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DENVER, May 04, 2010 (BUSINESS WIRE) --Intrepid Potash, Inc. (NYSE:IPI) today announced first quarter 2010 financial results, with net income for the quarter of $11.8 million, resulting in $0.16 of earnings per diluted share. Earnings before interest, taxes, depreciation and amortization (EBITDA1) for the first quarter of 2010 were $26.6 million.

Highlights for the First Quarter 2010:

• As of March 31, 2010, we had $129 million of cash and investments, no outstanding debt, and $125 million of availability under our revolving credit facility.
• The average net realized sales price² for potash in the first quarter 2010 was $354 per short ton ($390 per metric tonne) compared to $727 per short ton ($802 per metric tonne) in the same period of 2009.
• Adjusted net income¹ for the first quarter of 2010 was $12.2 million compared to adjusted net income of $25.2 million in the same period last year.
• Potash "cash operating" cost of goods sold net of by-product credits, which we define as total cost of goods sold excluding royalties, depreciation, depletion and amortization, was $199 per short ton in the first quarter of 2010 compared to $238 per short ton in the first quarter of 2009.
• Potash sales in the first quarter of 2010 were 243,000 short tons compared to 99,000 short tons in the first quarter of 2009.
• Potash production in the first quarter of 2010 was 172,000 short tons compared to 137,000 short tons produced in the first quarter of last year.
• Abnormal production costs of $0.5 million were incurred from our Wendover operations as our production lagged historically normal levels due to lower operating rates driven by inventory constraints associated with slower standard potash sales.
• Average net realized sales price for langbeinite, which we market under the name of Trio^TM, was $167 per short ton ($184 per metric tonne) in the first quarter of 2010 compared to $330 per short ton ($364 per metric tonne) in the first quarter of 2009.
• Sales of Trio^TM were 70,000 short tons in the first quarter of 2010 compared to 38,000 short tons in the first quarter of 2009.
• Langbeinite production in the first quarter of 2010 was 57,000 short tons compared to 42,000 short tons produced in the first quarter of 2009.
• Gross margin in the first quarter of 2010 for the sale of potash was $109 per short ton or 31 percent, compared to $435 per short ton or 60 percent in the three months ended March 31, 2009. This decrease was largely driven by market price decreases for potash. Gross margin for the sale of Trio^TM was $14 per short ton or eight percent compared to $144 per short ton or 44 percent in the same period of 2009. This decrease was largely driven by market price decreases for Trio(TM).
• Capital investments in the first quarter of 2010 totaled $19.1 million.

"The first quarter of 2010 saw resumption of more typical buying patterns by potash dealers, reinforcing our belief that the North American potash market is returning to a more historical level of demand," said Bob Jornayvaz, Intrepid's CEO. "The demand rebound which began in late 2009 has carried over into 2010. Our sales of 243,000 tons of potash during the first quarter was our second best quarter ever in terms of sales tons, and is strong evidence of the market reverting to more normal demand patterns. During the quarter, we substantially reduced the inventory that we had built in 2009 and, as the spring planting season has gotten underway, our granular inventories are fully committed in April and will remain tight in May. With the robust sales levels and the associated sell through of much of the granular product inventory we accumulated last year, our cash position has been bolstered. This cash position will provide much of the funding for our capital investment program which is geared toward increasing recoveries and improving reliability of the operations in order to increase productivity and lower our per ton operating costs. With our continuing efforts to ramp-up operations toward full production and the potential for strong demand for potash to continue, we believe that the remainder of 2010 should present Intrepid the opportunity to sell all of the agricultural product that we produce at competitive prices in the markets that we serve."

Market Conditions

During the first quarter of 2010 we saw dealers purchasing potash at or above historical rates. Demand remained strong throughout the quarter, although cold and wet weather conditions during the latter weeks of the quarter slowed crop planting and therefore forced some farmers to delay their spring application of fertilizers. With the recent improved weather conditions for farmers, product is now moving from the distributors through the dealers and onto the fields and pastures at a brisk pace. This continued strong demand has substantially depleted our granular inventory at all of our operating locations. This draw down of inventory is not unique to Intrepid as is evidenced by the recent announcement by the International Plant Nutrition Institute which shows that North American potash inventories in March 2010 decreased 49 percent to 2.0 million tons from their high of 3.9 million tons in June 2009.

We believe the significant quantity of product which we sold during the first quarter of 2010 supports our belief that farmers fully understand the need to replenish the potassium in their soil after under applying potash over the last two years. Additionally, we believe that farmers recognize that maintaining the proper level of potassium in the soil is critical to continued high-yield agricultural production.

We believe that this return to more normal application rates is sustainable and, as such, we are moving as quickly as possible to return our West mine to full staffing and full productive capacity. As we have stated previously, this may take some time to accomplish due to the extremely competitive labor market in the Carlsbad, New Mexico area and our desire to hire relatively more permanent staff compared to using temporary contract workers.

First Quarter Results

Income before income taxes for the first quarter of 2010 was $19.5 million compared to $39.9 million in the first quarter of 2009. Cash flows from operating activities were $35.8 million for the first quarter of 2010, which compares to $16.5 million for the first quarter of 2009.

Potash

During the first quarter of 2010, Intrepid produced 172,000 short tons of potash and sold 243,000 short tons of potash. This compares to 137,000 short tons produced and 99,000 short tons sold in the first quarter of 2009. The increase in sales volumes followed the trend that began to emerge in late 2009 as farmers began to apply potash at more normal rates and dealers actively returned to the market. Sales in the first quarter of 2010 benefited from dealers purchasing inventory ahead of the spring planting season with the expectation of more normal application of potash throughout the United States. We do not expect that dealers will carry much excess inventory as they exit the spring application season.

The 243,000 short tons of potash we sold in the first quarter of 2010 was at an average net realized sales price, which we define as gross sales less freight costs, of $354 per short ton as compared to an average net realized sales price of $727 per short ton during the first quarter of 2009. Our average net realized sales price during the first quarter was adversely impacted by other North American producers significantly reducing sales prices at the end of 2009 and our subsequent decision to compete in the market at this pricing level. These sales, however, allowed us to begin to increase production and are expected to result in lower per ton operating costs in the future.

The North American drilling rig count continued to improve at a moderate rate through the first quarter of 2010. Our industrial sales, however, have lagged levels that we experienced in 2007 and 2008, particularly in the Rocky Mountain region, as natural gas commodity pricing has remained weaker this year. The feed portion of our business continued to see consistent demand. Further, cattle and hog prices have improved significantly which should lead to greater demand at the feed lot and producer level.

Our potash "cash operating" cost of goods sold ("COGS"), net of by-product credits of $8 per ton, decreased to $199 per short ton in the first quarter of 2010 from $238 per short ton in the first quarter of 2009. Our COGS during the first quarter of 2010 were higher than the fourth quarter of 2009 due to the sale of higher priced inventory this quarter, which was produced throughout 2009 at lower operating rates. The majority of this higher priced inventory was carried as granular product at our Carlsbad facilities. As indicated previously, although we have resumed 24 / 7 operations at our West mine during the first quarter of 2010, we do not yet have all of the desired number of operating crews hired, trained and producing product. Depending on our ability to hire a sufficient number of qualified employees, it may take until mid to late 2010 to ramp-up to full production rates. We do not expect to see the full benefit of lower per ton production costs until such time as we are at full staffing levels.

Langbeinite - Trio^TM

Intrepid sold 70,000 short tons of Trio^TM in the first quarter of 2010, the majority of which was granular product, at an average net realized sales price of $167 per short ton. This compares to 38,000 short tons at an average net realized sales price of $330 per short ton in the prior year's first quarter. The increase in Trio^TM sales was driven largely by continued strong demand for granular sized product in the domestic agricultural sector. Additionally, we have recently seen a strengthening in the Trio^TM export market, and we are in the process of preparing a number of export orders for shipment.

Capital Investment

During the first quarter of 2010, Intrepid invested approximately $19.1 million related to our 2010 capital program. The investments in the first quarter of 2010 were used to complete certain capital projects that were in progress at the end of 2009 and to begin new projects. These projects included the full commissioning of the underground horizontal stacker, storage, and hoisting system that was placed in service in December 2009, and work to improve potash recoveries at the West mine. Additionally, we also worked towards the completion of the wash thickener to improve potash recoveries at the East mine. Commissioning of the thickener began in April 2010, and the thickener is expected to be running at designed production rates in the second quarter.

As previously announced, we also will start final engineering and then construction on our langbeinite recovery improvement project in the second quarter of 2010.

Intrepid routinely posts information about Intrepid on its website under the Investor Relations tab. Intrepid's website address is http://www.intrepidpotash.com.

Since adjusted net income and EBITDA are non-GAAP financial measures it is necessary to reference the respective reconciliations in the accompanying non-GAAP reconciliation tables towards the end of this release.Average net realized sales price and cash operating cost of goods sold are defined in the text of this release and the associated financial tables provide the details to recalculate these numbers in accordance with U.S. GAAP.

Conference Call Information

The conference call to discuss first quarter 2010 results is scheduled for May 5, 2010, at 8:00 a.m. MDT (10:00 a.m. EDT). The call participation number is (877) 419-5396. A recording of the conference call will be available two hours after the completion of the call at (800) 642-1687. International participants can dial (706) 902-2295 to take part in the conference call and can access a replay of the call at (706) 645-9291. All of the above calls will require the input of the conference identification number 67721194. The call will also be streamed on the Intrepid website, www.intrepidpotash.com. In addition, the press release announcing first quarter 2010 results will be available on the Intrepid website before the call under "Investor Relations - Press Releases." An audio recording of the conference call will be available at www.intrepidpotash.com through June 5, 2010.

Certain statements in this press release, and other written or oral statements made by or on behalf of us, are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, including statements regarding guidance, are forward-looking statements within the meaning of these laws. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that the expectations will be realized. These forward-looking statements are subject to a number of known and unknown risks and uncertainties, many of which are beyond our control that could cause actual results to differ materially and adversely from such statements. These risks and uncertainties include: changes in the price of potash or langbeinite; operational difficulties at our facilities; the ability to hire and retain qualified employees; changes in demand and/or supply for potash or langbeinite; changes in our reserve estimates; our ability to achieve the initiatives of our business strategy, including but not limited to the development of the HB Mine as a solution mine and the further development of our langbeinite recovery assets; changes in the prices of our raw materials, including but not limited to the price of natural gas and power; fluctuations in the costs of transporting our products to customers; changes in labor costs and availability of labor with mining expertise; the impact of federal, state or local government regulations, including but not limited to environmental and mining regulations, and the enforcement of such regulations; competition in the fertilizer industry; declines in U.S. or world agricultural production; declines in oil and gas drilling; changes in economic conditions; adverse weather events at our facilities; our ability to comply with covenants inherent in our current and future debt obligations to avoid defaulting under those agreements; disruptions in credit markets; governmental policy changes that may adversely affect our business and the risk factors detailed in our filings with the U.S. Securities and Exchange Commission. Please refer to those filings for more information on these risk factors. These forward-looking statements speak only as of the date of this press release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as the result of future events, new information or otherwise.

¹ This is a financial measure not calculated based on U.S. Generally Accepted Accounting Principles (Non-GAAP). See the Non-GAAP reconciliations set forth later in this press release for additional information.

² Average net realized sales price is calculated as gross sales less freight costs.

*Estimated effective tax rate of 39.3 percent for 2010 and 38.1 percent for 2009.

SOURCE: Intrepid Potash, Inc.

Intrepid Potash, Inc.
William Kent, 303-296-3006