LSB INDUSTRIES, INC.

Global Industrial Matter

In 2015, the Company received written notice from Global Industrial, Inc. (“Global”) of Global’s intention to assert mechanic liens for labor, service, or materials furnished under certain subcontract agreements for the construction of the ammonia plant (the “Ammonia Plant”) at our El Dorado Facility. Global was a subcontractor of Leidos Constructors, LLC (n/k/a Benham Constructors, LLC, and f/k/a SAIC Constructors, LLC) (“Benham”), the general contractor for the construction of the Ammonia Plant. Leidos Inc. (f/k/a Science Applications International Corporation) (“Leidos Inc.”) and Leidos Engineering, LLC (“Leidos Engineering” and, collectively with Benham and Leidos Inc., the “Leidos Entities”) Benham terminated the services of Global with respect to their work performed at our El Dorado Facility. We are pursuing the recovery of any damage or loss caused by Global’s work performed at our El Dorado Facility through their contract with the Leidos Entities. In March 2016, we were served a summons in a case styled Global Industrial, Inc. d/b/a Global Turnaround vs. Leidos Constructors, LLC et al., in the Circuit Court of Union County, Arkansas (the “Union County Trial Court”), wherein Global sought damages under breach of contract and other claims (the “Action”). At the time of the summons, our accounts payable included invoices totaling approximately $3.5 million related to work performed by Global that is the subject of the claims asserted by Global, but such invoices were not approved by Benham for payment. We requested indemnification from the Leidos Entities under the terms of our contracts, which they denied. As a result, we are seeking reimbursement of legal expenses from the Leidos Entities under our contracts. We are also seeking damages from the Leidos Entities for their wrongdoing during the expansion, including breach of contract, fraud, professional negligence and gross negligence.

During 2018, the Union County Trial Court bifurcated the case into: (1) Global’s claims against the Leidos Entities and LSB and (2) the cross-claims between the Leidos Entities and LSB. Part (1) of the case was tried in the Union County Trial Court. In March 2020, the Union County Trial Court rendered a judgment and then an amended final judgment in April 2020. The amended final judgment awarded Global (i) approximately $7.4 million (including the $3.5 million referred to above) for labor, service and materials furnished relating to the Ammonia Plant on the basis of what the Union County Trial Court called a claim for “nonpayment of invoices,” (ii) approximately $1.3 million for prejudgment interest on the same claim, and (iii) a lien on certain property and foreclosure on the lien to satisfy the monetary obligations of the judgement. In addition, post-judgment interest was set to accrue at the annual rate of 4.25% until the judgment is paid. LSB appealed this judgment and on October 18, 2023, the Arkansas Court of Appeals reversed and remanded. The Arkansas Court of Appeal ruled that the lien was defective and therefore invalid, and that the claim for “nonpayment of invoices” was not a cause of action and reversed and remanded the judgment on that claim. In December 2023, the Arkansas Court of Appeal denied Global’s request for rehearing and the Arkansas Supreme Court declined to hear Global’s appeal. As a result, we do not expect to have any material continuing liability related to this matter and, in 2023, we reversed approximately $9.8 million of payables and accrued liabilities, which related to approximately $2.4 million in pre- and post-judgement accrued interest and $7.4 million of gross plant, property and equipment. These adjustments also impacted our results of operations for the twelve months ended December 31, 2023, through the reversals of approximately $2.4 million of interest expense and of approximately $1.8 million in previously recognized depreciation expense (a component of cost of sales) on the related plant, property and equipment.

In August 2025, the Company and Global reached a settlement where the Company waived all its remaining claims against Global in return for a full release of claims by Global and Global’s dismissal, with prejudice, of its claims against the Company.

The Company intends to vigorously pursue its claims against the Leidos Entities and vigorously contest the cross-claims raised by the Leidos Entities. Trial for the remaining claims in this matter are scheduled to begin at the end of October 2026.

We are also involved in various other claims and legal actions (including matters involving gain contingencies) in the ordinary course of our business. While it is possible that the actual claims results could differ from our estimates, after consultation with legal counsel, we believe that any such differences will not have a material effect on our business, financial condition, results of operations or cash flows.