and industrial grade AN (“LDAN”) and solutions for the mining industry. We manufacture and distribute our products in four facilities; three of which we own and are located in El Dorado, Arkansas (the “El Dorado Facility”); Cherokee, Alabama (the “Cherokee Facility”); and Pryor, Oklahoma (the “Pryor Facility”); and one of which we operate on behalf of Covestro in Baytown, Texas.

Sales to customers include farmers, ranchers, fertilizer dealers and distributors primarily in the ranch land and grain production markets in the United States (“U.S.”); industrial users of acids throughout the U.S. and parts of Canada; and explosive manufacturers in the U.S. and parts of Mexico, Canada and the Caribbean.

These interim results are not necessarily indicative of results for a full year due, in part, to the seasonality of our sales of agricultural products and the timing of performing our major plant maintenance activities. Our selling seasons for agricultural products are primarily during the spring and fall planting seasons, which typically extend from March through June and from September through November.

Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Short-Term Investments - Investments, which consist of U.S. treasury bills with an original maturity up to and less than 52 weeks, are considered short-term investments and are classified as Level 1. We plan to hold these investments to maturity and have a history of holding investments to maturity. These investments are carried at cost which approximated fair value for the period ended March 31, 2023. Due to the nature of these investments, as U.S. treasury securities, no impairment is anticipated. Our estimate of expected losses is incorporated into the review of the investments' fair value quarterly.

Accounts Receivable – Our accounts receivable are presented at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any estimate of expected loss anticipated on accounts receivable balances. Our estimate is based on historical experience and periodic assessment of outstanding accounts receivable, particularly those accounts that are past due (based upon the terms of the sale). Our periodic assessment is based on our best estimate of amounts that are not recoverable which includes a present collectability review and forward looking assessment, where applicable.

Equity Awards – Equity award transactions with employees are measured based on the estimated fair value of the equity awards issued. For equity awards with service conditions that have a graded vesting period, we recognize compensation cost on a straight-line basis over the requisite service period for the entire award. Forfeitures are accounted for as they occur. We may issue new shares of common stock or may use treasury shares associated with the equity awards.

In January 2023, the compensation committee of our Board of Directors (“Board”) approved the grant of 171,641 shares of time-based restricted stock units and 171,641 shares of performance-based restricted stock units to certain executives and employees under our 2016 Long Term Incentive Plan (as Amended and Restated on March 4, 2021). The time-based restricted stock units will vest at the end of each one-year period at the rate of one-third per year for three years. The performance-based restricted stock units will vest on the third anniversary of the grant date subject to the achievement of a market metric established by the Board as set out in the grant. Upon the third anniversary the grants may be modified in a range between 0% and 200% based upon achievement of the market metric. The

unvested restricted units carry dividend and voting rights contingent upon the vesting and lapsing of restriction. Sales of these units are restricted prior to the date of vesting. Pursuant to the terms of the underlying restricted stock unit agreements, unvested restricted shares will immediately vest upon the occurrence of a change in control (as defined by agreement), or a certain portion will immediately vest upon termination without cause or death.

Contingencies – Certain conditions may exist which may result in a loss, but which will only be resolved when future events occur. We and our legal counsel assess such contingent liabilities and such assessment inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, we would accrue for such contingent losses when such losses can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Loss contingency liabilities are included in current and noncurrent accrued and other liabilities and are based on current estimates that may be revised in the near term. In addition, we recognize contingent gains when such gains are realized or when the contingencies have been resolved (generally at the time a settlement has been reached).

Derivatives, Hedges and Financial Instruments – Derivatives are recognized in the balance sheet and measured at fair value. Changes in fair value of derivatives are recorded in results of operations unless the normal purchase or sale exceptions apply, or hedge accounting is elected.

The fair value amounts recognized for our derivative contracts executed with the same counterparty under a master netting arrangement may be offset. We have the choice to offset or not, but that choice must be applied consistently. A master netting arrangement exists if the reporting entity has multiple contracts with a single counterparty that are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract. Offsetting the fair values recognized for the derivative contracts outstanding with a single counterparty results in the net fair value of the transactions reported as an asset or a liability in the balance sheet. When applicable, we present the fair values of our derivative contracts under master netting agreements using a gross fair value presentation.

Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 - Valuations of contracts classified as Level 1 are based on quoted prices in active markets for identical contracts.

Level 2 - Valuations of contracts classified as Level 2 are based on quoted prices for similar contracts and valuation inputs other than quoted prices that are observable for these contracts.

Level 3 - Valuations of assets and liabilities classified as Level 3 are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Recently Issued Accounting Pronouncements

Changes to U.S. GAAP are established by the FASB in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs issued and outstanding or that became effective since January 1, 2023 through the date of these financial statements were assessed and determined not to be applicable or are expected to have minimal impact on our condensed consolidated financial position and results of operations.

XML

Income Per Common Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Income Per Common Share

2. Income Per Common Share

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands, Except Per Share Amounts)
Numerator:
Net income	$	15,901	$	58,766
Numerator for basic and diluted net income   per common share	$	15,901	$	58,766
Denominator:
Denominator for basic net income per common    share - adjusted weighted-average shares (1)		75,807		88,421
Effect of dilutive securities:
Unvested restricted stock and stock units		504		1,345
Dilutive potential common shares		504		1,345
Denominator for diluted net income per    common share - adjusted weighted-average    shares		76,311		89,766
Basic net income per common share	$	0.21	$	0.66
Diluted net income per common share	$	0.21	$	0.65

(1)Excludes the weighted-average shares of unvested restricted stock that are contingently issuable.

The following weighted-average shares of securities were not included in the computation of diluted net income per common share as their effect would have been antidilutive:

	Three Months Ended
	March 31,
	2023		2022
Restricted stock and stock units		395,301		—
Stock options		13,000		13,000
		408,301		13,000

XML

Current and Noncurrent Accrued and Other Liabilities

3 Months Ended

Mar. 31, 2023

Other Liabilities Disclosure [Abstract]

Current and Noncurrent Accrued and Other Liabilities

3. Current and Noncurrent Accrued and Other Liabilities

	March 31,		December 31,
	2023		2022
	(In Thousands)
Accrued interest	$	22,212	$	11,196
Current portion of operating lease liabilities		7,869		7,259
Accrued payroll and benefits		4,468		12,440
Other		9,590		8,097
		44,139		38,992
Less noncurrent portion		522		522
Current portion of accrued and other liabilities	$	43,617	$	38,470

XML

Long-Term Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Long-Term Debt

4. Long-Term Debt

Our long-term debt consists of the following:

	March 31,			December 31,
	2023			2022
	(In Thousands)
Working Capital Revolver Loan, with a current interest    rate of 8.50% (A)	$	—		$	—
Senior Secured Notes due 2028, with an interest    rate of 6.25% (B)		700,000			700,000
Secured Financing due 2023, with an interest    rate of 8.32% (C)		3,292			4,161
Secured Financing due 2025, with an interest    rate of 8.75% (D)		18,023			19,277
Other		1,080			1,138
Unamortized debt issuance costs		(11,780	)		(12,321	)
		710,615			712,255
Less current portion of long-term debt		8,544			9,522
Long-term debt due after one year, net	$	702,071		$	702,733

(A)Our revolving credit facility, as amended (the “Working Capital Revolver Loan”), provides for advances up to $65 million (the “Maximum Revolver Amount”), based on specific percentages of eligible accounts receivable and inventories and up to $10 million of letters of credit, the outstanding amount as of March 31, 2023, was $0.9 million, which reduces the amount available for borrowing under the Working Capital Revolver Loan. At March 31, 2023, our available borrowings under our Working Capital Revolver Loan were approximately $62.3 million, based on our eligible collateral, less outstanding letters of credit and loan balance. The maturity date of the Working Capital Revolver Loan is on the earlier of (i) the date that is 90 days prior to the earliest stated maturity date of the Senior Secured Notes (unless refinanced or repaid) and (ii) February 26, 2024. Subject to certain conditions and subject to lender approval, the Maximum Revolver Amount may increase up to an additional $10 million. The Working Capital Revolver Loan also provides for a springing financial covenant (the “Financial Covenant”), which requires that, if the borrowing availability is less than 10.0% of the total revolver commitments, then the borrowers must maintain a minimum fixed charge coverage ratio of not less than 1.00 to 1.00. The Financial Covenant, if triggered, is tested monthly.

(B)On October 14, 2021, LSB completed the issuance and sale of $500 million aggregate principal amount of the Notes of its 6.25% Senior Secured Notes due 2028 (the “Notes”), pursuant to an indenture (the “Indenture”), dated as of October 14, 2021. The Notes were issued at a price equal to 100% of their face value.

On March 8, 2022, LSB completed the issuance and sale of an additional $200 million aggregate principal amount of the Notes (the “New Notes”), which were issued pursuant to the Indenture (the Notes together with the New Notes, the “Senior Secured Notes”). The New Notes were issued at a price equal to 100% of their face value, plus accrued interest from October 14, 2021 to March 7, 2022.

The Senior Secured Notes mature on October 15, 2028. Interest is to be paid in arrears on May 15 and October 15.

(C)El Dorado Chemical Company (“EDC”), one of our subsidiaries, is party to a secured financing arrangement with an affiliate of Eldridge. Principal and interest are payable in 48 equal monthly installments with a final balloon payment of approximately $3 million due in June 2023. The final balloon payment was repaid in April 2023.

(D)In August 2020, El Dorado Ammonia L.L.C. (“EDA”), one of our subsidiaries, entered into a $30 million secured financing arrangement with an affiliate of Eldridge. Beginning in September 2020, principal and interest is payable in 60 equal monthly installments with a final balloon payment of approximately $5 million due in August 2025. This financing arrangement is secured by an ammonia storage tank and is guaranteed by LSB.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Outstanding Natural Gas Purchase Commitments – At March 31, 2023, certain of our natural gas contracts qualify as normal purchases under GAAP and thus are not mark-to-market. These contracts included volume purchase commitments with fixed costs of approximately 21.1 million MMBtus of natural gas. Further, the natural gas contracts extend through December 2023 at a weighted-average cost of $3.60 per MMBtu ($75.9 million) and a weighted-average market value of $2.52 per MMBtu ($53.1 million).

Legal Matters - Following is a summary of certain legal matters involving the Company:

A. Environmental Matters

Our facilities and operations are subject to numerous federal, state and local environmental laws and to other laws regarding health and safety matters (collectively, the “Environmental and Health Laws”), many of which provide for certain performance obligations, substantial fines and criminal sanctions for violations. Certain Environmental and Health Laws impose strict liability as well as joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We may be required to remediate contaminated properties currently or formerly owned or operated by us or facilities of third parties that received waste generated by our operations regardless of whether such contamination resulted from the conduct of others or from consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken.

In addition, claims for damages to persons or property, including natural resources, may result from the environmental, health and safety effects of our operations.

There can be no assurance that we will not incur material costs or liabilities in complying with such laws or in paying fines or penalties for violation of such laws. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. The Environmental and Health Laws and related enforcement policies have in the past resulted and could in the future result, in significant compliance expenses, cleanup costs (for our sites or third-party sites where our wastes were disposed of), penalties or other liabilities relating to the handling, manufacture, use, emission, discharge or disposal of hazardous or toxic materials at or from our facilities or the use or disposal of certain of its chemical products. Further, a number of our facilities are dependent on environmental permits to operate, the loss or modification of which could have a material adverse effect on their operations and our financial condition.

Historically, significant capital expenditures have been incurred by our subsidiaries in order to comply with the Environmental and Health Laws and significant capital expenditures are expected to be incurred in the future. We will also be obligated to manage certain discharge water outlets and monitor groundwater contaminants at our facilities should we discontinue the operations of a facility.

As of March 31, 2023, our accrued liabilities for environmental matters totaled approximately $0.5 million relating primarily to the matters discussed below. Estimates of the most likely costs for our environmental matters are generally based on preliminary or completed assessment studies, preliminary results of studies, or our experience with other similar matters. It is reasonably possible that a change in the estimate of our liability could occur in the near term.

1. Discharge Water Matters

Each of our manufacturing facilities generates process wastewater, which may include cooling tower and boiler water quality control streams, contact storm water and miscellaneous spills and leaks from process equipment. The process water discharge, storm-water runoff and miscellaneous spills and leaks are governed by various permits generally issued by the respective state environmental agencies as authorized and overseen by the U.S. Environmental Protection Agency. These permits limit the type and volume of effluents that can be discharged and control the method of such discharge.

In 2017, the PCC filed a Permit Renewal Application for its Non-Hazardous Injection Well Permit at the Pryor Facility. Although the Injection Well Permit expired in 2018, PCC continues to operate the injection well pending the Oklahoma Department of Environmental Quality (“ODEQ”) action on the Permit Renewal Application. Since that time, PCC and ODEQ engaged in ongoing discussions related to the renewal of the injection well to address the wastewater stream. In 2022, ODEQ responded to the application in the form of an information request. PCC has submitted a formal response to the information request and is currently evaluating wastewater treatment alternatives.

In 2006, the El Dorado Facility entered into a Consent Administrative Order (“CAO”) that recognizes the presence of nitrate contamination in the shallow groundwater. The CAO required EDC to perform semi-annual groundwater monitoring, continue operation of a groundwater recovery system, submit a human health and ecological risk assessment and submit a remedial action plan.

The risk assessment was submitted in 2007. In 2015, the Arkansas Department of Environmental Quality (“ADEQ”) stated that El Dorado Chemical was meeting the requirements of the CAO and should continue semi-annual monitoring. A CAO was signed in 2018,

which required an Evaluation Report of the data and effectiveness of the groundwater remedy for nitrate contamination. During 2019, the Evaluation Report was submitted to the ADEQ and the ADEQ approved the report. No liability has been established as of March 31, 2023, in connection with this ADEQ matter.

2. Other Environmental Matters

In 2002, certain of our subsidiaries sold substantially all of their operating assets relating to a Kansas chemical facility (the “Hallowell Facility”) but retained ownership of the real property where the facility is located. Our subsidiary retained the obligation to be responsible for and perform the activities under, a previously executed consent order to investigate the surface and subsurface contamination at the real property, develop a corrective action strategy based on the investigation and implement such strategy. In addition, certain of our subsidiaries agreed to indemnify the buyer of such assets for these environmental matters.

As the successor to a prior owner of the Hallowell Facility, Chevron Environmental Management Company (“Chevron”) has agreed in writing, within certain limitations, to pay and has been paying one-half of the costs of the investigation and interim measures relating to this matter as approved by the Kansas Department of Health and Environment (the “KDHE”), subject to reallocation.

During this process, our subsidiary and Chevron retained an environmental consultant that prepared and performed a corrective action study work plan as to the appropriate method to remediate the Hallowell Facility. During 2020, the KDHE selected a remedy of annual monitoring and the implementation of an Environmental Use Control (“EUC”). This remedy primarily relates to long-term surface and groundwater monitoring to track the natural decline in contamination and is subject to a 5-year re-evaluation with the KDHE.

The final remedy, including the EUC, the finalization of the cost estimates and any required financial assurances remains under discussion with the KDHE. Pending the results from our discussions regarding the final remedy, we continue to accrue our allocable portion of costs primarily for the additional testing, monitoring and risk assessments that could be reasonably estimated, which amount is included in our accrued liabilities for environmental matters discussed above. The estimated amount is not discounted to its present value. As more information becomes available, our estimated accrual will be refined, as necessary.

B. Other Pending, Threatened or Settled Litigation

In 2013, an explosion and fire occurred at the West Fertilizer Co. (“West Fertilizer”) located in West, Texas, causing death, bodily injury and substantial property damage. West Fertilizer is not owned or controlled by us, but West Fertilizer was a customer of EDC and purchased AN from EDC from time to time. LSB and EDC received letters from counsel purporting to represent subrogated insurance carriers, personal injury claimants and persons who suffered property damages informing LSB and EDC that their clients are conducting investigations into the cause of the explosion and fire to determine, among other things, whether AN manufactured by EDC and supplied to West Fertilizer was stored at West Fertilizer at the time of the explosion and, if so, whether such AN may have been one of the contributing factors of the explosion. Initial lawsuits filed named West Fertilizer and another supplier of AN as defendants.

In 2014, EDC and LSB were named as defendants, together with other AN manufacturers and brokers that arranged the transport and delivery of AN to West Fertilizer, in the case styled City of West, Texas vs. CF Industries, Inc., et al., in the District Court of McLennan County, Texas. The plaintiffs allege, among other things, that LSB and EDC were negligent in the production and marketing of fertilizer products sold to West Fertilizer, resulting in death, personal injury and property damage. EDC retained a firm specializing in cause and origin investigations with particular experience with fertilizer facilities, to assist EDC in its own investigation. LSB and EDC placed its liability insurance carrier on notice and the carrier is handling the defense for LSB and EDC concerning this matter.

Our product liability insurance policies have aggregate limits of general liability totaling $100 million, with a self-insured retention of $250,000, which retention limit has been met relating to the West Fertilizer matter. In August 2015, the trial court dismissed plaintiff’s negligence claims against us and EDC based on a duty to inspect but allowed the plaintiffs to proceed on claims for design defect and failure to warn.

Subsequently, we and EDC have entered into confidential settlement agreements (with approval of our insurance carriers) with several plaintiffs that had claimed wrongful death and bodily injury and insurance companies asserting subrogation claims for damages from the explosion. While these settlements resolve the claims of a number of the claimants in this matter, we continue to be party to litigation related to the explosion. We continue to defend these lawsuits vigorously and we are unable to estimate a possible range of loss at this time if there is an adverse outcome in this matter. As of March 31, 2023, no liability reserve has been established in connection with this matter.

In 2015, we and EDA received formal written notice from Global Industrial, Inc. (“Global”) of Global’s intention to assert mechanic liens for labor, service, or materials furnished under certain subcontract agreements for the improvement of the new ammonia plant (“Ammonia Plant”) at our El Dorado Facility. Global was a subcontractor of Leidos Constructors, LLC (“Leidos”), the general contractor for EDA for the construction for the Ammonia Plant. Leidos terminated the services of Global with respect to their work performed at our El Dorado Facility.

LSB and EDA are pursuing the recovery of any damage or loss caused by Global’s work performed through their contract with Leidos at our El Dorado Facility. In March 2016, EDC and LSB were served a summons in a case styled Global Industrial, Inc. d/b/a Global Turnaround vs. Leidos Constructors, LLC et al., in the Circuit court of Union County, Arkansas, wherein Global sought damages under breach of contract and other claims. At the time of the summons, our accounts payable included invoices totaling approximately $3.5 million related to the claims asserted by Global, but such invoices were not approved by Leidos for payment. We have requested indemnification from Leidos under the terms of our contracts, which they have denied. As a result, we are seeking reimbursement of legal expenses from Leidos under our contracts. We also seek damages from Leidos for their wrongdoing during the expansion, including breach of contract, fraud, professional negligence and gross negligence.

During 2018, the court bifurcated the case into: (1) Global’s claims against Leidos and LSB and (2) the cross-claims between Leidos and LSB. Part (1) of the case was tried in the court. In March 2020, the court rendered an interim judgment and issued its final judgment in April 2020. In summary, the judgment awarded Global (i) approximately $7.4 million (including the $3.5 million discussed above) for labor, service and materials furnished relating to the Ammonia Plant, (ii) approximately $1.3 million for prejudgment interest and (iii) a claim of lien on certain property and the foreclosure of the lien to satisfy these obligations. In addition, post-judgment interest will accrue at the annual rate of 4.25% until paid. This judgement was accrued for at the time of the ruling, and we continue to accrue post-judgement interest.

We have filed a notice of intent to appeal and the court entered a stay of the judgment pending appeal. LSB intends to vigorously prosecute its claims against Leidos and vigorously contest the cross-claims in Part (2) of the matter. Due to the impact from the COVID-19 pandemic, the trial date for Part (2) of the matter has been delayed and we are awaiting a new trial date.

No liability was established at March 31, 2023 or December 31, 2022, in connection with the cross-claims in Part (2) of the matter, except for certain invoices held in accounts payable. We are also involved in various other claims and legal actions (including matters involving gain contingencies). It is possible that the actual future development of claims could be different from our estimates but, after consultation with legal counsel, we believe that changes in our estimates will not have a material effect on our business, financial condition, results of operations or cash flows.

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Derivatives, Hedges and Financial Instruments

3 Months Ended

Mar. 31, 2023

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives, Hedges and Financial Instruments

6. Derivatives, Hedges and Financial Instruments

Natural Gas Contracts

Periodically, we entered into certain forward natural gas contracts, which are accounted for on a mark-to-market basis. We are utilizing these natural gas contracts as economic hedges for risk management purposes but are not designated as hedging instruments. At March 31, 2023 and December 31, 2022, we had no outstanding natural gas contracts accounted for on a mark-to-market basis. When present the valuations of the natural gas contracts are classified as Level 2.

Financial Instruments

At March 31, 2023 and December 31, 2022, we did not have any financial instruments with fair values materially different from their carrying amounts (which excludes issuance costs, if applicable) except for our Senior Secured Notes included in the table below. The carrying value of our Senior Secured Notes approximates fair value and is classified as a Level 2 fair value measurement. The fair value of financial instruments is not indicative of the overall fair value of our assets and liabilities since financial instruments do not include all assets, including intangibles and all liabilities.

	March 31, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
	(In Millions)
Senior Secured Notes (1)	$	700	$	618	$	700	$	637

1.Based on a quoted price of 88.25 at March 31, 2023 and 91.00 at December 31, 2022.

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Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

Provision for income taxes is as follows:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Current:
Federal	$	—	$	—
State		290		292
Total Current	$	290	$	292
Deferred:
Federal	$	4,622	$	11,385
State		986		(562	)
Total Deferred	$	5,608	$	10,823
Provision for income taxes	$	5,898	$	11,115

The tax provision for the three months ended March 31, 2023, was $5.9 million (27.1% provision on pre-tax income). The tax provision for the three months ended March 31, 2022, was $11.1 million (15.9% provision on pre-tax income). For 2023, the effective tax rate is higher than the statutory tax rate primarily due to state taxes, including state valuation allowances on certain newly generated state tax attributes. For 2022, the effective tax rate was less than the statutory tax rate primarily due to the impact of the valuation allowances.

We considered both positive and negative evidence in our determination of the need for valuation allowances for deferred tax assets. Information evaluated includes our financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. Valuation allowances are reflective of our quarterly analysis of the four sources of taxable income, including the calculation of the reversal of existing tax assets and liabilities, the impact of financing activities and our quarterly results. Based on our analysis, we have determined that it is more-likely-than-not that all of our federal deferred tax assets and a portion of our state deferred tax assets will be utilized. We estimate an approximately $1.7 million increase in the related valuation allowance associated with these state deferred tax assets will be recorded during the year as part of the estimated annual effective tax rate applied to ordinary income.

We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.

LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the 2019-2022 years remain open for all purposes of examination by the U.S. Internal Revenue Service (“IRS”) and other major tax jurisdictions. Additionally, the 2013-2018 years remain subject to examination for determining the amount of net operating loss and other carryforwards.

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Net Sales

3 Months Ended

Mar. 31, 2023

Revenue From Contract With Customer [Abstract]

Net Sales

8. Net Sales

Disaggregated Net Sales

We primarily derive our revenues from the sales of various chemical products. The Company’s net sales disaggregation is consistent with other financial information utilized or provided outside of our condensed consolidated financial statements. With our continued focus on optimizing our commercial strategy and product mix going forward we will report revenue by product as opposed to the end market. Accordingly, this approach is reflected in disaggregated net sales, mirroring how the Company manages its net sales by product through contracts with customers.

The following table presents our net sales disaggregated by our principal product types:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Net sales:
AN & Nitric Acid	$	58,272	$	71,800
Urea ammonium nitrate (UAN)		46,590		56,569
Ammonia		63,415		59,342
Other		12,687		11,270
Total net sales	$	180,964	$	198,981

Other Information

Although most of our contracts have an original expected duration of one year or less, for our contracts with a duration greater than one year at contract inception, the average remaining expected duration was approximately 30 months at March 31, 2023.

Liabilities associated with contracts with customers (contract liabilities) primarily relate to deferred revenue and customer deposits associated with cash payments received in advance from customers for volume shortfall charges and product shipments. We had approximately $3.8 million, $2.0 million and $1.6 million of contract liabilities as of March 31, 2023, December 31, 2022 and December 31, 2021, respectively. For the three months ended March 31, 2023 and 2022, revenues of $0.6 million and $1.4 million, respectively, were recognized and included in the balance at the beginning of the respective period. We had approximately $86.9 million of accounts receivable as of December 31, 2021.

For most of our contracts with customers, the transaction price from the inception of a contract is constrained to a short period of time (generally one month) as these contracts contain terms with variable consideration related to both price and quantity. At March 31, 2023, we have remaining performance obligations with certain customer contracts, excluding contracts with original durations of less than one year and for service contracts for which we have elected the practical expedient for consideration recognized in revenue as invoiced. The remaining performance obligations totals approximately $92.1 million, of which approximately 60% of this amount relates to 2023 through 2025, approximately 26% relates to 2026 through 2027, with the remainder thereafter.

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Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions

9. Related Party Transactions

As of March 31, 2023, we have two separate outstanding financing arrangements by an affiliate of Eldridge as discussed in footnotes (C) and (D) of Note 4. An affiliate of Eldridge holds $30 million of the New Notes.

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Supplemental Cash Flow Information

3 Months Ended

Mar. 31, 2023

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

10. Supplemental Cash Flow Information

The following provides additional information relating to cash flow activities:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Cash payments (refunds) for:
Income taxes, net	$	20	$	—
Noncash investing and financing activities:
Accounts receivable, supplies, other assets, accounts     payable and accrued liabilities associated with additions     of property, plant and equipment	$	21,761	$	17,295
Accounts payable associated with debt-related costs	$	—	$	741

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation – LSB and its subsidiaries are consolidated in the accompanying condensed consolidated financial statements. LSB is a holding company with no significant operations or assets other than cash, cash equivalents, short-term investments and investments in its subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to current period presentation.

Nature of Business

Nature of Business – We are engaged in the manufacture and sale of chemical products. The chemical products we primarily manufacture, market and sell are ammonia, fertilizer grade ammonium nitrate (“AN” and “HDAN”) and urea ammonium nitrate ("UAN") for agricultural applications, high purity and commercial grade ammonia, high purity AN, sulfuric acids, concentrated, blended and regular nitric acid, mixed nitrating acids, carbon dioxide and diesel exhaust fluid for industrial applications and industrial grade AN (“LDAN”) and solutions for the mining industry. We manufacture and distribute our products in four facilities; three of which we own and are located in El Dorado, Arkansas (the “El Dorado Facility”); Cherokee, Alabama (the “Cherokee Facility”); and Pryor, Oklahoma (the “Pryor Facility”); and one of which we operate on behalf of Covestro in Baytown, Texas.

Sales to customers include farmers, ranchers, fertilizer dealers and distributors primarily in the ranch land and grain production markets in the United States (“U.S.”); industrial users of acids throughout the U.S. and parts of Canada; and explosive manufacturers in the U.S. and parts of Mexico, Canada and the Caribbean.

These interim results are not necessarily indicative of results for a full year due, in part, to the seasonality of our sales of agricultural products and the timing of performing our major plant maintenance activities. Our selling seasons for agricultural products are primarily during the spring and fall planting seasons, which typically extend from March through June and from September through November.

Use of Estimates

Use of Estimates – The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Short-Term Investments

Short-Term Investments - Investments, which consist of U.S. treasury bills with an original maturity up to and less than 52 weeks, are considered short-term investments and are classified as Level 1. We plan to hold these investments to maturity and have a history of holding investments to maturity. These investments are carried at cost which approximated fair value for the period ended March 31, 2023. Due to the nature of these investments, as U.S. treasury securities, no impairment is anticipated. Our estimate of expected losses is incorporated into the review of the investments' fair value quarterly.

Accounts Receivable

Accounts Receivable – Our accounts receivable are presented at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any estimate of expected loss anticipated on accounts receivable balances. Our estimate is based on historical experience and periodic assessment of outstanding accounts receivable, particularly those accounts that are past due (based upon the terms of the sale). Our periodic assessment is based on our best estimate of amounts that are not recoverable which includes a present collectability review and forward looking assessment, where applicable.

Equity Awards

Equity Awards – Equity award transactions with employees are measured based on the estimated fair value of the equity awards issued. For equity awards with service conditions that have a graded vesting period, we recognize compensation cost on a straight-line basis over the requisite service period for the entire award. Forfeitures are accounted for as they occur. We may issue new shares of common stock or may use treasury shares associated with the equity awards.

In January 2023, the compensation committee of our Board of Directors (“Board”) approved the grant of 171,641 shares of time-based restricted stock units and 171,641 shares of performance-based restricted stock units to certain executives and employees under our 2016 Long Term Incentive Plan (as Amended and Restated on March 4, 2021). The time-based restricted stock units will vest at the end of each one-year period at the rate of one-third per year for three years. The performance-based restricted stock units will vest on the third anniversary of the grant date subject to the achievement of a market metric established by the Board as set out in the grant. Upon the third anniversary the grants may be modified in a range between 0% and 200% based upon achievement of the market metric. The

unvested restricted units carry dividend and voting rights contingent upon the vesting and lapsing of restriction. Sales of these units are restricted prior to the date of vesting. Pursuant to the terms of the underlying restricted stock unit agreements, unvested restricted shares will immediately vest upon the occurrence of a change in control (as defined by agreement), or a certain portion will immediately vest upon termination without cause or death.

Contingencies

Contingencies – Certain conditions may exist which may result in a loss, but which will only be resolved when future events occur. We and our legal counsel assess such contingent liabilities and such assessment inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a loss has been incurred, we would accrue for such contingent losses when such losses can be reasonably estimated. If the assessment indicates that a potentially material loss contingency is not probable but reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Estimates of potential legal fees and other directly related costs associated with contingencies are not accrued but rather are expensed as incurred. Loss contingency liabilities are included in current and noncurrent accrued and other liabilities and are based on current estimates that may be revised in the near term. In addition, we recognize contingent gains when such gains are realized or when the contingencies have been resolved (generally at the time a settlement has been reached).

Derivatives, Hedges and Financial Instruments

Derivatives, Hedges and Financial Instruments – Derivatives are recognized in the balance sheet and measured at fair value. Changes in fair value of derivatives are recorded in results of operations unless the normal purchase or sale exceptions apply, or hedge accounting is elected.

The fair value amounts recognized for our derivative contracts executed with the same counterparty under a master netting arrangement may be offset. We have the choice to offset or not, but that choice must be applied consistently. A master netting arrangement exists if the reporting entity has multiple contracts with a single counterparty that are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract. Offsetting the fair values recognized for the derivative contracts outstanding with a single counterparty results in the net fair value of the transactions reported as an asset or a liability in the balance sheet. When applicable, we present the fair values of our derivative contracts under master netting agreements using a gross fair value presentation.

Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 - Valuations of contracts classified as Level 1 are based on quoted prices in active markets for identical contracts.

Level 2 - Valuations of contracts classified as Level 2 are based on quoted prices for similar contracts and valuation inputs other than quoted prices that are observable for these contracts.

Level 3 - Valuations of assets and liabilities classified as Level 3 are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Changes to U.S. GAAP are established by the FASB in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs issued and outstanding or that became effective since January 1, 2023 through the date of these financial statements were assessed and determined not to be applicable or are expected to have minimal impact on our condensed consolidated financial position and results of operations.

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Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income Per Common Share

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands, Except Per Share Amounts)
Numerator:
Net income	$	15,901	$	58,766
Numerator for basic and diluted net income   per common share	$	15,901	$	58,766
Denominator:
Denominator for basic net income per common    share - adjusted weighted-average shares (1)		75,807		88,421
Effect of dilutive securities:
Unvested restricted stock and stock units		504		1,345
Dilutive potential common shares		504		1,345
Denominator for diluted net income per    common share - adjusted weighted-average    shares		76,311		89,766
Basic net income per common share	$	0.21	$	0.66
Diluted net income per common share	$	0.21	$	0.65

(1)Excludes the weighted-average shares of unvested restricted stock that are contingently issuable.

Antidilutive Securities Excluded from Computation of Diluted Net Income Per Common Share

The following weighted-average shares of securities were not included in the computation of diluted net income per common share as their effect would have been antidilutive:

	Three Months Ended
	March 31,
	2023		2022
Restricted stock and stock units		395,301		—
Stock options		13,000		13,000
		408,301		13,000

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Current and Noncurrent Accrued and Other Liabilities (Tables)

3 Months Ended

Mar. 31, 2023

Other Liabilities Disclosure [Abstract]

Summary of Current and Noncurrent Accrued and Other Liabilities

	March 31,		December 31,
	2023		2022
	(In Thousands)
Accrued interest	$	22,212	$	11,196
Current portion of operating lease liabilities		7,869		7,259
Accrued payroll and benefits		4,468		12,440
Other		9,590		8,097
		44,139		38,992
Less noncurrent portion		522		522
Current portion of accrued and other liabilities	$	43,617	$	38,470

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Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Revolving Credit Facility and Long-Term Debt

Our long-term debt consists of the following:

	March 31,			December 31,
	2023			2022
	(In Thousands)
Working Capital Revolver Loan, with a current interest    rate of 8.50% (A)	$	—		$	—
Senior Secured Notes due 2028, with an interest    rate of 6.25% (B)		700,000			700,000
Secured Financing due 2023, with an interest    rate of 8.32% (C)		3,292			4,161
Secured Financing due 2025, with an interest    rate of 8.75% (D)		18,023			19,277
Other		1,080			1,138
Unamortized debt issuance costs		(11,780	)		(12,321	)
		710,615			712,255
Less current portion of long-term debt		8,544			9,522
Long-term debt due after one year, net	$	702,071		$	702,733

(A)Our revolving credit facility, as amended (the “Working Capital Revolver Loan”), provides for advances up to $65 million (the “Maximum Revolver Amount”), based on specific percentages of eligible accounts receivable and inventories and up to $10 million of letters of credit, the outstanding amount as of March 31, 2023, was $0.9 million, which reduces the amount available for borrowing under the Working Capital Revolver Loan. At March 31, 2023, our available borrowings under our Working Capital Revolver Loan were approximately $62.3 million, based on our eligible collateral, less outstanding letters of credit and loan balance. The maturity date of the Working Capital Revolver Loan is on the earlier of (i) the date that is 90 days prior to the earliest stated maturity date of the Senior Secured Notes (unless refinanced or repaid) and (ii) February 26, 2024. Subject to certain conditions and subject to lender approval, the Maximum Revolver Amount may increase up to an additional $10 million. The Working Capital Revolver Loan also provides for a springing financial covenant (the “Financial Covenant”), which requires that, if the borrowing availability is less than 10.0% of the total revolver commitments, then the borrowers must maintain a minimum fixed charge coverage ratio of not less than 1.00 to 1.00. The Financial Covenant, if triggered, is tested monthly.

(B)On October 14, 2021, LSB completed the issuance and sale of $500 million aggregate principal amount of the Notes of its 6.25% Senior Secured Notes due 2028 (the “Notes”), pursuant to an indenture (the “Indenture”), dated as of October 14, 2021. The Notes were issued at a price equal to 100% of their face value.

On March 8, 2022, LSB completed the issuance and sale of an additional $200 million aggregate principal amount of the Notes (the “New Notes”), which were issued pursuant to the Indenture (the Notes together with the New Notes, the “Senior Secured Notes”). The New Notes were issued at a price equal to 100% of their face value, plus accrued interest from October 14, 2021 to March 7, 2022.

The Senior Secured Notes mature on October 15, 2028. Interest is to be paid in arrears on May 15 and October 15.

(C)El Dorado Chemical Company (“EDC”), one of our subsidiaries, is party to a secured financing arrangement with an affiliate of Eldridge. Principal and interest are payable in 48 equal monthly installments with a final balloon payment of approximately $3 million due in June 2023. The final balloon payment was repaid in April 2023.

(D)In August 2020, El Dorado Ammonia L.L.C. (“EDA”), one of our subsidiaries, entered into a $30 million secured financing arrangement with an affiliate of Eldridge. Beginning in September 2020, principal and interest is payable in 60 equal monthly installments with a final balloon payment of approximately $5 million due in August 2025. This financing arrangement is secured by an ammonia storage tank and is guaranteed by LSB.

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Derivatives, Hedges and Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2023

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of Financial Instruments

At March 31, 2023 and December 31, 2022, we did not have any financial instruments with fair values materially different from their carrying amounts (which excludes issuance costs, if applicable) except for our Senior Secured Notes included in the table below. The carrying value of our Senior Secured Notes approximates fair value and is classified as a Level 2 fair value measurement. The fair value of financial instruments is not indicative of the overall fair value of our assets and liabilities since financial instruments do not include all assets, including intangibles and all liabilities.

	March 31, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
	(In Millions)
Senior Secured Notes (1)	$	700	$	618	$	700	$	637

1.Based on a quoted price of 88.25 at March 31, 2023 and 91.00 at December 31, 2022.

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Provision for income taxes is as follows:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Current:
Federal	$	—	$	—
State		290		292
Total Current	$	290	$	292
Deferred:
Federal	$	4,622	$	11,385
State		986		(562	)
Total Deferred	$	5,608	$	10,823
Provision for income taxes	$	5,898	$	11,115

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Net Sales (Tables)

3 Months Ended

Mar. 31, 2023

Revenue From Contract With Customer [Abstract]

Summary of Net Sales Disaggregated by Principal Markets

The following table presents our net sales disaggregated by our principal product types:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Net sales:
AN & Nitric Acid	$	58,272	$	71,800
Urea ammonium nitrate (UAN)		46,590		56,569
Ammonia		63,415		59,342
Other		12,687		11,270
Total net sales	$	180,964	$	198,981

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2023

Supplemental Cash Flow Elements [Abstract]

Additional Information Relating to Cash Flow Activities

The following provides additional information relating to cash flow activities:

	Three Months Ended
	March 31,
	2023		2022
	(In Thousands)
Cash payments (refunds) for:
Income taxes, net	$	20	$	—
Noncash investing and financing activities:
Accounts receivable, supplies, other assets, accounts     payable and accrued liabilities associated with additions     of property, plant and equipment	$	21,761	$	17,295
Accounts payable associated with debt-related costs	$	—	$	741

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Summary of Significant Accounting Policies - Additional Information (Detail)	1 Months Ended	3 Months Ended
	Jan. 31, 2023 shares	Mar. 31, 2023 Facility
Equity, Class of Treasury Stock [Line Items]
Number of facilities for manufacture and distribution of products | Facility		4
Time Based Restricted Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Vesting period of shares		3 years
Restricted stock, vesting percentage per year		33.33%
Performance Based Restricted Stock [Member] | Minimum [Member]
Equity, Class of Treasury Stock [Line Items]
Restricted stock units, grants percentage		0.00%
Performance Based Restricted Stock [Member] | Maximum [Member]
Equity, Class of Treasury Stock [Line Items]
Restricted stock units, grants percentage		200.00%
2016 Long Term Incentive Plan [Member]
Equity, Class of Treasury Stock [Line Items]
Awards granted vesting period		The time-based restricted stock units will vest at the end of each one-year period at the rate of one-third per year for three years. The performance-based restricted stock units will vest on the third anniversary of the grant date subject to the achievement of a market metric established by the Board as set out in the grant.
2016 Long Term Incentive Plan [Member] | Time Based Restricted Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Awards granted	171,641
2016 Long Term Incentive Plan [Member] | Performance Based Restricted Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Awards granted	171,641

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Income Per Common Share - Computation of Basic and Diluted Net Income Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net income	$ 15,901	$ 58,766
Numerator for basic net income per common share	15,901	58,766
Numerator for diluted net income per common share	$ 15,901	$ 58,766
Denominator:
Denominator for basic net income per common share - adjusted weighted-average shares	75,807	88,421
Effect of dilutive securities:
Unvested restricted stock and stock units	504	1,345
Dilutive potential common shares	504	1,345
Denominator for diluted net income per common share - adjusted weighted-average shares	76,311	89,766
Basic net income per common share	$ 0.21	$ 0.66
Diluted net income per common share	$ 0.21	$ 0.65

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Income Per Common Share - Antidilutive Securities Excluded from Computation of Diluted Net Income Per Common Share (Detail) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	408,301	13,000
Restricted Stock and Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	395,301
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	13,000	13,000

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Current and Noncurrent Accrued and Other Liabilities - Summary of Current and Noncurrent Accrued and Other Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Payables And Accruals [Abstract]
Accrued interest	$ 22,212	$ 11,196
Current portion of operating lease liabilities	$ 7,869	$ 7,259
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Current portion of accrued and other liabilities	Current portion of accrued and other liabilities
Accrued payroll and benefits	$ 4,468	$ 12,440
Other	9,590	8,097
Total current and noncurrent accrued liabilities	44,139	38,992
Less noncurrent portion	522	522
Current portion of accrued and other liabilities	$ 43,617	$ 38,470

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Long-Term Debt - Schedule of Revolving Credit Facility and Long-Term Debt (Detail) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ (11,780)	$ (12,321)
Long-term debt	710,615	712,255
Less current portion of long-term debt	8,544	9,522
Long-term debt due after one year, net	702,071	702,733
6.25% Senior Secured Notes Due 2028 [Member]
Debt Instrument [Line Items]
Debt carrying amount	700,000	700,000
8.32% Secured Financing Due 2023 [Member]
Debt Instrument [Line Items]
Debt carrying amount	3,292	4,161
8.75% Secured Financing Due 2025 [Member]
Debt Instrument [Line Items]
Debt carrying amount	18,023	19,277
Other [Member]
Debt Instrument [Line Items]
Debt carrying amount	$ 1,080	$ 1,138

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Long-Term Debt - Schedule of Revolving Credit Facility and Long-Term Debt (Parenthetical) (Detail)	Mar. 31, 2023	Dec. 31, 2022
8.50% Working Capital Revolver Loan [Member]
Debt Instrument [Line Items]
Line of credit facility, interest rate	8.50%	8.50%
6.25% Senior Secured Notes Due 2028 [Member]
Debt Instrument [Line Items]
Long-term debt, effective Interest Rate	6.25%	6.25%
8.32% Secured Financing Due 2023 [Member]
Debt Instrument [Line Items]
Long-term debt, effective Interest Rate	8.32%	8.32%
8.75% Secured Financing Due 2025 [Member]
Debt Instrument [Line Items]
Long-term debt, effective Interest Rate	8.75%	8.75%

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Long-Term Debt - Working Capital Revolver Loan and Senior Secured Notes - Additional Information (Detail) - USD ($)			3 Months Ended
	Mar. 08, 2022	Oct. 14, 2021	Mar. 31, 2023	Feb. 28, 2019
Working Capital Revolver Loan [Member]
Debt Instrument [Line Items]
Maximum amount of revolving credit facility				$ 65,000,000
Letters of credit outstanding			$ 900,000
Revolving credit facility, increase (decrease), net			10,000,000
Amount available for borrowing			$ 62,300,000
Maturity date			Feb. 26, 2024
Springing Financials Covenant [Member] | Working Capital Revolver Loan [Member]
Debt Instrument [Line Items]
Working capital revolver loan requirements			borrowers must maintain a minimum fixed charge coverage ratio of not less than 1.00 to 1.00.
Maximum revolver commitment available, percentage			10.00%
Loan requirements description			less than 10.0% of the total revolver commitments
Fixed charge coverage ratio			100.00%
6.25% Senior Secured Notes Due 2028 [Member]
Debt Instrument [Line Items]
Maturity date			Oct. 15, 2028
Debt issued - principal amount	$ 200,000,000	$ 500,000,000
Debt instrument, interest rate		6.25%
Debt instrument, maturity term		2028
Debt instrument issued price percentage	100.00%	100.00%
8.32% Secured Financing Due 2023 [Member] | El Dorado Chemical Company [Member]
Debt Instrument [Line Items]
Maturity date			Jun. 30, 2023
Debt instrument, frequency of interest payment			Principal and interest are payable in 48 equal monthly installments with a final balloon payment of approximately $3 million due in June 2023. The final balloon payment was repaid in April 2023.
Final balloon payment			$ 3,000,000
8.75% Secured Financing Due 2025 [Member] | El Dorado Ammonia L.L.C. [Member]
Debt Instrument [Line Items]
Maturity date			Aug. 31, 2025
Debt issued - principal amount			$ 30,000,000
Debt instrument, frequency of interest payment			principal and interest is payable in 60 equal monthly installments with a final balloon payment of approximately $5 million due in August 2025
Final balloon payment			$ 5,000,000
Letter of Credit [Member] | Working Capital Revolver Loan [Member]
Debt Instrument [Line Items]
Maximum amount of revolving credit facility				$ 10,000,000

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Commitments and Contingencies - Additional Information (Detail) MMBTU in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) MMBTU Settlement $ / MMBTU	Mar. 31, 2020 USD ($)	Mar. 31, 2016 USD ($)
Commitments And Contingencies [Line Items]
Accrued liabilities for environmental matters	$ 500,000
Percentage of payment of investigation costs agreed by Hallowell Facility	50.00%
Insurance coverage of general liability and auto liability risks	$ 100,000,000
Product liability deductible per claim	$ 250,000
Confidential settlement agreement with family groups | Settlement	3
Liability reserve	$ 0
Global Industrial Inc [Member]
Commitments And Contingencies [Line Items]
Amount awarded for labor, service, materials and other		$ 7,400,000
Prejudgment interest		$ 1,300,000
Percentage of accrue post judgement interest		4.25%
Leidos Constructors, LLC [Member] | Global Industrial Inc [Member] | Accounts Payable [Member]
Commitments And Contingencies [Line Items]
Claim amount not approved for payment		$ 3,500,000	$ 3,500,000
Natural Gas Purchase Commitments [Member]
Commitments And Contingencies [Line Items]
Natural gas purchase commitments volume | MMBTU	21.1
Weighted average cost of natural gas per unit | $ / MMBTU	3.60
Weighted average purchase price of natural gas	$ 75,900,000
Weighted average natural gas market value per unit | $ / MMBTU	2.52
Weighted average natural gas market value	$ 53,100,000

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Derivatives, Hedges and Financial Instruments - Additional Information (Detail) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023 USD ($) MMBTU	Dec. 31, 2022 USD ($) MMBTU
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Financial instruments with fair values | $	$ 0	$ 0
Natural Gas Purchase Commitments [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Natural gas purchase commitments volume	21,100,000
Natural Gas Purchase Commitments [Member] | Level 2 [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Natural gas purchase commitments volume	0	0

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Derivatives, Hedges and Financial Instruments - Summary of Financial Instruments (Detail) - Senior Notes - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Carrying Amount	$ 700	$ 700
Estimated Fair Value	$ 618	$ 637

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Derivatives, Hedges and Financial Instruments - Summary of Financial Instruments (Parenthetical) (Detail)	Mar. 31, 2023	Dec. 31, 2022
Offsetting [Abstract]
Quoted price	88.25	91.00

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Income Taxes - Provision for Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Current:
State	$ 290	$ 292
Total Current	290	292
Deferred:
Federal	4,622	11,385
State	986	(562)
Total Deferred	5,608	10,823
Provision for income taxes	$ 5,898	$ 11,115

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating Loss Carryforwards [Line Items]
Provision for income taxes	$ 5,898	$ 11,115
Percentage of provision on pre-tax income	27.10%	15.90%
State and Local Jurisdiction [Member]
Operating Loss Carryforwards [Line Items]
Valuation allowance reduction, Change	$ 1,700

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Net Sales - Summary of Net Sales Disaggregated by Principal Markets (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net sales:
Net sales	$ 180,964	$ 198,981
Chemical
Net sales:
Net sales	180,964	198,981
Chemical | AN and Nitric Acid
Net sales:
Net sales	58,272	71,800
Chemical | Urea ammonium nitrate (UAN)
Net sales:
Net sales	46,590	56,569
Chemical | Ammonia
Net sales:
Net sales	63,415	59,342
Chemical | Other
Net sales:
Net sales	$ 12,687	$ 11,270

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Net Sales - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Revenue From Contract With Customer [Abstract]
Revenue, remaining performance obligation, expected timing of satisfaction, description	contracts have an original expected duration of one year or less, for our contracts with a duration greater than one year at contract inception, the average remaining expected duration was approximately 30 months
Average revenue remaining performance obligation expected timing of satisfaction period	30 months
Contract liabilities	$ 3,800		$ 2,000	$ 1,600
Contract with customer, liability partially offset revenue recognized	600	$ 1,400
Amount of remaining performance obligation	92,100
Accounts receivable	$ 60,251		$ 75,494	$ 86,900

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Net Sales - Additional Information (Detail 1)	3 Months Ended
	Mar. 31, 2023
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-04-01
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, percent	60.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	33 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, percent	26.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	2 years

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Related Party Transactions - Additional Information (Detail) $ in Millions	Mar. 31, 2023 USD ($)
Eldridge [Member] | New Senior Secured Notes [Member]
Related Party Transaction [Line Items]
Debt issued - principal amount	$ 30

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Supplemental Cash Flow Information - Additional Information Relating to Cash Flow Activities (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash payments (refunds) for:
Income taxes, net	$ 20
Noncash investing and financing activities:
Accounts receivable, supplies, other assets, accounts payable and accrued liabilities associated with additions of property, plant and equipment	$ 21,761	$ 17,295
Accounts payable associated with debt-related costs		$ 741