Intrepid Announces Third Quarter 2011 Financial Results
![Intrepid Announces Third Quarter 2011 Financial Results](https://www.minenportal.de/media/goldseiten-news.jpg)
Intrepid Potash, Inc. (NYSE:IPI) announced third quarter 2011 financial
results today, with quarterly net income of $25.5 million and $0.34 of
earnings per diluted share. These results included the recognition of
$0.03 per diluted share of income, net of tax, associated with recording
an estimated additional refundable employment-related credit from the
State of New Mexico. Adjusted earnings before interest, taxes,
depreciation, and amortization (Adjusted EBITDA1) for the
third quarter of 2011 were $51.0 million.
'The domestic potash market, buoyed by solid crop prices and the
strength of overall farmer economics, remained firm during the third
quarter,? said Bob Jornayvaz, Intrepid′s Executive Chairman of the
Board. 'The flexibility we have built into our production facilities
together with our marketing expertise resulted in solid sales for the
quarter, despite the various weather challenges that impacted our
customers. The sequential $27 per ton improvement in our average net
realized sales price for potash from the second quarter reflects the
upward pricing momentum during the quarter and our ability to reach out
and fulfill customer demand. We believe that continued strong crop
economics make clear the value of balanced fertilization and therefore
will incentivize farmers to apply nutrients at normal rates this fall in
preparation for the 2012 growing season.?
Third Quarter 2011 Highlights:
Potash sales in the third quarter of 2011 were 190,000 tons as
compared to 221,000 tons in the same period of 2010.
Potash production increased four percent in the third quarter of 2011
to 173,000 tons compared to 166,000 tons in the same period a year ago.
Average net realized sales price2 for potash was $489 per
ton ($539 per metric tonne) in the third quarter of 2011, compared to
$343 per ton ($378 per metric tonne) in the third quarter of 2010 and
$462 per ton ($509 per metric tonne) in the second quarter of 2011.
Cash operating cost of goods sold, net of by-product credits3,
for potash was $175 per ton in the third quarter of 2011. This
compares to $171 per ton in the third quarter of 2010.
Sales of langbeinite, which Intrepid markets as Trio ?, were
54,000 tons in the third quarter of 2011 compared to 45,000 tons in
the same period a year ago.
Langbeinite production in the third quarter of 2011 was 35,000 tons
compared to 32,000 tons in the third quarter of 2010.
Average net realized sales price for Trio ? was $251 per ton
($277 per metric tonne) in the third quarter of 2011. This compares to
$173 per ton ($191 per metric tonne) in the third quarter of 2010 and
$222 per ton ($245 per metric tonne) in the second quarter of 2011.
Average gross margin in the third quarter of 2011 for the sale of
potash was $249 per ton or 51 percent, compared to $122 per ton or 36
percent in the third quarter of 2010. Average gross margin for the
sale of Trio ? was $5 per ton or two percent compared to $3
per ton or two percent in the same period of 2010.
Capital investment in the third quarter of 2011 totaled approximately
$42.0 million.
As of September 30, 2011, Intrepid had $168.8 million of cash, cash
equivalents, and investments; no outstanding debt; and $250.0 million
available under the company′s unsecured, revolving credit facility.
Intrepid′s third quarter results reflect our success in
opportunistically marketing our products. 'Continued severe drought
conditions in Texas required us to look to other markets for this
production. Through our longstanding customer relationships and new
affiliations we have been able to develop, we were very successful in
marketing these tons,? said Mr. Jornayvaz. 'Our ability to address these
challenges was greatly aided by the additional flexibility we have built
into our production system to produce those products most highly valued
in the market. Our focus on increasing granulation capacity has paid off
as we are better able to respond to shifting market dynamics.?
Mr. Jornayvaz continued, 'It is important to recognize the strength of
our capital investment program as we deliver on the major capital
investments in our facilities. This can be seen in the installation and
commissioning of the underground stacker at our West mine last year, the
significant upgrade to compaction at our Moab plant, the progress made
on our new compactor in Wendover, the approval of a new compaction
project at our North plant in Carlsbad, and the near-term completion of
the Langbeinite Recovery Improvement Project ('LRIP?) at our East
facility. These projects demonstrate our commitment to increasing
production and marketing flexibility. As to the LRIP project, we have
already successfully tied in selected pieces of equipment, we expect the
dense media separation plant to be operational before the end of the
year, and we expect the granulation plant to be operational in early
2012. We continue to be on track for the issuance of the Record of
Decision from the Bureau of Land Management on our proposed HB Solar
Solution Mine during the first quarter of 2012. These significant
capital projects will provide us even greater flexibility to meet our
customers′ needs as we grow our production.?
Market Conditions
Crop economics for U.S. farmers remain strong with continued tight
domestic stock-to-use ratios for corn and soybeans, as well as strong
demand for grains worldwide. We continue to believe that farmers should
have the economic resources and motivation to replace the nutrients
drawn from the soil and thereby capitalize on the strong commodity
markets. Harvest in most parts of the United States began in earnest in
the first half of October and has intensified in recent weeks. We
recognize that dealers have carried a healthy level of potash inventory
into the fall of 2011, unlike in 2010. The timing of fall harvest, and
ultimately how long the fall weather window stays open for fertilizer
applications, will be key determinates of fall demand.
Outside of the domestic agricultural market, we have begun to see an
uptick in demand in the industrial market. As shale gas develops and new
techniques to improve initial and ultimate recoveries from oil, natural
gas and liquids continue to reshape the energy industry, we anticipate
pockets of increased demand for standard-sized potash. Industrial demand
has increased 26 percent in the first nine months of 2011 over the same
period in 2010.
Third Quarter Results and Recent Performance
Income before income taxes for the third quarter of 2011 was $42.1
million compared to $19.8 million in the third quarter of 2010. Cash
flows from operating activities were $50.3 million for the third quarter
of 2011 compared to $8.6 million for the third quarter of 2010. Adjusted
net income4 for the third quarter of 2011 was $23.4 million
compared to Adjusted net income of $11.7 million in the same period last
year.
Potash
During the third quarter of 2011, Intrepid produced 173,000 tons of
potash and sold 190,000 tons of potash compared to 166,000 tons produced
and 221,000 tons sold in the third quarter of 2010. Production results
for the quarter were consistent with expectations and reflect the
scheduled annual turnaround maintenance work at the East facility, and
the completion of the summer evaporation season and commencement of
harvest in mid-September at Intrepid′s Moab, Utah mine. As noted in
Intrepid′s previous release dated October 13, 2011, the decrease in tons
sold as compared to the third quarter of 2010 is attributed in part to
certain customer requests to delay shipment of committed orders of
potash due to interruptions in rail service caused by persistent high
water levels in certain customer locations along the Missouri River
compared to an exceptionally strong third quarter in 2010. Intrepid also
focused on marketing volumes that normally are sold closer to our
Carlsbad plant locations into other markets less affected by weather,
albeit at higher freight costs.
Intrepid′s cash operating cost of goods sold for potash, net of
by-product credits of $8 per ton, was $175 per ton in the third quarter
of 2011 compared to $171 per ton, net of by-product credits of $7 per
ton, in the third quarter of 2010. Intrepid′s slightly higher per ton
cash operating cost of goods sold for potash during the third quarter of
2011 resulted from the lower relative production realized during the
quarter associated with the scheduled maintenance turnaround at our East
facility. The effect of the turnaround, and the time required to bring
the plant back to full capacity following the scheduled work, was
diminished production during the quarter spread over escalated
maintenance costs, thereby increasing the cash production costs per ton.
Given the timing of the turnaround in September, a portion of the
resulting higher per ton cash operating costs were recognized in the
third quarter, and will also be reflected in the ensuing periods when
the associated inventory is sold.
Langbeinite ? Trio ?
Demand for all grades of Trio ? remained strong during the
third quarter of 2011 and Intrepid expects this strong demand for Trio ?
to continue through the balance of 2011 and beyond. Because of this
demand and the decreased production in the third quarter from our East
plant, Intrepid finished the quarter with very low inventory levels for
both granular and standard-sized Trio ? product.
Intrepid sold 54,000 tons of Trio ? in the third quarter of
2011 at an average net realized sales price of $251 per ton, which was
$29 per ton higher than in the second quarter of 2011. This compares to
45,000 tons of Trio ? sold at an average net realized sales
price of $173 per ton in the prior year′s third quarter. The sequential
improvement in Trio ? pricing in the third quarter of 2011
resulted from realization of the price increases implemented in August
2011, as well as continued improvements in pricing parity in the export
markets for both standard and granular Trio ?.
Capital Investment
Total capital investment for the full year 2011 is expected to be
towards the top end of the previously disclosed range of $140 to $165
million. During the third quarter, Intrepid continued to make
significant progress on a number of major capital projects, investing
approximately $41.9 ?million, which brings the company′s capital
investments during the first nine months of 2011 to approximately $98.1
million. The fourth quarter has a high level of investment due to the
timing of equipment deliveries, commissioning of the Wendover compactor,
and commissioning of a significant portion of the LRIP. The total
investment for the LRIP remains on budget at approximately $85 to $90
million.
Intrepid continues to execute on it strategy to increase granulation
capacity for both potash and Trio ?. Beyond the addition of
granulation capacity at its Moab, Utah facility last year, Intrepid is
expanding its compaction capacity in Wendover, Utah and in Carlsbad, New
Mexico and adding granulation as part of the LRIP. Intrepid remains
focused on matching its production of standard potash with the
industrial sales opportunities from both its Utah and New Mexico
operations. Further, for Trio ?, Intrepid remains focused on
having the flexibility to be able to granulate all of its langbeiniteproduction to capture additional margin opportunities in this
premium market.
In October 2011, Intrepid′s Board of Directors approved the construction
of a new compaction plant to replace its current compaction facility at
its North plant, near Carlsbad, New Mexico. The North compaction project
is designed to increase the capacity of the North plant to handle all of
the anticipated production from the HB Solar Solution Mine project and
the planned expansions of mining and milling capacity at the West
facilities. The North compaction project is expected to be completed in
two phases to coincide with these production increases, with completion
of the first phase planned for early 2013 and completion of the second
phase planned for 2014. Intrepid expects to initiate the permitting
process for this project in the fourth quarter of 2011. Total capital
investment for the project is expected to be approximately $95 to $100
million, of which approximately $9.1 million has been invested to date.
The Environmental Impact Statement ('EIS?) review being conducted by the
Bureau of Land Management for our proposed HB Solar Solution Mine
continues to progress in a meaningful manner. The current schedule for
receiving the Record of Decision on the project remains in the first
quarter of 2012. As Intrepid moves closer to the expected Record of
Decision date, we have updated the project cost estimates to incorporate
changes in scope, cost escalations related to commodities, labor,
inflationary effects, and consideration of certain items described as
alternatives within the published draft EIS. The Board of Directors
recently approved the updated authorization for expenditure associated
with the HB Solar Solution Mine to an estimated $200 to $230 million
capital investment. The approval of this authorization was based on the
evaluation and conclusion that the project continues to be an important
and financially attractive capital investment that fits within the
company′s overall capital strategy of increasing productivity and
decreasing cash operating cost per ton. Intrepid expects to invest the
bulk of this capital after it receives all of the necessary approvals
and permits from the state and federal regulatory agencies. Intrepid has
invested $30.5 million to date in engineering, design, permitting, and
certain long lead-time equipment purchases.
In addition to the updates provided above, several other capital
investment activities progressed during the quarter at our New Mexico
and Utah facilities.
New Mexico
In addition to replacing two miners in the underground fleet, Intrepid
added an additional mine panel at each of its East and West mines. The
new West mine panel became operational in the third quarter of 2011
and the benefit from the East mine panel is expected to begin in the
first quarter of 2012.
Intrepid completed the installation and commissioning of distributed
control systems and increased instrumentation at its production
facilities at the West underground mine and our East surface mill in
the third quarter of 2011. During the third quarter of 2011, Intrepid
decided to defer the planned distributed control work in the East
underground as mining operations have been operating at rates that are
greater than the plant operating capacities.
Utah
Intrepid is continuing to evaluate additional solution mining
opportunities at our Moab facility. Intrepid anticipates drilling two
core holes beginning late in 2011 or early 2012 to obtain further data
as to the development of our Moab resource.
Intrepid continued construction of the new compaction facility in
Wendover, which will allow Intrepid to granulate more of its potash
production. Intrepid expects to have this project operational by the
end of 2011 and be able to increase granular production beginning in
2012. Intrepid also continued construction of a new product warehouse
at its Wendover facility. Intrepid expects the additional storage
capacity to be in place in early 2012 to complement the completion of
the new Wendover compaction plant.
* * * * * * * * * * *
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 third quarter 2011 results is scheduled
for Thursday, November 3, 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 third 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 December 3, 2011.
1 Adjusted EBITDA 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 Adjusted net income 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.
* * * * * * * * * * *
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 SEPTEMBER 30, 2011 AND 2010 | |||||||
? | |||||||
Three Months Ended | |||||||
September 30, 2011 | ? | ? | ? | September 30, 2010 | |||
Production volume (in thousands of tons): | |||||||
Potash | 173 | 166 | |||||
Langbeinite | 35 | 32 | |||||
? | |||||||
Sales volume (in thousands of tons): | |||||||
Potash | 190 | 221 | |||||
Trio ? | 54 | 45 | |||||
? | |||||||
Gross sales (in thousands): | |||||||
Potash | $ 97,770 | $ 81,246 | |||||
Trio ? | $ 16,230 | $ 10,225 | |||||
Freight costs (in thousands): | |||||||
Potash | $ 4,977 | $ 5,396 | |||||
Trio ? | $ 2,625 | $ 2,435 | |||||
Net sales (in thousands): | |||||||
Potash | $ 92,793 | $ 75,850 | |||||
Trio ? | $ 13,605 | $ 7,790 | |||||
? | |||||||
Potash statistics (per ton): | |||||||
Average net realized sales price | $ 489 | $ 343 | |||||
| 175 | 171 | |||||
Depreciation, depletion, and amortization | 33 | 26 | |||||
Royalties | 18 | 13 | |||||
Total potash cost of goods sold | 226 | 210 | |||||
Warehousing and handling costs | 14 | 11 | |||||
| $ 249 | $ 122 | |||||
? | |||||||
Trio ? statistics (per ton): | |||||||
Average net realized sales price | $ 251 | $ 173 | |||||
| 197 | 132 | |||||
Depreciation, depletion, and amortization | 21 | 18 | |||||
Royalties | 12 | 8 | |||||
Total Trio ? cost of goods sold | 230 | 158 | |||||
Warehousing and handling costs | 16 | 12 | |||||
| $ 5 | $ 3 |
* On a per ton basis, by-product credits were $8 and $7 for the third
quarter of 2011, and 2010, respectively. By-product credits were $1.4
million and $1.5 ?million for the third quarter of 2011, and 2010,
respectively. There were no costs associated with abnormal production
for the third quarter of 2011 or 2010.
? | ? | ? | |||||
INTREPID POTASH, INC. SELECTED OPERATIONS DATA (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 | |||||||
? | |||||||
Nine Months Ended | |||||||
September 30, 2011 | ? | September 30, 2010 | |||||
Production volume (in thousands of tons): | |||||||
Potash | 616 | 503 | |||||
Langbeinite | 110 | 128 | |||||
? | |||||||
Sales volume (in thousands of tons): | |||||||
Potash | 610 | 594 | |||||
Trio ? | 145 | 177 | |||||
? | |||||||
Gross sales (in thousands): | |||||||
Potash | $ 297,625 | $ 223,522 | |||||
Trio ? | $ 40,726 | $ 39,627 | |||||
Freight costs (in thousands): | |||||||
Potash | $ 14,346 | $ 13,110 | |||||
Trio ? | $ 7,974 | $ 10,060 | |||||
Net sales (in thousands): | |||||||
Potash | $ 283,279 | $ 210,412 | |||||
Trio ? | $ 32,752 | $ 29,567 | |||||
? | |||||||
Potash statistics (per ton): | |||||||
Average net realized sales price | $ 464 | $ 354 | |||||
| 167 | 190 | |||||
Depreciation, depletion, and amortization | 31 | 26 | |||||
Royalties | 17 | 13 | |||||
Total potash cost of goods sold | 215 | 229 | |||||
Warehousing and handling costs | 14 | 10 | |||||
| $ 235 | $ 115 | |||||
? | |||||||
Trio ? statistics (per ton): | |||||||
Average net realized sales price | $ 226 | $ 167 | |||||
| 174 | 124 | |||||
Depreciation, depletion, and amortization | 21 | 17 | |||||
Royalties | 11 | 8 | |||||
Total Trio ? cost of goods sold | 206 | 149 | |||||
Warehousing and handling costs | 15 | 10 | |||||
| $ 5 | $ 8 | |||||
? |
* On a per ton basis, by-product credits were $7 and $8 for the nine
months ended September 30, 2011, and 2010, respectively. By-product
credits were $4.0 ?million and $4.9 ?million for the nine months ended
September 30, 2011, and 2010, respectively. Costs associated with
abnormal production were zero and $0.5 million for the nine months ended
September 30, 2011, and 2010, respectively.
? | ? | ? | ? | ||||||||||||||
INTREPID POTASH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (In thousands, except share and per share amounts) | |||||||||||||||||
? | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, 2011 | ? | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||||||||||
Sales | $ | 114,000 | $ | 91,471 | $ | 338,351 | $ | 263,149 | |||||||||
Less: | |||||||||||||||||
Freight costs | 7,602 | 7,831 | 22,320 | 23,170 | |||||||||||||
Warehousing and handling costs | 3,556 | 2,893 | 10,617 | 7,935 | |||||||||||||
Cost of goods sold | 55,547 | 53,812 | 161,257 | 162,482 | |||||||||||||
Costs associated with abnormal | |||||||||||||||||
production | - | - | - | 470 | |||||||||||||
Other | ? | 188 | ? | ? | 127 | ? | ? | 695 | ? | ? | 666 | ? | |||||
Gross Margin | 47,107 | 26,808 | 143,462 | 68,426 | |||||||||||||
? | |||||||||||||||||
Selling and administrative | 8,277 | 6,439 | 24,134 | 21,021 | |||||||||||||
Accretion of asset retirement obligation | 184 | 176 | 566 | 528 | |||||||||||||
Insurance settlements from property | |||||||||||||||||
and business losses | - | - | (12,500 | ) | - | ||||||||||||
Other operating (income) loss | ? | (3,115 | ) | ? | 271 | ? | ? | (7,804 | ) | ? | 744 | ? | |||||
Operating Income | 41,761 | 19,922 | 139,066 | 46,133 | |||||||||||||
? | |||||||||||||||||
Other Income (Expense) | |||||||||||||||||
Interest expense, including realized and | |||||||||||||||||
unrealized derivative gains and losses | (175 | ) | (430 | ) | (677 | ) | (1,462 | ) | |||||||||
Interest income | 446 | 207 | 1,231 | 479 | |||||||||||||
Other income | ? | 22 | ? | ? | 147 | ? | ? | 340 | ? | ? | 296 | ? | |||||
Income Before Income Taxes | 42,054 | 19,846 | 139,960 | 45,446 | |||||||||||||
? | |||||||||||||||||
Income Tax Expense | ? | (16,547 | ) | ? | (8,187 | ) | ? | (55,466 | ) | ? | (18,338 | ) | |||||
Net Income | $ | 25,507 | ? | $ | 11,659 | ? | $ | 84,494 | ? | $ | 27,108 | ? | |||||
? | |||||||||||||||||
Weighted Average Shares Outstanding: | |||||||||||||||||
Basic | ? | 75,202,504 | ? | ? | 75,101,446 | ? | ? | 75,172,912 | ? | ? | 75,077,260 | ? | |||||
Diluted | ? | 75,300,272 | ? | ? | 75,143,542 | ? | ? | 75,277,594 | ? | ? | 75,133,775 | ? | |||||
Earnings Per Share: | |||||||||||||||||
Basic | $ | 0.34 | ? | $ | 0.16 | ? | $ | 1.12 | ? | $ | 0.36 | ? | |||||
Diluted | $ | 0.34 | ? | $ | 0.16 | ? | $ | 1.12 | ? | $ | 0.36 | ? | |||||
? |
? | ? | ? | |||||||
INTREPID POTASH, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF SEPTEMBER 30, 2011 AND DECEMBER 31, 2010 (In thousands, except share and per share amounts) | |||||||||
? | |||||||||
September 30, 2011 | December 31, 2010 | ||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 67,487 | $ | 76,133 | |||||
Short-term investments | 73,550 | 45,557 | |||||||
Accounts receivable: | |||||||||
Trade, net | 34,162 | 23,767 | |||||||
Other receivables | 10,989 | 1,161 | |||||||
Refundable income taxes | 7,095 | 6,543 | |||||||
Inventory, net | 53,420 | 48,094 | |||||||
Prepaid expenses and other current assets | 6,121 | 4,016 | |||||||
Current deferred tax asset | ? | 342 | ? | ? | 3,551 | ? | |||
Total current assets | ? | 253,166 | ? | ? | 208,822 | ? | |||
? | |||||||||
Property, plant, and equipment, net of accumulated depreciation | |||||||||
of $89,790 and $66,615, respectively | 359,318 | 285,920 | |||||||
Mineral properties and development costs, net of accumulated | |||||||||
depletion of $9,435 and $8,431, respectively | 33,324 | 34,372 | |||||||
Long-term parts inventory, net | 8,791 | 7,121 | |||||||
Long-term investments | 27,734 | 21,298 | |||||||
Other assets | 4,862 | 5,311 | |||||||
Non-current deferred tax asset | ? | 226,635 | ? | ? | 266,040 | ? | |||
Total Assets | $ | 913,830 | ? | $ | 828,884 | ? | |||
? | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Accounts payable: | |||||||||
Trade | $ | 21,115 | $ | 17,951 | |||||
Related parties | 93 | 126 | |||||||
Accrued liabilities | 19,921 | 17,153 | |||||||
Accrued employee compensation and benefits | 12,362 | 8,597 | |||||||
Other current liabilities | ? | 1,201 | ? | ? | 1,578 | ? | |||
Total current liabilities | ? | 54,692 | ? | ? | 45,405 | ? | |||
? | |||||||||
Asset retirement obligation | 9,757 | 9,478 | |||||||
Deferred insurance proceeds | - | 11,700 | |||||||
Other non-current liabilities | ? | 3,562 | ? | ? | 4,460 | ? | |||
Total Liabilities | ? | 68,011 | ? | ? | 71,043 | ? | |||
? | |||||||||
Commitments and Contingencies | |||||||||
? | |||||||||
Common stock, $0.001 par value; 100,000,000 shares | |||||||||
authorized; and 75,203,644 and 75,110,875 shares | |||||||||
outstanding at September 30, 2011, and December 31, 2010, | |||||||||
respectively | 75 | 75 | |||||||
Additional paid-in capital | 563,138 | 559,675 | |||||||
Accumulated other comprehensive loss | (681 | ) | (702 | ) | |||||
Retained earnings | ? | 283,287 | ? | ? | 198,793 | ? | |||
Total Stockholders' Equity | ? | 845,819 | ? | ? | 757,841 | ? | |||
Total Liabilities and Stockholders' Equity | $ | 913,830 | ? | $ | 828,884 | ? | |||
? |
? | ? | ? | ? | ? | ? | ? | ? | |||||||||||||
INTREPID POTASH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010 (In thousands) | ||||||||||||||||||||
? | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||
Reconciliation of net income to net cash | ||||||||||||||||||||
provided by operating activities: | ||||||||||||||||||||
Net income | $ | 25,507 | $ | 11,659 | $ | 84,494 | $ | 27,108 | ||||||||||||
Deferred income taxes | 12,597 | 12,191 | 42,614 | 19,355 | ||||||||||||||||
Insurance settlements from property and business losses | - | - | (12,500 | ) | - | |||||||||||||||
Items not affecting cash: | ||||||||||||||||||||
Depreciation, depletion, amortization, and accretion | 8,819 | 6,860 | 26,043 | 20,086 | ||||||||||||||||
Stock-based compensation | 1,104 | 978 | 3,776 | 3,093 | ||||||||||||||||
Unrealized derivative gain | (368 | ) | (56 | ) | (913 | ) | (173 | ) | ||||||||||||
Other | 1,110 | 272 | 1,565 | 756 | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Trade accounts receivable | 1,556 | (24,776 | ) | (10,395 | ) | (17,870 | ) | |||||||||||||
Other receivables | (3,821 | ) | (1,056 | ) | (9,834 | ) | (1,401 | ) | ||||||||||||
Refundable income taxes | 3,567 | (3,840 | ) | (552 | ) | 3,074 | ||||||||||||||
Inventory | (2,401 | ) | 4,553 | (6,996 | ) | 15,808 | ||||||||||||||
Prepaid expenses and other assets | (1,788 | ) | (2,903 | ) | (541 | ) | (2,309 | ) | ||||||||||||
| 4,529 | 5,000 | 13,243 | 10,365 | ||||||||||||||||
Other liabilities | ? | (84 | ) | ? | (268 | ) | ? | (392 | ) | ? | (1,383 | ) | ||||||||
Net cash provided by operating activities | ? | 50,327 | ? | ? | 8,614 | ? | ? | 129,612 | ? | ? | 76,509 | ? | ||||||||
? | ||||||||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Additions to property, plant, and equipment | (37,120 | ) | (20,161 | ) | (100,936 | ) | (57,844 | ) | ||||||||||||
Additions to mineral properties and development costs | (60 | ) | 159 | (780 | ) | (222 | ) | |||||||||||||
Proceeds from insurance settlements from property and business losses | - | 1,576 | 806 | 1,576 | ||||||||||||||||
Purchases of investments | (25,901 | ) | (38,271 | ) | (78,360 | ) | (61,909 | ) | ||||||||||||
Proceeds from investments | ? | 10,408 | ? | ? | 16,811 | ? | ? | 42,779 | ? | ? | 19,498 | ? | ||||||||
Net cash used in investing activities | ? | (52,673 | ) | ? | (39,886 | ) | ? | (136,491 | ) | ? | (98,901 | ) | ||||||||
? | ||||||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Debt issuance costs | (1,454 | ) | - | (1,454 | ) | - | ||||||||||||||
| (1 | ) | - | (1,077 | ) | (727 | ) | |||||||||||||
| 7 | (64 | ) | 434 | - | |||||||||||||||
Proceeds from exercise of stock options | ? | 31 | ? | ? | 19 | ? | ? | 330 | ? | ? | 19 | ? | ||||||||
Net cash used in financing activities | ? | (1,417 | ) | ? | (45 | ) | ? | (1,767 | ) | ? | (708 | ) | ||||||||
? | ||||||||||||||||||||
Net Change in Cash and Cash Equivalents | (3,763 | ) | (31,317 | ) | (8,646 | ) | (23,100 | ) | ||||||||||||
Cash and Cash Equivalents, beginning of period | ? | 71,250 | ? | ? | 98,009 | ? | ? | 76,133 | ? | ? | 89,792 | ? | ||||||||
Cash and Cash Equivalents, end of period | $ | 67,487 | ? | $ | 66,692 | ? | $ | 67,487 | ? | $ | 66,692 | ? | ||||||||
? | ||||||||||||||||||||
Supplemental disclosure of cash flow information | ||||||||||||||||||||
Cash paid (received) during the period for: | ||||||||||||||||||||
Interest, including settlements on derivatives | $ | 406 | ? | $ | 479 | ? | $ | 1,165 | ? | $ | 1,574 | ? | ||||||||
Income taxes | $ | 378 | ? | $ | 134 | ? | $ | 12,983 | ? | $ | (4,008 | ) | ||||||||
? |
INTREPID POTASH, INC.
NON-GAAP ADJUSTED NET INCOME
(UNAUDITED) RECONCILIATIONS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 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, the
income associated with the refundable employment-related credits from
the State of New Mexico, non-cash unrealized gains or losses associated
with derivative adjustments, costs associated with abnormal production
and other infrequent items. 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. The
following is a reconciliation of our net income, the most directly
comparable U.S. GAAP measure, to Adjusted net income:
? | ? | ? | ? | ? | ? | ? | ? | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, 2011 | September 30, 2010 | ? | September 30, 2011 | September 30, 2010 | ||||||||||||||||
? | ||||||||||||||||||||
Net Income | $ | 25,507 | $ | 11,659 | $ | 84,494 | $ | 27,108 | ||||||||||||
Adjustments | ||||||||||||||||||||
Insurance settlements from property | ||||||||||||||||||||
and business losses | - | - | (12,500 | ) | - | |||||||||||||||
Income associated with New Mexico | ||||||||||||||||||||
refundable employment-related credit ** | (3,230 | ) | - | (7,922 | ) | - | ||||||||||||||
Unrealized derivative gain | (368 | ) | (56 | ) | (913 | ) | (173 | ) | ||||||||||||
Costs associated with abnormal production | - | - | - | 470 | ||||||||||||||||
Other | 188 | 127 | 695 | 666 | ||||||||||||||||
Calculated tax effect * | ? | 1,350 | ? | ? | (28 | ) | ? | 8,173 | ? | ? | (379 | ) | ||||||||
Total adjustments | ? | (2,060 | ) | ? | 43 | ? | ? | (12,467 | ) | ? | 584 | ? | ||||||||
Adjusted Net Income | $ | 23,447 | ? | $ | 11,702 | ? | $ | 72,027 | ? | $ | 27,692 | ? | ||||||||
? | ||||||||||||||||||||
? | ||||||||||||||||||||
*Estimated annual effective tax rate of 39.6 percent for 2011 and 39.4 percent for 2010. | ||||||||||||||||||||
**Included in 'Other operating (income) loss' line item. | ||||||||||||||||||||
? |
INTREPID POTASH, INC.
NON-GAAP ADJUSTED EBITDA
(UNAUDITED) RECONCILIATIONS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 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 | Nine Months Ended | |||||||||||||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||||||||||
? | ||||||||||||||||
Net Income | $ | 25,507 | $ | 11,659 | $ | 84,494 | $ | 27,108 | ||||||||
? | ||||||||||||||||
Interest expense, including realized and | ||||||||||||||||
unrealized derivative gains and losses | 175 | 430 | 677 | 1,462 | ||||||||||||
Income tax expense | 16,547 | 8,187 | 55,466 | 18,338 | ||||||||||||
Depreciation, depletion, amortization, and accretion | ? | 8,819 | ? | 6,860 | ? | 26,043 | ? | 20,086 | ||||||||
Total adjustments | ? | 25,541 | ? | 15,477 | ? | 82,186 | ? | 39,886 | ||||||||
| $ | 51,048 | $ | 27,136 | $ | 166,680 | $ | 66,994 |
Intrepid Potash, Inc.
William Kent, 303-296-3006