Financial Analysis

5. Commitments and Contingencies Outstanding Natural Gas Purchase Commitments Certain of our natural gas contracts qualify for the NPNS exception under U.S. GAAP and thus are not financial instruments for which we mark-to-market. We did not have any natural gas contracts outstanding at June 30, 2026. From time to time, when we exceed the funding threshold in our natural gas purchase commitments, we are required to fund cash collateral to our counterparty. As of June 30, 2026, we had no counterparty cash collateral funding requirements. Legal Matters - The following is a summary of certain legal matters involving the Company: A. Environmental Matters Our facilities and operations are subject to numerous federal, state and local environmental laws and to other laws regarding health and safety matters (collectively, the Environmental and Health Laws), many of which provide for certain performance obligations, substantial fines and criminal sanctions for violations. Certain Environmental and Health Laws impose strict liability as well as joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We may be required to remediate contaminated properties currently or formerly owned or operated by us or facilities of third parties that received waste generated by our operations regardless of whether such contamination resulted from the conduct of others or from consequences of our …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

7. Income Taxes (Benefit) Provision fo r income taxes is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In Thousands) Current: Federal $ $ $ $ State ( 124 ) 37 201 90 Total Current $ ( 124 ) $ 37 $ 201 $ 90 Deferred: Federal $ ( 1,583 ) $ 983 $ 2,415 $ 775 State ( 210 ) 64 ( 6,663 ) ( 64 ) Total Deferred $ ( 1,793 ) $ 1,047 $ ( 4,248 ) $ 711 (Benefit) provision for income taxes $ ( 1,917 ) $ 1,084 $ ( 4,047 ) $ 801 The income tax benefit for the six months ended June 30, 2026 , was $ 4.0 million ( 42.8 % benefit on pre-tax income). The tax provision for the six months ended June 30, 2025, was $ 0.8 million ( 37.0 % provision on pre-tax income). For 2026, the effective tax rate was lower than the statutory tax rate primarily due to the release of state valuation allowances described below, partially offset by nondeductible compensation expense. For 2025, the effective tax rate was higher than the statutory tax rate primarily due to nondeductible compensation expense and state taxes. 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 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

4. Long-Term Debt Our long-term debt consists of the following: June 30, 2026 December 31, 2025 (In Thousands) Revolving Credit Facility (A) $ $ Senior Secured Notes due 2028, with an interest rate of 6.25 % (B) 438,580 438,580 Finance Leases (C) 5,857 6,233 Unamortized debt issuance costs (1) ( 3,088 ) ( 3,758 ) 441,349 441,055 Less current portion of long-term debt 774 760 Long-term debt due after one year, net $ 440,575 $ 440,295 _____________________________ (1) Debt issuance costs as of June 30, 2026 and December 31, 2025 of approxima tely $ 0.4 million and $ 0.5 million, respectively, relating to our Revolving Credit Facility (defined below) are not included in Unamortized debt issuance costs. Such costs are included in our condensed consolidated balance sheet in Intangible and other assets, net. (A) The revolving credit facility pursuant to a credit agreement, dated December 21, 2023, between us, the lenders identified on the signature pages thereof and JPMorgan Chase Bank, N.A, as administrative agent (the Revolving Credit Facility), provides for borrowings up to an initial maximum of $ 75 million, with an option to increase the maximum by an additional $ 25 million (which amount is uncommitted). Availability under the Revolving Credit Facility is subject to a borrowing base and is also subject to an availability block of $ 7.5 million (which can be removed by us at our sole discretion, subject to the satisfaction of certain conditions) (the Availability Block). The A …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Pronouncements ASU 2025-05 - In July 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-05, Financial InstrumentsCredit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05). The amendments in this ASU provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from our sales transactions. The practical expedient permits us to assume current conditions as of the balance sheet date that do not change for the remaining life of the current accounts receivable and current contract assets. Public business entities are not permitted to elect the optional accounting policy to consider subsequent cash collections. We adopted ASU 2025-05 on January 1, 2026 , on a prospective basis. The adoption did no t have a material impact on our condensed consolidated financial statements. No changes were made to our credit-loss estimation methodologies. Recently Issued Accounting Pronouncements ASU 2024-03 - In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This ASU requires an entity to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expe …

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8. Net Sales Disaggregated Net Sales We primarily derive our revenues from the sales of various chemical products. The Companys net sales disaggregation is consistent with other financial information utilized or provided outside of our condensed consolidated financial statements. 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 products, which disaggregation is consistent with other financial information utilized or provided outside of our condensed consolidated financial statements: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In Thousands) Net sales: AN & Nitric Acid $ 69,539 $ 61,707 $ 144,886 $ 119,325 Urea ammonium nitrate (UAN) 62,488 52,262 111,659 96,127 Ammonia 25,511 26,830 62,325 60,102 Other 10,554 10,497 18,709 19,174 Total net sales $ 168,092 $ 151,296 $ 337,579 $ 294,728 Other Information For our contracts with a duration greater than one year at contract inception, the average remaining expected duration wa s appro ximately 35 months at June 30, 2026. 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 product shipments. Our contract liabilities as of June 30, 2026 and December 31, 2025 were minimal. For …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

10. Segment The Company is managed on a consolidated basis with a single reportable segment, chemical manufacturing, which is not an aggregation of individual operating segments. There have been no changes in the basis of segmentation or in the basis of measurement of segment profit or loss since the filing of our 2025 Form 10-K. Information about reported segment revenue, measures of a segments profit or loss, significant segment expenses, and measure of a segment's assets: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In Thousands) Net sales $ 168,092 $ 151,296 $ 337,579 $ 294,728 Less: Cost of sales excluding depreciation, amortization and turnaround expense 105,952 104,867 214,904 211,857 Depreciation and amortization 21,878 20,617 42,725 40,680 Turnaround expense 28,801 2,639 32,695 4,634 Total cost of sales 156,631 128,123 290,324 257,171 Selling, general and administrative Wages and benefits 7,981 6,037 18,316 12,257 Other selling general and administrative 4,950 3,807 8,440 7,740 Total selling general and administrative 12,931 9,844 26,756 19,997 Interest expense 7,070 7,886 14,187 15,950 Loss on extinguishment of debt 59 59 Loss from asset write-down and disposals 1,718 2,528 929 2,599 Income tax benefit ( 1,917 ) 1,084 ( 4,047 ) 801 Other segment (income) expense, net (a) ( 2,152 ) ( 1,234 ) ( 4,066 ) ( 3,215 ) Segment net income (loss) ( 6,189 ) 3,006 13,496 1,366 Reconciliation of profit or loss Adjustments and reconciling items Consol …

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1. Summary of Significant Accounting Policies All references to LSB Industries, LSB, the Company, we, us, and our refer to LSB Industries, Inc. and its subsidiaries on a consolidated basis, except where the context makes clear that the reference is only to LSB Industries, Inc. itself and not its subsidiaries. The accompanying unaudited condensed consolidated interim financial statements and notes of LSB have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) have been omitted. The accompanying unaudited condensed consolidated interim financial statements and notes should be read in conjunction with the financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2025 (our 2025 Form 10-K), filed with the SEC on February 26, 2026. 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 Companys results of operations and cash flows for the three and six months ended June 30, 2026 and 2025 and the Companys financial position as of June 30, 2026. Basis of Consolidation LSB Industries, Inc. and its subsidiaries are consolidated in the accompanying unaudited condensed …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing