Intrepid Announces First Quarter 2011 Financial Results
Intrepid Potash, Inc. (NYSE:IPI) announced today first quarter 2011
financial results, with net income for the first quarter of $28.3
million, resulting in $0.38 of earnings per diluted share, which
included the recognition of $0.10 per diluted share of income, net of
tax, associated with deferred insurance proceeds. Adjusted earnings
before interest, taxes, depreciation, and amortization (Adjusted EBITDA1)
for the first quarter of 2011 were $55.8 million.
'During the first quarter of 2011, our solid performance was influenced
by the strong domestic markets for a variety of crops and the start of
the spring planting season,? said Bob Jornayvaz, Intrepid′s Executive
Chairman of the Board. 'In the first quarter of 2011, the potash market
reflected a level of demand that was more consistent with historical
demand trends prior to 2008. With fall harvest completed, producers had
the ability to get caught up on outstanding orders and to produce
product for the spring sales season. Further, tightening crop
inventories and an encouraging prospective plantings report from the
USDA support our estimates that nutrient demand will be at normal levels
for this planting season and into the fall. Farmer economics in the
United States remain robust by historical standards and we believe that
farmers will make every effort to maximize yield and profitability
during the 2011 growing season through balanced fertilization.?
First Quarter 2011 Highlights:
Potash sales in the first quarter of 2011 were 196,000 tons as
compared to 243,000 tons sold in the same period of 2010.
Potash production increased 36 percent in the first quarter of 2011 to
234,000 tons compared to 172,000 tons produced in the first quarter of
2010.
Average net realized sales price2 for potash was $442 per
ton ($487 per metric tonne) in the first quarter of 2011, compared to
$354 per ton ($390 per metric tonne) in the first quarter of 2010 and
$386 per ton ($425 per metric tonne) in the fourth quarter of 2010.
Cash operating cost of goods sold, net of by-product credits3,
for potash was $166 per ton in the first quarter of 2011. This
compares to $199 per ton in the first quarter of 2010 and $166 per ton
in the fourth quarter of 2010.
Sales of langbeinite, which we market as Trio ®, were 52,000
tons in the first quarter of 2011 compared to 70,000 tons in the first
quarter of 2010.
Langbeinite production in the first quarter of 2011 decreased to
31,000 tons from 57,000 tons produced in the first quarter of 2010.
Average net realized sales price for Trio ® was $204 per ton
($225 per metric tonne) in the first quarter of 2011. This compares to
$167 per ton ($184 per metric tonne) in the first quarter of 2010 and
$222 per ton ($245 per metric tonne) in the fourth quarter of 2010.
Average gross margin in the first quarter of 2011 for the sale of
potash was $218 per ton or 49 percent, compared to $109 per ton or 31
percent in the first quarter of 2010. Average gross margin for the
sale of Trio ® was a loss of $3 per ton or negative one
percent compared to $14 per ton or eight percent in the same period of
2010.
Capital investment in the first quarter of 2011 totaled approximately
$26.9 million.
As of March 31, 2011, we had $142.3 million of cash and investments,
no outstanding debt, and $125.0 million of availability under our
revolving credit facility.
Intrepid′s location advantage once again served to bolster its first
quarter results. 'While product demand was certainly good during the
first quarter of 2011, the strength of our local truck market during the
quarter helped us to once again achieve the best average net realized
sales price among our North American peers. The flexibility we have
added to our operations, through the initial steps of increasing
compaction capacity, and our ability to market our products in a more
strategic manner has helped us reach this position in the market,? said
Mr. Jornayvaz. 'Our strategic marketing and enhanced production
flexibility support our planned capital investments to increase our
granulation capability at both our Carlsbad and Wendover operations.?
Mr. Jornayvaz noted, 'Within the overall plan to build out the assets to
increase our recoveries, increase our production and to drive down our
per unit costs, we have moved forward our Langbeinite Recovery
Improvement Project with the start of construction of the dense media
separation plant at our East mine. We are also pleased that in April the
Bureau of Land Management issued its Draft Environmental Impact
Statement related to our proposed HB Solar Solution Mine, which
initiated the public comment period for this important project.?
Market Conditions
Many of the market trends that emerged during the second half of 2010 in
the United States agricultural market continued into the first quarter
of 2011. Specifically, crop prices moved up significantly for almost
every agricultural commodity, and have remained strong due to increased
demand for grains and agricultural products worldwide, most specifically
from China. Further, downward revisions in crop yields for both corn and
soybeans in the United States for the 2010 / 2011 crop year coupled with
historically low ending stocks-to-use ratios for these two commodities
contributed to the overall strength in the agricultural market.
In light of this favorable demand pattern created by strong commodity
prices, we raised the posted price for our red granular potash beginning
April 1, 2011, to $500 per ton with subsequent $15 per ton increases
taking effect on May 1, 2011, and June 1, 2011, which will result in a
posted price of $530 per ton effective June 1, 2011. Further, we raised
posted prices for granular-sized Trio ® on April 1, 2011, to
$271 per ton. We believe that, given the macroeconomic factors affecting
the domestic agricultural market, farmers recognize the strong returns
they can achieve through balanced fertilization and the value of
potassium.
As we entered the spring season, many dealers expressed a willingness to
exit the season with some level of inventory in their warehouses, which
is a substantial departure from the much more measured consumption
behavior observed in 2010. We have seen solid spring demand in the
markets where farmers have been able to get into their fields, yet, we
expect weather is going to drive the timing for farmers the remainder of
the season. Certain areas in our primary markets have experienced
challenging weather conditions, including severe flooding in recent
weeks, which has delayed spring application in those areas.
Additionally, the Texas markets and parts of Oklahoma and Kansas are
experiencing a lack of rainfall that may in the near-term negatively
affect our sales as the majority of dealers and distributors previously
built-up sufficient product inventory to handle a portion of expected
spring demand.
First Quarter Results and Recent Performance
Income before income taxes for the first quarter of 2011 was $47.1
million compared to $19.5 million in the first quarter of 2010. Cash
flows from operating activities were $28.6 million for the first quarter
of 2011, compared to $35.8 million for the first quarter of 2010.
Adjusted net income4 for the first quarter of 2011 was $20.6
million compared to adjusted net income of $12.1 million in the same
period last year.
Potash
During the first quarter of 2011, Intrepid increased production of
potash to 234,000 tons, including tons produced from the harvest of our
Moab solar evaporation ponds that is more heavily concentrated in the
fourth and first quarters of each year. During this same period, we sold
196,000 tons of potash. This compares to 172,000 tons produced and
243,000 tons sold in the first quarter of 2010. The increase in
production was largely driven by full production rates in 2011 following
our ramp-up in 2010 and solid results from our operations. The decrease
in tons sold as compared to the first quarter of 2010 is attributed to
market anomalies that occurred during 2009 which left the domestic
supply chain near empty entering 2010 after low application levels in
2009. The 196,000 tons of potash we sold in the first quarter of 2011
were at an average net realized sales price of $442 per ton, a $56 per
ton higher average net realized sales price than what was achieved in
the fourth quarter of 2010. Based on our calculations, our average net
realized sales price for the first quarter of 2011 exceeded that of our
North American competitors with an average net realized sales price
advantage of approximately $103 per ton.5
Our cash operating cost of goods sold for potash, net of by-product
credits of $6 per ton, decreased to $166 per ton in the first quarter of
2011 from $199 per ton, net of by-product credits of $8 per ton, in the
first quarter of 2010. Our lower cash operating cost of goods sold per
ton for potash during the first quarter of 2011 resulted from production
rates at our mines returning to higher levels, as compared to 2010,
which led to a decrease in our per unit costs. This decrease in per unit
costs was particularly evident at our Carlsbad, New Mexico facilities,
which posted strong production results in the quarter.
Langbeinite ? Trio ®
Demand for granular-sized Trio ® remains strong and we expect
granular-sized Trio ® demand will continue to exceed our
production capabilities for the next few quarters, resulting in the
on-going need to sell our granular-sized product on an allocated basis.
Our existing production facilities produce approximately half of our Trio ®
production in the form of natural granular-sized product, with the
remainder standard and fine standard-sized product. During the first
quarter of 2011, we experienced lower recoveries of Trio ® due
to operating inefficiencies that stemmed from modifications to equipment
at the East facility that were made in 2010. We made improvements to the
grinding and cyclone configurations and began to see a sustained
improvement in recoveries beginning in March 2011, which has continued
to date. We are continuing to make plant adjustments to improve recovery
rates to historical levels ahead of the completion of the Langbeinite
Recovery Improvement Project ('LRIP?). We commenced construction of the
dense media separation plant within our LRIP in March 2011.
Additionally, the construction permit application for the granulation
plant within the overall project has been declared administratively
complete and we are prepared to commence construction on this plant
immediately upon issuance of the permit. The importance of being able to
granulate all of our Trio ® production is that the current
average net realized sales price for granular-sized Trio ® is
approximately $55 to $60 per ton greater than the average net realized
sales price for standard-sized Trio ® sold into the export
market.
Intrepid sold 52,000 tons of Trio ® in the first quarter of
2011 at an average net realized sales price of $204 per ton, which was
$18 per ton lower than in the fourth quarter of 2010. This compares to
70,000 tons sold at an average net realized sales price of $167 per ton
in the prior year′s first quarter. The sequential decrease in average
net realized sales price was driven by a lack of availability of
granular-sized product from the lower recovery rates in the first two
months of 2011 coupled with the relatively higher percentage of sales of
standard-sized product into the export market during the first quarter
of 2011.
Recognition of Income Associated with Deferred Insurance Proceeds
As previously reported, during the first quarter of 2011, Intrepid
completed the reconstruction and commissioning of its product warehouses
at the East facility and placed these assets into service. Further,
Intrepid finalized insurance settlement amounts related to its previous
East product inventory warehouse, which was the result of an insurance
claim from a wind event that occurred in 2006. As a result, $11.7
million of deferred insurance proceeds that were recorded as a deferred
item on the consolidated balance sheet as of December 31, 2010, plus
approximately $0.8 million of additional insurance proceeds, were
recognized as income in the first quarter of 2011. The total of
approximately $12.5 million of income has been recorded as 'Insurance
settlements from property and business losses? on the consolidated
statement of operations during the first quarter of 2011. There was no
cash impact associated with this event in the first quarter, as the
previously deferred item was paid to Intrepid prior to December 31,
2010, and the additional payment of approximately $0.8 million was
received by Intrepid in April 2011.
Capital Investment
Total capital investment in 2011, which is designed to fit within our
overall capital investment strategy of increasing recoveries, increasing
production and decreasing per ton costs, is expected to be between $140
and $165 million. During the first quarter we made significant progress
on a number of our capital projects, investing approximately
$26.9 million in capital projects during the quarter.
In 2011, we plan to continue executing and to accelerate, when
appropriate, our capital strategy that is focused on additional
granulation capacity, additional mining capacity, and recovery
improvement projects. Our strategy to increase granulation capacity is
being undertaken for both potash and Trio ®. We successfully
completed the construction of a new compactor at our Moab facility in
2010, and have plans for additional compaction capacity at our North
facility in Carlsbad, New Mexico, as well as at our Wendover, Utah
facility. The LRIP also includes a pelletization plant that is expected
to have the ability to granulate all of our Trio ® production.
The Environmental Impact Statement ('EIS?) review being conducted by the
Bureau of Land Management ('BLM?) for our proposed HB Solar Solution
mine near Carlsbad, New Mexico, continues to progress. The Draft EIS for
the project was published in the Federal Register on April 15, 2011, and
a 60-day public comment period commenced on that date. The current
schedule for receiving the Record of Decision on the project remains in
the first quarter of 2012. We continue to be advised by the BLM that the
timing for issuance of the Record of Decision will depend on the level
and nature of comments received during the public comment period.
Several of the capital investment activities for the quarter at our New
Mexico and Utah facilities are described below and demonstrate the
continued execution of our capital investment strategy:
New Mexico
We commenced construction of the dense media separation plant of the
LRIP at our East facility. The total capital investment for the LRIP
is expected to be between $85 and $90 million. This dense media
separation plant is designed to increase the recoveries of langbeinite
to approximately 50 percent, from the currently designed recovery
levels of 30 to 35 percent.
The permit application for the granulation plant of the LRIP has been
declared administratively complete and we expect to commence
construction immediately upon receipt of this permit.
Engineering related to the expansion of the compaction plant at our
North surface facility has been initiated.
The completion and commissioning of our product storage facilities at
the East facility occurred in February 2011.
Progress continued on the distributed control system installation
underground at our West mine and at the surface operations of our East
facility.
Utah
The completion and commissioning of a new loading and screening
process in Moab, Utah during the first quarter of 2011. This project
was complementary and an extension of the compaction project completed
in 2010, which allows us to participate more broadly in the
agricultural markets.
Engineering and design was initiated on our program to drill
additional potash caverns in Moab, Utah. This program is designed to
access additional potash ore and increase production.
Engineering and design work was completed for a new compaction
facility together with improvements in product screening, and the
expansion of product warehousing in Wendover, Utah. We expect the new
compactor will be in service by the end of 2011.
Rail Transportation Interruption
As previously reported in several publications, there was a train
derailment outside of Carlsbad, New Mexico and a bridge failure that
occurred on a short-line track that is the sole railroad line into and
out of the Carlsbad Basin. Because of the derailment and bridge failure,
the short-line track was out of service for 17 days. The short-line
track has been placed back into service and we have resumed normal rail
shipping from our Carlsbad facilities. We do not expect that the
derailment will have a material adverse effect on our future operating
results and financial condition.
* * * * * * * * * * *
Intrepid routinely posts information about Intrepid on its website under
the Investor Relations tab. Intrepid′s website address is www.intrepidpotash.com.
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 of
our international competitors use, equals 1,000 kilograms or 2,204.68
pounds.
Since adjusted net income and Adjusted EBITDA are non-GAAP financial
measures, we make reference to their respective reconciliations in the
accompanying non-GAAP reconciliation tables towards the end of this
release and the associated financial tables provide the details to
reconcile these numbers to U.S. GAAP line items.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
additional details regarding these operating measures.
Conference Call Information
The conference call to discuss first quarter 2011 results is scheduled
for Thursday, May 5, 2011, at 8:00 a.m. MDT (10:00 a.m. EDT). The call
participation number is (800) 319-4610. A recording of the conference
call will be available two hours after the completion of the call at
(800) 319-6413. International participants can dial (412) 858-4600 to
take part in the conference call and can access a replay of the call at
(412) 317-0088. The replay of the call will require the input of the
conference identification number 763324. The call will also be streamed
on the Intrepid website, www.intrepidpotash.com.
In addition, the press release announcing first quarter 2011 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, 2011.
1 This is a financial measure not calculated in accordance
with 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 an operating
performance measure calculated as gross sales less freight costs,
divided by the number of tons sold in the period.
3 Cash operating cost of goods sold, net of by-product
credits, is an operating performance measure defined as total cost of
goods sold excluding royalties, depreciation, depletion and amortization.
4 This is a financial measure not calculated in accordance
with U.S. Generally Accepted Accounting Principles (Non-GAAP). See the
Non-GAAP reconciliations set forth later in this press release for
additional information.
5 The calculation of average net realized sales price
advantage is calculated as the difference between our average net
realized sales price and the combined average net realized sales price
of Potash Corporation of Saskatchewan Inc., The Mosaic Company and
Agrium Inc. ('Agrium?) based on publicly available information. In
calculating these average net realized sales prices, we assumed a
freight rate of $28 per ton for Agrium based on historical reported
results as freight was not separately disclosed in Agrium′s latest
periodic filing.
* * * * * * * * * * *
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
Trio ®; operational difficulties at our facilities that limit
production of our products; interruptions in railcar or truck
transportation services; the ability to hire and retain qualified
employees; changes in demand and/or supply for potash or Trio ®/langbeinite;
changes in our reserve estimates; our ability to successfully execute
the projects that are essential to our business strategy, including but
not limited to the development of the HB Solar Solution mine as a
solution mine and the further development of our langbeinite recovery
assets; weather risks affecting net evaporation rates at our solar
solution mining operations; changes in the prices of our raw materials,
including but not limited to the price of chemicals, 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; obtaining permitting for applicable
federal and state agencies related to the construction and operation of
assets; competition in the fertilizer industry; declines in U.S. or
world agricultural production; declines in use by the oil and gas
industry of potash products in drilling operations; 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; disruption in
credit markets; our ability to secure additional federal and state
potash leases to expand our existing mining operations; and 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, except as required by law we undertake no
obligation to publicly update or revise any forward-looking statement,
whether as the result of future events, new information or otherwise.
INTREPID POTASH, INC. SELECTED OPERATIONS DATA (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 | |||||||||||||||
Three Months Ended | |||||||||||||||
March 31, 2011 | March 31, 2010 | ||||||||||||||
Production volume (in thousands of tons): | |||||||||||||||
Potash | 234 | 172 | |||||||||||||
Langbeinite | 31 | 57 | |||||||||||||
Sales volume (in thousands of tons): | |||||||||||||||
Potash | 196 | 243 | |||||||||||||
Trio ® | 52 | 70 | |||||||||||||
Gross sales (in thousands): | |||||||||||||||
Potash |
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Trio ® |
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Freight costs (in thousands): | |||||||||||||||
Potash |
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Trio ® |
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Net sales (in thousands): | |||||||||||||||
Potash |
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Trio ® |
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Potash statistics (per ton): | |||||||||||||||
Average net realized sales price |
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| 166 | 199 | |||||||||||||
Depreciation, depletion, and amortization | 29 | 24 | |||||||||||||
Royalties | 16 | 13 | |||||||||||||
Total potash cost of goods sold | 211 | 236 | |||||||||||||
Warehousing and handling costs | 13 | 9 | |||||||||||||
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Trio ® statistics (per ton): | |||||||||||||||
Average net realized sales price |
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| 160 | 119 | |||||||||||||
Depreciation, depletion, and amortization | 23 | 17 | |||||||||||||
Royalties | 10 | 8 | |||||||||||||
Total Trio ® cost of goods sold | 193 | 144 | |||||||||||||
Warehousing and handling costs | 14 | 9 | |||||||||||||
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* |
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INTREPID POTASH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (In thousands, except share and per share amounts) | |||||||||||||||
Three Months Ended | |||||||||||||||
| March 31, 2011 | March 31, 2010 | ||||||||||||||
| Sales | $ | 104,978 | $ | 107,359 | |||||||||||
Less: | |||||||||||||||
Freight costs | 7,991 | 9,766 | |||||||||||||
Warehousing and handling costs | 3,277 | 2,725 | |||||||||||||
Cost of goods sold | 51,991 | 67,253 | |||||||||||||
Costs associated with abnormal | |||||||||||||||
production | - | 470 | |||||||||||||
Other | 502 | 269 | |||||||||||||
| Gross Margin | 41,217 | 26,876 | |||||||||||||
Selling and administrative | 6,871 | 6,613 | |||||||||||||
Accretion of asset retirement obligation | 191 | 176 | |||||||||||||
Insurance settlements from property | |||||||||||||||
and business losses |
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Other | 41 | 168 | |||||||||||||
| Operating Income | 46,614 | 19,919 | |||||||||||||
| Other Income (Expense) | |||||||||||||||
Interest expense, including realized and | |||||||||||||||
unrealized derivative gains and losses | (113 | ) | (555 | ) | |||||||||||
Interest income | 370 | 96 | |||||||||||||
Other income | 259 | 47 | |||||||||||||
| Income Before Income Taxes | 47,130 | 19,507 | |||||||||||||
| Income Tax Expense | (18,851 | ) | (7,661 | ) | |||||||||||
| Net Income | $ | 28,279 | $ | 11,846 | |||||||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Basic | 75,131,142 | 75,043,826 | |||||||||||||
Diluted | 75,263,447 | 75,131,530 | |||||||||||||
Earnings Per Share: | |||||||||||||||
Basic | $ | 0.38 | $ | 0.16 | |||||||||||
Diluted | $ | 0.38 | $ | 0.16 | |||||||||||
INTREPID POTASH, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF MARCH 31, 2011 AND DECEMBER 31, 2010 (In thousands, except share and per share amounts) | |||||||||||||||
| March 31, 2011 | December 31, 2010 | ||||||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | $ | 69,230 | $ | 76,133 | |||||||||||
Short-term investments | 38,669 | 45,557 | |||||||||||||
Accounts receivable: | |||||||||||||||
Trade, net | 38,062 | 23,767 | |||||||||||||
Other receivables | 2,415 | 1,161 | |||||||||||||
Refundable income taxes | 3,524 | 6,543 | |||||||||||||
Inventory, net | 49,292 | 48,094 | |||||||||||||
Prepaid expenses and other current assets | 3,065 | 4,016 | |||||||||||||
Current deferred tax asset | 4,906 | 3,551 | |||||||||||||
Total current assets | 209,163 | 208,822 | |||||||||||||
Property, plant, and equipment, net of accumulated depreciation | |||||||||||||||
of $74,191 and $66,615, respectively | 305,084 | 285,920 | |||||||||||||
Mineral properties and development costs, net of accumulated | |||||||||||||||
depletion of $8,865 and $8,431, respectively | 33,822 | 34,372 | |||||||||||||
Long-term parts inventory, net | 7,365 | 7,121 | |||||||||||||
Long-term investments | 34,371 | 21,298 | |||||||||||||
Other assets | 5,211 | 5,311 | |||||||||||||
Non-current deferred tax asset | 249,305 | 266,040 | |||||||||||||
| Total Assets | $ | 844,321 | $ | 828,884 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||
Accounts payable: | |||||||||||||||
Trade | $ | 16,151 | $ | 17,951 | |||||||||||
Related parties | 39 | 126 | |||||||||||||
Accrued liabilities | 18,469 | 17,153 | |||||||||||||
Accrued employee compensation and benefits | 7,110 | 8,597 | |||||||||||||
Other current liabilities | 1,322 | 1,578 | |||||||||||||
Total current liabilities | 43,091 | 45,405 | |||||||||||||
Asset retirement obligation | 9,669 | 9,478 | |||||||||||||
Deferred insurance proceeds | - | 11,700 | |||||||||||||
Other non-current liabilities | 4,169 | 4,460 | |||||||||||||
| Total Liabilities | 56,929 | 71,043 | |||||||||||||
| Commitments and Contingencies | |||||||||||||||
Common stock, $0.001 par value; 100,000,000 shares | |||||||||||||||
authorized; and 75,154,388 and 75,110,875 shares | |||||||||||||||
outstanding at March 31, 2011, and December 31, 2010, | |||||||||||||||
respectively | 75 | 75 | |||||||||||||
Additional paid-in capital | 560,926 | 559,675 | |||||||||||||
Accumulated other comprehensive loss | (681 | ) | (702 | ) | |||||||||||
Retained earnings | 227,072 | 198,793 | |||||||||||||
| Total Stockholders' Equity | 787,392 | 757,841 | |||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 844,321 | $ | 828,884 | |||||||||||
INTREPID POTASH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (In thousands) | ||||||||||||||||
Three Months Ended | ||||||||||||||||
| March 31, 2011 | March 31, 2010 | |||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||
Reconciliation of net income to net cash | ||||||||||||||||
provided by operating activities: | ||||||||||||||||
Net income | $ | 28,279 | $ | 11,846 | ||||||||||||
Deferred income taxes | 15,380 | 4,533 | ||||||||||||||
Insurance settlements from property and business losses | (12,500 | ) | - | |||||||||||||
Items not affecting cash: | ||||||||||||||||
Depreciation, depletion, amortization, and accretion | 8,533 | 6,539 | ||||||||||||||
Stock-based compensation | 1,112 | 987 | ||||||||||||||
Unrealized derivative gain | (321 | ) | (89 | ) | ||||||||||||
Other | 492 | 181 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade accounts receivable | (14,295 | ) | (7,613 | ) | ||||||||||||
Other receivables | (454 | ) | (136 | ) | ||||||||||||
Refundable income taxes | 3,019 | 4,835 | ||||||||||||||
Inventory | (1,442 | ) | 19,821 | |||||||||||||
Prepaid expenses and other assets | 951 | 861 | ||||||||||||||
| 190 | (4,702 | ) | |||||||||||||
Other liabilities | (320 | ) | (1,248 | ) | ||||||||||||
Net cash provided by operating activities | 28,624 | 35,815 | ||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||
Additions to property, plant, and equipment | (28,603 | ) | (13,950 | ) | ||||||||||||
Additions to mineral properties and development costs | (542 | ) | - | |||||||||||||
Purchases of investments | (22,299 | ) | (11,636 | ) | ||||||||||||
Proceeds from investments | 15,778 | 486 | ||||||||||||||
Net cash used in investing activities | (35,666 | ) | (25,100 | ) | ||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||
| (487 | ) | (240 | ) | ||||||||||||
| 372 | 64 | ||||||||||||||
Proceeds from exercise of stock options | 254 | - | ||||||||||||||
Net cash provided by (used in) financing activities | 139 | (176 | ) | |||||||||||||
| Net Change in Cash and Cash Equivalents | (6,903 | ) | 10,539 | |||||||||||||
| Cash and Cash Equivalents, beginning of period | 76,133 | 89,792 | ||||||||||||||
| Cash and Cash Equivalents, end of period | $ | 69,230 | $ | 100,331 | ||||||||||||
| Supplemental disclosure of cash flow information | ||||||||||||||||
Cash paid (received) during the period for: | ||||||||||||||||
Interest, including settlements on derivatives | $ | 309 | $ | 576 | ||||||||||||
Income taxes | $ | 93 | $ | (1,771 | ) | |||||||||||
INTREPID POTASH, INC.
NON-GAAP ADJUSTED NET INCOME
(UNAUDITED) RECONCILIATIONS
FOR THE THREE MONTHS ENDED MARCH
31, 2011 AND 2010
(In thousands)
Adjusted net income is calculated as net income adjusted for significant
non-cash and infrequent items. Examples of non-cash and infrequent items
include insurance settlements from property and business losses,
non-cash unrealized gains or losses associated with derivative
adjustments, and costs associated with abnormal production. The non-GAAP
measure of adjusted net income is presented because management believes
it provides useful additional information to investors for analysis of
Intrepid's fundamental business on a recurring basis. In addition,
management believes that the concept of adjusted net income is widely
used by professional research analysts and others in the valuation,
comparison, and investment recommendations of companies in the potash
mining industry, and many investors use the published research of
industry research analysts in making investment decisions.
Adjusted net income should not be considered in isolation or as a
substitute for net income, income from operations, cash provided by
operating activities or other income, profitability, cash flow, or
liquidity measures prepared under U.S. GAAP. Since adjusted net income
excludes some, but not all items that affect net income and may vary
among companies, the adjusted net income amounts presented may not be
comparable to similarly titled measures of other companies.
Three Months Ended | |||||||||||||||
March 31, 2011 | March 31, 2010 | ||||||||||||||
Net Income |
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Adjustments | |||||||||||||||
Insurance settlements from property and business losses |
|
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Unrealized derivative gain |
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Costs associated with abnormal production |
| 470 | |||||||||||||
Calculated tax effect * |
|
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Total adjustments |
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Adjusted Net Income |
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INTREPID POTASH, INC.
NON-GAAP ADJUSTED EBITDA
(UNAUDITED) RECONCILIATIONS
FOR THE THREE MONTHS ENDED MARCH
31, 2011 AND 2010
(In thousands)
Adjusted earnings before interest, taxes, depreciation, and amortization
('Adjusted EBITDA?) is computed as net income adjusted for the add back
of interest expense (including derivatives), income tax expense,
depreciation, depletion, and amortization, and asset retirement
obligation accretion. This non-GAAP measure is presented because
management believes it assists investors and analysts in comparing our
performance across reporting periods on a consistent basis by excluding
items that we do not believe are indicative of our core operating
performance. We use Adjusted EBITDA to evaluate the effectiveness of our
business strategies. In addition, Adjusted EBITDA is widely used by
professional research analysts and others in the valuation, comparison,
and investment recommendations of companies in the potash mining
industry, and many investors use the published research of industry
research analysts in making investment decisions.
Adjusted EBITDA should not be considered in isolation or as a substitute
for performance or liquidity measures calculated in accordance with U.S.
GAAP. Since Adjusted EBITDA excludes some, but not all items that affect
net income and net cash provided by operating activities and may vary
among companies, the Adjusted EBITDA amounts presented may not be
comparable to similarly titled measures of other companies. The
following is a reconciliation of our net income, the most directly
comparable U.S. GAAP measure, to Adjusted EBITDA:
Three Months Ended | |||||||||||||
March 31, 2011 | March 31, 2010 | ||||||||||||
Net Income |
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Interest expense, including derivatives |
| 555 | |||||||||||
Income tax expense |
|
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Depreciation, depletion, amortization, and accretion |
|
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Total adjustments |
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Intrepid Potash, Inc.
William Kent, 303-296-3006