LSB Industries, Inc. (LXU) Earnings Call Transcript & Summary

Greetings and welcome to the LSB Industries 2020 Annual Meeting of Stockholders Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rich Roedel, Chairman of the Board for LSB Industries. Thank you, sir. You may begin.

Good morning, everyone. I'm Rich Roedel, Chairman of the Board of LSB Industries. It's my pleasure to welcome you to the 2020 Annual Meeting of the Stockholders of LSB and to call the meeting to order. Our directors who are present this morning are Barry Golsen,, Richard Sanders; Lynn White; Jonathan Bobb; Kanna Kitamura; Mark Behrman, who is also our CEO and President; Diana Peninger; Jack Golsen, our Chairman Emeritus. Also present is our new director nominee, Steve Packebush. Officers present on the call today are John Burns, Executive Vice President of Manufacturing; Mike Foster, Executive Vice President, General Counsel and Secretary; Cheryl Maguire, Executive Vice President and Chief Financial Officer; Kristy Carver, Senior Vice President and Treasurer. Also on the call this morning are Drew Ward and Edwin Vandenberg of Ernst & Young. They're here on the phone and will be available to answer questions. We will take care of the formal business of the meeting and then report to you on a few matters of interest. After declaring the preliminary results of the matters under consideration, at the conclusion of the business part of the meeting, we will have a question-and-answer session. If you have questions or comments, please save them for the informal Q&A period. Before we proceed with the business for which this meeting has been called, we must comply with certain preliminary formalities. I call upon Michael Foster, the company's Secretary, to proceed with these formalities.

Thanks, Rich. The matters on which the stockholders are voting are: the election of 3 nominees to the Board of Directors; the ratification of the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for 2020; the advisory vote on the approved named executive officer compensation; and the transaction of any other business that may be properly come before this meeting. In accordance with the bylaws, the Board of Directors fixed the close of business on March 16, 2020, as the record date for the stockholders entitled to notice of and to vote at this meeting. As Secretary, I submit copies of the affidavit certifying the mailing or delivery on April 14, 2020, of the Notice of Annual Meeting, the related proxy material and the 2019 annual report to all stockholders of record of the company's common stock; Series B, 12% cumulative convertible preferred stock; Series D, 6% cumulative convertible preferred stock; and Series F1 redeemable Class C preferred stock as of the close of business on the record date. I also have available a complete list of the holders of outstanding common stock, Series B, Series D and Series F1 Class C preferred stock entitled to vote at and notice to of this annual meeting. This list, which is as of the close of business on the record date, has been prepared by the transfer agent for the company, Computershare Trust Company, and has been open to examination by any stockholder at the office of the company for at least 10 days prior to the meeting in accordance with Delaware law. The affidavit and the list of stockholders are available for inspection by any stockholder for any purpose germane to the meeting. Copies of the 2019 annual report to stockholders, the Notice of the Annual Meeting, the proxy statement and the proxy card are also available for any stockholder attending this annual meeting. The Board of Directors of the company has appointed Scott Kindle of Mediant Communications, Inc. as inspector of election to conduct the vote on business to be transacted at this meeting. Mr. Kindle is attending via teleconference. Mr. Kindle has signed the oath of office required by Delaware law. I have ballots available for any persons in attendance here today who has not yet sent in a proxy or who desires to vote personally. There are no people -- parties in attendance in person at this meeting today. Represented at this meeting, either in person or by proxy -- excuse me, I got to get the document open. I apologize, I don't have the document open. I apologize. I'm trying to get the document open.

Mike, why don't we proceed?

All right. I apologize. It says represented at this meeting, either in person or by proxy are shares of the company's voting securities representing 20,550,434 shares, which securities vote together as a single class and are entitled to vote consisting a 92.8 -- 92.58% of the common stock; 20,000 shares of Series B, 12% cumulative convertible preferred; 1 million shares of Series D, 6% cumulative convertible preferred, which are entitled to 0.875 votes per share; and 1 share of Series F1 redeemable Class C preferred stock entitling its holders to a number of votes equal to 456,225 shares of common stock subject to adjustment. Together with these shares, representing approximately 92% of the company's voting power of shares outstanding as of the close of business on March 16, 2020, the record date and constitute a quorum for the transaction of business at the meeting. Again, I apologize for the delay.

The Secretary of the company has informed us that there is a quorum present. And accordingly, this 2020 Annual Meeting of Stockholders of LSB is properly and willfully convened. The meeting is now open for the transaction of business. Mike Foster, please proceed with each item of business.

As stated in the Notice of the Annual Meeting, there are 3 proposals to be voted on today. The first proposal is the election of three directors. The proxy statement lists the company's nominees for Director. The candidates nominated by the company's Nominating and Corporate Governance Committee to serve as directors in the class of directors whose term will expire at the 2023 Annual Meeting of Stockholders are Stephen L. Packebush, Diana M. Peninger and Lynn F. White. Additional information about each of the nominees is included in the proxy statement. In accordance with the bylaws of the company, stockholders are required to provide the advanced notice of their intent to nominate candidates for directors. No such advanced notice was received, and we can move on to the second item of business. The second proposal is the ratification of the Audit Committee's appointment of Ernst & Young LLP as the company's independent registered accounting firm for the fiscal year ending December 31, 2020. Drew Ward of Ernst and Young's office was previously introduced. Mr. Ward will be available to answer any questions at the end of this meeting, and we can move to the third item of business. The third proposal is the advisory vote for the approval of the Compensation Committee's named executive officers. This proposal is nonbinding and is an advisory vote only. The compensation paid to the company's named executive officers is disclosed in the proxy material for this annual meeting. If you're present in Oklahoma City and did not receive a ballot, there's no one present so we don't need to address this. We have received all proxies through our proxy system. There is no further discussion or reason to open anything, and I declare the polls open as of 8:40 a.m. Central Daylight Time. The polls will remain open until voting is completed. Since there is no one available to vote, there's no reason to move forward with that. And I declare the polls closed at 8:41 on all proposals, and the inspector will proceed with the tabulation of the ballots. This closes the formal portion of this meeting. The Inspector of Election will report on the results of voting on the proposals after the tabulation has been completed.

The inspector has now submitted the preliminary report results of the votes taken during this meeting. Mike, please announce the results of the stockholder votes.

For proposal 1, each of the nominees for Director, Steven L. Packebush, Diana M. Peninger and Lynn F. White received more than a majority of the votes that were cast, and each nominee has been elected to the Board of Directors to serve in the class of directors whose term will expire at the 2023 Annual Meeting of Stockholders. For proposal 2, more than a majority of the votes cast were in favor of ratifying the appointment of Ernst & Young as the independent registered public accounting firm for the fiscal year ending December 31, 2020. Item 3. For proposal 3, more than the majority of the votes were cast in favor of approving the advisory resolution -- approving compensation for the company's named executives. Per the preliminary report, the requisite votes to approve the proposals described earlier and as required by the bylaws of the company and the Delaware General Corporation Law were obtained. The final report of the Inspector of Election will be filed with the meeting -- the minutes of this meeting.

The results of the voting have been announced, and this completes the business to be conducted at this meeting. The Board of Directors is appreciative of the loyalty and support of our stockholders and of the confidence expressed by management by the support given to our recommendations. Before we close the meeting, the other directors, the officers and I would like to recognize the contributions of Jack Golsen, our Founder and Chairman Emeritus, as he resigns from the Board of Directors. Jack has made immeasurable contributions to the company, and we wish him well as he leaves the Board as a formal member and welcome his continued contribution as Chairman Emeritus. Jack, thank you for all of -- that you've done. Much appreciated. There being no further business, the meeting is hereby adjourned. We'll be happy to answer any questions you may have. The operator will instruct you on asking questions over the phone. Since there's nobody there in person, all questions will come from the phone. Are there any questions?

[Operator Instructions]

Hearing no questions, the meeting is hereby adjourned. Thank you all for attending. And most importantly, stay safe. Thank you all.

Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. And you may disconnect your lines at this time.