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Investor Relations


Intrepid Announces First Quarter 2019 Results

DENVER, May 7, 2019 - Intrepid Potash, Inc. (Intrepid) (NYSE:IPI) today reported its results for the first quarter of 2019.

Key Takeaways

  • Net income of $6.2 million, or $0.05 per share, a $4.4 million increase compared to prior year first quarter net income of $1.8 million, or $0.01 per share.
  • Total sales of $57.6 million, including $34.3 million in potash segment sales and $17.8 million in Trio® segment sales, as higher average net realized sales price per ton(1) for potash and Trio® offset a delayed start to the spring agricultural season.
  • Higher average net realized sales prices per ton and increased byproduct sales drove improvements in potash and Trio® segment gross margins of $4.4 million and $2.8 million, respectively, compared to the prior year first quarter.
  • Completed the purchase of 100% of the Dinwiddie Jal Ranch assets on May 1, 2019.

"Higher realized prices for potash and Trio® and a great quarter from our diverse revenue streams of byproducts, water, and mixing services contributed to another year-over-year improvement in our quarterly results," said Bob Jornayvaz, Intrepid's Executive Chairman, President, and CEO. "Our focus on revenue diversification is paying off with a significant increase in salt sales during the quarter and additional traction for our high-speed mixing service as we completed multiple jobs and fielded inquiries about expanding our service into the Permian Basin. Water infrastructure projects around our Carlsbad facilities are nearing completion and drilling activity in southeast New Mexico continues at a staggering pace. This activity supports our expectation for strong water sales in the coming months and gives us confidence in the growth and long-term potential of our water business. We are seeing solid potash and Trio® sales as the spring agricultural season wraps up, and we expect to deliver a strong second quarter with a significant increase in cash flow from operations as compared to the first quarter."

Jornayvaz continued, "Completing the purchase of the Dinwiddie Jal Ranch is a significant step forward for our water midstream infrastructure system and will provide additional water supply for our partners in the area. We remain in a favorable liquidity position after the acquisition and we are excited to tap into the significant growth potential of the Dinwiddie property."

Consolidated Results

Intrepid generated first quarter net income of $6.2 million, or $0.05 per share, an increase of $4.4 million over the prior year first quarter. This year-over-year improvement was driven by increased gross margins, resulting from improvement in the average net realized sales prices per ton of potash and Trio® and increased byproduct sales.

Segment Highlights

Potash

    Three Months Ended March 31,
    2019   2018
    (in thousands, except per ton data)
Sales   $ 34,330     $ 30,606  
Gross margin   $ 9,364     $ 4,976  
         
Potash production volume (in tons)   110     125  
Potash sales volume (in tons)   88     97  
         
Average potash net realized sales price per ton(1)   $ 288     $ 243  

Gross margin increased $4.4 million, or 88%, compared to the first quarter of 2018, as increased market prices for potash drove a 19% increase in average net realized sales price per ton and strong demand for byproduct salt increased sales by $1.3 million. These increases were partially offset by a 9% decrease in sales volumes as wet weather delayed some agricultural shipments into the second quarter.

Potash production decreased 12% compared to the first quarter of 2018 due to lower production from the HB and Moab facilities. At the Moab facility, increased demand for salt resulted in a shift away from potash production days to meet increased salt demand. Both facilities expect to run longer into the second quarter than the previous year due to higher pond inventories entering the quarter.

Trio®

    Three Months Ended March 31,
    2019   2018
    (in thousands, except per ton data)
Sales   $ 17,809     $ 21,820  
Gross margin (deficit)   $ 731     $ (2,078 )
         
Trio® production volume (in tons)   63     47  
Trio® sales volume (in tons)   56     77  
         
Average Trio® net realized sales price per ton(1)   $ 206     $ 194  

Gross margin improved to $0.7 million on increased average net realized sales prices, a $0.7 million increase in byproduct sales, and a $0.7 million decrease in lower of cost or net realizable value adjustments. These items were partially offset by decreased domestic sales due to inclement weather, which delayed shipments into the second quarter.

Total sales volume decreased 27% compared to last year as domestic shipments were delayed due to inclement weather and due to the timing of international shipments.

Production volumes increased 34% compared to the first quarter of 2018 as Intrepid converted more work-in-process inventory into premium Trio®.

Oilfield Solutions

    Three Months Ended March 31,
    2019   2018
    (in thousands)
Sales   $ 6,623     $ 4,894  
Gross margin   $ 3,073     $ 4,302  

Sales increased to $6.6 million due to an increase in high-speed KCl mixing revenue, partially offset by a decrease in water sales of $0.7 million. The decrease in segment water sales was mainly due to a $0.6 million increase in water sales that were accounted for as byproduct water sales in other segments. When Intrepid sells water that was used in the potash or Trio® production process, it is accounted for as sales in the segment that used the water.

Acquisition

On May 1, 2019, Intrepid completed the acquisition of the Dinwiddie Jal Ranch in southeast New Mexico for $53 million. Intrepid has agreed to pay up to an additional $12 million pending the resolution of certain issues identified during the diligence process. Additional details on the acquisition can be found in a press release issued by Intrepid on May 2, 2019.

Liquidity

Cash provided by operations was $8.1 million during the first quarter of 2019 and cash spent on investing activities was $7.2 million. As of March 31, 2019, Intrepid had $34.0 million in cash and cash equivalents and $49.0 million available to borrow under its credit facility. As of May 3, 2019, after the Dinwiddie Jal Ranch acquisition, Intrepid had $15.6 million in cash and cash equivalents, $30.0 million drawn on its credit facility, and $19.0 million available to borrow under the facility.

Notes

1 Average net realized sales price per ton is a non-GAAP financial measure. See the non-GAAP reconciliations set forth later in this press release for additional information.

Unless expressly stated otherwise or the context otherwise requires, references to tons in this press release refer to short tons. One short ton equals 2,000 pounds. One metric tonne, which many international competitors use, equals 1,000 kilograms or 2,204.62 pounds.

Conference Call Information

A teleconference to discuss the quarter is scheduled for May 7, 2019, at 10:00 a.m. ET. The dial-in number is 1-800-319-4610 for U.S. and Canada, and is +1-631-891-4304 for other countries. The call will also be streamed on the Intrepid website, intrepidpotash.com.

An audio recording of the conference call will be available through June 7, 2019, at intrepidpotash.com and by dialing 1-800-319-6413 for U.S. and Canada, or +1-631-883-6842 for other countries. The replay will require the input of the conference identification number 3175.

About Intrepid

Intrepid is a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed, and the oil and gas industry. Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, Intrepid produces a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also provides water, magnesium chloride, brine, and various oilfield products and services.

Intrepid serves diverse customers in markets where a logistical advantage exists and is a leader in the use of solar evaporation for potash production, resulting in lower cost and more environmentally friendly production. Intrepid's mineral production comes from three solar solution potash facilities and one conventional underground Trio® mine.

Intrepid routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investor Relations tab. Investors and other interested parties are encouraged to enroll at intrepidpotash.com, to receive automatic email alerts or RSS feeds for new postings.

Forward-looking Statements

This document contains forward-looking statements - that is, statements about future, not past, events. The forward-looking statements in this document relate to, among other things, statements about Intrepid's future financial performance, cash flow from operations expectations, water sales, production costs, acquisition expectations and operating plans, and its market outlook. These statements are based on assumptions that Intrepid believes are reasonable. Forward-looking statements by their nature address matters that are uncertain. The particular uncertainties that could cause Intrepid's actual results to be materially different from its forward-looking statements include the following:

  • changes in the price, demand, or supply of Intrepid's products and services;
  • Intrepid's ability to successfully identify and implement any opportunities to grow its business whether through expanded sales of Trio®, water, byproducts, and other non-potassium related products or other revenue diversification activities;
  • challenges to Intrepid's water rights;
  • Intrepid's ability to integrate the Dinwiddie Jal Ranch assets into its existing business and achieve the expected benefits of the acquisition;
  • Intrepid's ability to comply with the terms of its senior notes and its revolving credit facility, including the underlying covenants, to avoid a default under those agreements;
  • Intrepid's ability to sell Trio® internationally and manage risks associated with international sales, including pricing pressure and freight costs;
  • the costs of, and Intrepid's ability to successfully execute, any strategic projects;
  • declines or changes in agricultural production or fertilizer application rates;
  • declines in the use of potassium-related products or water by oil and gas companies in their drilling operations;
  • further write-downs of the carrying value of assets, including inventories;
  • circumstances that disrupt or limit production, including operational difficulties or variances, geological or geotechnical variances, equipment failures, environmental hazards, and other unexpected events or problems;
  • changes in reserve estimates;
  • currency fluctuations;
  • adverse changes in economic conditions or credit markets;
  • the impact of governmental regulations, including environmental and mining regulations, the enforcement of those regulations, and governmental policy changes;
  • adverse weather events, including events affecting precipitation and evaporation rates at Intrepid's solar solution mines;
  • increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise;
  • changes in the prices of raw materials, including chemicals, natural gas, and power;
  • Intrepid's ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations;
  • interruptions in rail or truck transportation services, or fluctuations in the costs of these services;
  • Intrepid's inability to fund necessary capital investments; and
  • the other risks, uncertainties, and assumptions described in Intrepid's periodic filings with the Securities and Exchange Commission, including in "Risk Factors" in Intrepid's Annual Report on Form 10-K for the year ended December 31, 2018.

In addition, new risks emerge from time to time. It is not possible for Intrepid to predict all risks that may cause actual results to differ materially from those contained in any forward-looking statements Intrepid may make.

All information in this document speaks as of the date of this release. New information or events after that date may cause our forward-looking statements in this document to change. We undertake no duty to update or revise publicly any forward-looking statements to conform the statements to actual results or to reflect new information or future events.

Contact:
Matt Preston, Investor Relations                     
Phone:  303-996-3048
Email: matt.preston@intrepidpotash.com




INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
 (In thousands, except per share amounts)

    Three Months Ended March 31,
    2019   2018
Sales   $ 57,554     $ 57,320  
Less:        
Freight costs   10,456     10,483  
Warehousing and handling costs   2,236     2,273  
Cost of goods sold   31,694     36,659  
Lower of cost or net realizable value inventory adjustments   -     705  
Gross Margin   13,168     7,200  
         
Selling and administrative   5,807     3,970  
Accretion of asset retirement obligation   417     417  
Care and maintenance expense   149     128  
Other operating expense   371     168  
Operating Income   6,424     2,517  
         
Other Income (Expense)        
Interest expense, net   (603 )   (878 )
Interest income   -     98  
Other income   334     20  
Income Before Income Taxes   6,155     1,757  
         
Income Tax Expense   -     -  
Net Income   $ 6,155     $ 1,757  
         
Weighted Average Shares Outstanding:        
Basic   128,730     127,661  
Diluted   130,880     130,765  
Earnings Per Share:        
Basic   $ 0.05     $ 0.01  
Diluted   $ 0.05     $ 0.01  


INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018
(In thousands, except share and per share amounts)

    March 31,   December 31,
    2019   2018
ASSETS        
Cash and cash equivalents   $ 34,032     $ 33,222  
Accounts receivable:        
Trade, net   28,217     25,161  
Other receivables, net   959     597  
Inventory, net   86,270     82,046  
Prepaid expenses and other current assets   7,480     4,332  
Total current assets   156,958     145,358  
         
Property, plant, equipment, and mineral properties, net   347,670     346,209  
Long-term parts inventory, net   29,895     30,031  
Other assets, net   3,594     3,633  
Total Assets   $ 538,117     $ 525,231  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Accounts payable:        
Trade   $ 12,017     $ 9,107  
Related parties   28     28  
Income taxes payable   914     914  
Accrued liabilities   8,535     8,717  
Accrued employee compensation and benefits   4,204     4,124  
Other current liabilities   10,725     11,891  
Total current liabilities   36,423     34,781  
         
Long-term debt, net   49,670     49,642  
Asset retirement obligation   23,492     23,125  
Operating lease liabilities   3,766     -  
Other non-current liabilities   420     420  
Total Liabilities   113,771     107,968  
         
Commitments and Contingencies        
Common stock, $0.001 par value; 400,000,000 shares authorized;        
128,781,031 and 128,716,595 shares outstanding        
at March 31, 2019, and December 31, 2018, respectively   129     129  
Additional paid-in capital   650,130     649,202  
Retained deficit   (225,913 )   (232,068 )
Total Stockholders' Equity   424,346     417,263  
Total Liabilities and Stockholders' Equity   $ 538,117     $ 525,231  


INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(In thousands)

    Three Months Ended March 31,
    2019   2018
Cash Flows from Operating Activities:        
Net income   $ 6,155     $ 1,757  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation, depletion and amortization   8,746     8,515  
Accretion of asset retirement obligation   417     417  
Amortization of deferred financing costs   68     183  
Stock-based compensation   1,031     947  
Lower of cost or net realizable value inventory adjustments   -     705  
Loss on disposal of assets   19     (34 )
Allowance for parts inventory obsolescence   4     -  
Changes in operating assets and liabilities:        
Trade accounts receivable, net   (3,057 )   (11,828 )
Other receivables, net   (362 )   (207 )
Refundable income taxes   -     2,844  
Inventory, net   (4,091 )   6,009  
Prepaid expenses and other current assets   103     914  
Accounts payable, accrued liabilities, and accrued employee
  compensation and benefits
  2,455     1  
Operating lease liabilities   (479 )   -  
Other liabilities   (2,888 )   3,681  
Net cash provided by operating activities   8,121     13,904  
         
Cash Flows from Investing Activities:        
Additions to property, plant, equipment, and mineral properties   (3,958 )   (6,470 )
Deposit on asset purchase   (3,250 )   -  
Proceeds from sale of property, plant, equipment, and mineral properties   -     34  
Net cash used in investing activities   (7,208 )   (6,436 )
         
Cash Flows from Financing Activities:        
Proceeds from short-term borrowings on credit facility   -     13,500  
Repayments of short-term borrowings on credit facility   -     (15,900 )
Employee tax withholding paid for restricted stock upon vesting   (112 )   (62 )
Proceeds from exercise of stock options   9     11  
Net cash used in financing activities   (103 )   (2,451 )
         
Net Change in Cash, Cash Equivalents and Restricted Cash   810     5,017  
Cash, Cash Equivalents and Restricted Cash, beginning of period   33,704     1,549  
Cash, Cash Equivalents and Restricted Cash, end of period   $ 34,514     $ 6,566  
         
Supplemental disclosure of cash flow information        
Net cash paid (refunded) during the period for:        
  Interest   $ 49     $ 95  
  Income taxes   $ -     $ (2,843 )
Accrued purchases for property, plant, equipment, and mineral properties   $ 1,435     $ 933  
Right-of-use assets exchanged for new operating lease liabilities   $ 5,916     $ -  

INTREPID POTASH, INC.
UNAUDITED NON-GAAP RECONCILIATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(In thousands, except per share amounts)

To supplement Intrepid's consolidated financial statements, which are prepared and presented in accordance with GAAP, Intrepid uses several non-GAAP financial measures to monitor and evaluate its performance. These non-GAAP financial measures include adjusted EBITDA and average net realized sales price per ton. These non-GAAP financial measures should not be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.  In addition, because the presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.

Intrepid believes these non-GAAP financial measures provide useful information to investors for analysis of its business. Intrepid uses these non-GAAP financial measures as one of its tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. Intrepid believes these non-GAAP financial measures are used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.


Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net income adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers adjusted EBITDA to be useful because the measure reflects Intrepid's operating performance before the effects of certain non-cash items and other items that Intrepid believes are not indicative of its core operations. Intrepid uses adjusted EBITDA to assess operating performance.
               
Reconciliation of Net Income to Adjusted EBITDA:

    Three Months Ended March 31,
    2019   2018
    (in thousands)
Net Income   $ 6,155     $ 1,757  
  Interest expense   603     878  
  Depreciation, depletion, and amortization   8,746     8,515  
  Accretion of asset retirement obligation   417     417  
  Total adjustments   9,766     9,810  
Adjusted EBITDA   $ 15,921     $ 11,567  


Average Potash and Trio® Net Realized Sales Price per Ton

Average net realized sales price per ton for potash is calculated as potash segment sales less potash segment byproduct sales and potash freight costs and then dividing that difference by the number of tons of potash sold in the period. Likewise, average net realized sales price per ton for Trio® is calculated as Trio® segment sales less Trio® segment byproduct sales and Trio® freight costs and then dividing that difference by Trio® tons sold. Intrepid considers average net realized sales price per ton to be useful, and believe it to be useful for investors, because it shows Intrepid's potash and Trio® average per ton pricing without the effect of certain transportation and delivery costs. When Intrepid arranges transportation and delivery for a customer, it includes in revenue and in freight costs the costs associated with transportation and delivery. However, some of Intrepid's customers arrange for and pay their own transportation and delivery costs, in which case these costs are not included in Intrepid's revenue and freight costs. Intrepid uses average net realized sales price per ton as a key performance indicator to analyze potash and Trio® sales and price trends.

Reconciliation of Sales to Average Net Realized Sales Price per Ton:

    Three Months Ended March 31, 2019
(in thousands, except per ton amounts)   Potash   Trio®
Total Segment Sales   $ 34,330     $ 17,809  
Less: Segment byproduct sales   5,785     1,259  
  Freight costs   3,242     5,035  
  Subtotal   $ 25,303     $ 11,515  
         
Divided by:        
Tons sold (in thousands)   88     56  
  Average net realized sales price per ton   $ 288     $ 206  

    Three Months Ended March 31, 2018
(in thousands, except per ton amounts)   Potash   Trio®
Total Segment Sales   $ 30,606     $ 21,820  
Less: Segment byproduct sales   3,542     583  
  Freight costs   3,458     6,276  
  Subtotal   $ 23,606     $ 14,961  
         
Divided by:        
Tons sold (in thousands)   97     77  
  Average net realized sales price per ton   $ 243     $ 194  


INTREPID POTASH, INC.
DISAGGREGATION OF REVENUE AND SEGMENT DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(In thousands)

    For the Three Months Ended March 31, 2019
Product   Potash Segment   Trio® Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $ 28,545     $ -     $ 1,822     $ (1,208 )   $ 29,159  
Trio®   -     16,550     -     -     16,550  
Water   340     942     4,104     -     5,386  
Salt   3,001     317     -     -     3,318  
Magnesium Chloride   1,740     -     -     -     1,740  
Brines   704     -     -     -     704  
Other   -     -     697     -     697  
Total Revenue   $ 34,330     $ 17,809     $ 6,623     $ (1,208 )   $ 57,554  

    For the Three Months Ended March 31, 2018
Product   Potash Segment   Trio® Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $ 27,064     $ -     $ -     $ -     $ 27,064  
Trio®   -     21,237     -     -     21,237  
Water   170     505     4,849     -     5,524  
Salt   1,733     78     -     -     1,811  
Magnesium Chloride   1,405     -     -     -     1,405  
Brines   234     -     -     -     234  
Other   -     -     45     -     45  
Total Revenue   $ 30,606     $ 21,820     $ 4,894     $ -     $ 57,320  

    Three Months Ended March 31,
    2019   2018
Production volume (in thousands of tons):        
  Potash   110     125  
  Langbeinite   63     47  
Sales volume (in thousands of tons):        
  Potash   88     97  
  Trio®   56     77  
         
Average net realized sales price per ton (1)        
  Potash   $ 288     $ 243  
  Trio®   $ 206     $ 194  

Three Months Ended
March 31, 2019
  Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales(2)   $ 34,330     $ 17,809     $ 6,623     $ (1,208 )   $ 57,554  
Less: Freight costs   4,640     5,035     781     -     10,456  
Warehousing and handling costs   1,267     969     -     -     2,236  
Cost of goods sold   19,059     11,074     2,769     (1,208 )   31,694  
Gross Margin   $ 9,364     $ 731     $ 3,073     $ -     $ 13,168  
Depreciation, depletion, and amortization incurred(3)   $ 6,795     $ 1,558     $ 190     $ 203     $ 8,746  
                     
Three Months Ended
March 31, 2018
  Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales(2)   $ 30,606     $ 21,820     $ 4,894     $ -     $ 57,320  
Less: Freight costs   4,206     6,277     -     -     10,483  
Warehousing and handling costs   1,155     1,118     -     -     2,273  
Cost of goods sold   20,269     15,798     592     -     36,659  
Lower of cost or net realizable value inventory adjustments   -     705     -     -     705  
Gross Margin (Deficit)   $ 4,976     $ (2,078 )   $ 4,302     $ -     $ 7,200  
Depreciation, depletion, and amortization incurred(3)   $ 6,778     $ 1,633     $ 64     $ 40     $ 8,515  

(1) Average net realized sales price is a non-GAAP financial measure. See the non-GAAP reconciliations set forth above in this press release for additional information.
(2) Segment sales include the sales of byproducts generated during the production of potash and Trio®.
(3) Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation, depletion, and amortization amounts absorbed in or relieved from inventory.





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Source: Intrepid Potash Inc via Globenewswire