Exhibit
99.1
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PRESS RELEASE
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For Immediate Distribution
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Contact: Intrepid Potash, Inc.
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William
Kent
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Phone:
303-296-3006
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Intrepid Announces Financial Results for Third Quarter 2010
Denver, Colorado; November 3, 2010 – Intrepid
Potash, Inc. (NYSE:IPI) announced today third quarter 2010 financial
results, with net income for the quarter of $11.7 million, resulting in $0.16
of earnings per diluted share. Earnings
before interest, taxes, depreciation, and amortization (EBITDA(1)) for the
third quarter of 2010 were $27.1 million.
Highlights
for the Third Quarter 2010:
· Potash sales in the third quarter of 2010
were 221,000 tons compared to 111,000 tons in the third quarter of 2009.
· Potash production in the third quarter of
2010 increased to 166,000 tons compared to 112,000 tons produced in the third
quarter of 2009.
· The average net realized sales price(2) for
potash was $343 per ton ($378 per metric tonne) this year in the quarter,
compared to $458 per ton ($505 per metric tonne) in the third quarter of 2009.
· Our potash cash cost of goods sold, net of
by-product credits(3), was $171 per ton in the third quarter of 2010 compared
to $177 per ton in the third quarter of 2009.
There were no abnormal production costs recognized in the third quarter
of 2010, whereas, in the third quarter of 2009, $5.8 million of abnormal
production costs were expensed in the period and were therefore excluded from
the cash cost of goods sold. Our third
quarter 2010 cash cost of goods sold per ton results reflect that we fully
absorbed all costs attributed to production as we produced within normal ranges
during this period.
· Sales of Trio® were 45,000
tons in the third quarter of 2010 compared to 40,000 tons in the third quarter
of 2009.
(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
calculated as gross sales less freight costs, divided by the number of tons
sold in the period.
(3) Potash cash cost of goods sold, net
of by-product credits, is defined as total cost of goods sold excluding
royalties, depreciation, depletion and amortization.
· Langbeinite production in the third quarter
of 2010 decreased to 32,000 tons from 60,000 tons produced in the third quarter
of 2009.
· The average net realized sales price for
langbeinite, which we market as Trio®, was $173 per ton ($191 per metric tonne) in the
third quarter of 2010 compared to $246 per ton ($271 per metric tonne) in the
third quarter of 2009.
· Average gross margin in the third
quarter of 2010 for the sale of potash was $122 per ton or 35 percent, compared
to $231 per ton or 50 percent in the third quarter of 2009. Average gross margin for the sale of Trio® was $3 per ton or two
percent compared to $74 per ton or 30 percent in the same period of 2009. The most significant drivers of the decrease
in margin for each product were the competitive forces in the markets that
reduced sales prices.
· Capital investments in the third quarter of
2010 totaled $30.9 million.
· As of September 30, 2010, we had $126.5
million of cash and investments, no outstanding debt, and $125.0 million of
availability under our revolving credit facility.
“During
the third quarter of 2010, the fall potash application in the fields was
robust, and we are seeing the volumes of potash sold in the United States
rebound to more historical levels,” said Bob Jornayvaz, Intrepid’s
Executive Chairman of the Board. “Demand
for potash during the quarter started off somewhat slowly during July, as there
was a lack of clarity in the direction of potash price and dealers waited for
more clarity about market pricing for all three primary crop nutrients to
emerge. However, this hesitation was
short-lived and demand for product gained momentum throughout the quarter as
dealers began purchasing inventory for their own accounts as their confidence
in price increased and a strong fall fertilizer season began to
materialize. Farmer income in the United
States is expected to rise almost twenty-five percent this year as commodity
prices have moved up significantly in the last couple of months. Given the lower than expected yield numbers
recently announced by the USDA, specifically related to corn, we believe that the
forthcoming crop intention announcements will report near record corn acres
planted and should, in turn, lead to higher nutrient demand. It is not only corn that has favorable
economics, it is virtually every crop, which should further lead farmers to
seek maximum yield, which requires maximum plant nutrition. We have increased our posted price to $485
per ton FOB Carlsbad for our red granular product effective November 1,
2010. At the current time, we are
holding off on taking new rail orders until we get caught up on our backlog of rail
shipments and we are only taking new orders for spot sales from our
facilities. Our strategy is simple - we
are operating our plants and managing our sales function to fully and actively
participate in this bullish market. The
flexibility that our Moab compaction project is expected to bring at the end of
2010, allowing Intrepid to sell more granular tons into the agricultural
market, and the additional Trio® tons that our
Langbeinite Recovery Improvement Project is expected to bring on at the end of
2011, are designed to position Intrepid to benefit from this cycle.”
2
Market Conditions
The somewhat rapid rebound in the nutrient market can be associated
with several contributing factors.
First, the fall fertilizer season materialized quickly this year, as an
early harvest, combined with dry weather, created a larger window for
fertilizer application. Second, demand
was already strong for potash prior to the recent strengthening of agricultural
commodity prices and demand has remained strong as potash prices have risen in
conjunction with the increase in agricultural commodity pricing. Potash prices bottomed during the summer
months as other producers introduced summer price incentive programs. These factors, together with a diminished
chance of price shocks from nitrogen, which can be attributed to the relatively
flat natural gas forward curve, set the stage for strong economics to the
farmer. We expect sales volumes for
the remainder of 2010 to be in line with historical norms with higher sales
volumes through the fall season with sales volumes typically contracting as we
enter the winter months in November and December. With the recent price announcements, it is
difficult to predict with precision monthly sales volumes in the short
term. The specific monthly sales timing
is not as relevant as the overall strength in the potash market going into
2011.
During the third quarter of 2010, announced potash prices began their
first meaningful recovery since declining from peak levels in 2008. As mentioned previously, a number of our
competitors instituted summer price incentive programs in July 2010 to
stimulate demand, which resulted in our average net realized sales price of
$343 per ton for the quarter. We have
increased our potash pricing four times in the last two months. We initially raised the price for red
granular potash in Carlsbad from $360 per ton to $380 per ton for orders placed
after October 1, 2010, and again to $410 per ton for orders placed after November 1,
2010. Given the pace of change in the
agricultural commodity market, we subsequently accelerated our price increase to
$435 per ton on October 18, 2010, and then again to $485 per ton,
effective November 1, 2010, based on continued strong demand in the market
and limited available product. We expect
the net impact of these price increases to be realized approximately three
months after their effective date, as we typically have a certain amount of
product already committed for later rail delivery at the time we announce a
price increase. We will, however, begin
to realize the increased pricing immediately for product sold into the truck
market. It should be noted that we
experienced increased sales activity in September 2010 as a result of our
announced price increases. We estimate that some of our customers accelerated purchases
by approximately 20,000 to 25,000 tons from the fourth quarter into the third
quarter. Finally, we expect our third quarter
2010 average net realized sales price of $343 per ton to be the lowest of the
year and believe we will see sequential improvement in our average net realized
sales price into the next quarter and into next year.
As positive as the agricultural market for granular potash is, the
market for standard potash remains challenging as we are experiencing price and
volume pressure from the Canadian producers.
We believe that Canadian producers are moving more standard potash into
the domestic market due to the lack of large export orders to countries such as
India and China. As a result, the
pricing for standard product, which has typically priced at parity with
granular potash, is lagging granular potash pricing at this time. Moreover, this highlights the importance of
our Moab compaction project, which will allow us the flexibility to convert Moab
standard tons into granular product, in order for us to pursue the highest
average net realized sales price for our production, where pricing is currently
stronger.
Third
Quarter Results & Recent Performance
Income
before income taxes for the third quarter of 2010 was $19.8 million compared to
$15.9 million in the third quarter of 2009.
Cash flows from operating activities were $8.6 million for the third
quarter of 2010, compared to $6.6 million for the third quarter of 2009. Adjusted net
3
income(4) for
the third quarter of 2010 was $11.7 million compared to adjusted net income of
$13.1 million in the same period last year.
Potash
During
the third quarter of 2010, Intrepid increased production to 166,000 tons
of potash and sold 221,000 tons of potash.
This compares to 112,000 tons produced and 111,000 tons sold in the
third quarter of 2009. The 221,000 tons
of potash we sold were at an average net realized sales price of $343 per ton
as compared to $458 per ton during the third quarter of 2009. Our average net realized sales price for the
third quarter continued to exceed that of our North American competitors, with
an average net realized sales price advantage of $52 per ton.
Our
potash cash cost of goods sold, net of by-product credits of $7 per ton,
decreased to $171 per ton in the third quarter of 2010 from $177 per ton, net
of by-product credits of $16 per ton, in the third quarter of 2009. On a
comparative basis, net of by product credits, the potash cash cost of goods
sold was $199 per ton and $206 per ton in first and second quarters of 2010,
respectively. As noted previously, all
production costs were absorbed into the inventory costs in the third quarter of
2010, and therefore included in the cash cost of goods sold results in this
quarter, whereas abnormal production costs of $5.8 million were excluded from
the inventory calculation and therefore cash cost of goods sold in the third
quarter of 2009. Our lower cash cost of
goods sold per ton during the third quarter of 2010 resulted primarily from our
increasing staffing levels for our mining operations, which allowed the mines
to increase production resulting in decreased per unit costs.
We
conducted our annual maintenance turnaround at our East Mine in late September 2010,
which was successfully completed and the mine and mill recommenced production
on October 10, 2010. Following the maintenance
turnaround at the East Mine, we expect to increase production rates at our
Carlsbad facilities beginning in the month of November 2010. Further, this maintenance turnaround allowed
us to complete scheduled maintenance work at the East Mine and to prepare the
surface operations for the Langbeinite Recovery Improvement Project. We expect the net impact of this scheduled
maintenance will result in higher per ton operating costs in the fourth quarter
of 2010, as our fixed costs during the maintenance turnaround remained at least
the same, if not higher, due to curtailed production during this period.
Langbeinite
– Trio®
Intrepid sold 45,000 tons of Trio® in the third
quarter of 2010, the majority of which was granular product, at an average net
realized sales price of $173 per ton.
This compares to 40,000 tons sold at an average net realized sales price
of $246 per ton in the prior year’s third quarter. Our net realized sales price per ton
increased slightly compared to the second quarter of 2010 due to continued
strong demand for granular Trio® coupled with
a price increase of $15 per ton in September of 2010.
Demand for granular Trio® remains strong and we expect granular Trio® sales demand will continue to exceed our
production for the next few quarters, resulting in the on-going need to sell
our granular product on an allocated basis.
Based on this continued demand, and that
(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.
4
Trio® pricing typically moves in
step with potash pricing, we raised prices for granular Trio® to $246 per ton effective October 15,
2010.
As
highlighted in our second quarter 2010 earnings announcement, during July 2010
we were forced to shut down our langbeinite plant at our East facility for a
total of 14 days due to unusually heavy rainfall. This weather event
highlights the importance of our Langbeinite Recovery Improvement Project,
which is designed to reduce our freshwater usage in the production of
langbeinite, thereby reducing the risk of impacts from significant or unusual
weather events like those experienced in July 2010. Although we did
have constrained production during July 2010, we have not had any further
weather-related production impacts in the quarter.
Capital
Investment
During
the third quarter of 2010, we made significant progress in moving forward on a
number of our key capital projects. The
compaction project at our Moab, Utah plant is proceeding as planned. This project will enable the compaction of
all of our standard production, if necessary, into granular-sized product for
the agricultural market. We believe this
project will be completed prior to the end of 2010. The capital investment for this project is
now expected to be below budget at $11 to $13 million.
The
Langbeinite Recovery Improvement Project at our Carlsbad, New Mexico East Mine
is progressing well, with final engineering being completed and a number of
major components of the project currently out for bid. As mentioned previously, a number of
important pre-construction items, including electrical tie-ins and equipment
relocation for the project, were performed during the recent East Mine maintenance
turnaround. The total capital investment
for the project expected to be between $85 and $90 million, with approximately
$17 to $22 million to be invested during the remainder of 2010, with the
balance invested in 2011. Variability in
the timing of the fabrication of materials for this project could have an
impact on the timing of investment in the project during 2010.
Our
updated forecast for total capital investment in 2010 is estimated to be
between $110 and $120 million, which includes sustaining, improvement,
instrumentation and control projects in addition to the projects highlighted
above.
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 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. Average net realized sales price and cash cost
5
of
goods sold are defined in the text of this release and the associated financial
tables provide the details to reconcile these numbers to U.S. GAAP line items.
Conference
Call Information
The conference call to
discuss third quarter 2010 results is scheduled for November 4, 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
participation numbers will require the input of the conference identification
number 14693434. The call will also be
streamed on the Intrepid website, www.intrepidpotash.com. In addition, the press release announcing
third 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 December 4, 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 Trio®; operational
difficulties at our facilities; the ability to hire and retain qualified
employees; changes in demand and/or
production of potash or Trio®/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 Solar Solution
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 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; 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; our ability to
secure additional federal and state potash leases to expand our existing mining
operations; 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.
6
INTREPID POTASH, INC.
SELECTED OPERATIONS DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
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Three Months Ended
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September 30, 2010
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September 30, 2009
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Production volume (in thousands of tons):
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|
|
|
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Potash
|
|
166
|
|
112
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|
|
Langbeinite
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|
32
|
|
60
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|
|
Sales volume (in thousands of tons):
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|
|
|
|
|
|
Potash
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|
221
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111
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|
Trio®
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45
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40
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|
|
|
|
|
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|
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|
Gross sales (in thousands):
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Potash
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$
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81,246
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$
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54,521
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|
Trio®
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$
|
10,225
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|
$
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11,928
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Freight costs (in thousands):
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|
|
|
|
|
Potash
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|
$
|
5,396
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|
$
|
3,598
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|
|
Trio®
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|
$
|
2,435
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|
$
|
1,995
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|
|
Net sales (in thousands):
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|
|
|
|
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|
Potash
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|
$
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75,850
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|
$
|
50,923
|
|
|
Trio®
|
|
$
|
7,790
|
|
$
|
9,933
|
|
|
|
|
|
|
|
|
|
Potash statistics (per ton):
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|
|
|
|
|
|
Average net realized sales price
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|
$
|
343
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|
$
|
458
|
|
|
Cost of goods sold, net of by-product credits *
(exclusive of items shown separately below)
|
|
171
|
|
177
|
|
|
Depreciation, depletion, and amortization
|
|
26
|
|
19
|
|
|
Royalties
|
|
13
|
|
18
|
|
|
Total potash cost of goods sold
|
|
210
|
|
214
|
|
|
Warehousing and handling costs
|
|
11
|
|
13
|
|
|
Average potash gross margin (exclusive of costs associated
with abnormal production)
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|
$
|
122
|
|
$
|
231
|
|
|
|
|
|
|
|
|
|
Trio® statistics (per ton):
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|
|
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Average net realized sales price
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$
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173
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|
$
|
246
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|
|
Cost of goods sold (exclusive of items shown
separately below)
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|
132
|
|
131
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|
|
Depreciation, depletion, and amortization
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18
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|
12
|
|
|
Royalties
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8
|
|
12
|
|
|
Total Trio® cost of goods sold
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158
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|
155
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|
|
Warehousing and handling costs
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12
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|
17
|
|
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Average Trio® gross margin (exclusive of costs associated
with abnormal production)
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$
|
3
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|
$
|
74
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|
* On a per ton basis,
by-product credits were $7 and $16 for the three month periods ended September 30,
2010 and 2009, respectively. By-product
credits were $1.5 million and $1.7 million for the three month
periods ended September 30, 2010 and 2009, respectively. Costs associated with abnormal production
were zero and $5.8 million for the three month periods ended September 30,
2010 and 2009, respectively.
7
INTREPID POTASH, INC.
SELECTED OPERATIONS DATA (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
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Nine Months Ended
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September 30, 2010
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September 30, 2009
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Production volume (in thousands of tons):
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Potash
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|
503
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|
381
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Langbeinite
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128
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|
147
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|
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Sales volume (in thousands of tons):
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|
|
|
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Potash
|
|
594
|
|
290
|
|
|
Trio®
|
|
177
|
|
123
|
|
|
|
|
|
|
|
|
|
Gross sales (in thousands):
|
|
|
|
|
|
|
Potash
|
|
$
|
223,522
|
|
$
|
184,602
|
|
|
Trio®
|
|
$
|
39,627
|
|
$
|
44,140
|
|
|
Freight costs (in thousands):
|
|
|
|
|
|
|
Potash
|
|
$
|
13,110
|
|
$
|
7,997
|
|
|
Trio®
|
|
$
|
10,060
|
|
$
|
6,425
|
|
|
Net sales (in thousands):
|
|
|
|
|
|
|
Potash
|
|
$
|
210,412
|
|
$
|
176,605
|
|
|
Trio®
|
|
$
|
29,567
|
|
$
|
37,715
|
|
|
|
|
|
|
|
|
|
Potash statistics (per ton):
|
|
|
|
|
|
|
Average net realized sales price
|
|
$
|
354
|
|
$
|
610
|
|
|
Cost of goods sold, net of by-product credits *
(exclusive of items shown separately below)
|
|
190
|
|
200
|
|
|
Depreciation, depletion, and amortization
|
|
26
|
|
19
|
|
|
Royalties
|
|
13
|
|
22
|
|
|
Total potash cost of goods sold
|
|
229
|
|
241
|
|
|
Warehousing and handling costs
|
|
10
|
|
14
|
|
|
Average potash gross margin (exclusive of costs
associated with abnormal production)
|
|
$
|
115
|
|
$
|
355
|
|
|
|
|
|
|
|
|
|
Trio® statistics (per ton):
|
|
|
|
|
|
|
Average net realized sales price
|
|
$
|
167
|
|
$
|
306
|
|
|
Cost of goods sold (exclusive of items shown
separately below)
|
|
124
|
|
143
|
|
|
Depreciation, depletion, and amortization
|
|
17
|
|
14
|
|
|
Royalties
|
|
8
|
|
15
|
|
|
Total Trio® cost of goods sold
|
|
149
|
|
172
|
|
|
Warehousing and handling costs
|
|
10
|
|
14
|
|
|
Average Trio® gross margin (exclusive of costs associated
with abnormal production)
|
|
$
|
8
|
|
$
|
120
|
|
* On a per ton basis,
by-product credits were $8 and $17 for the nine month periods ended September 30,
2010 and 2009, respectively. By-product
credits were $4.9 million for both the nine month periods ended September 30,
2010 and 2009. Costs associated with
abnormal production were $0.5 million and $12.2 million for the nine month
periods ended September 30 2010 and 2009, respectively.
8
INTREPID POTASH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010
AND 2009
(In thousands, except share and per share amounts)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30, 2010
|
|
September 30, 2009
|
|
September 30, 2010
|
|
September 30, 2009
|
|
|
Sales
|
|
$
|
91,471
|
|
$
|
66,449
|
|
$
|
263,149
|
|
$
|
228,742
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Freight costs
|
|
7,831
|
|
5,593
|
|
23,170
|
|
14,422
|
|
|
Warehousing and handling costs
|
|
2,893
|
|
2,137
|
|
7,935
|
|
5,764
|
|
|
Cost of goods sold
|
|
53,812
|
|
30,035
|
|
162,482
|
|
90,943
|
|
|
Costs associated with abnormal production
|
|
—
|
|
5,784
|
|
470
|
|
12,159
|
|
|
Other
|
|
127
|
|
—
|
|
666
|
|
—
|
|
|
Gross Margin
|
|
26,808
|
|
22,900
|
|
68,426
|
|
105,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative
|
|
6,439
|
|
6,475
|
|
21,021
|
|
21,021
|
|
|
Accretion of asset retirement obligation
|
|
176
|
|
169
|
|
528
|
|
510
|
|
|
Other
|
|
271
|
|
18
|
|
744
|
|
595
|
|
|
Operating Income
|
|
19,922
|
|
16,238
|
|
46,133
|
|
83,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Interest expense, including realized and unrealized
derivative gains and losses
|
|
(430
|
)
|
(639
|
)
|
(1,462
|
)
|
(592
|
)
|
|
Interest income
|
|
207
|
|
42
|
|
479
|
|
75
|
|
|
Insurance settlements in excess of property losses
|
|
—
|
|
5
|
|
—
|
|
(11
|
)
|
|
Other income
|
|
147
|
|
266
|
|
296
|
|
448
|
|
|
Income Before Income Taxes
|
|
19,846
|
|
15,912
|
|
45,446
|
|
83,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
(8,187
|
)
|
(6,392
|
)
|
(18,338
|
)
|
(34,611
|
)
|
|
Net Income
|
|
$
|
11,659
|
|
$
|
9,520
|
|
$
|
27,108
|
|
$
|
48,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
75,101,446
|
|
75,032,086
|
|
75,077,260
|
|
75,008,438
|
|
|
Diluted
|
|
75,143,542
|
|
75,055,990
|
|
75,133,775
|
|
75,023,180
|
|
|
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.16
|
|
$
|
0.13
|
|
$
|
0.36
|
|
$
|
0.65
|
|
|
Diluted
|
|
$
|
0.16
|
|
$
|
0.13
|
|
$
|
0.36
|
|
$
|
0.65
|
|
9
INTREPID POTASH, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
(In thousands, except share and per share amounts)
|
|
|
September 30, 2010
|
|
December 31, 2009
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
66,692
|
|
$
|
89,792
|
|
|
Short-term investments
|
|
33,004
|
|
11,155
|
|
|
Accounts receivable:
|
|
|
|
|
|
|
Trade, net
|
|
37,039
|
|
19,169
|
|
|
Other receivables
|
|
1,872
|
|
471
|
|
|
Refundable income taxes
|
|
6,290
|
|
9,364
|
|
|
Inventory, net
|
|
45,963
|
|
61,949
|
|
|
Prepaid expenses and other current assets
|
|
4,958
|
|
2,632
|
|
|
Current deferred tax asset
|
|
2,338
|
|
9,807
|
|
|
Total current assets
|
|
198,156
|
|
204,339
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net of accumulated
depreciation of $59,914 and $41,787, respectively
|
|
261,954
|
|
221,403
|
|
|
Mineral properties and development costs, net of
accumulated depletion of $8,047 and $7,174, respectively
|
|
33,033
|
|
33,929
|
|
|
Long-term parts inventory, net
|
|
7,327
|
|
7,149
|
|
|
Long-term investments
|
|
26,769
|
|
6,189
|
|
|
Other assets
|
|
5,325
|
|
5,532
|
|
|
Non-current deferred tax asset
|
|
278,563
|
|
290,449
|
|
|
Total Assets
|
|
$
|
811,127
|
|
$
|
768,990
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Accounts payable:
|
|
|
|
|
|
|
Trade
|
|
$
|
16,841
|
|
$
|
13,523
|
|
|
Related parties
|
|
98
|
|
129
|
|
|
Accrued liabilities
|
|
19,171
|
|
12,403
|
|
|
Accrued employee compensation and benefits
|
|
9,022
|
|
7,028
|
|
|
Other current liabilities
|
|
1,633
|
|
2,849
|
|
|
Total current liabilities
|
|
46,765
|
|
35,932
|
|
|
|
|
|
|
|
|
|
Asset retirement obligation
|
|
9,157
|
|
8,619
|
|
|
Deferred insurance proceeds
|
|
11,700
|
|
10,124
|
|
|
Other non-current liabilities
|
|
4,811
|
|
5,093
|
|
|
Total Liabilities
|
|
72,433
|
|
59,768
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 100,000,000 shares
authorized; and 75,103,938 and 75,037,124 shares outstanding at
September 30, 2010, and December 31, 2009, respectively
|
|
75
|
|
75
|
|
|
Additional paid-in capital
|
|
558,713
|
|
556,328
|
|
|
Accumulated other comprehensive loss
|
|
(710
|
)
|
(689
|
)
|
|
Retained earnings
|
|
180,616
|
|
153,508
|
|
|
Total Stockholders’ Equity
|
|
738,694
|
|
709,222
|
|
|
Total Liabilities and
Stockholders’ Equity
|
|
$
|
811,127
|
|
$
|
768,990
|
|
10
INTREPID POTASH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010
AND 2009
(In thousands)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
September 30, 2010
|
|
September 30, 2009
|
|
September 30, 2010
|
|
September 30, 2009
|
|
|
Cash Flows from Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
11,659
|
|
$
|
9,520
|
|
$
|
27,108
|
|
$
|
48,637
|
|
|
Deferred income taxes
|
|
12,191
|
|
8,064
|
|
19,355
|
|
26,097
|
|
|
Insurance reimbursements
|
|
—
|
|
(5
|
)
|
—
|
|
11
|
|
|
Items not affecting cash:
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, amortization, and
accretion
|
|
6,860
|
|
4,270
|
|
20,086
|
|
12,017
|
|
|
Stock-based compensation
|
|
978
|
|
735
|
|
3,093
|
|
2,022
|
|
|
Unrealized derivative (gain) loss
|
|
(56
|
)
|
117
|
|
(173
|
)
|
(1,097
|
)
|
|
Other
|
|
272
|
|
(163
|
)
|
756
|
|
414
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
(24,776
|
)
|
(11,828
|
)
|
(17,870
|
)
|
(15,655
|
)
|
|
Other receivables
|
|
(1,056
|
)
|
(544
|
)
|
(1,401
|
)
|
(823
|
)
|
|
Refundable income taxes
|
|
(3,840
|
)
|
(2,017
|
)
|
3,074
|
|
1,369
|
|
|
Inventory
|
|
4,553
|
|
(5,763
|
)
|
15,808
|
|
(19,932
|
)
|
|
Prepaid expenses and other assets
|
|
(2,903
|
)
|
(252
|
)
|
(2,309
|
)
|
1,476
|
|
|
Accounts payable, accrued liabilities and accrued
employee compensation and benefits
|
|
5,000
|
|
2,736
|
|
10,365
|
|
1,243
|
|
|
Other liabilities
|
|
(268
|
)
|
1,746
|
|
(1,383
|
)
|
2,211
|
|
|
Net cash provided by operating activities
|
|
8,614
|
|
6,616
|
|
76,509
|
|
57,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing
Activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from insurance reimbursements
|
|
1,576
|
|
5
|
|
1,576
|
|
1,989
|
|
|
Additions to property, plant, and equipment
|
|
(20,161
|
)
|
(32,438
|
)
|
(57,844
|
)
|
(76,899
|
)
|
|
Additions to mineral properties and development
costs
|
|
159
|
|
(769
|
)
|
(222
|
)
|
(5,548
|
)
|
|
Proceeds from liquidation
of bond sinking fund
|
|
—
|
|
2,098
|
|
—
|
|
2,098
|
|
|
Purchases of investments
|
|
(38,271
|
)
|
(6,944
|
)
|
(61,909
|
)
|
(7,695
|
)
|
|
Proceeds from investments
|
|
16,811
|
|
—
|
|
19,498
|
|
—
|
|
|
Other
|
|
—
|
|
6
|
|
—
|
|
22
|
|
|
Net cash used in investing activities
|
|
(39,886
|
)
|
(38,042
|
)
|
(98,901
|
)
|
(86,033
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities:
|
|
|
|
|
|
|
|
|
|
|
Restricted stock used for employee tax withholding
upon vesting
|
|
—
|
|
—
|
|
(727
|
)
|
(1,283
|
)
|
|
Proceeds from exercise of stock options
|
|
19
|
|
—
|
|
19
|
|
—
|
|
|
Other
|
|
(64
|
)
|
—
|
|
—
|
|
—
|
|
|
Net cash used in financing activities
|
|
(45
|
)
|
—
|
|
(708
|
)
|
(1,283
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash
Equivalents
|
|
(31,317
|
)
|
(31,426
|
)
|
(23,100
|
)
|
(29,326
|
)
|
|
Cash and Cash Equivalents, beginning of
period
|
|
98,009
|
|
118,673
|
|
89,792
|
|
116,573
|
|
|
Cash and Cash Equivalents, end of period
|
|
$
|
66,692
|
|
$
|
87,247
|
|
$
|
66,692
|
|
$
|
87,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash
flow information
|
|
|
|
|
|
|
|
|
|
|
Cash paid (received) during the period for:
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
479
|
|
$
|
512
|
|
$
|
1,574
|
|
$
|
1,306
|
|
|
Income taxes
|
|
$
|
134
|
|
$
|
345
|
|
$
|
(4,008
|
)
|
$
|
7,145
|
|
11
INTREPID POTASH, INC.
NON-GAAP ADJUSTED NET INCOME RECONCILIATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In thousands)
Adjusted net income is calculated as net income adjusted for
significant non-cash and unusual items.
Examples of non-cash and unusual charges include insurance settlements
in excess of property losses, 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.
|
|
|
Three Months Ended
|
|
|
|
|
September 30, 2010
|
|
September 30, 2009
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
11,659
|
|
$
|
9,520
|
|
|
Adjustments
|
|
|
|
|
|
|
Insurance reimbursements
|
|
—
|
|
(5
|
)
|
|
Unrealized derivative (gain) loss
|
|
(56
|
)
|
117
|
|
|
Costs associated with abnormal production
|
|
—
|
|
5,784
|
|
|
Other
|
|
127
|
|
—
|
|
|
Calculated tax effect *
|
|
(28
|
)
|
(2,311
|
)
|
|
Total adjustments
|
|
43
|
|
3,585
|
|
|
Adjusted Net Income
|
|
$
|
11,702
|
|
$
|
13,105
|
|
*Estimated annual effective tax rate of 39.4 percent for 2010 and 39.2
percent for 2009.
12
INTREPID POTASH, INC.
NON-GAAP EBITDA
RECONCILIATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In thousands)
Earnings before interest, taxes, depreciation, and amortization (“EBITDA”)
is computed as net income adjusted for the add back of interest expense
(including derivatives), income tax expense, depreciation, depletion,
amortization, asset retirement obligation accretion, and impairment. This non-GAAP measure is presented because
management believes that it provides useful additional information to investors
for analysis of Intrepid’s ability to internally generate funds for capital
investment. In addition, 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.
EBITDA should not be considered in isolation or as a substitute for net
income, income from operations, net cash provided by operating activities or
other income, profitability, cash flow, or liquidity measures prepared under U.S.
GAAP. Since EBITDA excludes some, but
not all items that affect net income and net cash provided by operating
activities and may vary among companies, the EBITDA amounts presented may not
be comparable to similarly titled measures of other companies.
|
|
|
Three Months Ended
|
|
|
|
|
September 30, 2010
|
|
September 30, 2009
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
11,659
|
|
$
|
9,520
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
430
|
|
639
|
|
|
Income tax expense
|
|
8,187
|
|
6,392
|
|
|
Depreciation, depletion, amortization, and
accretion
|
|
6,860
|
|
4,269
|
|
|
Total adjustments
|
|
15,477
|
|
11,300
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before Interest, Taxes, Depreciation, and
Amortization
|
|
$
|
27,136
|
|
$
|
20,820
|
|
13