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Investor Relations


Intrepid Reports Fourth Quarter and Full Year 2021 Results

Denver, CO, March 07, 2022 (GLOBE NEWSWIRE) -- Intrepid Potash, Inc. (NYSE:IPI) ("Intrepid", the "Company", "we", "us", "our") today reports its financial results for the fourth quarter and full year of 2021.

Key Fourth Quarter and Full Year 2021 Takeaways

  • Net income of $223.9 million and $249.8 million in the fourth quarter and full year 2021, respectively, which includes the release of $215.9 million of valuation allowance for deferred tax assets
  • Adjusted net income(1) of $8.0 million and $21.8 million in the fourth quarter and full year 2021, respectively. Recorded $7.0 million of tax expense in the fourth quarter and full-year 2021 as a result of the release of the valuation allowance against the deferred tax assets
  • Adjusted EBITDA(1) of $24.8 million for the fourth quarter, bringing full year adjusted EBITDA to $67.6 million
  • Cash flow from operations of $19.6 million in the fourth quarter, increasing full year cash from operations to $79.1 million
  • Cash on hand of approximately $60 million as of March 7, 2022
  • Excited to announced a joint feasibility study alongside the New Mexico Water Consortium and the New Mexico Environment Department to evaluate the potential of using treated produced water from oil and gas operations as injectate for our HB solar solution mine
  • Board of Directors approved a $35 million share repurchase program

Management Comment

"The fourth quarter was highlighted by solid cash flow and a significant increase in EBITDA compared to the prior period led by the strong commodity environment and rising fertilizer prices," said Bob Jornayvaz, Intrepid's Executive Chairman and CEO. "Pricing and demand strength have continued into the first quarter of 2022 and we expect another quarter of increasing realized prices. The fertilizer and agriculture market outlook remains very strong and we are poised to drive significant increases in bottom line-results in 2022."

Jornayvaz continued, "Oilfield activity remains strong in the Delaware Basin with water volumes and other oilfield services revenue increasing, although segment results have lagged due to increased water purchases and lease, contract labor, and rental expenses. We continue to see good demand for water across our South ranch and expect to benefit from activity closer to our infrastructure during 2022. We are also excited to announce a joint feasibility study alongside the New Mexico Water Consortium and the New Mexico Environment Department to evaluate the potential of using treated produced water from oil and gas operations as injectate for our HB mine. Recycling and treatment technology have improved considerably over the last few years and the potential to convert a waste stream into a sustainable source for producing potash is a unique opportunity for the basin and we look forward to the pilot project beginning as early as the third quarter of this year."

Share Repurchase Program

In February 2022, our Board of Directors approved a $35 million share repurchase program. We intend to remain focused on continued growth across our business segments and anticipate good cash flow generation in the coming quarters.

“The share repurchase program reflects our confidence in both our underlying business and our long-term potential," said Bob Jornayvaz. "Our strategy hasn't changed. We view this simply as another tool available to us to opportunistically return value to shareholders.”

Under the share repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of share repurchases, if any, will be at the Company’s sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. The share repurchase program may be suspended or discontinued at any time.

HB Green Disposal Pilot Project

Intrepid is excited to announce a joint feasibility study with the New Mexico Produced Water Consortium, as technical consultant for the New Mexico Environment Department, to evaluate the opportunity to beneficially re-use produced water from oil and gas production in New Mexico’s Northern Delaware Basin as injectate for Intrepid’s HB solar solution mine.

The pilot project is meant to prove the concept that treatment of produced water can meet the constituent levels necessary to comply with the standards and requirements for injection into Intrepid’s HB Solar Solution Mine. Intrepid is uniquely able to provide this service at its HB Solar Solution Mine which currently utilizes naturally occurring salt brine and groundwater as permitted injectates.

The New Mexico Produced Water Consortium has already approved Intrepid’s submitted pilot proposal pursuant to and in compliance with the New Mexico Environment Department’s 2022 requirements for pilot testing. This high priority green pilot project is already preliminarily scheduled to begin testing as early as the third quarter of 2022. Intrepid is excited to cooperate with our public and private stakeholders in advancing the proposed environmentally friendly re-use of produced water. This project, if successful, will aid in conserving existing groundwater sources in addition to advancing and promoting Intrepid’s Environment, Social, and Governance (ESG) goals and values as well as the stated mission of the New Mexico Produced Water Consortium.

Consolidated Results

We recorded net income of $223.9 million, or $16.66 per diluted share in the fourth quarter of 2021, contributing to full year 2021 net income of $249.8 million, or $18.66 per diluted share. Net income for both periods benefited from the $215.9 million release of the valuation allowance for our deferred tax assets. We released the valuation allowance because our long-term projections of future taxable income indicates that most of our deferred tax assets will be realized in the future. As a result of the valuation allowance release, we recorded a tax benefit of $208.9 million in the fourth quarter and full year 2021. We recorded adjusted net income of $8.0 million, or $0.60 per diluted share in the fourth quarter of 2021, contributing to full year 2021 adjusted net income of $21.8 million, or $1.63 per diluted share(1). Since we no longer have a valuation allowance offsetting most our deferred tax assets, we utilized some of our deferred tax assets and recorded tax expense of $7.0 million, or $0.52 per diluted share, in both the fourth quarter and full year 2021.

Consolidated gross margin of $21.8 million and $55.8 million in the fourth quarter and full year 2021, respectively, was an increase compared to the same year-ago periods due primarily to increased net realized sales price per ton for our potash and Trio® products.

The Carlsbad, New Mexico area where our HB solar solution mining facility is located, received significant rainfall, well above the historical rainfall average during the summer of 2021. Additionally, humidity was higher than normal and temperatures were cooler than average during this period which reduced our pond production and our ability to extract brine. Due to the wet, humid weather and cooler temperatures, we had fewer harvestable tons of potash from our HB solution ponds. Accordingly, we recorded abnormal production costs of $2.4 million and $6.0 million in the fourth quarter and full year of 2021, respectively, and we may incur additional abnormal production costs in future periods. We did not incur any abnormal production costs in 2020.

Segment Highlights

Potash

    Three Months Ended December 31,   Year Ended December 31,
      2021     2020     2021     2020
    (in thousands, except per ton data)
Sales   $ 38,807   $ 27,556   $ 151,751   $ 108,060
Gross margin   $ 12,516   $ 3,847   $ 35,845   $ 11,551
                 
Potash production volume (in tons)     86     106     287     308
Potash sales volume (in tons)     61     78     331     317
                 
Average potash net realized sales price per ton(1)   $ 504   $ 248   $ 353   $ 250

Sales increased $11.2 million in the fourth quarter of 2021 driven by higher pricing, partially offset by reduced sales volumes. Sales volumes decreased due to reduced production from our mines and as we were selective in our sales in anticipation of a good spring season. Full year potash sales increased $43.7 million in the full year of 2021 due to improved net realized sales price per ton and higher byproduct sales. Byproduct sales improved in both periods due to increased magnesium chloride and water sales. Fourth quarter and full year average net realized sales price per ton increased as strong commodity pricing and tight-near-term inventory levels led to multiple price increases during 2021.

We recorded abnormal production costs of $2.4 million and $6.0 million in the fourth quarter and full year 2021, respectively, due to significant wet weather and reduced evaporation at our HB mine in the summer of 2021 which led to lower average ore grade and reduced product available to harvest.

Gross margin increased $8.7 million and $24.3 million in the fourth quarter and full year of 2021, respectively, compared to the same periods in 2020. Increases in both periods were primarily driven by higher average net realized sales prices for potash sales and increased byproducts sales.

Fourth quarter 2021 production decreased compared to the prior year as below average evaporation at our HB solar solution facility led to lower ore grades, reducing our daily production rates. Full year 2021 production decreased 7% compared to 2020 due to wet weather and reduced evaporation rates at our HB solar solution facility and significant wet weather at our Wendover facility in the summer of 2020 which resulted in fewer tons available to harvest in the spring of 2021.

Trio®

    Three Months Ended December 31,   Year Ended December 31,
      2021     2020       2021     2020  
    (in thousands, except per ton data)
Sales   $ 24,612   $ 15,565     $ 96,058   $ 70,287  
Gross margin (deficit)   $ 7,913   $ (375 )   $ 16,442   $ (8,505 )
                 
Trio® production volume (in tons)     53     58       228     213  
Trio® sales volume (in tons)     48     50       239     230  
                 
Average Trio® net realized sales price per ton(1)   $ 388   $ 188     $ 295   $ 195  

Sales increased $9.0 million and $25.8 million in the fourth quarter and full year 2021, respectively, compared to the prior year periods as price increases announced throughout 2021 drove significantly higher net realized sales price per ton. Full year sales volume increased 4% compared to the prior year as we continued to sell more tons into the domestic market and remained very selective on export sales, which also improved our net realized sales prices.

Gross margin increased $8.3 million and $24.9 million in the fourth quarter and full year 2021, respectively, compared to the prior year, as higher net realized pricing per ton drove bottom line improvements. We recorded a lower of cost or net realized value inventory adjustment of $2.9 million for the full year 2020. We did not record any lower of cost or net realized value inventory adjustments in 2021.

Production volumes increased 7% for the full year of 2021 as we began operating increased shifts in the second half of 2021 in anticipation of robust domestic demand in early 2022.

Oilfield Solutions

    Three Months Ended December 31,   Year Ended December 31,
      2021     2020     2021     2020
    (in thousands)
Sales   $ 8,479   $ 5,390   $ 22,770   $ 18,929
Gross margin   $ 1,420   $ 2,342   $ 3,477   $ 7,484

Sales increased $3.1 million and $3.8 million for the fourth quarter and full year of 2021, respectively, when compared to the same periods in 2020, as improvements in oilfield activity drove increased water, brine and other oilfield services sales.

Full-year cost of goods sold increased $7.8 million in 2021, compared to 2020, primarily due to water purchases, but also due to increased depreciation, rental, lease, and contract labor expense. Fourth quarter and full year 2021 gross margin decreased compared to 2020 as increased water sales were offset by higher costs, specifically the purchase of third party water to supplement the high-volume fracs on our South ranch.

Liquidity

Cash provided by operations was $19.6 million during the fourth quarter of 2021 and cash used for investing activities was $8.4 million during the fourth quarter of 2021. As of December 31, 2021, Intrepid had $36.5 million in cash and cash equivalents and $74.0 million available to borrow under its credit facility. Cash balance as of March 7 was approximately $60 million.

Notes

1 Adjusted net income, average net realized sales price per ton and adjusted EBITDA are non-GAAP financial measures. 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

Intrepid will host a conference call on Tuesday, March 8, 2022 at 12:00 p.m. Eastern time (10:00 a.m. Mountain time) to discuss the results. A Q&A session will immediately follow the discussion of the results for the period. The call will also be streamed on the Intrepid website, intrepidpotash.com.

Live event participation details
Domestic dial-in number: 800-319-4610
International dial-in number: +1-631-891-4304

Replay information available until April 10, 2022
Conference ID #: 8527
Replay dial-in (Toll Free US & Canada): 800-319-6413
Replay dial-in (International): +1-631-883-6842

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 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 and cash flows, water sales, production costs, 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;
  • challenges and legal proceedings related to Intrepid's water rights;
  • Intrepid's ability to successfully identify and implement any opportunities to grow its business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;
  • 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;
  • Intrepid's ability to prevail in outstanding legal proceedings against it;
  • Intrepid's ability to comply with the terms of its revolving credit facility, including the underlying covenants, to avoid a default under the agreement;
  • 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;
  • the impact of the COVID-19 pandemic on Intrepid's business, operations, liquidity, financial condition, and results of operations; 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, 2020, as updated by subsequent Quarterly Reports on Form 10-Q.

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, Chief Financial Officer
Phone: 303-996-3048
Email: matt.preston@intrepidpotash.com

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands, except share and per share amounts)

    Three Months Ended December 31,   Year Ended December 31,
      2021       2020       2021       2020  
Sales   $ 71,828     $ 48,442     $ 270,332     $ 196,954  
Less:                
Freight costs     7,786       8,736       37,892       37,135  
Warehousing and handling costs     2,208       2,149       9,282       9,431  
Cost of goods sold     37,606       31,743       161,421       135,843  
Lower of cost or net realizable value inventory adjustments                       4,015  
Costs associated with abnormal production     2,379             5,973        
Gross Margin     21,849       5,814       55,764       10,530  
                 
Selling and administrative     5,705       5,454       23,998       25,476  
Accretion of asset retirement obligation     535       435       1,858       1,738  
Litigation settlement                       10,075  
Loss (gain) on sale of assets     18       191       (2,542 )     (4,250 )
Other operating expense     564       241       178       735  
Operating Income (Loss)     15,027       (507 )     32,272       (23,244 )
                 
Other Income (Expense)                
Interest expense, net     (42 )     (412 )     (1,468 )     (4,289 )
Other income     6       255       48       384  
Gain on extinguishment of debt                 10,113        
Income (Loss) Before Income Taxes     14,991       (664 )     40,965       (27,149 )
                 
Income Tax Benefit (Expense)     208,869       (47 )     208,869       (5 )
Net Income (Loss)   $ 223,860     $ (711 )   $ 249,834     $ (27,154 )
                 
Weighted Average Shares Outstanding:                
Basic     13,129,081       13,030,185       13,098,871       12,993,225  
Diluted     13,440,708       13,030,185       13,391,362       12,993,225  
Income (Loss) Per Share:                
Basic   $ 17.05     $ (0.05 )   $ 19.07     $ (2.09 )
Diluted   $ 16.66     $ (0.05 )   $ 18.66     $ (2.09 )

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 2021 AND 2020
(In thousands, except share and per share amounts)

    December 31,
      2021     2020  
ASSETS        
Cash and cash equivalents   $ 36,452   $ 19,515  
Accounts receivable:        
Trade, net     35,409     22,516  
Other receivables, net     989     1,856  
Inventory, net     78,856     88,673  
Other current assets     5,144     3,228  
Total current assets     156,850     135,788  
         
Property, plant, equipment, and mineral properties, net     341,117     355,497  
Water rights     19,184     19,184  
Long-term parts inventory, net     29,251     28,900  
Other assets, net     11,418     10,819  
Non-current deferred tax asset, net     209,075      
Total Assets   $ 766,895   $ 550,188  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Accounts payable   $ 9,068   $ 7,278  
Income taxes payable     41      
Accrued liabilities     22,938     12,701  
Accrued employee compensation and benefits     6,805     4,422  
Other current liabilities     34,571     32,816  
Current portion of long-term debt         10,000  
Total current liabilities     73,423     67,217  
         
Advances on credit facility         29,817  
Long-term debt, net         14,926  
Asset retirement obligation     27,024     23,872  
Operating lease liabilities     1,879     2,136  
Other non-current liabilities     1,166     961  
Total Liabilities     103,492     138,929  
         
Commitments and Contingencies        
         
Common stock, $0.001 par value; 40,000,000 shares authorized:        
and 13,149,315 and 13,049,820 shares outstanding        
at December 31, 2021, and 2020, respectively     13     13  
Additional paid-in capital     659,147     656,837  
Retained Earnings (Accumulated deficit)     4,243     (245,591 )
Total Stockholders' Equity     663,403     411,259  
Total Liabilities and Stockholders' Equity   $ 766,895   $ 550,188  

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands)

    Three Months Ended December 31,   Year Ended December 31,
      2021       2020       2021       2020  
Cash Flows from Operating Activities:                
Net income (loss)   $ 223,861     $ (711 )   $ 249,834     $ (27,154 )
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, depletion, and amortization     9,126       9,411       35,635       35,788  
Amortization of intangible assets     81       81       322       322  
Accretion of asset retirement obligation     535       435       1,858       1,738  
Amortization of deferred financing costs     60       68       314       425  
Stock-based compensation     723       840       3,012       3,821  
Reserve for obsolescence     2,108             2,108       492  
Allowance for doubtful accounts           (200 )           75  
Loss (Gain) on disposal of assets     18       191       (2,542 )     (4,250 )
Gain on extinguishment of debt                 (10,113 )      
Lower of cost or net realizable value inventory adjustments                       4,015  
Other                       (116 )
Changes in operating assets and liabilities:                
Trade accounts receivable, net     (2,679 )     955       (12,615 )     1,158  
Other receivables, net     2,461       719       589       (609 )
Inventory, net     (4,320 )     (3,391 )     7,358       (291 )
Other current assets     (826 )     2,618       (1,974 )     2,305  
Deferred tax assets     (209,075 )           (209,075 )      
Accounts payable, accrued liabilities, and accrued employee
compensation and benefits
    (1,798 )     (1,740 )     13,456       2,331  
Income tax payable     2             42       (50 )
Operating lease liabilities     (892 )     (539 )     (2,508 )     (2,234 )
Other liabilities     259       3,921       3,366       13,379  
Net cash provided by operating activities     19,644       12,658       79,067       31,145  
                 
Cash Flows from Investing Activities:                
Additions to property, plant, equipment, mineral properties and other assets     (7,352 )     (2,356 )     (19,789 )     (16,443 )
Proceeds from sale of property, plant, equipment, and mineral properties                 6,042       4,786  
Long-term investment     (1,076 )           (1,076 )     (3,500 )
Net cash used in investing activities     (8,428 )     (2,356 )     (14,823 )     (15,157 )
                 
Cash Flows from Financing Activities:                
Payments of financing lease           (74 )     (1,258 )     (74 )
Repayment of long-term debt                 (15,000 )     (35,000 )
Debt prepayment costs                 (505 )     (1,869 )
Proceeds from loan under CARES Act                       10,000  
Proceeds from borrowings on credit facility                       10,000  
Repayments of borrowings on credit facility                 (29,817 )      
Capitalized debt costs                       (36 )
Employee tax withholding paid for restricted shares upon vesting     (409 )     (76 )     (791 )     (172 )
Proceeds from exercise of stock options     8       108       89       108  
Net cash used in financing activities     (401 )     (42 )     (47,282 )     (17,043 )
                 
Net Change in Cash, Cash Equivalents, and Restricted Cash     10,815       10,260       16,962       (1,055 )
Cash, Cash Equivalents, and Restricted Cash, beginning of period     26,331       9,924       20,184       21,239  
Cash, Cash Equivalents, and Restricted Cash, end of period   $ 37,146     $ 20,184     $ 37,146     $ 20,184  

INTREPID POTASH, INC.
DISAGGREGATION OF REVENUE AND SEGMENT DATA (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands)

    Three Months Ended December 31, 2021
Product   Potash Segment   Trio® Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $ 33,211   $   $   $ (70 )   $ 33,141
Trio®         22,775               22,775
Water     110     1,547     6,086           7,743
Salt     3,004     290               3,294
Magnesium Chloride     2,018                   2,018
Brines     464         394           858
Other             1,999         1,999
Total Revenue   $ 38,807   $ 24,612   $ 8,479   $ (70 )   $ 71,828

 

    Year Ended December 31, 2021
Product   Potash Segment   Trio® Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $ 130,460   $   $   $ (247 )   $ 130,213
Trio®         91,125               91,125
Water     2,050     4,355     15,594           21,999
Salt     9,592     578               10,170
Magnesium Chloride     7,847                   7,847
Brines     1,802         1,129           2,931
Other             6,047           6,047
Total Revenue   $ 151,751   $ 96,058   $ 22,770   $ (247 )   $ 270,332

 

    Three Months Ended December 31, 2020
Product   Potash Segment   Trio® Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $ 22,558   $   $   $ (69 )   $ 22,489
Trio®         13,870               13,870
Water     296     1,481     3,974           5,751
Salt     2,311     214               2,525
Magnesium Chloride     2,017                   2,017
Brines     374         141           515
Other             1,275           1,275
Total Revenue   $ 27,556   $ 15,565   $ 5,390   $ (69 )   $ 48,442

 

    Year Ended December 31, 2020
Product   Potash Segment   Trio® Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $ 92,500   $   $   $ (322 )   $ 92,178
Trio®         65,344               65,344
Water     1,253     4,444     14,701           20,398
Salt     8,103     499               8,602
Magnesium Chloride     4,855                   4,855
Brines     1,349         438           1,787
Other             3,790           3,790
Total Revenue   $ 108,060   $ 70,287   $ 18,929   $ (322 )   $ 196,954

 

Three Months Ended December 31, 2021   Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales(1)   $ 38,807   $ 24,612     $ 8,479   $ (70 )   $ 71,828
Less: Freight costs     3,717     4,139           (70 )     7,786
Warehousing and handling costs     1,165     1,043                 2,208
Cost of goods sold     19,030     11,517       7,059           37,606
Costs associated with abnormal
production and other
    2,379                     2,379
Gross Margin   $ 12,516   $ 7,913     $ 1,420   $     $ 21,849
Depreciation, depletion, and amortization incurred(2)   $ 6,933   $ 1,272     $ 790   $ 212     $ 9,207
                     
Year Ended December 31, 2021   Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales(1)   $ 151,751   $ 96,058     $ 22,770   $ (247 )   $ 270,332
Less: Freight costs     17,483     20,656           (247 )     37,892
Warehousing and handling costs     5,169     4,113                 9,282
Cost of goods sold     87,281     54,847       19,293           161,421
Costs associated with abnormal production     5,973                     5,973
Gross Margin   $ 35,845   $ 16,442     $ 3,477   $     $ 55,764
Depreciation, depletion, and amortization incurred(2)   $ 26,828   $ 5,477     $ 2,996   $ 656     $ 35,957
                     
Three Months Ended December 31, 2020   Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales(1)   $ 27,556   $ 15,565     $ 5,390   $ (69 )   $ 48,442
Less: Freight costs     4,324     4,481           (69 )     8,736
Warehousing and handling costs     1,186     963                 2,149
Cost of goods sold     18,199     10,496       3,048           31,743
Gross Margin (Deficit)   $ 3,847   $ (375 )   $ 2,342   $     $ 5,814
Depreciation, depletion, and amortization incurred(2)   $ 7,051   $ 1,512     $ 718   $ 211     $ 9,492
                     
Year Ended December 31, 2020   Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales(1)   $ 108,060   $ 70,287     $ 18,929   $ (322 )   $ 196,954
Less: Freight costs     17,026     20,431           (322 )     37,135
Warehousing and handling costs     4,857     4,574                 9,431
Cost of goods sold     73,496     50,902       11,445           135,843
Lower of cost or net realizable value inventory adjustments     1,130     2,885                 4,015
Gross Margin (Deficit)   $ 11,551   $ (8,505 )   $ 7,484   $     $ 10,530
Depreciation, depletion and, amortization incurred(2)   $ 26,536   $ 6,068     $ 2,663   $ 843     $ 36,110

(1) Segment sales include the sales of byproducts generated during the production of potash and Trio®.
(2) Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation and depletion amounts absorbed in or (relieved from) inventory.

INTREPID POTASH, INC.
UNAUDITED NON-GAAP RECONCILIATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(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 net income, adjusted net income per diluted share, 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 Net Income (Loss) and Adjusted Net Income (Loss) Per Diluted Share

Adjusted net income (loss) and adjusted net income (loss) per diluted share are calculated as net income (loss) or net income (loss) per diluted share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers these non-GAAP financial measures to be useful because they allow for period-to-period comparisons of its operating results excluding items that Intrepid believes are not indicative of its fundamental ongoing operations.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss):

  Three Months Ended December 31,   Year Ended December 31,
    2021       2020       2021       2020  
Net Income (Loss) $ 223,860     $ (711 )   $ 249,834     $ (27,154 )
Adjustments              
Litigation settlement                     10,075  
Loss (gain) on sale of assets   18       191       (2,542 )     (4,250 )
Gain on extinguishment of debt               (10,113 )      
Make-whole payment(1)               505       1,869  
Write-off of deferred financing fees(2)               60       128  
Valuation allowance for deferred tax assets   (215,910 )           (215,910 )      
Total adjustments   (215,892 )     191       (228,000 )     7,822  
Adjusted Net Income (Loss) $ 7,968     $ (520 )   $ 21,834     $ (19,332 )

Reconciliation of Net Income (Loss) per Share to Adjusted Net Income (Loss) per Share:

  Three Months Ended December 31,   Year Ended December 31,
    2021       2020       2021       2020  
Net Income (Loss) Per Diluted Share $ 16.66     $ (0.05 )   $ 18.66     $ (2.09 )
Adjustments              
Litigation settlement                     0.78  
Loss (gain) on sale of assets         0.01       (0.19 )     (0.33 )
Gain on extinguishment of debt               (0.76 )      
Make-whole payment(1)               0.04       0.14  
Write-off of deferred financing fees(2)                     0.01  
Valuation allowance for deferred tax assets   (16.06 )           (16.12 )      
Total adjustments   (16.06 )     0.01       (17.03 )     0.60  
Adjusted Net Income (Loss) Per Diluted Share $ 0.60     $ (0.04 )   $ 1.63     $ (1.49 )

(1) As a result of early repayments of its senior notes, Intrepid incurred make-whole payments, which are reflected on the income statement as interest expense.

(2) As a result of early repayments of principal on its senior notes, Intrepid wrote off a portion of the financing fees that had previously been capitalized related to the senior notes. The write-offs of deferred financing fees are reflected in Intrepid's financial statements as interest expense.

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 Potash and Trio® Net Realized Sales Price per Ton:

    Potash Segment
    Three Months Ended December 31,
      2021     2020
Total Segment Sales   $ 38,807   $ 27,556
Less: Segment byproduct sales     5,596     4,998
Potash freight costs     2,465     3,249
Subtotal   $ 30,746   $ 19,309
         
Divided by:        
Potash tons sold (in thousands)     61     78
Average net realized sales price per ton   $ 504   $ 248

 

    Potash Segment
      2021     2020
Total Segment Sales   $ 151,751   $ 108,060
Less: Segment byproduct sales     21,291     15,560
Potash freight costs     13,639     13,270
Subtotal   $ 116,821   $ 79,230
         
Divided by:        
Potash tons sold (in thousands)     331     317
Average net realized sales price per ton   $ 353   $ 250

 

    Trio® Segment
    Three Months Ended December 31,
      2021     2020
Total Segment Sales   $ 24,612   $ 15,565
Less: Segment byproduct sales     1,837     1,695
Trio® freight costs     4,139     4,481
Subtotal   $ 18,636   $ 9,389
         
Divided by:        
Trio® tons sold (in thousands)     48     50
Average net realized sales price per ton   $ 388   $ 188

 

    Trio® Segment
      2021     2020
Total Segment Sales   $ 96,058   $ 70,287
Less: Segment byproduct sales     4,933     4,943
Trio® freight costs     20,656     20,416
Subtotal   $ 70,469   $ 44,928
         
Divided by:        
Trio® tons sold (in thousands)     239     230
Average net realized sales price per ton   $ 295   $ 195

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net income (loss) 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 (Loss) to Adjusted EBITDA:

  Three Months Ended December 31,   Year Ended December 31,
    2021       2020       2021       2020  
               
Net Income (Loss) $ 223,860     $ (711 )   $ 249,834     $ (27,154 )
Adjustments              
Gain on extinguishment of debt               (10,113 )      
Litigation settlement                     10,075  
Loss (gain) on sale of assets   18       191       (2,542 )     (4,250 )
Interest expense   42       412       1,468       4,289  
Income tax (benefit) expense   (208,869 )     47       (208,869 )     5  
Depreciation, depletion, and amortization   9,126       9,411       35,635       35,788  
Amortization of intangible assets   81       81       322       322  
Accretion of asset retirement obligation   535       435       1,858       1,738  
Total adjustments   (199,067 )     10,577       (182,241 )     47,967  
Adjusted Earnings Before Interest, Taxes, Depreciation,              
and Amortization $ 24,793     $ 9,866     $ 67,593     $ 20,813  

 


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