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

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.

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).

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”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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).

The number of shares outstanding of the Registrant's common stock was ~~30,300,571~~89,564,162 sharesas of ~~July 23, 2021.~~April 29, 2022.

	June 30,			December 31,				March 31,			December 31,
	2021			2020				2022			2021
	(In Thousands)							(In Thousands)
Assets
Current assets:
Cash and cash equivalents	$	17,625		$	16,264			$	254,299		$	82,144
Short-term investments									89,311			—
Accounts receivable		67,431			42,929				97,515			86,902
Allowance for doubtful accounts		(377	)		(378	)			(463	)		(474	)
Accounts receivable, net		67,054			42,551				97,052			86,428
Inventories:
Finished goods		12,781			17,778				25,810			14,688
Raw materials		1,521			1,795				1,590			1,895
Total inventories		14,302			19,573				27,400			16,583
Supplies, prepaid items and other:							��
Prepaid insurance		5,682			12,315				10,557			14,244
Precious metals		7,801			6,787				13,945			14,945
Supplies		25,878			25,288				27,066			26,558
Other		4,757			6,802				9,805			2,234
Total supplies, prepaid items and other		44,118			51,192				61,373			57,981
Total current assets		143,099			129,580				529,435			243,136

Property, plant and equipment, net		871,780			891,198				850,372			858,480

Other assets:
Operating lease assets		27,854			26,403				24,829			27,317
Intangible and other assets, net		6,752			6,121				3,555			3,907
		34,606			32,524				28,384			31,224

	$	1,049,485		$	1,053,302			$	1,408,191		$	1,132,840

	June 30,			December 31,			March 31,		December 31,
	2021			2020			2022		2021
	(In Thousands)						(In Thousands)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	51,212		$	46,551		$	60,649	$	49,458
Short-term financing		4,516			13,576			9,911		12,716
Accrued and other liabilities		30,541			30,367			44,913		33,301
Current portion of long-term debt		9,049			16,801			8,112		9,454
Total current liabilities		95,318			107,295			123,585		104,929

Long-term debt, net		461,459			467,389			708,398		518,190

Noncurrent operating lease liabilities		20,277			19,845			17,542		19,568

Other noncurrent accrued and other liabilities		7,372			6,090			3,023		3,030

Deferred income taxes		31,195			30,939			37,455		26,633

Commitments and contingencies (Note 5)

Redeemable preferred stocks:
Series E 14% cumulative, redeemable Class C preferred stock, no par value, 210,000 shares issued; 139,768 outstanding; aggregate liquidation preference of $297,706,000 ($277,982,000 at December 31, 2020)		292,849			272,101
Series F redeemable Class C preferred stock, no par value, 1 share issued and outstanding; aggregate liquidation preference of $100		—			—
Commitments and contingencies (Note 6)

Stockholders' equity:
Series B 12% cumulative, convertible preferred stock, $100 par value; 20,000 shares issued and outstanding; aggregate liquidation preference of $3,385,000 ($3,265,000 at December 31, 2020)		2,000			2,000
Series D 6% cumulative, convertible Class C preferred stock, no par value; 1,000,000 shares issued and outstanding; aggregate liquidation preference of $1,342,000 ($1,312,000 at December 31, 2020)		1,000			1,000
Common stock, $.10 par value; 75,000,000 shares authorized, 31,283,210 shares issued		3,128			3,128
Common stock, $.10 par value; 150 million shares authorized, 91.2 million shares issued								9,117		9,117
Capital in excess of par value		192,980			198,215			493,964		493,161
Accumulated deficit		(51,844	)		(41,487	)
Retained earnings (accumulated deficit)								27,511		(31,255	)
		147,264			162,856			530,592		471,023
Less treasury stock, at cost:
Common stock, 982,639 shares (2,074,565 shares at December 31, 2020)		6,249			13,213
Common stock, 1.6 million shares (1.4 million shares at December 31, 2021)								12,404		10,533
Total stockholders' equity		141,015			149,643			518,188		460,490
	$	1,049,485		$	1,053,302		$	1,408,191	$	1,132,840

See accompanying ~~notes.~~notes to condensed consolidated financial statements.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021
	(In Thousands, Except Per Share Amounts)												(In Thousands, Except Per Share Amounts)
Net sales	$	140,696		$	105,033		$	238,812		$	188,444		$	198,981		$	98,116
Cost of sales		105,688			86,012			195,744			166,872			108,251			90,056
Gross profit		35,008			19,021			43,068			21,572			90,730			8,060

Selling, general and administrative expense		8,545			8,504			17,338			18,510			10,935			8,793
Other expense (income), net		6			(167	)		(257	)		(635	)
Operating income		26,457			10,684			25,987			3,697
Other income, net														(176	)		(263	)
Operating income (loss)														79,971			(470	)

Interest expense, net		12,290			12,476			24,662			25,955			9,955			12,372
Gain on extinguishment of debt		(10,000	)		—			(10,000	)		—
Non-operating other expense (income), net		745			(128	)		1,140			(803	)
Income (loss) before benefit for income taxes		23,422			(1,664	)		10,185			(21,455	)
Benefit for income taxes		(248	)		(1,299	)		(206	)		(1,638	)
Non-operating other expense, net														135			395
Income (loss) before provision for income taxes														69,881			(13,237	)
Provision for income taxes														11,115			42
Net income (loss)		23,670			(365	)		10,391			(19,817	)		58,766			(13,279	)

Dividends on convertible preferred stocks		75			75			150			150			—			75
Dividends on Series E redeemable preferred stock		10,213			8,689			19,724			16,996			—			9,511
Accretion of Series E redeemable preferred stock		513			505			1,024			1,009			—			511
Net income attributable to participating securities		223			—			—			—
Net income (loss) attributable to common stockholders	$	12,646		$	(9,634	)	$	(10,507	)	$	(37,972	)	$	58,766		$	(23,376	)

Income (loss) per common share:
Basic:
Net income (loss)	$	0.44		$	(0.34	)	$	(0.37	)	$	(1.35	)	$	0.66		$	(0.63	)

Diluted:
Net income (loss)	$	0.42		$	(0.34	)	$	(0.37	)	$	(1.35	)	$	0.65		$	(0.63	)

See accompanying ~~notes.~~notes to condensed consolidated financial statements.

	Common Stock Shares		Treasury Stock- Common Shares			Non- Redeemable Preferred Stock		Common Stock Par Value		Capital in Excess of Par Value			Retained Earnings (Accumulated Deficit)			Treasury Stock- Common			Total
	(In Thousands)
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

Balance at December 31, 2020		39,926		(2,075	)	$	3,000	$	3,993	$	197,350		$	(41,487	)	$	(13,213	)	$	149,643
Net loss														(13,279	)					(13,279	)
Dividend accrued on redeemable preferred stock														(9,511	)					(9,511	)
Accretion of redeemable preferred stock														(511	)					(511	)
Stock-based compensation											713									713
Issuance of restricted stock		250		835					25		(5,335	)					5,310			—
Other				(5	)												(18	)		(18	)
Balance at March 31, 2021		40,176		(1,245	)	$	3,000	$	4,018	$	192,728		$	(64,788	)	$	(7,921	)	$	127,037

Common
Stock
Shares

Treasury
Stock-
Common
Shares

Non-
Redeemable
Preferred
Stock

Common
Stock
Par
Value

Capital in
Excess of
Par
Value

Retained
Earnings (Accumulated Deficit)

Treasury
Stock-
Common

Total

(In Thousands)

Balance at December 31, 2020

31,283

(2,075
)

$
3,000

$
3,128

$
198,215

$
(41,487
)

$
(13,213
)

$
149,643

Net loss

(13,279
)

(13,279
)
Dividend accrued on redeemable
   preferred stock

(9,511
)

(9,511
)
Accretion of redeemable preferred stock

(511
)

(511
)
Stock-based compensation

713

713

Issuance of restricted stock

835

(5,310
)

5,310

—

Other

(5
)

(18
)

(18
)
Balance at March 31, 2021

31,283

(1,245
)

$
3,000

$
3,128

$
193,618

$
(64,788
)

$
(7,921
)

$
127,037

Net income

23,670

23,670

Dividend accrued on redeemable
   preferred stock

(10,213
)

(10,213
)
Accretion of redeemable preferred stock

(513
)

(513
)
Stock-based compensation

1,062

1,062

Issuance of unrestricted stock

267

(1,700
)

1,700

—

Other

(5
)

-

(28
)

(28
)
Balance at June 30, 2021

31,283

(983
)

$
3,000

$
3,128

$
192,980

$
(51,844
)

$
(6,249
)

$
141,015

Balance at December 31, 2019

31,283

(2,010
)

$
3,000

$
3,128

$
196,833

$
57,632

$
(13,266
)

$
247,327

Net loss

(19,452
)

(19,452
)
Dividend accrued on redeemable
   preferred stock

(8,307
)

(8,307
)
Accretion of redeemable preferred stock

(504
)

(504
)
Stock-based compensation

495

495

Other

30

(356
)

292

(64
)
Balance at March 31, 2020

31,283

(1,980
)

$
3,000

$
3,128

$
196,972

$
29,369

$
(12,974
)

$
219,495

Net loss

(365
)

(365
)
Dividend accrued on redeemable
   preferred stock

(8,689
)

(8,689
)
Accretion of redeemable preferred stock

(505
)

(505
)
Stock-based compensation

684

684

Other

14

(90
)

90

—

Balance at June 30, 2020

31,283

(1,966
)

$
3,000

$
3,128

$
197,566

$
19,810

$
(12,884
)

$
210,620

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2021			2020			2022			2021
	(In Thousands)						(In Thousands)
Cash flows from operating activities
Net income (loss)	$	10,391		$	(19,817	)	$	58,766		$	(13,279	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes		256			(1,661	)		10,823			327
Gain on extinguishment of debt		(10,000	)		—
Depreciation and amortization of property, plant and equipment		33,725			34,572			17,197			16,762
Amortization of intangible and other assets		629			631			311			315
Other		1,749			3,192			1,438			(1,058	)
Cash provided (used) by changes in assets and liabilities:
Accounts receivable		(23,369	)		(3,117	)		(11,707	)		(17,321	)
Inventories		5,535			8,655			(10,817	)		625
Prepaid insurance		6,633			6,642			3,687			2,265
Precious metals		(1,014	)		(2,114	)
Accounts payable		3,627			(7,674	)		10,003			8,598
Accrued interest		(20	)		1,685			13,618			10,412
Other assets and other liabilities		2,439			(1,618	)		(7,827	)		5,065
Net cash provided by operating activities		30,581			19,376			85,492			12,711

Cash flows from investing activities
Expenditures for property, plant and equipment		(14,849	)		(17,953	)		(8,254	)		(6,133	)
Purchases of short-term investments								(89,311	)		-
Other investing activities		300			299			51			198
Net cash used by investing activities		(14,549	)		(17,654	)		(97,514	)		(5,935	)

Cash flows from financing activities
Proceeds from revolving debt facility		12,000			30,000
Payments on revolving debt facility		(12,000	)		—
Proceeds from other long-term debt		—			12,570
Net proceeds from 6.25% senior secured notes								200,000			—
Payments on other long-term debt		(5,520	)		(4,411	)		(6,912	)		(3,353	)
Payments on short-term financing		(9,060	)		(6,095	)		(2,805	)		(5,419	)
Payments of debt-related costs, including extinguishment costs								(4,102	)		—
Other financing activities		(91	)		(64	)		(2,004	)		(36	)
Net cash provided (used) by financing activities		(14,671	)		32,000			184,177			(8,808	)

Net increase in cash and cash equivalents		1,361			33,722
Net increase (decrease) in cash and cash equivalents								172,155			(2,032	)

Cash and cash equivalents at beginning of period		16,264			22,791			82,144			16,264
Cash and cash equivalents at end of period	$	17,625		$	56,513		$	254,299		$	14,232

~~For a complete discussion~~The accompanying unaudited interim financial statements and notes of ~~our significant accounting policies, refer~~LSB Industries, Inc. (“LSB”) have been prepared pursuant to the ~~notes to our audited consolidated financial statements included in our Form 10-K for the year~~ ~~ended December 31, 2020 (“2020 Form 10-K”), filed with~~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, 2021, filed with the SEC on February 24, 2022, as amended by the Form 10-K/A filed on March 25, ~~2021.~~2022 (“2021 Form 10-K”). 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, 2022 and 2021 and the Company’s financial position as of March 31, 2022.

Basis of Consolidation – LSB ~~Industries, Inc. (“LSB”)~~ and its subsidiaries (the “Company,” “we,” “us,” or “our”) 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, and investments in its subsidiaries. All material intercompany accounts and transactions have been eliminated. Certain prior period amounts reported in our consolidated financial statements and notes thereto have been reclassified to conform to current period ~~presentation.~~presentation, including all share and per share information relating to the stock split in the form of a stock dividend on October 8, 2021.

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 AN (“HDAN”) and 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 4 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 a global chemical company 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 and Canada.

In our opinion, the unaudited condensed consolidated financial statements of the Company as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 include all adjustments and accruals, consisting of normal, recurring accrual adjustments, which are necessary for a fair presentation of the results ~~for the interim periods.~~ 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.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. These condensed consolidated financial statements should be read in connection with our audited consolidated financial statements and notes thereto included in ~~our 2020 Form~~ ~~10-K.~~

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.

~~Income Taxes –~~Short-Term Investments - Investments, which consist of U.S. treasury bills with an original maturities ranging from approximately 17 weeks to 51 weeks, were considered short-term investments. These investments are carried at cost which approximated fair value.

Equity Awards ~~Income taxes~~–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 ~~under~~as they occur. We may issue new shares of common stock or may use treasury shares associated with 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. 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.equity awards.

In addition, we do not recognize a tax benefit unless we conclude that it is more likely than not that the benefit will be sustained on audit by the relevant taxing authorities based solely on the technical merits of the associated tax position. If the recognition threshold is met, we recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is greater than 50% likely to be realized.

~~We reduce income tax expense for investment tax credits in the period the credit arises and is earned.~~

~~Contingencies~~In January 2022 and March 2022, the compensation committee of our Board of Directors approved the grant of 224,455 shares of time-based restricted stock units and 160,724 shares of performance-based restricted stock units to certain executives and employees under our 2016 Long Term Incentive Plan. A portion of the time-based restricted stock unit shares will vest at the end of each one-year period at the rate of one-third per year for three years and a portion will vest 100% at the end of three years. The performance-based restricted stock units ~~– Certain conditions~~will vest on the third anniversary of the grant date subject to the achievement of certain performance metrics established by the Board of Directors as set out in the grant. Upon the third anniversary the grants may ~~exist which may result~~be modified in a ~~loss, but which will only be resolved when future events occur. We~~range between 0% and ~~our legal counsel assess such~~200% based upon achievement of the performance goals. The unvested restricted shares carry dividend and voting rights contingent ~~liabilities,~~upon the vesting and ~~such assessment inherently involves an exercise~~lapsing of ~~judgment. If~~restriction. Sales of these shares are restricted prior to the ~~assessment~~date of vesting. Pursuant to the terms of the underlying restricted stock agreements, unvested restricted shares may immediately vest upon the occurrence 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,change in control (as defined by agreement), termination without cause 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).

~~Redeemable Preferred Stocks~~–Our redeemable preferred stocks that are redeemable outside of our control are classified as temporary/mezzanine equity. The redeemable preferred stocks were recorded at fair value upon issuance, net of issuance costs or discounts. In addition, certain embedded features included in the Series E Redeemable Preferred required bifurcation and are classified as derivative liabilities. The carrying values of the redeemable preferred stocks are being increased by periodic accretions (including the amount for dividends earned but not yet declared or paid) using the interest method so that the carrying amount will equal the redemption value as of October 25, 2023, the earliest possible redemption date by the holder. The accretion was recorded to retained earnings. However, this accretion will change if the expected redemption date changes. Also, see discussion in Note 12 – Subsequent Events.death.

Derivatives, Hedges and Financial Instruments – Derivatives are recognized in the balance sheet and ~~are~~ 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 ~~being~~ 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.

At ~~June 30, 2021,~~March 31, 2022 and December 31, ~~2020,~~2021, we did not have any financial instruments with fair values materially different from their carrying amounts (which excludes issuance costs, if applicable). 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.

~~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 2021, the compensation committee of our Board of Directors approved the grant of 614,999 shares of time-based restricted stock and 219,084 shares of performance-based restricted stock to certain executives under our 2016 Long Term Incentive Plan. The time-based restricted stock shares will vest at the end of each one-year period at the rate of one-third per year for three years, vesting 100% at the end of three years. The performance-based restricted stock will vest at the end of three years, subject to achievement of certain performance metrics. The unvested restricted shares carry dividend and voting rights contingent upon the vesting and lapsing of restriction. Sales of these shares are restricted prior to the date of vesting. Pursuant to the terms of the underlying restricted stock agreements, unvested restricted shares will immediately vest upon the occurrence of a change in control (as defined by agreement), termination without cause or death.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Generally, satisfaction occurs when control of the promised goods is transferred to the customer or as services are rendered or completed in exchange for consideration in an amount for which we expect to be entitled. Generally, control is transferred when the preparation for shipment of the product to a customer has been completed. Most of our contracts contain a single performance obligation with the promise to transfer a specific product.

Most of our revenue is recognized from performance obligations satisfied at a point in time, however, we have a performance obligation to perform certain services that are satisfied over a period of time. Revenue is recognized from this type of performance obligation as services are rendered and are based on the amount for which we have a right to invoice, which reflects the amount of expected consideration that corresponds directly with the value of the services performed.

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. These contract prices are often based on commodity indexes (such as NYMEX natural gas index) published monthly and the contract quantities are typically based on estimated ranges. The quantities become fixed and determinable over a period of time as each sale order is received from the customer.

The nature of our contracts also gives rise to other types of variable consideration, including volume discounts and rebates, make-whole provisions, other pricing concessions, and short-fall charges. We estimate these amounts based on the expected amount to be provided to customers, which result in a transaction price adjustment reducing revenue (net sales) with the offset increasing contract or refund liabilities. These estimates are based on historical experience, anticipated performance and our best judgment at the time. We reassess these estimates on a quarterly basis.

The aforementioned constraints over transaction prices in conjunction with the variable consideration included in our material contracts prevent a practical assignment of a specific dollar amount to performance obligations at the beginning and end of the period. Therefore, we have applied the variable consideration allocation exception.

Future revenues to be earned from the satisfaction of performance obligations will be recognized when control transfers as goods are loaded and weighed or services are performed over the remaining duration of our contracts.

~~Income (Loss) per Common Share~~ – Net income (loss) attributable to common stockholders is computed by adjusting net income (loss) by the amount of dividends and dividend requirements on preferred stocks and the accretion of redeemable preferred stocks, if applicable. Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, excluding contingently issuable common shares (unvested restricted stock), if applicable. For periods we earn net income, a proportional share of net income is allocated to participating securities, if applicable and dilutive, determined by dividing total weighted average participating securities by the sum of the total weighted average common shares and participating securities (the “two-class method”). Certain securities (Series E Redeemable Preferred and restricted stock units) participate in dividends declared on our common stock and are therefore considered to be participating securities.

Participating securities have the effect of diluting both basic and diluted income per common share during periods of net income. For periods we incur a net loss, no loss is allocated to participating securities because they have no contractual obligation to share in our losses. Diluted loss per common share is computed after giving consideration to the dilutive effect of our potential common stock instruments that are outstanding during the period, except where such non-participating securities would be anti-dilutive.

~~ASU 2019-12~~ – ~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,~~ which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. The ASU removes certain exceptions to the general framework and also seeks to simplify and/or clarify accounting for income taxes by adding certain requirements that would simplify GAAP for financial statement preparers. On January 1, 2021, we adopted ASU 2019-12, which did not have a material impact on our condensed consolidated financial statements or related disclosures.

ASU 2020-06 - In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own Equity (Subtopic 815-40). This ASU addresses the complexity associated with applying GAAP to certain financial instruments with characteristics of liabilities and equity. The ASU includes amendments to the guidance on convertible instruments and the derivative scope exception for contracts in an entity’s own equity and simplifies the accounting for convertible instruments which include beneficial conversion features or cash conversion features by removing certain separation models. Additionally, the ASU requires entities to use the “if-converted” method when calculating diluted earnings per share for convertible instruments. This ASU will be effective for us on January 1, 2024; however, early adoption iswas permitted beginning January 1, 2021. We are currently evaluating the timing and the effect of ~~our pending~~ adoption of this ASU on our consolidated financial statements and related ~~disclosures at this time.~~disclosures.

ASU 2020-04 – In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential accounting burden associated with transitioning away from reference rates such as LIBOR that are expected to be discontinued. This ASU provides exceptions and optional expedients for applying GAAP to contract modifications, hedging relationships, and other transactions that reference LIBOR or other reference rates to be discontinued as a result of reference rate reform. They do not apply to modifications made or hedges entered into or evaluated after December 31, 2022, unless the hedging relationships existed as of that date and optional expedients for them were elected and retained through the end of the hedging relationship. This ASU became effective upon issuance. We continue to evaluate the effect of this ASU and plan to utilize this relief for our debt agreements that include LIBOR rates.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022		2021
	(Dollars In Thousands, Except Per Share Amounts)												(In Thousands, Except Per Share Amounts)
Numerator:
Net income (loss)	$	23,670		$	(365	)	$	10,391		$	(19,817	)	$	58,766	$	(13,279	)
Adjustments for basic net income (loss) per common share:
Adjustments for basic income (loss) per common share:
Dividend requirements on Series E Redeemable Preferred		(10,213	)		(8,689	)		(19,724	)		(16,996	)		—		(9,511	)
Dividend requirements on Series B Preferred		(60	)		(60	)		(120	)		(120	)		—		(60	)
Dividend requirements on Series D Preferred		(15	)		(15	)		(30	)		(30	)		—		(15	)
Accretion of Series E Redeemable Preferred		(513	)		(505	)		(1,024	)		(1,009	)		—		(511	)
Net income attributable to participating securities		(223	)		—			—			—
Numerator for basic net income (loss) per common share - net income (loss) attributable to common stockholders	$	12,646		$	(9,634	)	$	(10,507	)	$	(37,972	)
Dividends on Series B and Series D Preferred assumed to be converted, if dilutive		75			—			—			—
Numerator for diluted net income (loss) per common share	$	12,721		$	(9,634	)	$	(10,507	)	$	(37,972	)
Numerator for basic and diluted net income (loss) per common share													$	58,766	$	(23,376	)

Denominator:
Denominator for basic net income (loss) per common share - weighted- average shares (1)		28,485,251			28,198,963			28,414,863			28,187,584
Denominator for basic net income (loss) per common share - adjusted weighted-average shares (1)														88,421		36,850
Effect of dilutive securities:
Convertible preferred stocks		916,666			—			—			—
Unvested restricted stock and stock units		741,784			—			—						1,345		—
Dilutive potential common shares		1,658,450			—			—			—			1,345		—

Denominator for diluted net income (loss) per common share - adjusted weighted-average shares		30,143,701			28,198,963			28,414,863			28,187,584			89,766		36,850

Basic net income (loss) per common share	$	0.44		$	(0.34	)	$	(0.37	)	$	(1.35	)	$	0.66	$	(0.63	)

Diluted net income (loss) per common share	$	0.42		$	(0.34	)	$	(0.37	)	$	(1.35	)	$	0.65	$	(0.63	)

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

June 30,

December 31,

2021

2020

(In Thousands)

Working Capital Revolver Loan, with a current interest
   rate of 3.75% (A)

$
—

$
—

Senior Secured Notes due 2023 (B)

435,000

435,000

Secured Financing due 2023, with an interest
   rate of 8.32% (C)

9,241

10,715

Secured Loan Agreement due 2025, with an interest
   rate of 8.75% (D)

6,156

6,834

Secured Financing due 2025, with an interest
   rate of 8.75% (E)

26,534

28,636

Unsecured Loan Agreement due 2022 (F)

—

10,000

Secured Promissory Note due 2021

—

1,221

Other

387

432

Unamortized discount, net of premium and debt issuance
  costs

(6,810
)

(8,648
)

470,508

484,190

Less current portion of long-term debt

9,049

16,801

Long-term debt due after one year, net

$
461,459

$
467,389

	March 31,			December 31,
	2022			2021
	(In Thousands)
Working Capital Revolver Loan, with a current interest rate of 4.00% (A)	$	—		$	—
Senior Secured Notes due 2028, with an interest rate of 6.25% (B)		700,000			500,000
Secured Financing due 2023, with an interest rate of 8.32% (C)		6,918			7,712
Secured Financing due 2025, with an interest rate of 8.75% (D)		23,220			23,987
Secured Loan Agreement due 2025 (E)		—			5,328
Other		316			339
Unamortized discount, net of premium and debt issuance costs		(13,944	)		(9,722	)
		716,510			527,644
Less current portion of long-term debt		8,112			9,454
Long-term debt due after one year, net	$	708,398		$	518,190

(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, 2022 was $2.6 million, which reduces the available for borrowing under the Working Capital Revolver Loan. At ~~June 30, 2021~~March 31, 2022, our available borrowings under our Working Capital Revolver Loan were approximately ~~$50.3~~$62.4 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 ~~April 25, 2018,~~October 14, 2021, LSB completed the issuance and sale of ~~$400~~$500 million aggregate principal amount of the Notes of its ~~9.625%~~6.25% Senior Secured Notes due ~~2023~~2028 (the “Notes”), pursuant to an indenture (the “Indenture”), dated as of ~~April 25, 2018.~~October 14, 2021. The Notes were issued at a price equal to ~~99.509%~~100% of their face value.

On ~~June 21, 2019,~~March 8, 2022, LSB completed the issuance and sale of ~~$35~~an additional $200 million aggregate principal amount of ~~its 9.625% Senior Secured~~the Notes ~~due 2023~~ (the “New 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 ~~102.125%~~100% of their face value, plus accrued interest from ~~May 1, 2019~~October 14, 2021 to ~~June 21, 2019.~~March 7, 2022.

The Senior Secured Notes mature on ~~May 1, 2023~~October 15, 2028. Interest is to be paid ~~semiannually~~ in arrears on May 1^st15 and ~~November 1~~^st.October 15.

As it relates to the issuance of the Notes in October 2021, most of the proceeds from the Notes were used to purchase/redeem the previously outstanding $435 million aggregate principal amount of senior secured notes scheduled to mature in 2023. The remaining net proceeds were primarily used to pay related transaction fees. This transaction was accounted for as an extinguishment of debt. As a result, we recognized a loss on extinguishment of debt of approximately $20.3 million in 2021, primarily consisting of a portion of the contractual redemption premium paid and the expensing of unamortized debt issuance costs associated with the senior secured notes purchased/redeemed.

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

(D) ~~EDC is party to a secured loan agreement with an affiliate of LSB Funding. Principal and interest are payable in 60 equal monthly installments through March 2025.~~

~~(E)~~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 LSB Funding. Beginning in September 2020, principal and interest are 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.

~~(F)~~ (E)~~In April 2020,~~ During the first quarter of 2022 EDC’s secured loan agreement with an affiliate of LSB ~~entered into~~Funding was paid off resulting in a federally guaranteed loan agreement (“PPP loan”) for $10 million with a lender pursuant to a new loan program through the U.S. Small Business Administration (“SBA”) as the result of the Paycheck Protection Program (“PPP”) established by the ~~Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and amended by the Paycheck Protection Program Flexibility Act of 2020. We applied ASC~~ ~~470,~~ ~~Debt,~~ to account for the PPP loan. We have used all of the proceeds from the PPP loan for payroll, rent, utilities, and other specified costs that qualify for loan forgiveness. In April 2021, we submitted the PPP loan forgiveness application to the lender. ~~In June 2021, the PPP loan was fully forgiven by the SBA and lender. As a result, we recognized a gain~~minimal loss on extinguishment of ~~debt of $10 million for the three months ended June 30, 2021.~~debt.

Settlements and Outstanding Natural Gas Purchase Commitments –During several days in February 2021, the Pryor Facility was taken out of service after extreme cold weather caused a surge in natural gas prices in the region, along with the curtailment of gas distribution by the operator of the pipeline that supplies natural gas to the facility. Also, as a result of unprecedented cold weather conditions, the primary natural gas supplier to our El Dorado Facility asserted a claim of force majeure and materially restricted the supply of gas to the facility. In order to mitigate a portion of the commodity price risk associated with natural gas, we periodically enter into natural gas forward contracts and volume purchase commitments that locked in the cost of certain volumes of natural gas. Prior to this weather event, we had both types of arrangements. During the first quarter of 2021, as a result of the extreme conditions previously described, we settled all of our natural gas forward contracts and certain volume purchase commitments at that time and recognized a realized gain of approximately $6.8 million, which includes the realized gain ~~discussed under “Natural Gas Contracts” in Note 6 and is~~ classified as a reduction to cost of ~~sales.~~sales.

At ~~June 30, 2021,~~March 31, 2022, certain of our natural gas contracts qualify as normal purchases under GAAP and thus are not ~~mark-to-market, which~~mark-to-market. These contracts included volume purchase commitments with fixed costs of approximately ~~4.7~~1.8 million MMBtus of natural gas. ~~These~~Further, the contracts extend through ~~December 2021~~April 2022 at a weighted-average cost of ~~$2.75~~$5.06 per MMBtu ($~~13.1~~9.2 million) and a weighted-average market value of ~~$3.40~~$4.97 per MMBtu ($~~16.1~~9.1 million).

~~Settlements of Gain Contingencies -~~ In June 2020, EDC and certain vendors mediated settlements for EDC to recover certain costs associated with a nitric acid plant at our El Dorado Facility. The construction of this plant was completed, and the plant began production in 2016. As a result, the recovery from these settlements recognized during the three months ended June 30, 2020, includes approximately $5.7 million classified as a reduction to cost of sales and approximately $1.9 million classified as a reduction to PP&E.

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

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 ~~June 30, 2021,~~March 31, 2022, our accrued liabilities for environmental matters totaled ~~$467,000~~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.

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 ~~amount~~volume of effluents that can be discharged and control the method of such discharge.

In 2017, the Pryor Chemical Company (“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. PCC and ODEQ are engaged in ongoing discussions related to the renewal of the injection well to address the wastewater stream.

Our El Dorado Facility is subject to a National Pollutant Discharge Elimination System (“NPDES”) permit issued by the Arkansas Department of Environmental Quality (“ADEQ”) in 2004. In 2010, the ADEQ issued a draft NPDES permit renewal for the El Dorado Facility, which contained more restrictive discharge limits than the previous 2004 permit. During 2017, ADEQ issued a final NPDES permit with new dissolved mineral limits; however, EDC filed an appeal, and a Permit Appeal Resolution (“PAR”) was signed in 2018. EDC is in compliance with the revised permit limits agreed upon in the PAR.

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 ADEQ stated that El Dorado Chemical was meeting the requirements of the CAO and should continue semi-annual monitoring. Subsequent to the PAR mentioned previously, a new 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 at ~~June 30, 2021~~,March 31, 2022, in connection with this ADEQ matter.

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, but continues to be delayed due to the impact from the COVID-19 pandemic. 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.

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 to EDC.~~matter. As of ~~June 30, 2021,~~March 31, 2022, 0 liability reserve has been established in connection with this ~~matter, except for the unpaid portion of the settlement agreements discussed above.~~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~~$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. ~~During~~This judgement was accrued for at the ~~first six months~~time of ~~2020, this judgment impacted our condensed consolidated statement of operations as follows:~~the ruling.

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.

NoNaN liability was established at ~~June 30, 2021,~~March 31, 2022 or December 31, ~~2020,~~2021, in connection with the cross-claims in Part (2) of the ~~matte~~r,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.

~~For the periods presented, the following significant instruments are accounted for on a fair value basis:~~

Periodically, we entered into certain forward natural gas contracts (“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, 2022 and December 31, 2020, our natural gas contracts included 7.3 million MMBtu of natural gas, that extended through December 2021, but these contracts were settled during the first quarter of 2021, primarily due to the weather event discussed in Note 5. At June 30, 2021, we had no outstanding natural gas contracts. ~~The~~When present the valuations of the natural gas contracts are classified as Level 2. ~~At December 31, 2020, the valuation inputs included the contractual weighted-average cost of $2.65 per MMBtu and the weighted-average market value of $2.49 per MMBtu.~~

For the ~~six~~three months ended ~~June 30,~~March 31, 2021, we recognized a gain of $2.7 million ~~(including~~(includes a realized gain of $1.5 million), ~~all of which was recognized in the first quarter.For~~(0ne for the three ~~and six~~ months ended ~~June 30, 2020, we recognized a minimal gain and a loss of $0.7, respectively~~March 31, 2022). The gain is classified as a reduction of cost of ~~sales and the loss is classified as cost of~~ sales.

~~As discussed~~ ~~in Note 8, certain~~ embedded features (“embedded derivative”) relating to the redemption of the Series E Redeemable Preferred, which includes certain contingent redemption features and the participation rights value have been bifurcated from the Series E Redeemable Preferred and recorded as a ~~liability. At June 30, 2021, and December 31, 2020, we estimate~~ that the contingent redemption features have fair value since we estimate that a portion of the shares of this preferred stock would be redeemed prior to October 25, 2023. For certain other embedded features, we estimated no fair value based on our assessment that there is a remote probability that these features will be exercised.

~~The fair value of the embedded derivative was valued using discounted cash flow models and primarily based on the difference in the present value of estimated future cash~~ flows with no redemptions prior to October 25, 2023, compared to certain estimated redemptions during the same period and applying the effective dividend rate of the Series E Redeemable Preferred. In addition, at June 30, 2021, and December 31, 2020, the ~~fair value of the embedded derivative included the valuation of the participation rights, which was based on the equivalent of 303,646 shares of our common stock~~ ~~at $6.05 and~~ ~~$3.39 per share, respectively.~~

The valuations of the embedded derivative are classified as Level 3. This derivative is valued using market information, management’s redemption assumptions, the underlying number of shares as defined in the terms of the Series E Redeemable Preferred, and the market price of our common stock.

For the three months ended June 30, 2021, and 2020, we recognized an unrealized loss of approximately $0.7 million and an unrealized gain of approximately $0.1 million, respectively, due to the change in fair value of the embedded derivative. For the six months ended June 30, 2021, and 2020, we recognized an unrealized loss of approximately $1.2 million and an unrealized gain of approximately $0.8 million, respectively, due to the change in fair value of the embedded derivative. The unrealized gain and loss are included in non-operating other income and expense.

~~The following details our assets and liabilities that are measured at fair value on a recurring basis at June 30, 2021, and December 31, 2020:~~

Fair Value Measurements at
June 30, 2021 Using

Description

Total Fair
Value at
June 30,
2021

Quoted Prices
in Active
Markets for
Identical
Contracts
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)⁽¹⁾

Total Fair
Value at
December 31,
2020

(In Thousands)

Assets - Supplies, prepaid items and other:

Natural gas contracts

$
—

$
—

$
—

$
—

$
80

Total

$
—

$
—

$
—

$
—

$
80

Liabilities - Current and noncurrent accrued and
other liabilities:

Natural gas contracts

$
—

$
—

$
—

$
—

$
1,285

Embedded derivative

$
2,181

$
—

$
—

$
2,181

$
1,029

Total

$
2,181

$
—

$
—

$
2,181

$
2,314

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021
	(In Thousands)												(In Thousands)
Current:
Federal	$	—		$	—		$	—		$	—		$	—		$	—
State		(175	)		(12	)		(462	)		23			292			(285	)
Total Current	$	(175	)	$	(12	)	$	(462	)	$	23		$	292		$	(285	)

Deferred:
Federal	$	(57	)	$	(1,138	)	$	(136	)	$	(1,891	)	$	11,385		$	(80	)
State		(16	)		(149	)		392			230			(562	)		407
Total Deferred	$	(73	)	$	(1,287	)	$	256		$	(1,661	)	$	10,823		$	327
Benefit for income taxes	$	(248	)	$	(1,299	)	$	(206	)	$	(1,638	)
Provision for income taxes													$	11,115		$	42

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the current provision (benefit) for state income taxes shown above includes regular state income tax, provisions for uncertain state income tax positions, the impact of state tax law changes and other similar adjustments.

Our estimated annual effective ~~tax~~ rate for ~~2021~~2022 includes the impact of permanent tax differences, ~~including but not limited to PPP loan forgiveness,~~ limits on deductible compensation, ~~state tax law changes,~~valuation allowances and ~~valuation allowances.~~other permanent items.

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 currently believe that it is more-likely-than-not ~~that a portion of~~ our federal deferred tax assets will ~~not~~ be able to be ~~utilized and~~utilized. Thus, we estimate a $12.7 million reduction in the related valuation allowance associated with these federal deferred tax assets will be recognized throughout the year as part of the estimated annual effective tax rate applied to ~~be recorded during 2021 to be approximately $3.0 million.~~ordinary income. We have ~~also~~ determined it is more-likely-than-not that a portion of our state deferred tax assets will not be able to be utilized. However, we estimate a $7.2 million reduction in the related valuation allowance associated with these state deferred tax assets ~~to be recorded during 2021~~ will be ~~approximately~~ $~~4.4 million.~~recognized throughout 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.

The tax ~~benefit~~provision for the ~~six~~three months ended ~~June 30,~~March 31, 2022 was $11.1 million (15.9% provision on pre-tax income). The tax provision for the three months ended March 31, 2021 was ~~$0.2 million (2% benefit on pre-tax income) and the tax benefit for the six months ended June 30, 2020, was $1.6 million (8% benefit on pre-tax loss).~~ minimal. For both periods, the effective tax rate is less than the statutory tax rate primarily due to the impact of the valuation allowances.

LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the ~~2017-2020~~ 2018-2021 years remain open for all purposes of examination by the U.S. Internal Revenue Service (“IRS”) and other major tax jurisdictions. Additionally, the ~~2013-2016~~2013-2017 years remain subject to examination for determining the amount of net operating loss and other carryforwards.

As of June 30, 2021, the Series E Redeemable Preferred had a 14.5% annual dividend rate and a participating right in dividends and liquidating distributions equal to 303,646 shares of common stock (participation rights value). Dividends accrue semi-annually in arrears and are compounded. Pursuant to the terms of the Series E Redeemable Preferred, the annual dividend rate will increase (a) by an additional 0.50% in April 2022 and (b) by an additional 1.0% in April 2023. The Series E Redeemable Preferred contains redemption features and a participation rights value that are being accounted for as derivative instruments and have been bifurcated from the Series E Redeemable Preferred as discussed in Note 6. Also, see discussion in Note 12 – Subsequent Events.

~~As of~~ ~~June 30, 2021~~, the Series F Redeemable Preferred has voting rights to vote as a single class on all matters which the common stock have the right to vote and is entitled to a number of votes equal to 456,225 shares of our common stock.

~~As discussed in Note 1, we~~We primarily derive our revenues from the sales of various chemical products. The ~~following table presents our~~Company’s net sales ~~disaggregated by our principal markets,~~ ~~which~~ disaggregation is consistent with other financial information utilized or provided outside of our condensed consolidated financial ~~statements:~~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:

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 1517 months at ~~June 30, 2021~~.March 31, 2022.

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 ~~$1.2~~$1.8 million and ~~$2.5~~$1.6 million of contract liabilities as of ~~June 30, 2021~~ March 31, 2022 and December 31, ~~2020,~~2021, respectively. For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, revenues of ~~$1.0 million and $1.6 million, respectively,~~ ~~were recognized and included in the balance at the beginning of the respective period.~~ ~~For the three and six months ended June 30, 2020, revenues of $1.5~~$1.4 million and $1.0 million, respectively, were recognized and included in the balance at the beginning of the respective period.

~~10.~~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, 2022, 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 $74 million, of which approximately 37% of this amount relates to 2022 through 2024, approximately 30% relates to 2025 through 2026, with the remainder thereafter.

As of ~~June 30, 2021,~~March 31, 2022, we have ~~three~~two separate outstanding financing arrangements ~~with~~by an affiliate of LSB Funding as discussed in footnotes ~~(D), (E)~~(C) and ~~(F)~~(D) of Note 4. ~~Also, an~~An affiliate of LSB Funding holds ~~$50~~$30 million of ~~our Senior Secured Notes discussed in footnote (B) of Note 4. In addition, LSB Funding holds all outstanding shares of~~ the ~~Series E and Series F Redeemable Preferred discussed in Note 8. Also, see discussion in Note 12 – Subsequent Events.~~New Notes.

~~The Golsen Holders and an immediate family member hold all outstanding shares of the Series B Preferred and Series D Preferred, which accumulated dividends on such shares totaled approximately $1.7 million at~~ ~~June 30, 2021~~.

On July 19, 2021, we entered into a Securities Exchange Agreement (the “Exchange Agreement”) with LSB Funding LLC (the “Holder”), an affiliate of Eldridge. Pursuant to the terms of the Exchange Agreement, the Holder has agreed with us to exchange all of the shares of our Series E and Series F Redeemable Preferred Stock held by it for shares of our common stock. Under the terms of the Exchange Agreement, LSB would exchange, at the closing, approximately $300 million of preferred stock held by Eldridge into an equivalent value of our common stock based on an exchange price of $6.16, which is equal to the 30-day volume weighted average price as of the date of the Exchange Agreement. In connection with the transaction, our common stockholders will receive a special dividend in the form of 0.30 shares of our common stock for every share owned as of the record date and any such amount received by the Holder will reduce the exchange consideration otherwise payable under the Exchange Agreement. Completion of the exchange transaction is subject to a number of customary closing conditions, including receipt of stockholder approval from the holders of a majority of the shares of our outstanding common stock not held by Eldridge or any of its affiliates. This summary description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement included as exhibit 10.2 ~~in this Form 10-Q.~~

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 ~~June 30, 2021~~March 31, 2022 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.”

LSB is headquartered in Oklahoma City, Oklahoma and through its subsidiaries, manufactures and sells 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 ~~a global chemical company~~Covestro in Baytown, Texas. Our products are sold through distributors and directly to end customers primarily throughout the U.S. and parts of Mexico and Canada.

We ~~believe~~expect our future results of operations and financial condition ~~will depend significantly on our ability~~ to ~~successfully implement the~~benefit from following key initiatives:

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. 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.

~~We may not successfully implement any or all of these initiatives. Even if we successfully implement the initiatives, they may not achieve the results that we expect or desire.~~

On September 27, 2021, we closed a Securities Exchange Transaction (the “Exchange Transaction”) with LSB Funding LLC (the “Holder”), an affiliate of Eldridge, in which we exchanged the shares of Series E and Series F Redeemable Preferred Stock held by the Holder for shares of our common stock. In summary, we exchanged the approximately $310 million liquidation preference of preferred stock held by the Holder into our common stock based on an exchange price of $6.16, which was equal to the 30-day volume weighted average price as of the date of the Exchange Agreement. However, the exchange consideration paid under the Exchange Agreement was reduced by approximately 1.2 million shares, which shares were included in the Special Dividend and received by the Holder. In connection with the transaction, on October 8, 2021, our common stockholders, including the Holder, received the Special Dividend in the form of 0.30 shares of our common stock for every share owned as of the September 24, 2021, the Special Dividend record date. The main benefit of the exchange is that it relieved our Company and our common stockholders from the expensive, compounding burden of the preferred stock dividend, simplifying and creating more flexibility with our capital structure.

The Exchange Transaction discussed above prompted the major credit rating agencies, Moody’s and S&P, to upgrade their credit ratings on our debt, which combined with the favorable credit markets, enabled us to complete a refinancing of our senior notes on significantly improved terms, reducing our cost of capital, bolstering our liquidity and extending the maturity of our debt. More specifically, on October 14, 2021, we closed on an offering of $500 million of senior secured notes due 2028, bearing an interest rate of 6.25%, which we used to redeem our $435 million of 9.625% senior notes that were due to mature in 2023, with the balance being used to enhance the liquidity of our balance sheet and for general corporate purposes. In February and March of 2022, we received additional credit upgrades from S&P and Moody’s, respectively, after which we completed an offering of $200 million of senior secured notes due 2028, bearing an interest rate of 6.25%. The proceeds from this “tack on” offering in combination with the enhanced liquidity we attained through our October 2021 offering along with our current level of strong cash flow provide us with ample capital for use in pursuing and investing in the Key Operating Initiatives summarized above.

~~Driven by several supply and demand factors, selling~~Selling prices for all of our major products ~~improved~~continued to increase during the ~~second~~first quarter of ~~2021~~2022 as compared to the same quarter of ~~2020. As for our agricultural business,~~2021 driven by a combination of supply and demand factors. The strong corn prices ~~reached an eight-year during~~over the ~~first half~~past year have been driven, in part, by a rebound in the production of ~~2021 and we are benefiting from~~ethanol, a gasoline additive that represents approximately 40% of total U.S. corn use annually, as miles driven have returned to near pre-pandemic levels. Also supporting the strong ~~farmer economics.~~corn pricing over the past year has been Chinese demand for corn ~~continues to be strong~~for use as ~~China continues~~feed for swine as part of the nation’s efforts to rebuild ~~their~~its swine ~~population following~~production in the ~~swine flu, which decimated the~~wake of a virus that dramatically reduced its swine population several years ago. This demand for feed is expected to remain robust as China has moved to large institutional hog farms ~~for~~ which consume significant quantities of corn. Globally, corn supplies have been constrained by drought conditions in South America and the Western U.S., which has served to further bolster corn prices. Early forecasts point to U.S. corn

acreage to be planted in the 2022-2023 planting season to be approximately 90 million acres, modestly lower than the 2021-2022 estimate of 93.4 million acres, but still at a very healthy level to support strong demand for ~~feed is significant.~~ fertilizers.

In addition ~~domestic~~to strong corn demand to produce ethanol continues to rebound since the second quarter of 2020 as vaccines are rolled out, stay-at-home orders are lifted and demand for gasoline continues to improve. As corn prices increased, pricing, ~~for fertilizers followed suit as growers sought to apply more fertilizer~~which has prompted farmers to increase ~~yields. Also entering into~~fertilizer purchases to maximize yields, a series of supply related factors that unfolded over the ~~second quarter~~course of 2021 have served to create a global shortage of ammonia, driving the ~~supply of~~strong increase in the prices for nitrogen products that has persisted into 2022. Constraints to ammonia production began in ~~the U.S. was tight due to~~February 2021 as winter storm Uri and the resultant severe cold weather experienced in many areas of the U.S. ~~that~~ caused many nitrogen producers to idle their plants ~~during February 2021. Additionally, wet weather across~~resulting in a tightening in the ~~Midwest and Southern Plains regions in May has resulted in~~supply of nitrogen products headed into the spring planting ~~season extending into July~~season. Constraining supply further, during the third quarter of 2021 a number of ammonia facilities underwent turnarounds that were originally scheduled for third quarter of 2020 but were postponed due to the COVID-19 pandemic. Additionally, in late August, Hurricane Ida, a Category 4 storm caused production along the U.S. Gulf coast to be shut down for a period of time, further reducing production.

Also supporting the strength in fertilizer prices has been the significant increase in the cost of natural gas, the primary feedstock for production of ammonia, which has prompted various producers to cease operations of some facilities, particularly in Europe where natural gas prices had surged to more than $30 per MMBtu by late 2021, and ~~that combined with other~~through the first quarter of 2022 averaged $33 per MMBtu, rendering some ammonia plants uneconomical to operate. The resultant decrease in global production of ammonia has fueled further strength in nitrogen-based fertilizer prices, which have thus far materially outstripped the impact to production costs of rising natural gas prices in the U.S. The factors discussed above ~~has~~have led to continued strong pricing into the first quarter of 2022, which we expect to support continued favorable pricing levels over the balance of the year. These factors combined to serve as the foundation for the global ammonia market dynamic that our industry is now experiencing thus far in ~~July that~~2022, in which demand exceeds available supply.

Further contributing to increased fertilizer prices has been the impact of the Russian invasion of Ukraine. Ukraine is one of the world’s largest exporters of corn and the current unstable geopolitical situation is expected to ~~continue throughout 2021~~disrupt the nation’s corn production and exports in 2022 and 2023; a concern that appears to be reflected in corn futures prices which currently sit at their highest prices in recent years. With respect to global nitrogen supply, Russia has historically been one of the top exporters of ammonia worldwide. Current economic sanctions against Russia by numerous countries around the world have further reduced the supply of ammonia flowing into ~~2022. However, improvements~~the global fertilizer market, resulting in ~~fertilizer demand and pricing are being somewhat tempered by higher~~rising prices. Finally, the war in Ukraine has resulted in continued high prices for natural gas ~~costs thus~~in Europe, which imports more than 40% of its gas from Russia, making ammonia production even more uneconomical for European ammonia producers. On top of the dynamics already resulting in elevated nitrogen prices entering 2022, Russia’s aggression toward Ukraine is likely to have impacts on the global ammonia market far ~~in 2021 as compared to 2020.~~beyond when the conflict ends.

As for our industrial ~~and mining~~ products, selling prices ~~continued to improve~~have increased as the supply of ammonia ~~remained~~remains tight due to ~~strong global demand, curtailed regional supply from~~ the ~~winter storm Uri, numerous global unplanned outages and lower than expected product imports.~~aforementioned factors. As a result, the Tampa Ammonia benchmark price ~~increased,~~remains at record high levels, which ~~in turn, increased~~has translated into higher selling prices for our ~~selling prices~~products as many of our industrial contracts are indexed to this benchmark price. Demand trends for the industrial products we sell, primarily nitric acid and ammonia, have remained robust despite disruptions to certain end markets, such as auto manufacturing which has been constrained due to a shortage of microprocessors, as activity in other markets, such as homebuilding and power generation has remained strong. In addition, our sales of nitric acid increased steadily throughout 2021 pursuant to the new long-term nitric acid supply contract discussed above. ~~Also,~~Demand for our products from mining end-markets continues to improve as quarry and construction activity has been elevated due to robust levels of residential, commercial and civil infrastructure buildout along with strong demand for ~~our mining products continued~~precious metals, including expectations for rising copper production to ~~improve due to increased mining activities.~~support the growing domestic production of electric vehicles.

~~In April 2020, we~~ ~~entered into a federally guaranteed PPP loan for $10 million with a lender pursuant to a new loan program through the SBA as the result of the PPP established by the~~ ~~CARES Act and amended by the PPP Flexibility Act of 2020.~~ We have used all of the proceeds from the PPP loan for payroll, rent, utilities, and other specified costs that qualify for loan forgiveness. In April 2021, we submitted the PPP loan forgiveness application to the ~~lender. In June 2021, the PPP loan was fully forgiven by the SBA and lender. As a result, we recognized a gain on extinguishment of debt of $10 million for the second quarter of 2021.~~

On July 19, 2021, we entered into a Securities Exchange Agreement (the “Exchange Agreement”) with LSB Funding LLC (the “Holder”), an affiliate of Eldridge, to exchange the shares of Series E and Series F Redeemable Preferred Stock held by it for shares of our common stock. Under the terms of the Exchange Agreement, LSB would exchange, at the closing, approximately $300 million of preferred stock held by Eldridge into an equivalent value of our common stock based on an exchange price of $6.16, which is equal to the 30-day volume weighted average price as of the date of the Exchange Agreement. In connection with the transaction, our common stockholders will receive a special dividend in the form of 0.30 shares of our common stock for every share owned as of the record date and any such amount received by the Holder will reduce the exchange consideration otherwise payable under the Exchange Agreement.

Completion of the exchange transaction is subject to a number of customary closing conditions, including receipt of stockholder approval from the holders of a majority of the shares of our outstanding common stock not held by Eldridge or any of its affiliates. We expect to file a preliminary proxy for a special meeting of stockholders and deliver additional information related to the special

~~meeting to stockholders in the near term. Results of the stockholder vote will be tabulated at the special meeting of stockholders expected to be held in the third quarter of 2021.~~

~~Sales of our agricultural products were~~ ~~approximately 47% of~~ ~~our total net sales for~~ ~~the second quarter of 2021.~~ The price at which our ~~agricultural~~fertilizer 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.

The March 2022 USDA annual ~~Acreage Report,~~Prospective Planting report currently indicates farmers intend to plant 9389.5 million acres of corn in 2022, down 4% from 2021, ~~up 2 percent compared to~~and certain industry sources maintain an estimate of approximately 90 million corn acres. In addition, the ~~2020 planting season. As it relates to~~USDA estimates the U.S. ending stocks for the 2022 Crop as noted in the table below, ~~the USDA estimates the U.S. ending stocks~~ will be approximately 3637 million metric tons, a ~~32%~~16.6% increase from ~~the current estimate for~~ the 2021 Crop. The UDSA also is estimating a record yield for the 2022 Crop, up approximately 4%3.3% from a year ago.

The following ~~July 2021~~April 2022 estimates are associated with the corn market:

	2022 Crop		2021 Crop					2020 Crop					2022 Crop		2021 Crop					2020 Crop
	(2021 Harvest)		(2020 Harvest)		Percentage			(2019 Harvest)		Percentage			(2021 Harvest)		(2020 Harvest)		Percentage			(2019 Harvest)		Percentage
	July Report (1)		July Report (1)		Change (2)			July Report (1)		Change (3)			April Report (1)		April Report (1)		Change (2)			April Report (1)		Change (3)
U.S. Area Planted (Million acres)		92.7		90.8		2.1	%		89.7		3.3	%		93.4		90.7		3.0	%		89.7		4.1	%
U.S. Yield per Acre (Bushels)		179.5		172.0		4.4	%		167.5		7.2	%		177.0		171.4		3.3	%		167.5		5.7	%
U.S. Production (Million bushels)		15,165		14,182		6.9	%		13,620		11.3	%		15,115		14,111		7.1	%		13,620		11.0	%
U.S. Ending Stocks (Million metric tons)		36.4		27.5		32.4	%		48.8		(25.4	%)		36.6		31.4		16.6	%		48.8		(25.0	%)
World Ending Stocks (Million metric tons)		291.2		279.9		4.0	%		305.5		(4.7	%)		305.5		292.2		4.6	%		306.4		(0.3	%)

~~From a demand perspective for 2021, since the~~The current USDA ~~has significantly decreased ending~~ corn ~~stocks~~outlook for the ~~2021 Crop~~U.S. did not change production, food, seed and ~~only slightly increased the number~~industrial use and unchanged ending stocks. Domestic corn ~~acres~~demand to ~~be planted, coupled with increasing export volumes primarily to China, drought conditions for certain areas in South America and the western U.S.,~~produce ethanol ~~use returning~~has rebounded to pre-pandemic levels ~~and favorable 2020 grower income, corn prices during~~as the ~~second quarter elevated to prices not seen in eight years and projected corn prices~~continued roll-out of vaccines has allowed for the ~~remainder~~re-opening of ~~2021 continue~~the vast majority of the U.S. economy, promoting increased mobility and a return to ~~be strong compared to the second half~~historical levels of ~~2020, which has had a positive impact on fertilizer demand and prices.~~

gasoline consumption. Most gasoline has 10% ethanol content. The Biden administration announced the Environmental Protection Agency would issue an emergency waiver from the Clean Air Act that will permit the sale of gasoline that is 15 percent ethanol, 5 percent more than the typical blend, from June 1 to Sept. 15. Ethanol is commonly made from corn and ethanol production is the largest user of U.S. corn, currently representing ~~roughly 35%~~approximately 40% of total U.S. corn demand.

The available U.S. supply of ammonia and other nitrogen products has tightened in 2021 to date, primarily as the result of higher demand for such products, in addition to the idling of many nitrogen plants in February 2021 due to the severe cold weather and ongoing industry downtime increases cause by “hard” plant shutdowns and the lingering problems of that event.

As a result of these factors discussed above, we have experienced a price rally for fertilizers over the last several months, which we expect will continue for the remainder of 2021, compared to the same period of 2020.

~~Sales of our industrial products were~~ ~~approximately 43% of our~~ ~~total net sales for the second quarter of 2021.~~ Our industrial products sales volumes are dependent upon general economic conditions primarily in the housing, automotive, and paper industries. According to the American Chemistry Council, the U.S. economic indicators are improving and pointing towards continued improvement in the markets we serve. Our sales prices generally vary with the market price of ammonia or natural gas, as applicable, in our pricing arrangements with customers.

~~Sales of our mining products were~~ ~~approximately 10% of our~~ ~~total net sales for the second quarter of 2021.~~ Our mining products are LDAN and AN solution, which are ~~primary~~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. InDemand for our products from mining ~~markets, our sales volumes are typically driven by changes in the overall North American consumption~~end-markets continues to improve as quarry and construction activity has been elevated due to robust levels of mining products that can be impacted by weather. Metals prices continue to improve in 2021 as producers continue to extract as much as possible. This improvement includes an increase in copper mining, driven primarily byresidential, commercial and civil infrastructure buildout along with strong demand for ~~electric vehicles.~~ ~~We believe our plants are well located~~precious metals, including expectations for rising copper production to support the ~~more stable quarry and construction industries and the metals mining industries.~~growing domestic production of electric vehicles.

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:

Costs for transporting nitrogen-based products can be significant relative to their selling price. For example, ammonia is a hazardous gas at ambient temperatures and must be transported in specialized equipment, which is more expensive than other forms of nitrogen fertilizers. In recent years, a significant amount of the ammonia consumed annually in the U.S. was imported. Therefore, nitrogen fertilizers prices in the U.S. are influenced by the cost to transport product from exporting countries, giving domestic producers who transport shorter distances an advantage. However, weWe continue to evaluate the recent rising costs of ~~rail and truck~~ freight domestically. Since the Magellan ammonia pipeline was permanently shut down in 2020, certain Oklahoma and Texas producers that relied on the pipeline to transport their ammonia are relying on other transportation modes, primarily trucks, but also rail and barge transport. As a result of increases in demand for ~~trucks~~available rail, truck and barge options to transport ~~ammonia,~~product, primarily during the spring and fall planting seasons, higher transportation costs have and could continue to impact our margins, if we were 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.

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 (primarily associated with our ammonia plants), 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 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 o~~f 2021.~~ of 2024.

Our El Dorado and Pryor Facilities are ~~currently on a three-year ammonia plant Turnaround cycle with~~ both currently scheduled for their next ammonia plant Turnarounds induring the third quarter of ~~2022~~2022. Following those Turnarounds, they will be on a three-year and two-year ammonia plant Turnaround cycle, respectively..

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 ~~2021,~~2022, we are targeting total ammonia production of approximately ~~810,000~~770,000 tons to ~~830,000~~790,000 tons despite ~~a 30-day Turnaround~~Turnarounds at our ~~Cherokee Facility,~~Pryor and El Dorado Facilities, which will lower ammonia production during the third quarter by approximately ~~15,000~~55,000 to 65,000 tons.

We believe that our focus on continuous improvement in reliability as discussed in key operating initiatives will result in year over year improvement in ammonia production for ~~2021.~~2022.

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.

Our consolidated net sales for the ~~second~~first quarter of ~~2021~~2022 were ~~$140.7~~$199.0 million compared to ~~$105.0~~$98.1 million for the same period in ~~2020.~~2021. Our consolidated operating income for the first quarter of 2022 was ~~$26.5~~$80.0 million compared to ~~$10.7~~an operating loss of $0.5 million for the same period in ~~2020.~~2021. The items impacting our operating results are discussed in more detail below and under “Results of Operations.”

For the ~~second~~first quarter of ~~2021,~~2022, average ~~agricultural~~ selling prices for our a~~mmonia, UAN and HDAN~~key products increased ~~60%, 50% and 20%, respectively,~~approximately 85% to more than 200% compared to the ~~second~~first quarter of ~~2020.~~2021. As discussed above under “Recent ~~Business~~Business Developments,” increased demand, higher corn prices and tighter supplies of nitrogen products contributed to the improved pricing.

For the ~~second~~first quarter of ~~2021,~~2022, average industrial selling prices for most of our products were also higher compared to the same period of ~~2020,~~2021, primarily driven by the ~~$311~~$858 per metric ton increase in the Tampa Ammonia benchmark price, as many of our industrial contracts are indexed to the Tampa Ammonia benchmark price.

~~As discussed above under “Recent Business Developments,”~~ ~~in June 2021, the PPP loan was fully forgiven by the SBA and lender. As a result, we recognized a gain on extinguishment of debt of $10 million during the second quarter of 2021.~~Natural Gas Contracts

During the ~~second~~first quarter of ~~2020, EDC~~2021, we settled all of our natural gas forward contracts and certain ~~vendors mediated settlements for EDC to recover certain costs associated with~~volume purchase commitments and recognized a ~~nitric acid plant at our El Dorado Facility. The construction~~realized gain of ~~this plant~~approximately $6.8 million, which was ~~completed and began production in 2016. As a result, a recovery from these settlements was recognized, which included approximately $5.7 million~~ classified as a reduction to cost of sales. As a result of the settlement of these natural gas contracts, we were able to significantly mitigate the impact from lost production, lost sales and higher costs resulting from the impact of the natural gas shortage caused by the February 2021 cold weather event.

The following Results of Operations should be read in conjunction with our condensed consolidated financial statements for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ 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.

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~June 30, 2020~~March 31, 2021

	Three Months Ended												Three Months Ended
	June 30,									Percentage			March 31,									Percentage
	2021			2020			Change			Change			2022			2021			Change			Change
	(Dollars In Thousands)												(Dollars In Thousands)
Net sales:
Agricultural products	$	66,508		$	64,997		$	1,511			2	%
Industrial and mining products		74,188			40,036			34,152			85	%
AN & Nitric Acid													$	71,800		$	49,837			21,963			44	%
Urea ammonium nitrate (UAN)														56,569			17,638			38,931			221	%
Ammonia														59,342			21,165			38,177			180	%
Other														11,270			9,476			1,794			19	%
Total net sales	$	140,696		$	105,033		$	35,663			34	%	$	198,981		$	98,116		$	100,865			103	%

Gross profit:
Adjusted gross profit (1)	$	52,656		$	30,328		$	22,328			74	%		110,418			24,939			85,479			343	%
Depreciation and amortization (2)		(16,941	)		(16,960	)		19			—	%		(17,157	)		(16,739	)		(418	)		2	%
Turnaround expense		(707	)		(11	)		(696	)					(2,531	)		(140	)		(2,391	)
Recovery from settlements with certain vendors (3)		—			5,664			(5,664	)
Total gross profit		35,008			19,021			15,987			84	%		90,730			8,060			82,670
Selling, general and administrative expense		8,545			8,504			41			—	%		10,935			8,793			2,142			24	%
Other expense (income), net		6			(167	)		173
Operating income		26,457			10,684			15,773			148	%
Other income, net														(176	)		(263	)		87
Operating income (loss)														79,971			(470	)		80,441
Interest expense, net		12,290			12,476			(186	)		(1	)%		9,955			12,372			(2,417	)		(20	)%
Gain on extinguishment of debt		(10,000	)		—			(10,000	)
Non-operating other expense (income), net		745			(128	)		873
Benefit for income taxes		(248	)		(1,299	)		1,051
Non-operating other expense, net														135			395			(260	)
Provision for income taxes														11,115			42			11,073
Net income (loss)	$	23,670		$	(365	)	$	24,035					$	58,766		$	(13,279	)	$	72,045			543	%

Other information:
Gross profit percentage ~~(4)~~(3)		24.9	%		18.1	%		6.8	%					45.6	%		8.2	%		37.4	%
Adjusted gross profit percentage ~~(4)~~(3)		37.4	%		28.9	%		8.5	%					55.5	%		25.4	%		30.1	%
Property, plant and equipment expenditures	$	8,716		$	7,216		$	1,500			21	%	$	8,254		$	6,133		$	2,121			35	%

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

~~With respect to sales of industrial and mining products, the following table indicates key operating metrics of our major products:~~

Net sales of our ~~agricultural~~primary products increased during the ~~second~~first quarter of ~~2021~~2022 compared to the prior year period driven by stronger pricing for ~~UAN, ammonia and HDAN.~~all of our products. Partially offsetting the benefit of stronger pricing was ~~the lingering impact from winter storm Uri in February 2021. Our El Dorado~~lower sales volumes for fertilizer products including UAN, AN and Pryor Facilities were shut down as our natural gas supply was curtailed during the very cold weather conditions that were experienced throughout the central U.S. These shutdowns, resulted in a drawdown of inventory, particularly of HDAN, given increased sales during the first quarter of 2021, reducing our inventory available for sale in the second quarter of 2021. Also depressing agricultural volumes during the second quarter of 2021 was the impact ofammonia caused by wet weather ~~across the Southern Plains throughout much of May~~ delaying the ~~application of fertilizer products. As a result, we are seeing an extension of the season into July given early season weather issues. Agricultural~~planting season. AN sales were also impacted by a shift in product mix as we ~~continue~~optimize our ~~focus on~~sales of nitric acid. Historically, we have built inventory of HDAN used for fertilizer in the ~~industrial products business.~~second half of the year, to sell in season, during the first six months of the following year. Due to a shift in product mix to nitric acid volumes beginning in the first quarter of 2021, which are more ratable, we did not have significant inventory build of AN over the latter half of 2021 to sell during the fertilizer season in 2022.

~~Net sales of~~Demand for our industrial and mining products ~~increased~~has been strong as ~~a result of higher pricing related to a rise in the Tampa ammonia benchmark price, to which many of our industrial contracts are tied. Also benefitting industrial sales was the~~ ~~ramp up of~~ ~~a new nitric acid offtake agreement along with the continued recovery of demand from several key end markets including automotive, home building~~ quarry and construction activity has been elevated due to robust levels of residential, commercial and civil infrastructure buildout along with strong demand for precious metals, ~~mining and power generation, which have now exceeded pre-pandemic demand levels~~.

~~As noted in~~including expectations for rising copper production to support the ~~table above, we recognized a gross profit~~growing domestic production of ~~$35 million for the second quarter of 2021 compared to $19 million for the same period in 2020, or a $16 million improvement. Overall, our gross profit percentage was 24.9%compared to 18.1% for the same period in 2020. Our adjusted gross profit percentage increased to 37.4% for the second quarter of 2021 from 28.9% for the second quarter of 2020.~~

The increase in gross profit was primarily driven by higher sales prices for our products coupled with increased sales volume of upgraded industrial and mining products and UAN partially offset by lower volumes of HDAN. The improvement in gross profit was partially offset by overall higher average natural gas costs which averaged $2.78 per MMBtu for the second quarter of 2021 as compared to $1.81 per MMBtu for the second quarter of 2020. The second quarter of 2020 also included ~~settlements with certain vendors resulting in a recovery of approximately $5.7 million.~~

The benefit for income taxes for the second quarter of 2021 was $0.2 million compared to $1.3 million for the same period of 2020. For both periods, the effective tax rate is less than the statutory rate primarily due to the impact of the PPP loan forgiveness, state tax law changes and valuation allowances. Also see discussion in Note 7.

~~Six Months~~ ~~Ended June 30, 2021 Compared to Six Month Ended June 30, 2020~~

Six Months Ended

June 30,

Percentage

2021

2020

Change

Change

(Dollars In Thousands)

Net sales:

Agricultural products

$
111,421

$
106,455

$
4,966

5
%
Industrial and mining products

127,391

81,989

45,402

55
%
Total net sales

$
238,812

$
188,444

$
50,368

27
%

Gross profit:

Adjusted gross profit by market (1)

$
77,596

$
50,456

$
27,140

54
%
Depreciation and amortization (2)

(33,681
)

(34,537
)

856

(2
)%
Turnaround expense

(847
)

(11
)

(836
)

Recovery from settlements with certain vendors (3)

—

5,664

(5,664
)

Total gross profit

43,068

21,572

21,496

100
%
Selling, general and administrative expense

17,338

18,510

(1,172
)

(6
)%
Other expense, net

(257
)

(635
)

378

Operating income

25,987

3,697

22,290

603
%
Interest expense, net

24,662

25,955

(1,293
)

(5
)%
Gain on extinguishment of debt

(10,000
)

—

(10,000
)

Non-operating other expense (income), net

1,140

(803
)

1,943

Benefit for income taxes

(206
)

(1,638
)

1,432

Net income (loss)

$
10,391

$
(19,817
)

$
30,208

152
%

Other information:

Gross profit percentage (4)

18.0
%

11.4
%

6.6
%

Adjusted gross profit percentage (4)

32.5
%

26.8
%

5.7
%

Property, plant and equipment expenditures

$
14,849

$
17,953

$
(3,104
)

(17
)%

~~The following tables provide key operating metrics for the agricultural products:~~

~~With respect to sales of industrial and mining products, the following table indicates key operating metrics of our major products:~~

Agricultural product sales increased driven primarily by higher sales prices for all of our agricultural products and improved UAN sales volumes partially offset by lower sales volumes of HDAN and ammonia resulting from and lower production, including ammonia, due to the February 2021 weather event), the impact of wet weather across the Southern Plains throughout much of May, which delayed the application of fertilizer products, and product mix shifts to our industrial and mining products. ~~As discussed above under “Recent Business Developments,” increased demand, higher corn prices and tighter supplies of nitrogen products contributed to the improved pricing.~~

Industrial product sales increased primarily from higher sales prices due primarily to higher Tampa Ammonia benchmark pricing and higher nitric acid sales volume due in part to sales beginning in 2021 pursuant to the new long-term nitric acid supply agreement, and product mix shifts. The average Tampa Ammonia pricing was approximately $205 per ton higher compared to the same period in 2020.

~~Mining products sales improved driven by primarily from increased sales volumes. Demand for mining products has improved, especially relating to metals mining as expanding~~ electric ~~vehicle market is driving the need for copper.~~vehicles. Also, certain mining sales contracts are linked to natural gas indexes and as the cost of natural gas increases, the pricing for these products increase accordingly.

As noted in the table above, we recognized a gross profit of ~~$43.1~~$90.7 million for the first ~~six months~~quarter of ~~2021~~2022 compared ~~to $21.6~~$8.1 million for the same period in ~~2020,~~2022, or ~~a $21.5~~an $82.6 million improvement. Overall, our gross profit percentage was ~~18.0%~~45.6% compared to ~~11.4%~~8.2% for the same period in ~~2020.~~2021. Our adjusted gross profit percentage increased to ~~32.5%~~55.5% for the first ~~six months~~quarter of ~~2021~~2022 from ~~28.6%~~25.4% for the first ~~six months~~quarter of ~~2020.~~2021.

The increase in gross profit was primarily driven by higher sales prices for our products ~~coupled with increased sales volume of upgraded industrial and mining products and UAN~~ partially offset by lower volumes of ~~HDAN.~~our agricultural products. Also, during the first quarter of 2021 gross profit was negatively impact by the February 2021 weather disruption, winter storm Uri. The improvement in gross profit was also partially offset by ~~the net impact of the February weather disruption and~~ overall higher average natural gas costs, which averaged ~~$2.96~~$4.74 per MMBtu for ~~the first six months of 2021~~2022 as compared to ~~$1.95~~$3.15 per MMBtu for ~~the same period of 2020. The first six months of 2020 also included~~ ~~settlements with certain vendors resulting in a recovery of approximately $5.7 million.~~2021.

Our SG&A expenses were ~~$17.3~~$10.9 million for the first ~~six months~~quarter of ~~2021, a decrease~~2022, an increase of ~~$1.2~~$2.1 million compared to the same period in ~~2020.~~2021. The net ~~decrease~~increase was primarily driven by ~~lower professional~~approximately $2.2 million of expense relating to nonrecurring transaction fees ~~including lower legal fees of $2.9 million associated with claims we are pursuing against Leidos,~~ partially offset by ~~an increase in short~~lower long-term and ~~long-term~~short-term incentive compensation ~~incentives of $2.0 million.~~incentives.

Interest expense for the first ~~half~~quarter of ~~2021~~2022 was ~~$24.7~~$10.0 million compared to ~~$26.0~~$12.4 million for the same period ~~in 2020.~~of 2021. The decrease relates primarily to ~~the~~lower interest expense incurred from the new senior secured notes held during the first ~~six months of 2020 associated with a litigation judgment discussed in footnote (B) of Note 5.~~

~~Non-operating other expense for the first half~~2022 which carry an interest rate of ~~2021 was $1.1 million~~6.25% compared to ~~non-operating income of $0.8 million for~~ the same period in ~~2020 or a change of $1.9 million. This change primarily relates to~~2021 which the ~~change in fair value of the embedded derivative included in the Series E Preferred.~~old senior secured notes interest rate was 9.625%.

The ~~benefit~~provision for income taxes for the first ~~six months~~quarter of ~~2021~~2022 was ~~$0.2~~$11.1 million ~~compared to $1.6 million~~and was minimal for the same period in ~~2020.~~2021. The resulting effective tax rate for the first quarter of 2022 was 15.9%. For ~~both periods,~~the first quarters of 2022 and 2021, the effective tax rate is less than the statutory rate primarily due to the impact of the ~~PPP loan forgiveness, state tax law changes and~~ valuation ~~allowances.~~allowance. Also see discussion in Note 7.

The following table summarizes our cash flow activities for the ~~six~~three months ended ~~June~~ ~~30:~~March 31:

Net cash provided by operating activities was ~~$30.6~~$85.5 million for first ~~half~~quarter of ~~2021~~2022 compared to ~~$19.4~~$12.7 million for the same period of ~~2020,~~2021, a change of ~~$11.2~~$72.8 million.

For the first ~~half~~quarter of ~~2021,~~2022, the net cash provided is the result of a net income of ~~$10.4~~$58.8 million plus adjustments of ~~$33.7~~$17.2 million for depreciation and amortization of PP&E, $10.8 million for deferred taxes and other adjustments of ~~$2.6~~$1.7 million ~~less $10.0 million for a gain on extinguishment of debt,~~ and net cash used of ~~$6.1~~$3.0 million primarily from our working capital.

For the first ~~half~~quarter of ~~2020,~~2021, the net cash provided is the result of a net loss of ~~$19.8~~$13.3 million plus adjustments of ~~$34.6~~$16.8 million for depreciation and amortization of PP&E ~~and~~less other adjustments of ~~$2.1~~$0.4 million and net cash provided of ~~$2.5~~$9.6 million primarily from our working capital.

Net cash used by investing activities was ~~$14.5~~$97.5 million for the first ~~half of 2021~~quarter 2022 compared to ~~$17.7~~$5.9 million for the same period of ~~2020,~~2021, a change of ~~$3.1~~$91.6 million.

For the first ~~half~~quarters of ~~2021~~2022, the net cash used primarily relates purchases of short-term investments of $89.3 million and ~~2020,~~expenditures for PP&E.

For the first quarter of 2021, the net cash used relates primarily to expenditures for PP&E.

Net cash ~~used~~ providedby financing activities was ~~$14.7~~$184.2 million for the first ~~half~~quarter of ~~2021~~2022 compared to net cash ~~provided~~used of ~~$32.0~~$8.8 million for the same period of ~~2020,~~2021, a change of ~~$46.7~~$193.0 million.

For the first ~~half~~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.

For the first quarter of 2021, the net cash used primarily consists of payments on other long-term debt and short-term financing.

For the first half of 2020, the net cash provided primarily consists of proceeds of $30 million from our Working Capital Revolver Loan and proceeds of $12.6 million from other long-term debt partially offset by payments on other long-term debt and short-term financing of $10.5 million and payments of $0.1 million for other financing activities.25

The following is our total current cash, long-term debt ~~redeemable preferred stock~~ and stockholders’ equity:

~~See discussion above under “Recent Business Developments - Planned Exchange Transaction and Special Common Stock Dividend.”~~

We currently have a revolving credit facility, our Working Capital Revolver Loan, with a borrowing base of $65 million. As of ~~June 30, 2021~~,March 31, 2022, our Working Capital Revolver Loan was undrawn and had approximately ~~$50.3~~$62.4 million of availability.

For the full year of ~~2021,~~2022, we expect capital expenditures to be approximately ~~$30 million to $35~~$65 million, which includes approximately $5$15 million for margin enhancement projects. The remaining capital spending is planned for reliability and maintenance capital projects.

We believe that the combination of our cash on hand, 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 discussed below in Note 4,5, 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 ~~June 30, 2021,~~March 31, 2022, no trigger event had occurred.

Senior Secured Notes due ~~2023~~2028 – LSB has ~~$435~~$700 million aggregate principal amount of the ~~9.625%~~6.25% Senior Secured Notes currently outstanding, including the $200 million associated with the New Notes as discussed in footnote (B) of Note 4.5. Interest is to be paid semiannually on May 115^stth and ~~November 1~~October 15^stth, maturing ~~May 1, 2023.~~October 15, 2028. As a result of the financing transactions, our interest expense has increased and is expected to increase compared to 2021. The proceeds from the issuance of the New Notes were used to pay related transaction expenses, with the remainder intended to be used to pursue strategic acquisition opportunities, to fund organic growth, and for general corporate purposes.

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

Secured ~~Loan Agreement due 2025 -~~ ~~EDC is party to a secured loan agreement with an affiliate of LSB Funding. Principal and interest are payable in 60 equal monthly installments~~ ~~through March 2025.~~

~~Secured~~ Financing due 2025 – EDA is party to a $30 million secured financing arrangement with an affiliate of LSB Funding. 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 ~~June 30, 2021,~~March 31, 2022, our Working Capital Revolver Loan was undrawn and had approximately ~~$50.3~~ $62.4 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.”

~~Series E Redeemable Preferred~~– At ~~June 30, 2021, there were 139,768 outstanding shares of Series E Redeemable Preferred and the aggregate liquidation preference (par value plus accrued dividends) was $297.7 million.~~

~~See discussion above under “Recent Business Developments - Planned Exchange Transaction and Special Common Stock Dividend.”~~

For the first ~~half~~quarter of ~~2021,~~2022, capital expenditures relating to PP&E were ~~$14.8~~$8.3 million. The capital expenditures were funded primarily from cash and working capital.

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

We are subject to specific federal and state environmental compliance laws, regulations and guidelines. As a result, ~~we incurred~~our expenses ~~of $1.7 million~~were minimal during the first ~~six months~~quarter of ~~2021~~2022 in connection with environmental projects. For the remainder of ~~2021,~~2022, we expect to incur expenses ranging from ~~$1.9~~$0.7 million to ~~$2.2~~$0.9 million in connection with additional environmental projects. However, it is possible that the actual costs could be significantly different than our estimates.

~~See discussion above under “Recent Business Developments - Planned Exchange Transaction and Special Common Stock Dividend.”~~

~~We have not paid cash dividends on our outstanding common stock in many years, and we do not currently anticipate paying cash dividends on our outstanding common stock in the near future.~~

Dividends on the Series E Redeemable Preferred are cumulative and payable semi-annually (May 1 and November 1) in arrears at the annual rate of 14.5% of the liquidation value of $1,000 per share, but such annual rate will increase to 15.0% beginning in April 2022 and to 16% beginning in April 2023 as discussed in Note 8. Each share of Series E Redeemable Preferred is entitled to receive a semi-annual dividend, only when declared by our Board. In addition, dividends in arrears at the dividend date, until paid, shall compound additional dividends at the annual rate. As of June 30, 2021, the semi-annual compounded dividend is approximately $150.84 per share for the current aggregate semi-annual dividend of $21.1 million. We also must declare a dividend on the Series E Redeemable Preferred on a pro rata basis with our common stock. As long as the Purchaser holds at least 10% of the Series E Redeemable Preferred, we may not declare dividends on our common stock and other preferred stocks unless and until dividends have been declared and paid on the Series E Redeemable Preferred for the then current dividend period in cash. As of June 30, 2021, the amount of accumulated dividends on the Series E Redeemable Preferred was approximately $157.9 million.

Dividends on the Series D 6% cumulative convertible Class C preferred stock (the “Series D Preferred”) and Series B 12% cumulative convertible Class C Preferred Stock (the “Series B Preferred”) are payable annually, only when declared by our Board, as follows:

~~As of June 30, 2021, the amount of accumulated dividends on the Series D Preferred and Series B Preferred totaled approximately~~ ~~$1.7~~ million. All shares of the Series D Preferred and Series B Preferred are owned by the Golsen Holders and an immediate family member. There are no optional or mandatory redemption rights with respect to the Series B Preferred or Series D Preferred.

We believe fertilizer products sold to the ~~agricultural~~fertilizer industry are seasonal, while sales into the industrial and mining sectors generally are less susceptible to seasonal fluctuations. The selling seasons for ~~agricultural~~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 ~~agricultural~~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 ~~agricultural~~fertilizer markets depend upon weather conditions and other circumstances beyond our control.

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 ~~June 30, 2021,~~March 31, 2022, we have agreed to indemnify the sureties for payments, up to $9.7 million, ~~made~~ made by them in respect of such bonds. These insurance bonds are expected to expire or be renewed later in ~~2021.~~2022.

See “Critical Accounting Policies and Estimates,” Item 7 of our ~~2020~~2021 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 ~~and the lawsuit styled~~ ~~City of West, Texas vs.CF Industries, Inc., et al.,~~ ~~discussed under “Other Pending, Threatened or Settled Litigation”~~ 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.

~~The carrying values of the redeemable preferred stocks discussed in Note 8 are~~ ~~being increased~~ by periodic accretions (recorded to retained earnings and included in determining income or loss per share) using the interest method so that the carrying amount will equal the redemption value as of October 25, 2023, the earliest possible redemption date by the holder.

It is also reasonably possible that the estimates and assumptions utilized as of ~~June 30, 2021~~March 31, 2022 could change in the near term. Actual results could differ materially from these estimates and judgments, as additional information becomes known.

~~See discussion above under “Recent Business Developments - Planned Exchange Transaction and Special Common Stock Dividend.”~~

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.

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.

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 ~~June 30, 2021,~~March 31, 2022, we had no embedded losses associated with sales commitments with firm sales prices.

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 ~~June 30, 2021,~~March 31, 2022, we had no outstanding natural gas ~~contracts, which are accounted for on a mark-to-market basis.~~ contracts.

Generally, we are exposed to variable interest rate risk with respect to our revolving credit facility. As of ~~June 30, 2021,~~March 31, 2022, 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.

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 ~~June 30, 2021.~~March 31, 2022. 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 ~~June 30, 2021,~~March 31, 2022, at the reasonable assurance level.

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:

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:

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.

ADEQ	-	The Arkansas Department of Environmental Quality.

AN	-	Ammonium nitrate.

~~ASC~~	-	~~Accounting Standard Codification.~~

ASU	-	Accounting Standard Update.

CAO	-	A consent administrative order.

~~CARES~~	-	~~Coronavirus Aid, Relief, and Economic Security Act.~~

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, LLC, an affiliate of LSB Funding

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.

~~GAAP~~	-	~~U.S. Generally Accepted Accounting Principles.~~

Global	-	Global Industrial, Inc., a subcontractor asserting mechanics liens for work rendered to LSB and EDC.

~~Golsen Holders~~	-	~~Jack E. Golsen, Barry H. Golsen, and certain of their related parties identified as beneficial owners of our securities.~~

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.

Holder	-	LSB Funding L.L.C., the holder of all of the shares of the Series E and Series F Redeemable Preferred.

Indenture	-	The agreement governing the 6.25% senior secured notes.

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.

~~Liquidation Preference~~	-	~~The Series E Redeemable Preferred liquidation preference of $1,000 per share plus accrued and unpaid dividends plus the participation rights value.~~

LSB	-	LSB Industries, Inc.

LSB Funding	-	LSB Funding L.L.C.

MD&A	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

New Notes	-	The senior secured notes issued ~~on June 21, 2019~~March 8, 2022 with an interest rate of ~~9.625%~~6.25%, which mature in ~~May 2023.~~October 2028.

Note	-	A note in the accompanying notes to the condensed consolidated financial statements.

Notes	-	The senior secured notes issued on ~~April 28, 2018~~October 14, 2021 with an interest rate of ~~9.625%~~6.25%, which mature in ~~May 2023.~~October 2028.

NPDES	-	National Pollutant Discharge Elimination System.

ODEQ	-	The Oklahoma Department of Environmental Quality.

PAR	-	Permit Appeal Resolution.

PCC	-	Pryor Chemical Company.

PP&E	-	Plant, property and equipment.

~~PPP~~	-	~~Paycheck Protection Program.~~

Pryor Facility	-	Our chemical production facility located in Pryor, Oklahoma.

~~Purchaser~~	-	~~LSB Funding L.L.C.~~

~~SBA~~	-	~~Small Business Administration.~~

SEC	-	The U.S. Securities and Exchange Commission.

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.

The information ~~to be~~ reported under this Item is not required for smaller reporting companies.

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 294^th day of May 2022~~July 2021.~~.

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

	PART I – Financial Information	Page

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2318

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3629

Item 4.	Controls and Procedures	3629

	PART II – Other Information

Item 1.	Legal Proceedings	4134

Item 1A.	Risk Factors	4134

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4134

Item 3.	Defaults Upon Senior Securities	4134

Item 4.	Mining Safety Disclosures	4134

Item 5.	Other Information	4134

Item 6.	Exhibits	4134

	June 30,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
	(In Thousands)				(In Thousands)
Accrued interest	$	8,649	$	8,669	$	22,015	$	8,397
Current portion of operating lease liabilities						7,293		7,755
Accrued payroll and benefits		7,910		5,837		6,582		9,794
Current portion of operating lease liabilities		7,704		6,706
Accrued death and other executive benefits		2,527		2,539		2,508		2,514
Series E Redeemable Preferred - embedded derivative		2,181		1,029
Deferred revenue		895		1,890
Accrued health and worker compensation insurance claims						1,103		1,272
Other		8,047		9,787		8,435		6,599
		37,913		36,457		47,936		36,331
Less noncurrent portion		7,372		6,090		3,023		3,030
Current portion of accrued and other liabilities	$	30,541	$	30,367	$	44,913	$	33,301


Secured Financing due 2023	-	A secured financing arrangement between EDC and an affiliate of LSB Funding L.L.C. which matures in June 2023.

Secured Financing due 2025	-	A secured financing arrangement between EDA and an affiliate of LSB Funding L.L.C. which matures in August 2025.

~~Secured Loan Agreement due 2025~~	-	~~A secured loan agreement between EDC and an affiliate of LSB Funding L.L.C. which matures in March 2025.~~

~~Secured Promissory Note due 2021~~	-	~~A secured promissory note between EDC and a lender which, matured in March 2021.~~

Senior Secured Notes	-	The Notes and New Notes, taken together due on ~~May 1, 2023~~October 15, 2028 with a stated interest rate of ~~9.625%~~6.25%.

~~Series B Preferred~~	-	~~The Series B 12% cumulative convertible Class C Preferred stock.~~

~~Series D Preferred~~	-	~~The Series D 6% cumulative convertible Class C preferred stock.~~

~~Series E Redeemable Preferred~~	-	~~The 14% Series E-1 Redeemable Preferred stock with participating rights and liquidating distributions based on a certain number of shares of our common stock.~~

~~Series F Redeemable Preferred~~	-	~~The Series F-1 Redeemable Preferred stock with one share to vote as a single class on all matters with our common stock equal to 456,225 shares of our common stock.~~

SG&A	-	Selling, general and administrative expense.

Turnaround	-	A planned major maintenance activity.

UAN	-	Urea ammonium nitrate.

			Fair Value Measurements at June 30, 2021 Using
Description	Total Fair Value at June 30, 2021		Quoted Prices in Active Markets for Identical Contracts (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)⁽¹⁾		Total Fair Value at December 31, 2020
	(In Thousands)

Assets - Supplies, prepaid items and other:
Natural gas contracts	$	—	$	—	$	—	$	—	$	80
Total	$	—	$	—	$	—	$	—	$	80

Liabilities - Current and noncurrent accrued and other liabilities:
Natural gas contracts	$	—	$	—	$	—	$	—	$	1,285
Embedded derivative	$	2,181	$	—	$	—	$	2,181	$	1,029
Total	$	2,181	$	—	$	—	$	2,181	$	2,314

	Series E Redeemable Preferred
	Shares		Amount
	(Dollars In Thousands)
Balance at December 31, 2020		139,768	$	272,101
Accretion relating to liquidation preference on preferred stock		—		547
Accretion for discount and issuance costs on preferred stock		—		477
Accumulated dividends		—		19,724
Balance at June 30, 2021		139,768	$	292,849

U.S.	-	United States.

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.

2020 Crop	-	Corn crop marketing year (September 1 - August 31), which began in 2019 and ended in 2020 and primarily relates to corn planted and harvested in 2019.

2021 Crop	-	Corn crop marketing year (September 1 - August 31), which began in 2020 and ~~will end~~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.

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 From 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 19, 2021

~~3.1~~10.1	~~Certificate~~Consent and Fifth Amendment to Third Amended and Restated Loan and Security Agreement, dated as of ~~Designations of Series G Class C Preferred Stock of~~March 2, 2022, by and among Wells Fargo Capital Finance, LLC, as the arranger and administrative agent, the lenders party thereto, LSB Industries, Inc., and its subsidiaries identified on the signature pages thereto as ~~filed with~~borrowers and the ~~Secretary of State of~~Company’s subsidiaries identified on the ~~State of Delaware on July 6, 2020~~signature pages thereto as guarantors.	Exhibit ~~3.1~~10.1 to the Company’s Form 8-K filed ~~July 6, 2020~~March 3, 2022

10.1*	~~LSB Industries, Inc. 2016 Long Term Incentive Plan (As Amended and Restated March 4, 2021)~~	~~Appendix A of the Registrant’s Proxy Statement on Schedule 14A relating to the Registrant’s 2021 Annual Meeting of Stockholders, File No. 001-07677, filed with the SEC on April 19, 2021~~

~~10.2~~	~~Securities Exchange Agreement, dated July 19, 2021, by and between LSB Industries, Inc. and LSB Funding LLC~~	~~Exhibit 10.1 to the Company’s Form 8-K filed July 19, 2021~~

~~31.1(a)~~31.1	Certification of Mark T. Behrman, Chief Executive Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302

~~31.2(a)~~31.2	Certification of Cheryl A. Maguire, Chief Financial Officer, pursuant to Sarbanes-Oxley Act of 2002, Section 302

~~32.1(b)~~32.1	Certification of Mark T. Behrman, Chief Executive Officer, furnished pursuant to Sarbanes-Oxley Act of 2002, Section 906

~~32.2(b)~~32.2	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	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company