LSB Industries Inc. (LXU) 2024年年度報告「AMEX」.pdf

《LSB Industries Inc. (LXU) 2024年年度報告「AMEX」.pdf》由會員分享，可在線閱讀，更多相關《LSB Industries Inc. (LXU) 2024年年度報告「AMEX」.pdf（96頁珍藏版）》請在三個皮匠報告上搜索。

1、2024 ANNUAL REPORT2024 Chairmans Letter to StockholdersDear Fellow Stockholders,In 2024,we focused on positioning LSB for multi-year growth.We used our strong financial position to continueto invest in the reliability and production capacity of our plants.In August,we performed an extensiveturnaroun

2、d at our Pryor facility which,among other improvements,resulted in the expansion of Pryors ureaproduction capacity by approximately 25%.In December,our Pryor facility achieved a record for monthly ureaand UAN production.In November,we performed a turnaround on the ammonia plant at our Cherokee facil

3、ity.Following that work,the Cherokee facility set a record for its highest daily production rates for urea and UAN in10 years.We believe that the operational and financial performance of our Company depends on our success with our mostcritical core value,Protect What Matters.This core value pertains

4、 to our ability to consistently ensure a safeworking environment for our employees and contractors,and also extends beyond our plantsfence-lines to thecommunities where we operate.Along with our operational improvements in 2024,we also attained somenoteworthy safety achievements.We completed the tur

5、naround of our Cherokee facility injury-free and,in fact,our Cherokee site finished 2024 with zero recordable injuries for the entire year.Additionally,our Baytown,Texas team,who operates a nitric acid plant for a global chemical customer,had an injury-free year and has nowachieved nine years withou

6、t a recordable injury.I congratulate and thank the teams at both of these facilities forexemplifying our Protect What Matters corporate value.Incremental Earnings Opportunities from Core AssetsWe remain focused on improving the financial returns of our business and believe we have numerousopportunit

7、ies to achieve our goals.We anticipate that the investments we made in 2024,combined with our 2025initiatives,can collectively generate between$60 million and$80 million of incremental annual EBITDA.Growing Our Industrial BusinessIn addition to our efforts to improve production efficiency,a key focu

8、s of our growth strategy is driven by ourefforts to expand sales in our industrial end markets.Currently,more than a third of our sales are made toindustrial customers through contractual arrangements with ratable off-take.These arrangements allow us tomitigate the impact of the more volatile agricu

9、ltural spot market business.Our contracts with industrialcustomers also provide us with stable margins and enhance our visibility into future results.Low Carbon Product DevelopmentWe firmly believe that low carbon ammonia will be integral in the global decarbonization landscape and areconfident in o

10、ur role as a meaningful player in this evolving market.Our low carbon product strategy representsa potential multi-year earnings growth driver and complements our near-term opportunities to increaseproduction and sales volumes from our core manufacturing assets.Our carbon capture and sequestration p

11、roject at our El Dorado facility continues to move forward.Our partner,Lapis Carbon Solutions(“Lapis”),is currently awaiting the Environmental Protection Agencys approval of aClass VI permit application that will allow Lapis to inject CO2deep underground at our El Dorado site.Lapisexpects to begin s

12、equestering the CO2in late 2026.Lapis will pay us a fee for each ton of CO2sequestered,resulting in a nearly 25%reduction in our overall scope 1 GHG emissions.Additionally,once operational,thecapture and sequestration project at our El Dorado facility would enable us to produce more than 300,000 met

13、rictons per year of low carbon ammonia to sell or upgrade into other low carbon products to sell to our customers.In May 2024,we announced our first off-take customer for low carbon ammonium nitrate solution(ANS)thatwell be producing at our El Dorado facility.This milestone reflects a successful ach

14、ievement with respect to ourstrategy to grow our industrial business.We believe it also makes a strong statement about the potential demandfor low carbon products.Lastly,we continue to explore the development of a world-scale,low carbon ammonia production and exportfacility on the Houston Ship Chann

15、el.In collaboration with INPEX Corporation,we completed a preliminaryfront end engineering design study on the project in 2024.We are engaged in discussions with potentialcustomers for long-term off-take from the prospective facility with the goal of securing customer commitments atprice levels that

16、 would generate our targeted returns on investment.Our ability to obtain these customercommitments is key to our decision to move to the next step in the project development process,which would bea more extensive engineering study.While we believe that the long-term prospects for low carbon ammonia

17、and low carbon downstream products areattractive,we are committed to approaching this emerging market in a disciplined manner,prioritizing riskmanagement and the health of our balance sheet.2024 RESULTSFinancial Performance OverviewOur 2024 net sales were$522 million with adjusted EBITDA of$130 mill

18、ion and we generated operating cashflow of$87 million.We delivered these results despite completing planned turnarounds at both our Pryor andCherokee facilities in 2024.Balanced Capital Allocation StrategyOur solid cash flow generation continues to enable us to invest in our facilities to improve re

19、liability and increaseproduction volume while maintaining a strong balance sheet.We also returned approximately$12 million tostockholders through stock repurchases and reduced our debt,buying back$97 million of our senior securednotes.We finished the year with approximately$485 million in debt,down

20、from over$580 million at the end of2023.We finished 2024 with$184 million of cash,cash equivalents and short-term investments.IN CONCLUSIONWe begin 2025 positioned for profitable growth.We are well capitalized and focused on making investments inthe reliability,efficiency and output of our facilitie

21、s.We are already seeing the results of the investments wemade in 2024 and with our ongoing initiatives in 2025.We continue to pursue longer-term growth opportunities,including projects in the low carbon product arena,always with a focus on minimizing risk and maximizingreturns.I am confident that we

22、ve assembled a leadership team that can drive the successful execution of ourstrategy and am excited about our ability to generate increased value for stockholders in the years to come.Thank you for your continued support and I look forward to reporting our progress to you in the future.Mark Behrman

23、Chairman,President&Chief Executive OfficerMarch 2025Non-GAAP ReconciliationLSB Consolidated($In Thousands)Year EndedDecember 31,2024Net(loss)income$(19,353)Plus:Interest expense and interest income,net23,087Gain on extinguishment of debt(3,013)Depreciation and amortization74,478(Benefit)provision fo

24、r income taxes(6,684)EBITDA$68,515Stock-based compensation6,607Legal Fees&SettlementsSpecific Matters3,536Loss on write down of assets11,703Turnaround costs37,781Growth Initiatives1,378Adjusted EBITDA$129,520THIS PAGE INTENTIONALLY LEFT BLANK2024 FORM 10-KTHIS PAGE INTENTIONALLY LEFT BLANKUNITED STA

25、TESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2024OrTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the tr

26、ansition period from _ to _Commission File Number:1-7677LSB INDUSTRIES,INC.(Exact Name of Registrant as Specified in its Charter)Delaware73-1015226(State of or other JurisdictionIncorporation or Organization)(I.R.S.EmployerIdentification No.)3503 NW 63rdStreet,Suite 500,Oklahoma City,Oklahoma73116(A

27、ddress of Principal Executive Offices)(Zip Code)Registrants Telephone Number,Including Area Code:(405)235-4546Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,Par Value$.10Preferred Stock Purchase Righ

28、tsLXUN/ANew York Stock ExchangeNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes NoIndicate by check mark if the Registrant is not required to

29、file reports pursuant to Section 13 or Section 15(d)of the Act.Yes NoIndicate 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 forsuch shorter period that the Registrant wa

30、s required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes NoIndicate 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 chapte

31、r)during the preceding 12 months(or for such shorter period that the Registrant was required to file such reports submit such files).Yes NoIndicate by check mark whether the Registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emergin

32、g growth company.See thedefinitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging gr

33、owth 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 accountingstandards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on an

34、d attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Se

35、ction 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error topreviously issued financial statements.Yes NoIndicate by check mark whether any of those error corrections are restatements that required a reco

36、very analysis of incentive-based compensation received by any of the registrants executiveofficers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes NoThe aggregate market value of th

37、e Registrants voting common equity held by non-affiliates of the Registrant,computed by reference to the price at which the voting common stock was last soldas of June 28,2024,was approximately$415 million.As a result,the Registrant is an accelerated filer as of December 31,2024.For purposes of this

38、 computation,shares of the Registrantscommon stock beneficially owned by each executive officer and director of the Registrant and by TLB-LSB,LLC were deemed to be owned by affiliates of the Registrant as of June 28,2024.Such determination should not be deemed an admission that such executive office

39、rs,directors or entity of our common stock are,in fact,affiliates of the Registrant or affiliates as of the date ofthis Form 10-K.As of February 21,2025,the Registrant had 71,849,398 shares of common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrants proxy statement for

40、 its 2025 annual meeting of stockholders will be filed with the Securities and Exchange Commission within 120 days after the end of its 2024fiscal year,are incorporated by reference in Part III.Auditor Firm Id:00042Auditor Name:Ernst&Young LLPAuditor Location:Oklahoma City,OK,United States2PagePART

41、IItem 1.Business6Item 1A.Risk Factors12Item 1B.Unresolved Staff Comments25Item 1C.Cybersecurity25Item 2.Properties26Item 3.Legal Proceedings26Item 4.Mine Safety Disclosures26PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities27Item

42、6.RESERVED27Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations28Item 7A.Quantitative and Qualitative Disclosures About Market Risk43Item 8.Financial Statements and Supplementary Data43Item 9.Changes in and Disagreements with Accountants on Accounting and Fina

43、ncial Disclosure43Item 9A.Controls and Procedures43Item 9B.Other Information46Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections46PART III(Items 10,11,12,13,and 14)46The information required by Part III,shall be incorporated by reference from our definitive proxy statement t

44、obe filed pursuant to Regulation 14A which involves the election of directors that we expect to be filed with theSecurities and Exchange Commission not later than 120 days after the end of our 2024 fiscal year covered by thisreport.PART IVItem 15.Exhibits and Financial Statement Schedules473SPECIAL

45、NOTE REGARDING FORWARD-LOOKING STATEMENTSCertain statements contained within this report may be deemed“Forward-Looking Statements.”within the meaning of United Statesfederal securities laws.All statements in this report other than statements of historical fact are Forward-Looking Statements that are

46、subject to known and unknown risks,uncertainties and other factors,many of which are difficult to predict or outside of theCompanys control,which could cause actual results and performance of the Company to differ materially from those expressed in,orimplied or projected by,such statements.Any such

47、Forward-Looking Statements are not guarantees of future performance.The words“believe,”“expect,”“anticipate,”“intend,”“plan,”“may,”“could,”and similar expressions identify Forward-Looking Statements.AllForward-Looking Statements speak only as of the date on which they are made.Forward-Looking Statem

48、ents contained herein,andthe associated risks,uncertainties,assumptions and other important factors include,but are not limited to,the following:our ability to invest in projects that will generate the best returns for our stockholders;our future liquidity outlook;the outlook of our chemical product

49、s and related markets;our ability to successfully leverage our existing business platform and portfolio of assets to produce low carbon productsand execute our strategy to become a leader in the energy transition in the chemical industry;the amount,timing and effect on the nitrogen market from curre

50、nt nitrogen expansion projects;the effect from the lack of non-seasonal volume;our belief that competition is based upon service,price,location of production and distribution sites,and product qualityand performance;the outlook for the industrial end markets;the availability of raw materials;our abi

51、lity to broaden the distribution of our products,including our ability to leverage our nitric acid production capacityat our El Dorado Facility;our ongoing initiatives to increase the distribution of our products within our industrial end markets;the execution and success of our advanced low carbon

52、ammonia initiatives;our expectations regarding future ammonia pricing;the result of our product and market diversification strategy;changes in domestic fertilizer production;the increasing output and capacity of our existing production facilities;production volumes at our production facilities;our a

53、bility to moderate risk inherent in agricultural markets;the sources to fund our cash needs and how this cash will be used;the ability to enter into the additional borrowings;the anticipated cost and timing of our capital projects;certain costs covered under warranty provisions;our ability to pass t

54、o our customers cost increases in the form of higher prices;our belief as to whether we have sufficient sources for materials and components;our beliefs regarding our estimates and contingencies with respect claims and legal actions in the ordinary course of ourbusiness and their effect on our busin

55、ess,financial condition,results of operations or cash flows;annual natural gas requirements;the development of the market and demand for low carbon ammonia;compliance by our facilities with the terms of our permits;the costs of compliance with environmental laws,health laws,security regulations and

56、transportation regulations;our belief as to when Turnarounds will be performed and completed;expenses in connection with environmental projects;the effect of litigation and other contingencies,including the potential financial penalties associated with the NOV fromADEQ regarding wastewater discharge

57、s from our El Dorado Facility;the increase in interest expense;our ability to comply with debt servicing and covenants;our ability to meet debt maturities or redemption obligations when due;the impact of our repurchase program on our stock price and cash reserves;and4our beliefs as to whether we can

58、 meet all required covenant tests for the next twelve months.While we believe,the expectations reflected in such Forward-Looking Statements are reasonable,we can give no assurance suchexpectations will prove to have been correct.There are a variety of factors which could cause future outcomes to dif

59、fer materiallyfrom those described in this report,including,but not limited to,the following:changes in general economic conditions,both domestic and foreign;material reductions in revenues;material changes in interest rates;our ability to collect in a timely manner a material amount of receivables;

60、increased competitive pressures;adverse effects of increases in prices of raw materials;changes in federal,state and local laws and regulations,or in the interpretation of such laws and regulations;changes in laws,regulations or other issues related to climate change;releases of pollutants into the

61、environment exceeding our permitted limits;material increases in equipment,maintenance,operating or labor costs not presently anticipated by us;the requirement to use internally generated funds for purposes not presently anticipated;the inability to secure additional financing for planned capital ex

62、penditures or financing obligations due in the near future;our substantial existing indebtedness;material changes in the cost of natural gas and certain precious metals;limitations due to financial covenants;changes in competition;the loss of any significant customer;increases in cost to maintain in

63、ternal controls over financial reporting;changes in operating strategy or development plans;an inability to fund the working capital and expansion of our businesses;changes in the production efficiency of our facilities;adverse results in our contingencies including pending litigation;unplanned down

64、time at one or more of our chemical facilities;changes in production rates at any of our chemical plants;an inability to obtain necessary raw materials and purchased components;material increases in cost of raw materials;material changes in our accounting estimates;significant problems within our pr

65、oduction equipment;fire or natural disasters;an inability to obtain or retain our insurance coverage;difficulty obtaining necessary permits;difficulty obtaining third-party financing;risks associated with proxy contests initiated by dissident stockholders;changes in fertilizer production;reduction i

66、n acres planted for crops requiring fertilizer;decreases in duties for products we sell resulting in an increase in imported products into the United States;adverse effects from regulatory policies,including tariffs;geopolitical concerns;volatility of natural gas prices;price increases resulting fro

67、m increased inflation;weather conditions,including the effects of climate change;increases in imported agricultural products;5global supply chain disruptions;other factors described in Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operationscontained in this report

68、;andother factors described in Item 1A.Risk Factors contained in this report.Given these uncertainties,all parties are cautioned not to place undue reliance on such Forward-Looking Statements.Except to theextent required by law,we disclaim any obligation to update any such factors or to publicly ann

69、ounce the result of any revisions to anyof the Forward-Looking Statements contained herein to reflect future events or developments.6PART IITEM 1.BUSINESSOverviewAll references to“LSB Industries,”“LSB,”the“Company,”“we,”“us,”and“our”refer to LSB Industries,Inc.and its subsidiaries ona consolidated b

70、asis,except where the context makes clear that the reference is only to LSB Industries,Inc.itself and not itssubsidiaries.Notes referenced throughout this document refer to consolidated financial statement footnote disclosures that are found inItem 8.Financial Statements and Supplementary Data of th

71、is report.Capitalized terms not otherwise defined herein shall have themeanings ascribed thereto under the heading“Special Note Regarding Forward-Looking Statements Defined Terms.”LSB is a Delaware corporation,formed in 1968,and headquartered in Oklahoma City,Oklahoma.LSB is committed to playing ale

72、adership role in the energy transition through the production of low and no carbon products that build,feed and power the world.Weseek to accomplish this goal through the manufacture and marketing of essential products for the agricultural and industrial markets,and in the future,energy markets,all

73、with an emphasis on a culture of excellence in customer experience.The Company manufacturesammonia and ammonia-related products in El Dorado,Arkansas(the“El Dorado Facility”),Cherokee,Alabama(the“CherokeeFacility”),and Pryor,Oklahoma(the“Pryor Facility”),and operates a facility on behalf of Covestro

74、 LLC(“Covestro”)in Baytown,Texas(the“Baytown Facility”).Our products are sold through distributors and directly to end customers,such as farmers,ranchers,and fertilizer dealers,throughout the United States and parts of Canada,and to explosives manufacturers in the United States and otherparts of Nor

75、th America.Our BusinessOur business manufactures products for two principal markets:(a)Agricultural and(b)Industrial.The chart below highlightsrepresentative products and applications in each of our end markets.The products we manufacture at our facilities are primarily derived from natural gas(a ra

76、w material).Our facilities and productionprocesses have been designed to produce products that are marketable at nearly each stage of production.This design has allowed usto develop and deploy a business model optimizing the mix of products to capture the value opportunities in the end markets we se

77、rvewith a focus on balancing our production.7The following table summarizes net sales information relating to our products:20242023Percentage of consolidated net sales:AN&Nitric acid41%37%Urea ammonium nitrate(UAN)27%26%Ammonia26%28%Other6%9%100%100%For additional information regarding our net sales

78、,operating results and total assets for the past three fiscal years,see the ConsolidatedFinancial Statements included in this report.Our StrategyWe aim to be a leader in the energy transition in the chemical industry through the production of low and no carbon products thatbuild,feed and power the w

79、orld.We plan to accomplish this goal by leveraging our existing business platform and portfolio of assetsto produce low carbon products,utilizing our significant manufacturing expertise and experience in ammonia and hydrogen plantoperations,optimizing our liquidity and free cash flows to generate gr

80、owth,and creating a network of partners that bring additionalknowledge,expertise and relationships.With respect to our current portfolio of products,we pursue a strategy of balancing the sale of product as fertilizer into the agriculturemarkets at spot prices or short duration pre-sales and developi

81、ng industrial customers that purchase substantial quantities of products,primarily under contractual obligations and/or pricing arrangements that generally provide for the pass through of some raw materialand other manufacturing costs.We believe this product and market diversification strategy allow

82、s us to have more consistent levels ofproduction compared to some of our competitors and helps reduce the volatility risk inherent in the prices of our raw material and/orthe changes in demand for our products.The strategy of developing industrial customers helps to moderate the risk inherent in the

83、 agricultural markets where spot sales pricesof our agricultural products may not have a correlation to natural gas raw material costs but rather reflect market conditions for likeand competing nitrogen sources.This volatility of sales pricing in our agricultural products may,from time to time,compr

84、omise ourability to recover our full cost to produce the product.Additionally,the lack of sufficient non-seasonal agricultural sales volume tooperate our manufacturing facilities at optimum levels can preclude us from balancing production and storage capabilities.Lookingforward,we remain focused on

85、upgrading margins by maximizing downstream production.Our strategy calls for further developmentof industrial customers who assume the volatility risk associated with the raw material costs and mitigate the effects of seasonality inthe agricultural sector.Our strategy also includes evaluating furthe

86、r investments in low carbon opportunities,potential acquisitions of strategic assets orcompanies,joint ventures with other companies and investments in additional production capacity where we believe thoseacquisitions,joint ventures or expansion of production capacity will enhance the value of the C

87、ompany and provide appropriatereturns.Key Operating Initiatives for 2025As discussed in more detail under“Item 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsKey Operating Initiatives,”we believe our future results of operations and financial condition will dep

88、end significantly on our abilityto successfully implement the following key initiatives:Investing to Improve Environmental,Health&Safety and Reliability at our Facilities while Supplying our Customers withProducts of the Highest Quality;Continue Optimization and Increase the Breadth of Distribution

89、of our Product Mix;Development of Low Carbon Ammonia and Clean Energy Projects;Evaluate and Pursue Organic Capacity Expansion;andEvaluate Acquisitions of Strategic Assets or Companies.As for our liquidity,we had approximately$221 million of combined cash and cash equivalents,short-term investments a

90、ndborrowing capacity at the end of 2024,which we believe provides us with ample liquidity to fund our operations and meet our currentobligations.Also see discussions in“Item 7.Managements Discussion and Analysis of Financial Condition and Results ofOperationsLiquidity and Capital Resources”.8Our Com

91、petitive StrengthsStrategically Located Chemical AssetsOur business benefits from highly advantageous locations with logistical and distribution benefits.We have access to the Nustarammonia pipeline from the Gulf Coast of the United States at our El Dorado Facility,which provides low-cost transporta

92、tion todistribution points.The El Dorado Facility also has rail access providing favorable freight logistics to our industrial and agriculturalcustomers and cost advantages when selling a number of our products west of the Mississippi River.Our Cherokee Facility is locatedeast of the Mississippi Riv

93、er,allowing it to reach customers that are not freight logical for our competitors.Our Cherokee Facility sitsadjacent to the Tennessee River,providing barge receipt and shipping access,in addition to truck and rail delivery access.Our PryorFacility is located in the heart of the Southern Plains with

94、 strategic rail and truck delivery access.Advantaged Raw Material Cost PositionWe have access to low-cost(relative to international markets)natural gas in the United States,which allows for significant costadvantages as compared to comparable production facilities in Europe and other parts of the wo

95、rld.Diversified Sources of RevenueOur business serves a broad range of agricultural and industrial end markets,which we believe diminishes the cyclicality of ourfinancial performance.The flexible nature of our production process and storage capability allows us the ability to shift our productmix ba

96、sed on end market demand.Agricultural Market ConditionsAs discussed in more detail under“Item 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsKey Industry Factors”,the price at which our agricultural products are ultimately sold depends on numerous factors,inclu

97、ding thesupply and demand for nitrogen fertilizers which,in turn,depends upon world grain demand and production levels,the cost andavailability of transportation and storage,weather conditions,competitive pricing and the availability of imports,all of which impactcompetition.Additionally,expansions

98、or upgrades of competitors facilities and international and domestic political and economicdevelopments continue to play an important role in the global nitrogen fertilizer industry economics.These factors can affect,inaddition to selling prices,the level of inventories in the market which can cause

99、 price volatility and affect product margins.We sell our agricultural products at the current spot market price for either immediate shipment or as part of forward salescommitments,depending on fertilizer seasonality and our forward pricing point of view.Looking forward to 2025,we expect ammonia pri

100、cing to moderate for a variety of reasons,including:the anticipated start-up of newproduction capacity in both the United States and internationally;an increase in Russian exports;and continued muted demand fornitrogen products from the global industrial sector,particularly in Asia.Upside to our pri

101、cing expectations could be driven by avariety of factors,including:a continued increase in energy prices;a strengthening Chinese economy driving increased industrialmarket demand;further delays in new production capacity coming online;gas curtailments in regions exporting ammonia;a lowerinterest rat

102、e environment;the potential impact of United States import tariffs;and supportive weather dynamics.Agricultural ProductsWe produce and sell UAN,HDAN and ammonia,all of which are nitrogen-based fertilizers.We sell these agricultural products tofarmers,ranchers,fertilizer dealers and distributors prim

103、arily in the ranch land and grain production markets in the United States.Ournitrogen-based fertilizers are used to grow food crops,biofuel feedstock crops,and pasture forage for grazing livestock and forageproduction.We maintain long-term relationships with wholesale agricultural distributors and r

104、etailers and also sell directly toagricultural end-users through our wholesale and retail distribution centers.The demand for nitrogen fertilizer products in the agricultural industry is seasonal.If seasonal demand is less than we expect,we maybe left with excess inventory that will have to be store

105、d(in which case our results of operations will be negatively affected by anyrelated increased storage costs)or liquidated(in which case the selling price may be below our production,procurement and storagecosts).Industrial Market ConditionsAs discussed in more detail in“Item 7.Managements Discussion

106、 and Analysis of Financial Condition and Results of OperationsKeyIndustry Factors,”in our industrial markets,our sales volumes are typically driven by changes in general economic conditions,energyprices,metals market prices and our contractual arrangements with certain large customers.For our other

107、products,our sales volumesare typically driven by changes in the overall North American consumption levels of mining products,which can be impacted byweather.Additionally,changes in natural gas prices and demand in renewable power sources,such as wind and solar in the electricalgeneration sector,wil

108、l impact demand for our other products and impact competition within the other sectors of this market.Our industrial business competes based upon service,price and location of production and distribution sites,product quality andperformance as part of the value-added services offered to certain cust

109、omers.9Looking forward to 2025,we expect demand for our industrial products to be stable,despite persistent global economic challenges.We anticipate that nitric acid demand will remain steady,reflecting the strength of the United States economy and robust consumerspending levels.Demand for AN for us

110、e in mining applications should continue to benefit from positive exposure to copper,gold andiron ore mining,as well as continued attractive market fundamentals for aggregate production relating to infrastructure construction.While some degree of economic uncertainty persists,we believe that we have

111、 a meaningful degree of downside protection in ourindustrial business given our diverse customer base,the nature of our contracts and our ability to shift our production mix to productswhere demand and pricing are strongest.Industrial ProductsWe manufacture and sell industrial acids and other chemic

112、al products primarily to the polyurethane intermediates,paper,fibers,emission control,and electronics industries.In addition,we produce and sell blended and regular nitric acid and industrial and highpurity ammonia for many specialty applications,including the reduction of air emissions from power p

113、lants.Sales of our industrial products are generally made to customers pursuant to sales contracts or pricing arrangements on terms thatinclude the cost of the primary raw materials as a pass-through component in the sales price.These contractual sales stabilize theeffect of commodity cost changes a

114、nd fluctuations in demand for these products due to the cyclicality of the end markets.We operate the Baytown Facility on behalf of Covestro and we believe it is one of the largest and most technologically advanced nitricacid manufacturing units in the United States.We operate and maintain this faci

115、lity pursuant to a long-term operating contract inexchange for a management fee,which is not significant to our results of operations.The term of this agreement runs until October2029 with options for renewal by mutual agreement between us and Covestro.Our industrial products sales volumes are depen

116、dent upon general economic conditions,primarily in the housing,automotive,andpaper industries.Our sale prices generally vary with the market price of ammonia,sulfur or natural gas,as applicable,in our pricingarrangements with customers.We also produce and sell LDAN,HDAN and AN solution for use in ot

117、her applications,which are primarily used as AN fuel oil andspecialty emulsions for usage in the quarry and the construction industries and for metals mining.We have signed long-term contractswith certain customers that provide for the annual sale of LDAN mostly under natural gas cost pass through p

118、ricing arrangements.One of our customers has a plant located at our El Dorado Facility.Raw MaterialsThe products we manufacture at our facilities are primarily derived from natural gas.This raw material is a commodity and subject toprice fluctuations.Natural gas is the primary raw material for produ

119、cing ammonia,UAN,nitric acid and acid blends and otherproducts at our El Dorado,Cherokee and Pryor Facilities.During 2024,we purchased approximately 28.4 million MMBtus of naturalgas.The chemical facilities natural gas requirements are generally purchased at spot market price.Periodically,we enter i

120、nto volumepurchase commitments and/or forward contracts to fix the cost of certain expected natural gas requirements primarily to matchquantities needed to produce product that have been sold forward.At December 31,2024,we had natural gas contracts ofapproximately 0.6 million MMBtus,at an average co

121、st of$3.70 per MMBtu.These contracts extend through March 2025.See further discussion relating to the outlook for our business under“Item 7.Managements Discussion and Analysis of FinancialCondition and Results of OperationsKey Industry Factors.”CompetitionWe operate in a highly competitive market wi

122、th many other larger chemical companies,such as CF Industries Holdings,Inc.,CVRPartners,Dyno Nobel,a subsidiary of Incitec Pivot Limited,Eurochem North America,Helm AG,Koch Industries,Macro-SourceL.L.C.,Nutrien,Orica Limited,and Yara International(some of whom are our customers),many of whom have gr

123、eater financial andother resources than we do.We believe that competition within the markets we serve is primarily based upon service,price,locationof production and distribution sites,and product quality and performance.CustomersThe principal customers for our products are distributors and end cust

124、omers,such as farmers,ranchers,and fertilizer dealers andindustrial users.Sales are generated by our internal marketing and sales force.For 2024,five customers accounted for approximately30%of our consolidated net sales.NOL Rights AgreementWe are party to an Amended and Restated Section 382 Rights A

125、greement(as amended,the“NOL Rights Agreement”)withComputershare Trust Company,N.A.,as rights agent.10The purpose of the NOL Rights Agreement is to facilitate our ability to preserve our NOLs and other tax attributes in order to be ableto offset potential future income taxes for federal income tax pu

126、rposes.Our ability to use these NOLs and other tax attributes would besubstantially limited if we experience an“ownership change,”as defined in Section 382 of the Internal Revenue Code of 1986,asamended(the“Code”).A company generally experiences an ownership change if the percentage of the value of

127、its stock owned bycertain 5%stockholders,as defined in Section 382 of the Code,increases by more than 50%points over a rolling three-year period.The NOL Rights Agreement is intended to reduce the likelihood of an ownership change under Section 382 of the Code by deterringany person(as defined in the

128、 NOL Rights Agreement)or group of affiliated or associated persons from acquiring beneficial ownershipof 4.9%or more of our outstanding shares of common stock.The rights issued under the NOL Rights Agreement will expire on the earliest to occur of(i)the date on which our Board of Directors(the“Board

129、”)determines in its sole discretion that(x)the NOL Rights Agreement is no longer necessary for the preservation ofmaterial valuable NOLs or tax attributes or(y)the NOLs and tax attributes have been fully utilized and may no longer be carriedforward and(ii)the close of business on August 22,2026.Our

130、Board may,in its discretion,determine that a person,entity or a certain transaction is exempt from the operation of the NOLRights Agreement or amend the terms of the rights.Human Capital ResourcesAs of December 31,2024,we employed 583 persons,164 of whom are represented by unions under collective ba

131、rgaining agreements.We have three union contracts,one of which was ratified in 2024 and the remaining two of which were last ratified in 2022 and arescheduled to be considered for ratification in 2025.Oversight&ManagementOur success depends on the capabilities and strength of our workforce.Our Chief

132、 Human Resources Officer(“CHRO”)is responsiblefor developing and executing our human capital strategy.This strategy includes the acquisition,development,and retention of talentas well as the enhancement of benefits and employee experience to deliver on our overall strategy.Our CHRO regularly updates

133、 ourBoard on the operation and status of these human capital activities including:Training&Development We are committed to the continued development of our employees through training opportunities,annual reviews and development action plans.We provide formal training to our frontline supervisors foc

134、using on foundationalleadership capabilities.Annual reviews of talent occur across all operational business units and corporate functions.It is theresponsibility of the CEO,CHRO and the executive staff to review talent data on an annual basis and plan development actionsto ensure succession and cont

135、inuous improvement and growth.Engagement We believe that we have favorable relations with our employees.We take proactive measures,such asconducting employee surveys and focus groups,to help us understand employee engagement.We then implement programs,based on the results,such as employee recognitio

136、n and operationally-focused communications,that are specifically directed atimproving engagement.Additionally,we conduct annual benefit benchmarking studies in an effort to ensure that any changesto benefits are improvements or add value for employees.Each of our business units conducts roundtable d

137、iscussions todevelop action plans to improve the work environment and culture.Health and Safety Our Health and Safety Management System continues to build to establish a consistent and robustapproach to enhance safety and a culture of compliance at each business unit.This system is guided by an exec

138、utive committeethat provides focus and priority to compliance and industry best practices that protect our employees while performing workwithin our operations.Each business team is responsible for evaluating its unique operations and applying the defined controlsto engage employees and manage risk.

139、We use leading and lagging metrics,such as near miss tracking,assigning potential riskconsequences to events,incident tracking,and releases to monitor our performance and effectiveness across our operations andindividual business teams.Events are investigated based on risk using root cause analysis

140、tools and corrective actions aretracked to ensure prevention.In addition,the management system includes periodic third-party audits and internal self-assessment to continuously improve.Government RegulationOur facilities and operations are subject to numerous federal,state and local laws and regulat

141、ions regarding environmental,health andsafety,including laws and regulations relating to the generation and handling of hazardous substances and wastes,the introduction ofnew chemicals or substances to the market,the investigation and remediation of contamination,spills or releases and the discharge

142、 oremissions of regulated substances to the air,water or soils.These laws and regulations provide for certain performance obligations andin some cases require us to obtain and maintain permits for our operations.The failure to comply with these laws and regulations canresult in substantial administr

143、ative,civil and criminal fines,injunctive relief and criminal sanctions.Compliance with and changes tothese laws and regulations may adversely affect our business,results or operations and financial condition.Certain of these laws and regulations impose strict liability as well as joint and several

144、liability for costs required to remediate andrestore sites that we own or operate or that we have formerly owned or operated,as well as sites where hazardous substances,11hydrocarbons,solid wastes or other materials from our operations have been stored,disposed or released,regardless of whether such

145、contamination resulted from the conduct of others or from consequences of our own actions that were in compliance with allapplicable laws at the time those actions were taken.We may incur material costs or liabilities in complying with such laws and pay fines or penalties for violation of such laws.

146、Ourinsurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is madeagainst us.These laws and regulations(including enforcement policies thereunder)have in the past resulted,and could in the futureresult,in significant compliance expen

147、ses,cleanup costs(for our sites or third-party sites where we disposed our wastes),penalties orother liabilities relating to the handling,manufacture,use,emission,discharge or disposal of materials at or from our facilities or theuse or disposal of certain of its chemical products.Historically,we ha

148、ve incurred significant expenditures in order to comply withthese laws and regulations and are reasonably expected to do so in the future.Changes in these laws and regulations,and changes inthe interpretations of such laws and regulations by the regulatory bodies impact the costs of compliance and m

149、ay impact the demandsfor our products.We will also be obligated to manage certain discharge water outlets and monitor groundwater contaminants at ourchemical facilities should we discontinue the operations of a facility.We have obtained and maintain numerous environmental permits and approvals in co

150、nnection with the operations of our facilities.Changes to our facilities or new facilities or operations may require new or amended permits,and many of our existing permits requireperiodic renewal.If the regulatory body were to deny or delay issuing a permit or permit amendment or were to modify an

151、existingpermit or approval,we could experience a material adverse impact on our ability to operate or the costs of our operations.Therequirement to obtain permits and authorizations may also impact our ability to construct new operations or to make changes toexisting operations.Also see discussions

152、concerning our risk factors under“Item 1A.Risk Factors”of this report.Available InformationWe make available free of charge through our Internet website()or by calling Investor Relations(405)510-3550 our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and,if ap

153、plicable,amendments to those reports filed or furnished pursuant to Section 13(a)of the Exchange Act of 1934,as amended(the“ExchangeAct”)as soon as reasonably practicable after we electronically file such material with,or furnish it to,the Securities and ExchangeCommission(the“SEC”).In addition to t

154、he reports filed or furnished with the SEC,we publicly disclose material information fromtime to time in press releases,at annual meetings of stockholders,in publicly accessible conferences and investor presentations,andthrough our website.The information included on our website does not constitute

155、part of this Annual Report on Form 10-K.12ITEM 1A.RISK FACTORSRisks Relating to Our BusinessCost and the lack of availability of raw materials could materially affect our profitability.Our sales and profits are heavily affected by the costs and availability of primary raw materials.These primary raw

156、 materials aretypically subject to considerable price volatility,and recent global supply chain disruptions and increased inflation in the United Stateshave led to further heightened volatility.Historically,when there have been rapid increases in the cost of these primary raw materials,we have somet

157、imes been unable to timely increase our sales prices to cover all of the higher costs incurred.While we periodicallyenter into futures/forward contracts to economically hedge against price increases in certain of these raw materials,we may noteffectively manage against price fluctuations in those ra

158、w materials.Natural gas represents the primary raw material in the production of most of our chemical products.Although we enter into contractswith certain customers that provide for the pass-through of raw material costs,we have a substantial amount of sales that do notprovide for the pass-through

159、of raw material costs.Also,the spot sales prices of our agricultural products may not correlate to the costof natural gas but rather reflect market conditions for similar and competing nitrogen sources.This lack of correlation can compromiseour ability to recover our full cost to produce the product

160、s in this market.As a result,in the future,we may not be able to pass along toall of our customers the full amount of any increases in raw material costs.Future price fluctuations in our raw materials may have anadverse effect on our business,financial condition,liquidity and results of operations.A

161、dditionally,we depend on certain vendors to deliver natural gas and other key components that are required in the production of ourproducts.Any disruption in the supply of natural gas and other key components could result in lost production or delayed shipments.The price of natural gas in North Amer

162、ica and worldwide has been volatile in recent years and had declined on average due in part tothe development of significant natural gas reserves,including shale gas,and the rapid improvement in shale gas extraction techniques,such as hydraulic fracturing and horizontal drilling.However,recent disru

163、ptions in the global supply chain may continue to have animpact in the near term in fiscal year 2025.Future production of natural gas from shale formations could be reduced by regulatorychanges that restrict drilling or hydraulic fracturing or increase its cost or by reduction in oil exploration and

164、 development promptedby lower oil prices and resulting in production of less associated natural gas.Additionally,increased demand for natural gas,particularly in the Gulf Coast Region,due to increased industrial demand and increased natural gas exports could result in increasednatural gas prices.We

165、have suspended in the past,and could suspend in the future,production at our chemical facilities due to,among other things,thehigh cost or lack of availability of natural gas and other key components,which could adversely affect our competitiveness in themarkets we serve.Accordingly,our business,fin

166、ancial condition,liquidity and results of operations could be materially affected in thefuture by the lack of availability of natural gas and other key components and increase costs relating to the purchase of natural gas andother key components.We are reliant on a limited number of key facilities.W

167、e manufacture products at four facilities.Operational disruptions could occur for many reasons,including natural disaster,weather,unplanned maintenance and other manufacturing problems,disease,strikes or other labor unrest or transportation interruptions.Extreme weather events,including temperature

168、extremes,depending on the severity and location,have the potential not only todamage our facilities and disrupt our operations,but also to affect adversely the distribution of our products.Moreover,our facilitiesmay be subject to failure of equipment that may be difficult to replace or have long del

169、ivery lead times,due in part to a limited numberof suppliers and could result in operational disruptions.The suspension of operations at any of these facilities,or significant impactson any of their operations as a result of supply chain disruption,could adversely affect our ability to produce our p

170、roducts and fulfillour commitments and could have a material adverse effect on our liquidity,financial condition,results of operations and business.The age of our chemical manufacturing facilities increases the risk for unplanned downtime,which may be significant.Our business is comprised of operati

171、ng units of various ages and levels of automated control.While we have continued to makesignificant annual capital improvements,potential age or control-related issues have occurred in the past and may occur in the future,which could cause damage to the equipment and ancillary facilities.As a result

172、,we have experienced and may continue to experienceadditional downtime at our chemical facilities in the future.The equipment required for the manufacture of our products is specialized,and the time for replacement of such equipment can belengthy,resulting in extended downtime in the affected unit.I

173、n addition,the cost for such equipment could be influenced by changesin regulatory policies(including tariffs)of foreign governments,as well as the U.S.laws and policies affecting foreign trade andinvestment.Although we use various reliability and inspection programs and maintain a significant inven

174、tory of spare equipment,which are intended to mitigate the extent of production losses,unplanned outages may still occur.As a result,these planned andunplanned downtime events at our chemical facilities have in the past and could in the future adversely affect our liquidity,operatingresults and fina

175、ncial condition.13Our operations and the production and handling of our products involve significant risks and hazards.Our operations are subject to hazards inherent in the manufacture,transportation,storage and distribution of chemical products,including some products that are highly toxic and corr

176、osive.These hazards include,among other things,explosions;fires;severeweather and natural disasters;train derailments,collisions,vessel groundings and other transportation and maritime incidents;leaksand ruptures involving storage tanks,pipelines and rail cars;spills,discharges and releases of toxic

177、 or hazardous substances or gases;deliberate sabotage and terrorist incidents;mechanical failures;unscheduled plant downtime;labor difficulties and other risks.Someof these hazards can cause bodily injury and loss of life,severe damage to or destruction of property and equipment and environmentaldam

178、age and may result in suspension of operations for an extended period of time and/or the imposition of civil or criminal penaltiesand liabilities.We periodically experience minor releases of ammonia related to leaks from our equipment.Similar events may occurin the future.As a result,such events cou

179、ld have a material adverse effect on our results of operations and financial condition.Our transportation and distribution activities rely on third-party providers,which subject us to risks and uncertaintiesbeyond our control that may adversely affect our operations.We rely on railroad,trucking,pipe

180、line and other transportation service providers to transport raw materials to our manufacturingfacilities,to coordinate and deliver finished products to our storage and distribution system and our retail centers and to ship finishedproducts to our customers.These transportation operations,equipment

181、and services are subject to various hazards,including adverseoperating conditions,extreme weather conditions,system failures,work stoppages,equipment and personnel shortages,delays,accidents such as spills and derailments and other accidents and operating hazards.In the event of a disruption of exis

182、ting transportation or terminaling facilities for our products or raw materials,alternativetransportation and terminaling facilities may not have sufficient capacity to fully serve all of our customers or facilities.An extendedinterruption in the delivery of our products to our customers or the supp

183、ly of natural gas,ammonia or sulfur to our production facilitiescould adversely affect sales volumes and margins.These transportation operations,equipment and services are also subject to environmental,safety,and regulatory oversight.Due toconcerns related to accidents,terrorism or increasing concer

184、ns regarding transportation of potentially hazardous substances,local,provincial,state and federal governments could implement new regulations affecting the transportation of raw materials or ourfinished products.If transportation of our products is delayed or we are unable to obtain raw materials a

185、s a result of any third partysfailure to operate properly or the other hazards described above,or if new and more stringent regulatory requirements are implementedaffecting transportation operations or equipment,or if there are significant increases in the cost of these services or equipment,ourreve

186、nues and cost of operations could be adversely affected.In addition,we may experience increases in our transportation costs,orchanges in such costs relative to transportation costs incurred by our competitors.We may not be successful in the development and implementation of our low carbon ammonia pr

187、ojects in a timely oreconomic manner,or at all.We are currently evaluating and developing projects and other investments that could enable us to become a producer and marketer oflow carbon ammonia and other derivative products.The success of these projects is dependent on a number of factors,many of

188、 whichare beyond our control.For example,the market for low carbon ammonia remains nascent,and is continuing to develop and evolve.We cannot be certain thatthe market will grow to the size or at the rate we expect.The demand for low carbon ammonia is dependent in part on the developingmarket for low

189、 carbon hydrogen,for which ammonia can serve as a transport and storage molecule.These markets are heavilyinfluenced by demand for clean energy,technology advancement and a range of domestic and international laws,regulations andpolicies related to carbon emissions,clean energy,tax benefits and othe

190、r incentives and corporate accountability.Recently,many other proposed low carbon ammonia projects have been announced or considered,and future hydrogen,energy,orenvironmental/carbon policies may support development of additional nitrogen production in locations outside North America,including Europ

191、e,Australia,and the Middle East.In the event that the growth in supply of low carbon ammonia and low carbonhydrogen exceeds the growth in demand for those products,the resulting unfavorable supply and demand balance could lead to lowerselling prices than we expect,which could negatively affect our b

192、usiness,financial condition,results of operations and cash flows.The recognition and acceptance of low carbon ammonia as a transport and storage molecule for low carbon hydrogen,the use of lowcarbon ammonia as a fuel in its own right,and the development and growth of end market demand and applicatio

193、ns for hydrogen andammonia are uncertain.Such matters depend on many factors outside of our control,such as the extent and rate at which costcompetitive global renewable energy capacity increases,the price of traditional and alternative sources of energy,the implementationof taxes on carbon emission

194、s,the realization of technological improvements required to increase the efficiency and lower the costs ofproduction of ammonia,the regulatory environment,and the success of the projects described above to provide ammonia offeringscost-effectively.In addition,further development of alternative decar

195、bonization technologies may result in viable alternatives to theuse of low carbon ammonia for many potential decarbonization applications,resulting in lower than expected market demand growthrelative to our current expectations.The success of our low carbon ammonia projects also depends on the reali

196、zation of certain technical improvements required toincrease the efficiency and lower the costs of production of low carbon ammonia.Over time,we may face operational difficulties and14execution risks related to design,development and construction.If our assumptions about the engineering and project

197、executionrequirements necessary to successfully build or convert the facility capacity that we are contemplating and to scale up to largerproduction quantities prove to be incorrect,we may be unable to produce substantial quantities of low carbon ammonia,and the costto construct such low carbon ammo

198、nia facilities,or the production costs associated with the operation of such facilities,may be higherthan we project.The production of low carbon ammonia depends to a large extent upon the ability of third parties to develop class VIcarbon sequestration wells,which currently do not exist at large sc

199、ale and are subject to a permitting process and operational risks,which may result in delays,impact viability in some or all situations,or create long-term liabilities.There is intense competition in the markets we serve.Substantially all of the markets in which we participate are highly competitive

200、 with respect to product quality,price,distribution,service,and reliability.We compete with many companies,domestic and foreign,that have greater financial,marketing and otherresources.Competitive factors could require us to reduce prices or increase spending on product development,marketing and sal

201、es,which could have a material adverse effect on our business,results of operation and financial condition.We compete with many U.S.producers and producers in other countries,including state-owned and government-subsidized entities.Some competitors have greater total resources and are less dependent

202、 on earnings from chemical sales,which makes them lessvulnerable to industry downturns and better positioned to pursue new expansion and development opportunities.Our competitiveposition could suffer to the extent we are not able to expand our own resources sufficiently either through investments in

203、 new orexisting operations or through acquisitions,joint ventures or partnerships.An inability to compete successfully could result in the lossof customers,which could adversely affect our sales and profitability.In addition,future technological innovation,such as the development of seeds that requi

204、re less crop nutrients,or developments in theapplication of crop nutrients,if they occur,could have the potential to adversely affect the demand for our products and results ofoperations.A major factor underlying the current high level of demand for our nitrogen-based fertilizer products is the prod

205、uction ofethanol.A decrease in ethanol production or an increase in ethanol imports could have a material adverse effect on our resultsof operations and financial condition.A major factor underlying the solid level of demand for our nitrogen-based fertilizer products is the production of ethanol in

206、theUnited States and the use of corn in ethanol production.Ethanol production in the United States is highly dependent upon a myriad offederal statutes and regulations and is made significantly more competitive by various federal and state incentives and mandated usageof renewable fuels pursuant to

207、the federal renewable fuel standards(“RFS”).To date,the RFS has been satisfied primarily with fuelethanol blended into gasoline.However,a number of factors,including the continuing“food versus fuel”debate and studies showingthat expanded ethanol usage may increase the level of greenhouse gases in th

208、e environment as well as be unsuitable for small engineuse,have resulted in calls to reduce subsidies for ethanol,allow increased ethanol imports and to repeal or waive(in whole or in part)the current RFS,any of which could have an adverse effect on corn-based ethanol production,planted corn acreage

209、 and fertilizerdemand.Therefore,ethanol incentive programs may not be renewed,or if renewed,they may be renewed on terms significantly lessfavorable to ethanol producers when compared with current incentive programs.Consequently,a decrease in ethanol production or anincrease in ethanol imports could

210、 have a material adverse effect on our overall business,results of operations,financial condition andliquidity.Seasonality can adversely affect our business.Demand for nitrogen fertilizer products in the agricultural industry is seasonal.If seasonal demand is less than we expect,we may beleft with e

211、xcess inventory that will have to be stored(in which case our results of operations will be negatively affected by any relatedincreased storage costs)or liquidated(in which case the selling price may be below our production,procurement and storage costs).The risks associated with excess inventory an

212、d product shortages are exacerbated by the volatility of natural gas and nitrogen fertilizerprices and the relatively brief periods during which farmers can apply nitrogen fertilizers.If prices for our products rapidly decrease,we may be subject to inventory write-downs,adversely affecting our opera

213、ting results.If seasonal demand is greater than we expect,we may experience product shortages,and customers of ours may turn to our competitors for products that they would otherwise havepurchased from us.A substantial portion of our sales is dependent upon a limited number of customers.For 2024,fiv

214、e customers accounted for approximately 30%of our consolidated net sales.The loss of,or a material reduction inpurchase levels by,one or more of these customers could have a material adverse effect on our business,results of operations,financial condition and liquidity if we are unable to replace on

215、e or more customers with other sales on substantially similar terms.15A change in the volume of products that our customers purchase on a forward basis,or the percentage of our sales volumethat is sold to our customers on a forward basis,could increase our exposure to fluctuations in our profit marg

216、ins andmaterially adversely affect our business,financial condition,results of operations and cash flows.From time-to-time,we offer our customers the opportunity to purchase products from us on a forward basis at prices and deliverydates we propose.Under our forward sales programs,customers generall

217、y make an initial cash down payment at the time of order andpay the remaining portion of the contract sales under their usual invoice terms when the performance obligation is satisfied.Forwardsales improve our liquidity due to the cash payments received from customers in advance of shipment of the p

218、roduct and allow us toimprove our production scheduling and planning and the utilization of our manufacturing and distribution assets.Any cash paymentsreceived in advance from customers in connection with forward sales are reflected on our consolidated balance sheets as a currentliability until the

219、related performance obligations are satisfied,which can take up to several months.We believe the ability to purchaseproducts on a forward basis is most appealing to our customers during periods of generally increasing prices for nitrogen fertilizers.Our customers may be less willing,or even unwillin

220、g,to purchase products on a forward basis during periods of generally decreasingor stable prices or during periods of relatively high fertilizer prices due to the expectation of lower prices in the future or limitedcapital resources.In periods of rising fertilizer prices,selling our nitrogen fertili

221、zers on a forward basis may result in lower profitmargins than if we had not sold fertilizer on a forward basis.Conversely,in periods of declining fertilizer prices,selling our nitrogenfertilizers on a forward basis may result in higher profit margins than if we had not sold fertilizer on a forward

222、basis.In addition,fixing the selling prices of our products,often months in advance of their ultimate delivery to customers,typically causes our reportedselling prices and margins to differ from spot market prices and margins available at the time the performance obligation is satisfied.Our business

223、 is subject to risks involving derivatives and the risk that our hedging activities might not be effective.From time to time,we may utilize natural gas derivatives to economically hedge our financial exposure to the price volatility ofnatural gas,the principal raw material used in the production of

224、nitrogen-based products.We use futures,financial swaps and optioncontracts traded in the over-the-counter markets or on exchanges to hedge our risk.Our use of derivatives can result in volatility inreported earnings due to the unrealized mark-to-market adjustments that occur from changes in the valu

225、e of the derivatives that do notqualify for,or to which we do not apply,hedge accounting.To the extent that our derivative positions lose value,we may be requiredto post collateral with our counterparties,adversely affecting our liquidity.We have also used fixed-price,physical purchase and salescont

226、racts to hedge our exposure to natural gas price volatility.Hedging arrangements are imperfect and unhedged risks will alwaysexist.In addition,our hedging activities may themselves give rise to various risks that could adversely affect us.For example,we areexposed to counterparty credit risk when ou

227、r derivatives are in a net asset position.The counterparties to our derivatives are multi-national commercial banks,major financial institutions or large energy companies.Our liquidity could be negatively impacted by acounterparty default on settlement of one or more of our derivative financial inst

228、ruments or by the trigger of any cross-defaultprovisions or credit support requirements.Additionally,the International Swaps and Derivative Association master nettingarrangements for most of our derivative instruments contain credit-risk-related contingent features,such as cross-default and/oraccele

229、ration provisions and credit support requirements.In the event of certain defaults or a credit ratings downgrade,our counterpartymay request early termination and net settlement of certain derivative trades or may require us to collateralize derivatives in a netliability position.At other times we m

230、ay not utilize derivatives or derivative strategies to hedge certain risks or to reduce the financialexposure of price volatility.As a result,we may not prevent certain material adverse impacts that could have been mitigated throughthe use of derivative strategies.Cybersecurity risks could adversely

231、 affect our business.As we continue to increase our dependence on information technologies to conduct our operations the risks associated withcybersecurity also increase.Cybersecurity breaches may be the result of,among other things,negligent or unauthorized activity by ouremployees or by third part

232、ies who use cyber-attack techniques involving malware,ransomware,hacking and phishing.Such cyber-attacks continue to increase in frequency and potential harm,and the methods used to gain unauthorized access evolve,making itincreasingly difficult to anticipate,prevent,and detect incidents.We rely on

233、our enterprise resource planning software and otherinformation systems,among other things,to manage our manufacturing,supply chain,accounting and financial functions.Additionally,third parties on whose systems we place significant reliance for the conduct of our business are also subject tocybersecu

234、rity risks.We are significantly dependent upon internet connectivity and a third-party cloud hosting vendor.We haveimplemented security procedures and measures in order to protect our information from being vulnerable to theft,loss,damage orinterruption from a number of potential sources or events.A

235、lthough we believe these measures and procedures are appropriate,wemay not have the resources or technical sophistication to anticipate,prevent,or recover from rapidly evolving types of cyber-attacks.Compromises to our information systems could have an adverse effect on our business,results of opera

236、tions,liquidity and financialcondition.We may engage in certain strategic transactions which may adversely affect our financial condition.An important part of our business strategy is the acquisition of strategic assets or companies.Our management is currently evaluatingand pursuing certain such opp

237、ortunities,and from time to time separately provides indications of interest in respect of similartransactions,which may be significant.Any such discussions may or may not result in the consummation of a transaction,and we maynot be able to identify or complete any of these potential acquisitions.We

238、 cannot predict the effect,if any,that any announcement or16consummation of a transaction would have on the price of our securities.While the documents governing our indebtedness includecertain restrictions on our ability to finance any acquisitions of new assets,such restrictions contain various ex

239、ceptions and limitations.There is no guarantee that any such transactions will be successful or,even if consummated,improve our operating results.We mayincur costs,breakage fees or other expenses in connection with any such transactions or may not be able to obtain the necessaryfinancing for such tr

240、ansactions on acceptable terms.Accordingly,any such transactions may ultimately have a material adverse effecton our operating results.In addition,any future acquisitions could present a number of risks,including:the risk of using management time and resources to pursue acquisitions that are not suc

241、cessfully completed;the risk of incorrect assumptions regarding the future results of acquired operations or business;the risk of failing to integrate the operations or management of any acquired operations or assets successfully and timely;andthe risk of diversion of managements attention from exis

242、ting operations or other priorities.If we are unsuccessful in integrating acquisitions in a timely and cost-effective manner,our financial condition and results ofoperations could be adversely affected.Risks Relating to Our Industry and MarketsOur business and customers are sensitive to adverse econ

243、omic cycles and a prolonged deterioration of global market andeconomic conditions could have a material adverse effect on our business,financial condition,results of operations and cashflow.From time to time,our business is affected by cyclical factors such as inflation,currency exchange rates,globa

244、l energy policy andcosts,regulatory policies(including tariffs),global market conditions and economic downturns in specific industries.Certain sales aresensitive to the level of activity in the agricultural,mining,automotive and housing industries.Therefore,substantial changes in thesefactors could

245、adversely affect our operating results,liquidity,financial condition and capital resources.A slowdown of,or persistent weakness in,economic activity caused by a deterioration of global market and economic conditionscould adversely affect our business in the following ways,among others:conditions in

246、the credit markets could impact the ability ofour customers and their customers to obtain sufficient credit to support their operations;the failure of our customers to fulfill theirpurchase obligations could result in increases in bad debts and affect our working capital;and the failure of certain k

247、ey suppliers couldincrease our exposure to disruptions in supply or to financial losses.We also may experience declining demand and falling prices forsome of our products due to our customers reluctance to replenish inventories.The overall impact of a global economic downturn orreduced overall globa

248、l trade on us is difficult to predict,and our business could be materially adversely impacted.In addition,conditions in the international market for nitrogen fertilizer significantly influence our operating results.The internationalmarket for fertilizers is influenced by such factors as the relative

249、 value of the U.S.currency and its impact on the importation offertilizers,foreign agricultural policies,the existence of,or changes in,import or foreign currency exchange barriers in certain foreignmarkets and other regulatory policies(including tariffs)of foreign governments,as well as the U.S.law

250、s and policies affecting foreigntrade and investment.An increase of imported agricultural products could adversely affect our business.Russia,Ukraine and Trinidad have substantial capacity to produce and export fertilizers.Producers in these countries also benefit frombelow-market prices for natural

251、 gas,due to government regulation and other factors.In addition,producers in China have substantial capacity to produce and export urea.Depending on various factors,includingprevailing prices from other exporters,the price of coal and regulatory policies,including the price of Chinas export tariff,h

252、ighervolumes of urea from China could be imported into the U.S.at prices that could have an adverse effect on the selling prices of othernitrogen products,including the nitrogen products we manufacture and sell.Domestic and regional inflation trends,increased interest rates and other factors could l

253、ead to the erosion of economies andadversely impact us.Both the U.S.and many other countries are experiencing inflation,which,in turn,is leading to increased costs in multiple industrysegments,including agriculture and related industries.The persistence of inflation has led central bankers to increa

254、se interest rateswithin their regions.There is no guarantee that these measures will arrest the inflationary trend.Further,these factors,taken togetherwith reduced productivity and constraints on the labor supply could lead to recessionary periods in the regions in which the Companydoes business.Whi

255、le we will take measures within our control to manage the effects of inflation,higher interest rates and otherfactors,ultimately,they are outside of our control.Further,the persistence and/or severity of one or more of them could adverselyaffect our financial performance and/or operations.17Adverse

256、weather conditions and climate change could adversely affect our business.The products(primarily agricultural)produced and sold by us have been in the past,and could be in the future,materially affected byadverse weather conditions(such as excessive rain or drought)in the primary markets for our fer

257、tilizer and related agriculturalproducts.In addition,weather can cause an interruption to the operations of our chemical facilities.Over the course of the past severalyears,global climate conditions have become increasingly inconsistent,volatile and unpredictable.Many of the regions in which wedo bu

258、siness have variously experienced excessive moisture,cold,drought and/or heat of an unprecedented nature at various times ofthe year.In some cases,these conditions have either reduced or obviated the need for our products,particularly in the agriculturespace,whether pre-plant,at-plant,post-emergent

259、or at harvest.Due to the unpredictable nature of these conditions,we have observedgrowers and distributors becoming increasingly conservative in procurement practices and the accumulation of inventory.Further,theunpredictable nature of climactic change has made it increasingly difficult to forecast

260、market demand and,consequently,financialperformance,from year-to-year.There is no guarantee that climate change or its impacts will abate in the near future,and it is possiblethat such change will continue to hinder,or significantly further hinder,our ability to forecast sales performance with accur

261、acy andotherwise adversely affect our financial performance.Some scientists have concluded that increasing concentrations of greenhouse gases in the Earths atmosphere may produce climatechanges that have significant physical effects,such as increased frequency and severity of storms,droughts and flo

262、ods and otherclimatic events.If any such effects,whether anthropogenic or otherwise,were to occur in areas where we or our clients operate,theycould have an adverse effect on our business,financial condition and results of operations.These climate changes might also occur asthe result of other pheno

263、mena that human activity is unable to influence,including changes in solar activity and volcanic activity.Regardless of the cause,if any of these adverse weather events occur,or occur with greater frequency,during the primary seasons forsales of our agricultural products(March-June and September-Nov

264、ember),this could have a material adverse effect on our agriculturalsales and our financial condition and results of operations.Natural disasters may also directly affect our physical facilities,especially our chemical facilities,or those of our suppliers orcustomers and could affect our sales,our p

265、roduction capability and our ability to deliver products to our customers.In the past,hurricanes affecting the Gulf Coast of the U.S.have negatively affected our operations and those of our customers.Any future naturaldisasters affecting the areas in which we or our suppliers or customers operation

266、could negatively affect our business operations andfinancial performance.Geopolitical conditions,including political turmoil and volatility,regional conflicts,terrorism and war have negativelyaffected and could negatively affect U.S.and foreign companies,the financial markets,the industries where we

267、 operate,ouroperations and our profitability.Geopolitical events,instability and terrorist attacks in the United States and elsewhere,including events like Russias occupation ofUkraine and ongoing conflict in the Middle East,have in the past and can in the future negatively affect our operations.Whi

268、le theoccupation of Ukraine has had an effect on commodity prices and fertilizer supply(primarily ammonia and urea from Russia),there isno guarantee that the current conflict will not draw military intervention from other countries or further retaliation from Russia,which,in turn,could lead to a muc

269、h larger conflict.It is possible that supply chain,trade routes and the markets we currently serve could befurther adversely affected,which,in turn,could materially,adversely affect our business operations and financial performance.Like other companies with major industrial facilities,we may be targ

270、ets of terrorist activities.Many of our plants and facilities storesignificant quantities of ammonia and other materials that can be dangerous if mishandled.Any damage to infrastructure facilities,such as electric generation,transmission and distribution facilities,or injury to employees,who could b

271、e direct targets or indirectcasualties of an act of terrorism,may affect our operations.Any disruption of our ability to produce or distribute our products couldresult in a significant decrease in revenues and significant additional costs to replace,repair or insure our assets,which could have amate

272、rial adverse effect on our business,financial condition,results of operations and cash flows.Risks Relating to Our Liquidity and DebtWe may not be able to generate sufficient cash to service our debt and may be required to take other actions to satisfy theobligations under our debt agreements,which

273、may not be successful.Our ability to make scheduled payments on our debt obligations depends on our financial condition and operating performance,prevailing economic and competitive conditions,and certain financial,business and other factors,some of which may be beyond ourcontrol.For example,we may

274、not be able to maintain a level of cash flows sufficient to pay the principal and interest on our debt,includingthe$478 million principal amount of our 6.25%senior secured notes due 2028(the“Senior Secured Notes”).In addition,if we wereto draw on our Revolving Credit Facility,such borrowings would b

275、e at variable rates of interest and expose us to interest rate risk.If cash flows and capital resources are insufficient to fund our debt obligations,we could face substantial liquidity problems and willneed to seek additional capital through the issuance of debt,the issuance of equity,asset sales o

276、r a combination of the foregoing.If weare unsuccessful,we will need to reduce or delay investments and capital expenditures,dispose of other assets or operations,seek18additional capital,or restructure or refinance debt.These alternative measures may not be successful,may not be completed oneconomic

277、ally attractive terms,or may not be adequate for us to meet our debt obligations when due.Additionally,our debt agreementslimit the use of the proceeds from many dispositions of assets or operations.As a result,we may not be permitted to use the proceedsfrom these dispositions to satisfy our debt ob

278、ligations.If we cannot make scheduled payments on our debt,we will be in default andthe outstanding principal and interest on our debt could be declared to be due and payable,in which case we could be forced intobankruptcy or liquidation or required to substantially restructure or alter our business

279、 operations or debt obligations.In such an event,we may not have sufficient assets to repay all of our debt.Further,if we suffer or appear to suffer from a lack of available liquidity,the evaluation of our creditworthiness by counterparties andrating agencies and the willingness of third parties to

280、do business with us could be materially and adversely affected.In particular,ourcredit ratings could be lowered,suspended or withdrawn entirely at any time by the rating agencies.Downgrades in long-term debtratings generally cause borrowing costs to increase and the potential pool of investors and f

281、unding sources to decrease and couldtrigger liquidity demands pursuant to the terms of contracts,leases or other agreements.Any future transactions by us,including theissuance of additional debt,the sale of any operating assets,or any other transaction to manage our liquidity,could result in tempora

282、ryor permanent downgrades of our credit ratings.Our substantial indebtedness level could limit our financial and operating activities,and adversely affect our ability to incuradditional debt to fund future needs.We currently have a substantial amount of indebtedness.As a result,this level could,amon

283、g other things:require us to dedicate a substantial portion of our cash flow to the payment of principal and interest,thereby reducing thefunds available for operations and future business opportunities;make it more difficult for us to satisfy our obligations,including our repurchase obligations;lim

284、it our ability to borrow additional money if needed for other purposes,including working capital,capital expenditures,debt service requirements,acquisitions and general corporate or other purposes,on satisfactory terms or at all;limit our ability to adjust to changing economic,business and competiti

285、ve conditions;place us at a competitive disadvantage with competitors who may have less indebtedness or greater access to financing;make us more vulnerable to an increase in interest rates,a downturn in our operating performance or a decline in generaleconomic conditions;andmake us more susceptible

286、to changes in credit ratings,which could affect our ability to obtain financing in the future andincrease the cost of such financing.Any of the foregoing could adversely affect our liquidity,operating results and financial condition.Our debt agreements and the Exchange Agreement contain covenants an

287、d impose restrictions on our business operations,andany breach of these covenants or restrictions could result in an event of default under one or more of our debt agreements orcontracts at different entities within our capital structure,including as a result of cross acceleration or default provisi

288、ons.Our debt agreements and the Exchange Agreement contain various covenants and other restrictions that,among other things,limitflexibility in operating our businesses.These covenants and other restrictions limit our ability to,among other things:incur additional debt or issue preferred shares;pay

289、dividends on,repurchase or make distributions in respect of capital stock,or make other restricted payments;make investments or certain capital expenditures;sell or transfer assets;create liens on assets to secure debt;engage in certain fundamental corporate changes or changes to our business activi

290、ties;make certain material acquisitions;consolidate,merge,sell or otherwise dispose of all or substantially all of our assets;enter into transactions with affiliates;designate subsidiaries as unrestricted subsidiaries;andrepay,repurchase or modify certain subordinated and other material debt.The Rev

291、olving Credit Facility also contains certain affirmative covenants and requires the borrowers to comply with a fixed chargecoverage ratio(as defined in the Revolving Credit Facility)if their excess availability(as defined in the Revolving Credit Facility)falls below a certain level.These covenants a

292、nd restrictions could affect our ability to operate our business and may limit our ability to react to market conditionsor take advantage of potential business opportunities as they arise.Additionally,our ability to comply with these covenants may beaffected by events beyond our control,including ge

293、neral economic and credit conditions and industry downturns.A breach of any ofthese covenants or restrictions could result in a significant portion of our debt becoming due and payable or could result in significantcontractual liability.19In addition,certain failures to make payments when due on,or

294、the acceleration of,significant indebtedness constitutes a default undersome of our debt instruments,including the Indenture governing the Senior Secured Notes.Further,a breach of any of the covenantsor restrictions in a debt instrument could result in an event of default under such debt instrument.

295、Upon the occurrence of an event ofdefault under one of these debt instruments,our lenders or noteholders could elect to declare all amounts outstanding under such debtinstrument to be immediately due and payable and/or terminate all commitments to extend further credit.Such actions by thoselenders o

296、r noteholders could cause cross defaults or accelerations under our other debt.If we were unable to repay those amounts,thelenders or noteholders could proceed against any collateral granted to them to secure such debt.In the case of a default under debt thatis guaranteed,holders of such debt could

297、also seek to enforce the guarantees.If lenders or noteholders accelerate the repayment of allborrowings,we would likely not have sufficient assets and funds to repay those borrowings.Such occurrence could result in our or ourapplicable subsidiary going into bankruptcy,liquidation or insolvency.Despi

298、te our current levels of debt,we may still incur more debt ranking senior or equal in right of payment with our existingobligations,including secured debt,which would increase the risks described herein.The agreements relating to our debt,including the Indenture governing the Senior Secured Notes an

299、d the credit agreement governingour Revolving Credit Facility,limit but do not prohibit our ability to incur additional debt,including additional secured debt.Notwithstanding the fact that the Indenture governing the Senior Secured Notes and the credit agreement governing our RevolvingCredit Facilit

300、y limit our ability to incur additional debt or grant certain liens on our assets,the restrictions on the incurrence ofadditional indebtedness and liens are subject to a number of important qualifications and exceptions,and the additional indebtednessand liens incurred in compliance with these restr

301、ictions could be substantial.If new debt is added to our current debt levels,the relatedrisks that we now face could intensify.Risks Relating to Legal,Regulatory and Compliance MattersCurrent and future legislative or regulatory requirements affecting our business may result in increased costs and d

302、ecreasedrevenues,cash flows and liquidity or could have other negative effects on our business.Our business is subject to numerous health,safety,security and environmental laws and regulations.The manufacture and distributionof chemical products and our other activities entail health,safety and envi

303、ronmental risks and impose obligations under health,safetyand environmental laws and regulations,many of which provide for substantial fines,injunctive relief and potential criminal sanctionsfor violations.Although we believe we have established processes to monitor,review and manage our businesses

304、to comply with thenumerous health,safety and environmental laws and regulations,we previously were,and in the future,may be,subject to fines,penalties,sanctions and injunctive relief for violations and substantial expenditures for cleanup costs and other liabilities relating tothe handling,manufactu

305、re,use,emission,discharge or disposal of wastes,effluents,emission and other materials at or from ourpresent and former chemical facilities.Further,a number of our facilities are dependent on environmental permits to operate,the loss,or inability to renew or modification of which could have a materi

306、al adverse effect on their operations and our results of operation andfinancial condition.These operating permits are subject to modification,renewal and revocation.In addition,third parties may contestour ability to receive or renew certain permits that we need to operate,which can lengthen the app

307、lication process or even prevent usfrom obtaining necessary permits.Delays in obtaining permits or unanticipated permit conditions could delay projects,increase thecosts of operations or make operations unfeasible.We regularly monitor and review our operations,procedures and policies forcompliance w

308、ith permits,laws and regulations.Despite these compliance efforts,risk of noncompliance,the risk of loss ormodification of permits or changing regulatory or permit interpretation is inherent in the operation of our business.There can be no assurance as to the amount or timing of future expenditures

309、for environmental compliance or remediation,and actualfuture expenditures may be different from the amounts we currently anticipate.Environmental requirements change frequently and aresubject to interpretation.New requirements or interpretations along with the expanding scope of regulation may incre

310、ase our futureexpenditures to comply with environmental requirements.We try to anticipate future regulatory requirements that might be imposedand plan accordingly to remain in compliance with changing environmental laws and regulations and to minimize the costs ofcompliance.Changes to the production

311、 equipment at our chemical facilities that are required in order to comply with health,safety andenvironmental regulations may require substantial capital expenditures.Explosions and/or losses at other chemical facilities that we do not own(such as the April 2013 explosion in West,Texas)could alsore

312、sult in new or additional legislation or regulatory changes,particularly relating to public health,safety or any of the productsmanufactured and/or sold by us or the inability on the part of our customers to obtain or maintain insurance as to certain productsmanufactured and/or sold by us,which coul

313、d have a negative effect on our revenues,cash flow and liquidity.In summary,new or changed laws and regulations or the inability of our customers to obtain or maintain insurance in connection withany of our chemical products could have an adverse effect on our operating results,liquidity and financi

314、al condition.Additionally,under CERCLA or similar state statutes,we may be required to conduct environmental investigation and remediation(and pay for natural resource damages)at presently or formerly owned or operated sites or at sites at which materials from ouroperations have been disposed or rel

315、eased.Such liability is often strict and joint and several,meaning that we may be required to pay a20disproportionate share of remediation costs if other responsible parties are unable to pay.Additionally,we could be required toconduct additional cleanup at sites where we previously participated in

316、remediation efforts in response to new information or newregulatory requirements.Although we cannot presently provide a precise estimate of the ultimate cost of the exposure with respect toinvestigation and remediation obligations,we make accruals as warranted and we do not believe that the reasonab

317、ly possible range ofloss in excess of accruals would be material to our operations.However,given the uncertainties inherent to any estimation ofremediation costs,potential changing regulations,the uncertainties of litigation and other factors,the ultimate amounts that we pay orexpend could vary sign

318、ificantly from the amount we accrue and have a material impact on our business and operations.We may not have adequate insurance.While we maintain liability,property and business interruption insurance,including certain coverage for environmentalcontamination,it is subject to coverage limits and pol

319、icies that may exclude coverage for some types of damages.Although there maycurrently be sources from which such coverage may be obtained,the coverage may not continue to be available to us on commerciallyreasonable terms or the possible types of liabilities that may be incurred by us may not be cov

320、ered by our insurance.In addition,ourinsurance carriers may not be able to meet their obligations under the policies,or the dollar amount of the liabilities may exceed ourpolicy limits.Even a partially uninsured claim,if successful and of significant magnitude,could have a material adverse effect on

321、 ourbusiness,results of operations,financial condition and liquidity.Furthermore,we are subject to litigation for which we could be obligated to bear legal,settlement and other costs,which may be inexcess of any available insurance coverage.If we are required to incur all or a portion of the costs a

322、rising out of any litigation orinvestigation as a result of inadequate insurance proceeds,if any,our business,results of operations,financial condition and liquiditycould be materially adversely affected.For further discussion of our litigation,please see“Other Pending,Threatened or SettledLitigatio

323、n”in Note 7 Commitments and Contingencies to the Consolidated Financial Statements included in this report.We may be required to modify or expand our operating,sales and reporting procedures and to install additional equipment inorder to comply with current and possible future government regulations

324、.The chemical industry in general,and producers and distributors of ammonia and AN specifically,are scrutinized by the government,industry and public on security issues.Under current and proposed regulations,we may be required to incur substantial additionalcosts relating to security at our chemical

325、 facilities and distribution centers,as well as in the transportation of our products.These costscould have a material effect on our results of operations,financial condition,and liquidity.The cost of such regulatory changes,ifsignificant,could lead some of our customers to choose other products ove

326、r ammonia and AN,which may have a significant adverseeffect on our business.The“Secure Handling of Ammonium Nitrate Act of 2007”was enacted by the U.S.Congress,and subsequently the U.S.Departmentof Homeland Security(“DHS”)published a notice of proposed rulemaking in 2011.This regulation proposes to

327、require sellers,buyers,their agents and transporters of solid AN and certain solid mixtures containing AN to possess a valid registration issued by DHS,keepcertain records,report the theft or unexplained loss of regulated materials,and comply with certain other new requirements.We andothers affected

328、 by this proposal have submitted appropriate comments to DHS regarding the proposed regulation.It is possible thatDHS could significantly revise the requirements currently being proposed.Depending on the provisions of the final regulation to bepromulgated by DHS and on our ability to pass these cost

329、s to our customers,these requirements may have a negative effect on theprofitability of our AN business and may result in fewer distributors who are willing to handle the product.DHS has not finalized thisrule,and has indicated that its next action,and the timing of such an action,is undetermined.On

330、 August 1,2013,U.S.President Obama issued an executive order addressing the safety and security of chemical facilities inresponse to recent incidents involving chemicals such as the explosion at West,Texas.The President directed federal agencies toenhance existing regulations and make recommendation

331、s to the U.S.Congress to develop new laws that may affect our business.InJanuary 2016,the U.S.Chemical Safety and Hazard Investigation Board(“CSB”)released its final report on the West,Texas incident.The CSB report identifies several federal and state regulations and standards that could be strength

332、ened to reduce the risk of a similarincident occurring in the future.While the CSB does not have authority to directly regulate our business,the findings in this report,and other activities taken in response to the West,Texas incident by federal,state,and local regulators may result in additionalreg

333、ulation of our processes and products.In 2024,the U.S.EPA finalized revisions to its Risk Management Program(“RMP”)under Section 112(r)of the Clean Air Act.Therevisions are the results of many years of back-and-forth among changing administrations.The current RMP rule includesrequirements for certain facilities to perform hazard analyses including a safer technologies and alternatives analysis,an