LSB Industries (LXU) risk factors, FY2024 10-K

Risks Relating to Our Business

1. 01Cost and the lack of availability of raw materials could materially affect our profitability
2. 02Additionally, we depend on certain vendors to deliver natural gas and other key components that are required in the production of our products. Any disruption in the supply of natural gas and other key components could result in lost production or delayed shipments
3. 03We are reliant on a limited number of key facilities
4. 04The age of our chemical manufacturing facilities increases the risk for unplanned downtime, which may be significant
5. 05Our operations and the production and handling of our products involve significant risks and hazards
6. 06Our transportation and distribution activities rely on third-party providers, which subject us to risks and uncertainties beyond our control that may adversely affect our operations
7. 07We are currently evaluating and developing projects and other investments that could enable us to become a producer and marketer of low carbon ammonia and other derivative products. The success of these projects is dependent on a number of factors, many of which are beyond our control
8. 08There is intense competition in the markets we serve
9. 09A major factor underlying the current high level of demand for our nitrogen-based fertilizer products is the production of ethanol. A decrease in ethanol production or an increase in ethanol imports could have a material adverse effect on our results of operations and financial condition
10. 10Seasonality can adversely affect our business
11. 11A substantial portion of our sales is dependent upon a limited number of customers
12. 12Our business is subject to risks involving derivatives and the risk that our hedging activities might not be effective
13. 13Cybersecurity risks could adversely affect our business
14. 14We may engage in certain strategic transactions which may adversely affect our financial condition
15. 15consummation of a transaction would have on the price of our securities. While the documents governing our indebtedness include certain restrictions on our ability to finance any acquisitions of new assets, such restrictions contain various exceptions and limitations

Risks Relating to Our Industry and Markets

1. 16Our business and customers are sensitive to adverse economic cycles and a prolonged deterioration of global market and economic conditions could have a material adverse effect on our business, financial condition, results of operations and cash flow
2. 17Russia, Ukraine and Trinidad have substantial capacity to produce and export fertilizers. Producers in these countries also benefit from below-market prices for natural gas, due to government regulation and other factors
3. 18Domestic and regional inflation trends, increased interest rates and other factors could lead to the erosion of economies and adversely impact us
4. 19Adverse weather conditions and climate change could adversely affect our business
5. 20Geopolitical conditions, including political turmoil and volatility, regional conflicts, terrorism and war have negatively affected and could negatively affect U.S. and foreign companies, the financial markets, the industries where we operate, our operations and our profitability

Risks Relating to Our Liquidity and Debt

1. 21We may not be able to generate sufficient cash to service our debt and may be required to take other actions to satisfy the obligations under our debt agreements, which may not be successful
2. 22Our ability to make scheduled payments on our debt obligations depends on our financial condition and operating performance, prevailing economic and competitive conditions, and certain financial, business and other factors, some of which may be beyond our control
3. 23Our substantial indebtedness level could limit our financial and operating activities, and adversely affect our ability to incur additional debt to fund future needs
4. 24Any of the foregoing could adversely affect our liquidity, operating results and financial condition
5. 25The Revolving Credit Facility also contains certain affirmative covenants and requires the borrowers to comply with a fixed charge coverage ratio (as defined in the Revolving Credit Facility) if their excess availability (as defined in the Revolving Credit Facility) falls below a certain level
6. 26Despite our current levels of debt, we may still incur more debt ranking senior or equal in right of payment with our existing obligations, including secured debt, which would increase the risks described herein

Risks Relating to Legal, Regulatory and Compliance Matters

1. 27Current and future legislative or regulatory requirements affecting our business may result in increased costs and decreased revenues, cash flows and liquidity or could have other negative effects on our business
2. 28Changes to the production equipment at our chemical facilities that are required in order to comply with health, safety and environmental regulations may require substantial capital expenditures
3. 29In summary, new or changed laws and regulations or the inability of our customers to obtain or maintain insurance in connection with any of our chemical products could have an adverse effect on our operating results, liquidity and financial condition
4. 30We may not have adequate insurance
5. 31We may be required to modify or expand our operating, sales and reporting procedures and to install additional equipment in order to comply with current and possible future government regulations
6. 32Proposed and existing governmental laws and regulations relating to greenhouse gas and other air emissions may subject certain of our operations and customers to significant new costs and restrictions on their operations and may reduce sales of our products
7. 33Laws, regulations or other issues related to climate change could have a material adverse effect on us

Risks Relating to Human Capital

1. 34Loss of key personnel and other employees, including those with engineering and technical expertise, could negatively affect our business
2. 35We are subject to collective bargaining agreements with certain employees

Risks Relating to Stockholders

1. 36Todd Boehly (“Boehly”), through an affiliate, has a significant influence over us, which could limit other stockholders’ ability to influence the outcome of key transactions, including a change of control
2. 37There can be no assurance that we will repurchase shares of common stock or that we will repurchase shares at favorable prices
3. 38We are subject to a variety of factors that could discourage other parties from attempting to acquire us
4. 39Future issuances or potential issuances of our common stock or preferred stock could adversely affect the price of our common stock and our ability to raise funds in new stock offerings and could dilute the percentage ownership or voting power of our common stockholders
5. 40Revolving Credit Facility