DENVER, March 12, 2019 -
Intrepid Potash, Inc. (Intrepid) (NYSE:IPI) today reported its
financial results for the fourth quarter and full year of 2018.
Key Takeaways
-
Net income improved $9.3 million and $34.4
million in the fourth quarter and full year 2018, respectively,
compared with the same periods in the prior year.
-
Potash segment gross margin of $10.7 million in
the fourth quarter contributed to full year potash segment gross
margin of $29.0 million, an increase of $13.3 million compared to
the prior year.
-
Trio® segment
delivered fourth quarter gross margin of $0.7 million. Full year
gross deficit was $3.8 million, an improvement of $5.7 million
compared to the prior year.
-
Oilfield solutions segment gross margin of $13.0
million in 2018 driven by water sales of $16.0 million.
-
Total company water sales of $19.8 million in
2018 with byproduct water included.
-
Full year cash received from water of $30.2
million.
-
Cash generated from operations increased $47.5
million year over year, totaling $64.2 million in 2018.
"Fourth quarter results benefited from strong
potash sales, higher market prices for potash and Trio®, and
another quarter of solid demand for oilfield solutions," said Bob
Jornayvaz, Intrepid's Executive Chairman, President, and CEO. "The
fourth quarter also marks the first quarter of positive gross
margin for our Trio® segment
since 2016 as we saw the benefits of a focused international
strategy and increased byproduct sales. Price increases announced
in January for both potash and Trio® provide
stability heading into the spring selling season and we believe
Intrepid is well-positioned for another year of strong cash flow
generation in 2019."
Jornayvaz continued, "Our success in generating
cash in 2018 provides us with additional flexibility to execute
upon our growth strategy. To that end, we recently agreed to
purchase the Dinwiddie Jal Ranch in southeastern New Mexico as part
of our expanding oilfield solutions. The acquisition of this
property and the associated water rights will increase our
footprint in the prolific Delaware Basin and allow us to offer a
more complete midstream infrastructure system and additional supply
to our water partners in the region. For the full year 2019, we
expect cash received from our total company water sales, including
byproducts but excluding the pending acquisition, of between $25
and $35 million, and revenue of between $20 and $30 million."
Presentation Changes
Due to the growth of its oilfield products and
services and continued diversification and growth of byproduct
sales in addition to recent accounting changes, Intrepid is now
presenting a third segment, in addition to its potash and
Trio® segments, and
is accounting for byproduct sales as revenue instead of as a credit
to cost of goods sold. The new oilfield solutions segment includes
certain sales of water, high-speed KCl mixing, saltwater disposal,
trucking, and other activities associated with oil and gas
production. Prior period amounts have been recast to be consistent
with current presentation and will be posted on Intrepid's
website.
Consolidated Results
Intrepid recorded fourth quarter net income of
$7.6 million, or $0.06 per share, resulting in full year net income
of $11.8 million, or $0.09 per share. Consolidated gross margin of
$14.8 million and $38.3 million in the fourth quarter and full year
2018, respectively, were increases of $11.2 million and $26.4
million, respectively, compared to the same year-ago periods.
Improvements in net income and gross margin were driven by
increased water sales, higher average net realized sales
prices(1) for potash
and Trio®, and
reduced lower of cost or net realizable value adjustments related
to international Trio®
shipments.
Segment Highlights
Potash
|
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
(in thousands, except per ton
data) |
Sales |
|
$ |
34,884 |
|
|
$ |
23,515 |
|
|
$ |
124,058 |
|
|
$ |
107,917 |
|
Gross
margin |
|
$ |
10,664 |
|
|
$ |
4,297 |
|
|
$ |
29,008 |
|
|
$ |
15,670 |
|
|
|
|
|
|
|
|
|
|
Potash
production volume (in tons) |
|
114 |
|
|
121 |
|
|
344 |
|
|
359 |
|
Potash
sales volume (in tons) |
|
95 |
|
|
70 |
|
|
364 |
|
|
352 |
|
|
|
|
|
|
|
|
|
|
Average potash net realized sales price per ton(1) |
|
$ |
270 |
|
|
$ |
248 |
|
|
$ |
256 |
|
|
$ |
238 |
|
Gross margin increased $6.4 million and $13.3
million in the fourth quarter and full year of 2018, respectively,
when compared to the same periods in 2017. These increases were
driven by higher market prices for potash, increased potash sales
volume, and an increase in byproduct sales.
Average net realized sales price per ton for
potash increased as a result of price increases announced
throughout 2018. Byproduct sales of brine and water increased as a
result of increased oil and gas activity in the Carlsbad area.
Fourth quarter and full year potash sales volumes
benefited from an increase in industrial market sales. Potash
production decreased 6% in the fourth quarter of 2018 compared to
the fourth quarter of 2017 due to reduced runtime at the Moab
facility and reduced compaction at HB. Full year 2018 production
decreased 4% compared to the prior year as HB produced fewer tons
during the first half of the year.
Trio®
|
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
(in thousands, except per ton
data) |
Sales |
|
$ |
14,994 |
|
|
$ |
16,144 |
|
|
$ |
66,808 |
|
|
$ |
63,686 |
|
Gross
margin (deficit) |
|
$ |
711 |
|
|
$ |
(3,397 |
) |
|
$ |
(3,782 |
) |
|
$ |
(9,548 |
) |
|
|
|
|
|
|
|
|
|
Trio® production
volume (in tons) |
|
56 |
|
|
51 |
|
|
217 |
|
|
243 |
|
Trio® sales volume
(in tons) |
|
44 |
|
|
65 |
|
|
225 |
|
|
237 |
|
|
|
|
|
|
|
|
|
|
Average Trio® net realized
sales price per ton(1) |
|
$ |
215 |
|
|
$ |
164 |
|
|
$ |
199 |
|
|
$ |
191 |
|
Improvements in average net realized sales price
per ton and increased byproduct sales drove year-over-year
increases to gross margin for both the fourth quarter and full year
periods. Fourth quarter and full year average net realized sales
price per ton increased due to fewer lower priced export sales and
higher list prices for Trio® product in
domestic markets. Strong oil and gas activity drove comparative
period increases in byproduct sales.
Sales volumes decreased for the comparative three-
and twelve-month periods of 2018 as improved domestic sales volumes
were offset by reduced volumes into international markets. Intrepid
continues to focus on international markets with higher market
prices for Trio® or where a
logistical advantage exists.
Improved ore grades drove a 10% increase in fourth
quarter Trio® production
compared to the prior year. Full year production decreased 11%
compared to prior year due to the reduced production schedule which
began in the second half of 2017.
Oilfield Solutions
|
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
(in thousands) |
Sales |
|
$ |
4,486 |
|
|
$ |
2,923 |
|
|
$ |
17,404 |
|
|
$ |
6,312 |
|
Gross
margin |
|
$ |
3,451 |
|
|
$ |
2,728 |
|
|
$ |
13,045 |
|
|
$ |
5,766 |
|
During 2018, Intrepid increased its focus on
developing and growing its products and services to the oil and gas
industry, which resulted in its classification as a reportable
segment of the business, supported by dedicated business
development personnel and ongoing business development activity,
including the pending Dinwiddie Jal acquisition described below.
During the fourth quarter and full year 2018, this increased focus
on oilfield solutions yielded an increase in sales, though gross
margin as a percentage of sales decreased in 2018 due to an
increase in mixing and trucking, which on average carry lower
margins than Intrepid's water sales. Intrepid also incurred
increased legal fees related to the permitting process and
third-party protests of its water rights.
Liquidity
Cash provided by operations was $11.3 million
during the fourth quarter of 2018 and cash spent on capital
investments was $4.2 million. Intrepid made a scheduled prepayment
of $10 million on its senior notes in December 2018, lowering the
total amount outstanding on the notes to $50 million at year end.
As of December 31, 2018, Intrepid had $33.2 million in cash and
cash equivalents and $49.0 million available to borrow under its
credit facility with no borrowing outstanding on the facility.
Acquisition
On February 8, 2019, Intrepid announced an
agreement to acquire a 51% undivided interest in the Dinwiddie Jal
Ranch and related assets for an expected cash purchase price to
Intrepid of $33.2 million, subject to customary closing conditions.
The acquisition, which if completed would expand Intrepid's
footprint and water rights in the Delaware Basin, is expected to be
funded with cash on hand and short-term borrowing under its credit
facility. Management believes it has adequate liquidity to both
fund the acquisition and execute on its long-term strategy for the
business. The acquisition is expected to close in the first quarter
of 2019.
Notes
1 Average net
realized sales price per ton is a non-GAAP financial measure. See
the non-GAAP reconciliations set forth later in this press release
for additional information.
Unless expressly stated otherwise or the context
otherwise requires, references to tons in this press release refer
to short tons. One short ton equals 2,000 pounds. One metric tonne,
which many international competitors use, equals 1,000 kilograms or
2,204.62 pounds.
Conference Call
Information
A teleconference to discuss the fourth quarter of
2018 is scheduled for March 12, 2019, at 10:00 a.m. ET. The
dial in number is 800-319-4610 for the U.S. and Canada, and is
+1-631-891-4304 for other countries. The call will also be streamed
on the Intrepid website, www.intrepidpotash.com.
An audio recording of the conference call will be
available through April 12, 2019, at www.intrepidpotash.com and by
dialing 800-319-6413 for the U.S. and Canada, or +1-631-883-6842
for other countries. The replay will require the input of the
conference identification number 2955.
About Intrepid
Intrepid is a diversified mineral company that
delivers potassium, magnesium, sulfur, salt and water products
essential for customer success in agriculture, animal feed and the
oil and gas industry. Intrepid is the only U.S. producer of muriate
of potash, which is applied as an essential nutrient for healthy
crop development, utilized in several industrial applications and
used as an ingredient in animal feed. In addition, Intrepid
produces a specialty fertilizer, Trio®, which
delivers three key nutrients, potassium, magnesium, and sulfate, in
a single particle. Intrepid also provides water, magnesium
chloride, brine and various oilfield products and services.
Intrepid serves diverse customers in markets where
a logistical advantage exists and is a leader in the use of solar
evaporation for potash production, resulting in lower cost and more
environmentally friendly production. Intrepid's mineral production
comes from three solar solution potash facilities and one
conventional underground Trio® mine.
Intrepid routinely posts important information,
including information about upcoming investor presentations and
press releases, on its website under the Investor Relations tab.
Investors and other interested parties are encouraged to enroll at
intrepidpotash.com, to receive automatic email alerts or RSS feeds
for new postings.
Forward-looking
Statements
This document contains forward-looking statements
- that is, statements about future, not past, events. The
forward-looking statements in this document relate to, among other
things, statements about Intrepid's future financial performance,
water sales, production costs, acquisition expectations and
operating plans, and its market outlook. These statements are based
on assumptions that Intrepid believes are reasonable.
Forward-looking statements by their nature address matters that are
uncertain. The particular uncertainties that could cause Intrepid's
actual results to be materially different from its forward-looking
statements include the following:
· changes in
the price, demand, or supply of Intrepid's products and
services;
· Intrepid's ability to
successfully identify and implement any opportunities to grow its
business whether through expanded sales of Trio®, water,
byproducts, and other non-potassium related products or other
revenue diversification activities;
· challenges to Intrepid's
water rights;
· Intrepid's ability to
close its acquisition of the Dinwiddie Jal Ranch, integrate the
acquired assets into its existing business, and achieve the
expected benefits of the acquisition;
· Intrepid's ability to comply
with the terms of its senior notes and its revolving credit
facility, including the underlying covenants, to avoid a default
under those agreements;
· Intrepid's ability to sell
Trio®
internationally and manage risks associated with international
sales, including pricing pressure and freight costs;
· the costs of, and Intrepid's
ability to successfully execute, any strategic projects;
· declines or changes in
agricultural production or fertilizer application rates;
· declines in the use of
potassium-related products or water by oil and gas companies in
their drilling operations;
· further write-downs of the
carrying value of assets, including inventories;
· circumstances that disrupt
or limit production, including operational difficulties or
variances, geological or geotechnical variances, equipment
failures, environmental hazards, and other unexpected events or
problems;
· changes in reserve
estimates;
· currency
fluctuations;
· adverse changes in economic
conditions or credit markets;
· the impact of governmental
regulations, including environmental and mining regulations, the
enforcement of those regulations, and governmental policy
changes;
· adverse weather events,
including events affecting precipitation and evaporation rates at
Intrepid's solar solution mines;
· increased labor costs or
difficulties in hiring and retaining qualified employees and
contractors, including workers with mining, mineral processing, or
construction expertise;
· changes in the prices of raw
materials, including chemicals, natural gas, and power;
· Intrepid's ability to obtain
and maintain any necessary governmental permits or leases relating
to current or future operations;
· interruptions in rail or
truck transportation services, or fluctuations in the costs of
these services;
· Intrepid's inability to fund
necessary capital investments; and
· the other risks,
uncertainties, and assumptions described in Intrepid's periodic
filings with the Securities and Exchange Commission, including in
"Risk Factors" in Intrepid's Annual Report on Form 10-K for the
year ended December 31, 2017.
In addition, new risks emerge from time to time.
It is not possible for Intrepid to predict all risks that may cause
actual results to differ materially from those contained in any
forward-looking statements Intrepid may make.
All information in this document speaks as of the
date of this release. New information or events after that date may
cause our forward-looking statements in this document to change. We
undertake no duty to update or revise publicly any forward-looking
statements to conform the statements to actual results or to
reflect new information or future events.
Contact:
Matt Preston, Investor
Relations
Phone: 303-996-3048
Email: matt.preston@intrepidpotash.com
INTREPID POTASH,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31,
2018 AND 2017
(In thousands, except share and per share
amounts)
|
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Sales |
|
$ |
54,364 |
|
|
$ |
42,582 |
|
|
$ |
208,270 |
|
|
$ |
177,915 |
|
Less: |
|
|
|
|
|
|
|
|
Freight costs |
|
9,893 |
|
|
8,246 |
|
|
37,052 |
|
|
32,016 |
|
Warehousing and handling costs |
|
2,211 |
|
|
2,656 |
|
|
9,281 |
|
|
9,670 |
|
Cost
of goods sold |
|
26,504 |
|
|
26,481 |
|
|
121,955 |
|
|
117,962 |
|
Lower
of cost or net realizable value inventory adjustments |
|
930 |
|
|
1,571 |
|
|
1,711 |
|
|
6,379 |
|
Gross Margin |
|
14,826 |
|
|
3,628 |
|
|
38,271 |
|
|
11,888 |
|
|
|
|
|
|
|
|
|
|
Selling and administrative |
|
5,157 |
|
|
5,316 |
|
|
20,438 |
|
|
18,915 |
|
Debt
restructuring expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Accretion of asset retirement obligation |
|
417 |
|
|
390 |
|
|
1,668 |
|
|
1,558 |
|
Restructuring expense |
|
- |
|
|
- |
|
|
- |
|
|
266 |
|
Care
and maintenance expense |
|
165 |
|
|
282 |
|
|
530 |
|
|
1,687 |
|
Other
operating expense |
|
205 |
|
|
765 |
|
|
141 |
|
|
3,523 |
|
Operating Income (Loss) |
|
8,882 |
|
|
(3,125 |
) |
|
15,494 |
|
|
(14,061 |
) |
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
Interest expense, net |
|
(1,235 |
) |
|
(1,061 |
) |
|
(3,855 |
) |
|
(11,692 |
) |
Interest income |
|
11 |
|
|
1 |
|
|
110 |
|
|
6 |
|
Other
income (expense) |
|
38 |
|
|
(117 |
) |
|
142 |
|
|
397 |
|
Income (Loss) Before Income Taxes |
|
7,696 |
|
|
(4,302 |
) |
|
11,891 |
|
|
(25,350 |
) |
|
|
|
|
|
|
|
|
|
Income Tax (Expense) Benefit |
|
(62 |
) |
|
2,666 |
|
|
(108 |
) |
|
2,783 |
|
Net Income (Loss) |
|
$ |
7,634 |
|
|
$ |
(1,636 |
) |
|
$ |
11,783 |
|
|
$ |
(22,567 |
) |
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
128,516,121 |
|
|
127,401,932 |
|
|
128,070,702 |
|
|
115,708,859 |
|
Diluted |
|
130,899,744 |
|
|
127,401,932 |
|
|
130,985,919 |
|
|
115,708,859 |
|
Income
(Loss) Per Share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
0.09 |
|
|
$ |
(0.20 |
) |
Diluted |
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
0.09 |
|
|
$ |
(0.20 |
) |
INTREPID POTASH,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
AS OF DECEMBER 31, 2018 AND 2017
(In thousands, except share and per share
amounts)
|
|
December
31, |
|
|
2018 |
|
2017 |
ASSETS |
|
|
|
|
Cash
and cash equivalents |
|
$ |
33,222 |
|
|
$ |
1,068 |
|
Accounts receivable: |
|
|
|
|
Trade,
net |
|
25,161 |
|
|
17,777 |
|
Other
receivables, net |
|
597 |
|
|
762 |
|
Refundable income taxes |
|
- |
|
|
2,663 |
|
Inventory, net |
|
82,046 |
|
|
83,126 |
|
Other
current assets |
|
4,332 |
|
|
6,088 |
|
Total
current assets |
|
145,358 |
|
|
111,484 |
|
|
|
|
|
|
|
|
|
|
|
Property, plant, equipment, and mineral properties, net |
|
346,209 |
|
|
364,542 |
|
Long-term parts inventory, net |
|
30,031 |
|
|
30,611 |
|
Other
assets, net |
|
3,633 |
|
|
3,955 |
|
Total Assets |
|
$ |
525,231 |
|
|
$ |
510,592 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
Accounts payable: |
|
|
|
|
Trade |
|
$ |
9,107 |
|
|
$ |
11,103 |
|
Related parties |
|
28 |
|
|
28 |
|
Income
taxes payable |
|
914 |
|
|
- |
|
Accrued liabilities |
|
8,717 |
|
|
8,074 |
|
Accrued employee compensation and benefits |
|
4,124 |
|
|
4,317 |
|
Other
current liabilities |
|
11,891 |
|
|
65 |
|
Advances on credit facility |
|
- |
|
|
3,900 |
|
Current portion of long-term debt |
|
- |
|
|
10,000 |
|
Total
current liabilities |
|
34,781 |
|
|
37,487 |
|
|
|
|
|
|
Long-term debt, net |
|
49,642 |
|
|
49,437 |
|
Asset
retirement obligation |
|
23,125 |
|
|
21,476 |
|
Other
non-current liabilities |
|
420 |
|
|
102 |
|
Total Liabilities |
|
107,968 |
|
|
108,502 |
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value; 400,000,000 shares authorized: |
|
|
|
|
and
128,716,595 and 127,646,530 shares outstanding |
|
|
|
|
at
December 31, 2018, and 2017, respectively |
|
129 |
|
|
128 |
|
Additional paid-in capital |
|
649,202 |
|
|
645,813 |
|
Retained deficit |
|
(232,068 |
) |
|
(243,851 |
) |
Total Stockholders' Equity |
|
417,263 |
|
|
402,090 |
|
Total Liabilities and Stockholders'
Equity |
|
$ |
525,231 |
|
|
$ |
510,592 |
|
INTREPID POTASH,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31,
2018 AND 2017
(In thousands)
|
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
7,634 |
|
|
(1,636 |
) |
|
11,783 |
|
|
(22,567 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and depletion |
|
8,377 |
|
|
8,488 |
|
|
32,215 |
|
|
33,209 |
|
Accretion of asset retirement obligation |
|
417 |
|
|
390 |
|
|
1,668 |
|
|
1,558 |
|
Amortization of deferred financing costs |
|
182 |
|
|
182 |
|
|
732 |
|
|
1,778 |
|
Stock-based compensation |
|
586 |
|
|
943 |
|
|
4,179 |
|
|
3,622 |
|
Reserve for obsolescence |
|
- |
|
|
1,093 |
|
|
15 |
|
|
1,073 |
|
Allowance for doubtful accounts |
|
- |
|
|
445 |
|
|
100 |
|
|
865 |
|
(Gain)
loss on disposal of assets |
|
(3 |
) |
|
81 |
|
|
(87 |
) |
|
1,830 |
|
Lower
of cost or net realizable value inventory adjustments |
|
930 |
|
|
1,571 |
|
|
1,711 |
|
|
6,379 |
|
Other |
|
(19 |
) |
|
(6 |
) |
|
(19 |
) |
|
- |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Trade
accounts receivable, net |
|
(6,872 |
) |
|
9 |
|
|
(7,484 |
) |
|
(6,870 |
) |
Other
receivables, net |
|
3,204 |
|
|
90 |
|
|
165 |
|
|
(270 |
) |
Refundable income taxes |
|
- |
|
|
(2,663 |
) |
|
2,663 |
|
|
(1,284 |
) |
Inventory, net |
|
(5,698 |
) |
|
(4,289 |
) |
|
(67 |
) |
|
(1,263 |
) |
Other
current assets |
|
1,113 |
|
|
1,243 |
|
|
1,762 |
|
|
(3,207 |
) |
Income
tax payable |
|
704 |
|
|
- |
|
|
914 |
|
|
- |
|
Accounts payable, accrued liabilities, and accrued
employee
compensation and benefits |
|
(1,336 |
) |
|
(2,785 |
) |
|
1,740 |
|
|
1,738 |
|
Other
liabilities |
|
2,073 |
|
|
2 |
|
|
12,247 |
|
|
102 |
|
Net
cash provided by operating activities |
|
11,292 |
|
|
3,158 |
|
|
64,237 |
|
|
16,693 |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
Additions to property, plant, equipment, and mineral
properties |
|
(4,223 |
) |
|
(7,280 |
) |
|
(16,891 |
) |
|
(13,505 |
) |
Proceeds from sale of property, plant, equipment, and mineral
properties |
|
18 |
|
|
98 |
|
|
110 |
|
|
5,651 |
|
Net
cash used in investing activities |
|
(4,205 |
) |
|
(7,182 |
) |
|
(16,781 |
) |
|
(7,854 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
Issuance of common stock, net of transaction expenses |
|
- |
|
|
- |
|
|
- |
|
|
59,130 |
|
Repayment of long-term debt |
|
(10,000 |
) |
|
- |
|
|
(10,000 |
) |
|
(75,000 |
) |
Debt
prepayment costs |
|
(402 |
) |
|
- |
|
|
(402 |
) |
|
(3,001 |
) |
Proceeds from short-term borrowings on credit facility |
|
- |
|
|
13,000 |
|
|
13,500 |
|
|
22,000 |
|
Repayments of short-term borrowings on credit facility |
|
- |
|
|
(9,100 |
) |
|
(17,400 |
) |
|
(18,100 |
) |
Debt
issuance costs |
|
(210 |
) |
|
- |
|
|
(210 |
) |
|
(129 |
) |
Employee tax withholding paid for restricted shares upon
vesting |
|
(532 |
) |
|
(623 |
) |
|
(903 |
) |
|
(781 |
) |
Proceeds from exercise of stock options |
|
67 |
|
|
121 |
|
|
114 |
|
|
121 |
|
Net
cash (used in) provided by financing activities |
|
(11,077 |
) |
|
3,398 |
|
|
(15,301 |
) |
|
(15,760 |
) |
|
|
|
|
|
|
|
|
|
Net Change in Cash, Cash Equivalents, and
Restricted Cash |
|
(3,990 |
) |
|
(626 |
) |
|
32,155 |
|
|
(6,921 |
) |
Cash, Cash Equivalents, and Restricted Cash,
beginning of period |
|
37,694 |
|
|
2,175 |
|
|
1,549 |
|
|
8,470 |
|
Cash, Cash Equivalents, and Restricted Cash, end
of period |
|
$ |
33,704 |
|
|
$ |
1,549 |
|
|
$ |
33,704 |
|
|
$ |
1,549 |
|
INTREPID POTASH,
INC.
DISAGGREGATION OF REVENUE AND SEGMENT DATA
(UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31,
2018 AND 2017
(In thousands)
|
|
Three Months
Ended December 31, |
Product |
|
2018 |
|
2017 |
Potash |
|
$ |
30,050 |
|
|
$ |
19,795 |
|
Trio® |
|
13,743 |
|
|
15,846 |
|
Water |
|
5,048 |
|
|
3,516 |
|
Magnesium Chloride |
|
2,123 |
|
|
1,277 |
|
Salt |
|
1,801 |
|
|
1,989 |
|
Brines |
|
584 |
|
|
159 |
|
Other |
|
1,015 |
|
|
- |
|
Total Revenue |
|
$ |
54,364 |
|
|
$ |
42,582 |
|
|
|
Year Ended
December 31, |
Product |
|
2018 |
|
2017 |
Potash |
|
$ |
107,471 |
|
|
$ |
95,540 |
|
Trio® |
|
64,139 |
|
|
63,338 |
|
Water |
|
19,797 |
|
|
7,042 |
|
Salt |
|
6,877 |
|
|
6,334 |
|
Magnesium Chloride |
|
6,804 |
|
|
5,432 |
|
Brines |
|
1,777 |
|
|
229 |
|
Other |
|
1,405 |
|
|
- |
|
Total Revenue |
|
$ |
208,270 |
|
|
$ |
177,915 |
|
|
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Production volume (in thousands of tons): |
|
|
|
|
|
|
|
|
Potash |
|
114 |
|
|
121 |
|
|
344 |
|
|
359 |
|
Langbeinite |
|
56 |
|
|
51 |
|
|
217 |
|
|
243 |
|
Sales
volume (in thousands of tons): |
|
|
|
|
|
|
|
|
Potash |
|
95 |
|
|
70 |
|
|
364 |
|
|
352 |
|
Trio® |
|
44 |
|
|
65 |
|
|
225 |
|
|
237 |
|
|
|
|
|
|
|
|
|
|
Average net realized sales price per ton (1) |
|
|
|
|
|
|
|
|
Potash |
|
$ |
270 |
|
|
$ |
248 |
|
|
$ |
256 |
|
|
$ |
238 |
|
Trio® |
|
$ |
215 |
|
|
$ |
164 |
|
|
$ |
199 |
|
|
$ |
191 |
|
Three Months Ended
December 31, 2018 |
|
Potash |
|
Trio® |
|
Oilfield Solutions |
|
Other |
|
Consolidated |
Sales(2) |
|
$ |
34,884 |
|
|
$ |
14,994 |
|
|
$ |
4,486 |
|
|
$ |
- |
|
|
$ |
54,364 |
|
Less:
Freight costs |
|
5,593 |
|
|
4,300 |
|
|
- |
|
|
- |
|
|
9,893 |
|
Warehousing and handling costs |
|
1,272 |
|
|
939 |
|
|
- |
|
|
- |
|
|
2,211 |
|
Cost
of goods sold |
|
17,355 |
|
|
8,114 |
|
|
1,035 |
|
|
- |
|
|
26,504 |
|
Lower
of cost or net realizable value inventory adjustments |
|
- |
|
|
930 |
|
|
- |
|
|
- |
|
|
930 |
|
Gross
Margin |
|
$ |
10,664 |
|
|
$ |
711 |
|
|
$ |
3,451 |
|
|
$ |
- |
|
|
$ |
14,826 |
|
Depreciation and depletion incurred(3) |
|
$ |
6,660 |
|
|
$ |
1,473 |
|
|
$ |
105 |
|
|
$ |
139 |
|
|
$ |
8,377 |
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018 |
|
Potash |
|
Trio® |
|
Oilfield Solutions |
|
Other |
|
Consolidated |
Sales(2) |
|
$ |
124,058 |
|
|
$ |
66,808 |
|
|
$ |
17,404 |
|
|
$ |
- |
|
|
$ |
208,270 |
|
Less:
Freight costs |
|
17,682 |
|
|
19,370 |
|
|
- |
|
|
- |
|
|
37,052 |
|
Warehousing and handling costs |
|
5,046 |
|
|
4,225 |
|
|
10 |
|
|
- |
|
|
9,281 |
|
Cost
of goods sold |
|
72,322 |
|
|
45,284 |
|
|
4,349 |
|
|
- |
|
|
121,955 |
|
Lower
of cost or net realizable value inventory adjustments |
|
- |
|
|
1,711 |
|
|
- |
|
|
- |
|
|
1,711 |
|
Gross
Margin (Deficit) |
|
$ |
29,008 |
|
|
$ |
(3,782 |
) |
|
$ |
13,045 |
|
|
$ |
- |
|
|
$ |
38,271 |
|
Depreciation and depletion incurred(3) |
|
$ |
25,134 |
|
|
$ |
6,343 |
|
|
$ |
343 |
|
|
$ |
395 |
|
|
$ |
32,215 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2017 |
|
Potash |
|
Trio® |
|
Oilfield Solutions |
|
Other |
|
Consolidated |
Sales(2) |
|
$ |
23,515 |
|
|
$ |
16,144 |
|
|
$ |
2,923 |
|
|
$ |
- |
|
|
$ |
42,582 |
|
Less:
Freight costs |
|
3,066 |
|
|
5,180 |
|
|
- |
|
|
- |
|
|
8,246 |
|
Warehousing and handling costs |
|
1,504 |
|
|
1,152 |
|
|
- |
|
|
- |
|
|
2,656 |
|
Cost
of goods sold |
|
14,243 |
|
|
12,043 |
|
|
195 |
|
|
- |
|
|
26,481 |
|
Lower
of cost or net realizable value inventory adjustments |
|
405 |
|
|
1,166 |
|
|
- |
|
|
- |
|
|
1,571 |
|
Gross
Margin (Deficit) |
|
$ |
4,297 |
|
|
$ |
(3,397 |
) |
|
$ |
2,728 |
|
|
$ |
- |
|
|
$ |
3,628 |
|
Depreciation and depletion incurred(3) |
|
$ |
6,812 |
|
|
$ |
1,641 |
|
|
$ |
19 |
|
|
$ |
16 |
|
|
$ |
8,488 |
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2017 |
|
Potash |
|
Trio® |
|
Oilfield Solutions |
|
Other |
|
Consolidated |
Sales(2) |
|
$ |
107,917 |
|
|
$ |
63,686 |
|
|
$ |
6,312 |
|
|
$ |
- |
|
|
$ |
177,915 |
|
Less:
Freight costs |
|
13,912 |
|
|
18,104 |
|
|
- |
|
|
- |
|
|
32,016 |
|
Warehousing and handling costs |
|
5,556 |
|
|
4,114 |
|
|
- |
|
|
- |
|
|
9,670 |
|
Cost
of goods sold |
|
72,229 |
|
|
45,187 |
|
|
546 |
|
|
- |
|
|
117,962 |
|
Lower
of cost or net realizable value inventory adjustments |
|
550 |
|
|
5,829 |
|
|
- |
|
|
- |
|
|
6,379 |
|
Gross
Margin (Deficit) |
|
$ |
15,670 |
|
|
$ |
(9,548 |
) |
|
$ |
5,766 |
|
|
$ |
- |
|
|
$ |
11,888 |
|
Depreciation and depletion incurred(3) |
|
$ |
26,485 |
|
|
$ |
6,576 |
|
|
$ |
19 |
|
|
$ |
129 |
|
|
$ |
33,209 |
|
(1) Average net realized sales price is a non-GAAP
financial measure. See the non-GAAP reconciliations set forth later
in this press release for additional information.
(2) Segment sales include the sales of byproducts generated during
the production of potash and Trio®. Prior to the
fourth quarter of 2018, sales of byproducts were accounted for as a
credit to cost of goods sold for potash and Trio®.
(3) Depreciation and depletion incurred for potash and
Trio® excludes
depreciation and depletion amounts absorbed in or (relieved from)
inventory.
INTREPID POTASH,
INC.
UNAUDITED NON-GAAP RECONCILIATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31,
2018 AND 2017
(In thousands, except per share amounts)
To supplement Intrepid's consolidated financial
statements, which are prepared and presented in accordance with
GAAP, Intrepid uses several non-GAAP financial measures to monitor
and evaluate its performance. These non-GAAP financial measures
include adjusted net income (loss), adjusted net income (loss) per
diluted share, adjusted EBITDA, and average net realized sales
price per ton. These non-GAAP financial measures should not be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP. In addition, because the presentation of these non-GAAP
financial measures varies among companies, these non-GAAP financial
measures may not be comparable to similarly titled measures used by
other companies.
Intrepid believes these non-GAAP financial
measures provide useful information to investors for analysis of
its business. Intrepid uses these non-GAAP financial measures as
one of its tools in comparing period-over-period performance on a
consistent basis and when planning, forecasting, and analyzing
future periods. Intrepid believes these non-GAAP financial measures
are used by professional research analysts and others in the
valuation, comparison, and investment recommendations of companies
in the potash mining industry. Many investors use the published
research reports of these professional research analysts and others
in making investment decisions.
Adjusted Net Income (Loss) and
Adjusted Net Income (Loss) Per Diluted Share
Adjusted net income (loss) and adjusted net income
(loss) per diluted share are calculated as net income (loss) or net
income (loss) per diluted share adjusted for certain items that
impact the comparability of results from period to period, as set
forth in the reconciliation below. Intrepid considers these
non-GAAP financial measures to be useful because they allow for
period-to-period comparisons of its operating results excluding
items that Intrepid believes are not indicative of its fundamental
ongoing operations.
Reconciliation of Net Income
(Loss) to Adjusted Net Income (Loss):
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
Income (Loss) |
$ |
7,634 |
|
|
$ |
(1,636 |
) |
|
$ |
11,783 |
|
|
$ |
(22,567 |
) |
Adjustments |
|
|
|
|
|
|
|
Restructuring expense(1) |
- |
|
|
- |
|
|
- |
|
|
266 |
|
Write-off of deferred financing fees(2) |
72 |
|
|
- |
|
|
72 |
|
|
819 |
|
Make-whole payment(3) |
402 |
|
|
- |
|
|
402 |
|
|
3,001 |
|
AMT Carryback(4) |
- |
|
|
(2,653 |
) |
|
- |
|
|
(2,653 |
) |
Total adjustments |
474 |
|
|
(2,653 |
) |
|
474 |
|
|
1,433 |
|
Adjusted Net Income (Loss) |
$ |
8,108 |
|
|
$ |
(4,289 |
) |
|
$ |
12,257 |
|
|
$ |
(21,134 |
) |
Reconciliation of Net Income
(Loss) per Share to Adjusted Net Income (Loss) per Share:
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
Income (Loss) Per Diluted Share |
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
0.09 |
|
|
$ |
(0.20 |
) |
Adjustments |
|
|
|
|
|
|
|
Restructuring expense(1) |
- |
|
|
- |
|
|
- |
|
|
- |
|
Write-off of deferred financing fees(2) |
- |
|
|
- |
|
|
- |
|
|
0.01 |
|
Make-whole payment(3) |
- |
|
|
- |
|
|
- |
|
|
0.03 |
|
AMT Carryback(4) |
- |
|
|
(0.02 |
) |
|
- |
|
|
(0.02 |
) |
Total adjustments |
- |
|
|
(0.02 |
) |
|
- |
|
|
0.02 |
|
Adjusted Net Income (Loss) Per Diluted Share |
$ |
0.06 |
|
|
$ |
(0.03 |
) |
|
$ |
0.09 |
|
|
$ |
(0.18 |
) |
(1) Intrepid recorded restructuring expense of
$0.3 million for the year ended December 31, 2017, related to a
scheduling change at its East facility.
(2) As a result of early repayments of principal
on its senior notes, Intrepid wrote off a portion of the financing
fees that had previously been capitalized related to the senior
notes. The write-offs of deferred financing fees are reflected in
Intrepid's financial statements as interest expense.
(3) As a result of early repayments of its senior
notes, Intrepid incurred make whole-payments, which are reflected
on the income statement as interest expense.
(4) During the fourth quarter of 2017, Intrepid
monetized existing alternative minimum tax credits through a
carryback, resulting in a $2.7 million benefit.
Average Potash and
Trio® Net Realized
Sales Price per Ton
Average net realized sales price per ton for
potash is calculated as potash segment sales less potash segment
byproduct sales and potash freight costs and then dividing that
difference by the number of tons of potash sold in the period.
Likewise, average net realized sales price per ton for
Trio® is calculated
as Trio® segment sales
less Trio® segment
byproduct sales and Trio® freight costs
and then dividing that difference by Trio® tons sold.
Intrepid considers average net realized sales price per ton to be
useful, and believe it to be useful for investors, because it shows
Intrepid's potash and Trio® average
per-ton pricing without the effect of certain transportation and
delivery costs. When Intrepid arranges transportation and delivery
for a customer, it includes in revenue and in freight costs the
costs associated with transportation and delivery. However, some of
Intrepid's customers arrange for and pay their own transportation
and delivery costs, in which case these costs are not included in
Intrepid's revenue and freight costs. Intrepid uses average net
realized sales price per ton as a key performance indicator to
analyze potash and Trio® sales and
price trends.
Reconciliation of Sales to
Average Potash and Trio® Net Realized
Sales Price per Ton:
|
|
Potash Segment |
|
|
Three Months Ended December
31, |
|
|
2018 |
|
2017 |
Total
Segment Sales |
|
$ |
34,884 |
|
|
$ |
23,515 |
|
Less:
Segment byproduct sales |
|
4,834 |
|
|
3,720 |
|
Potash freight costs |
|
4,400 |
|
|
2,417 |
|
Subtotal |
|
$ |
25,650 |
|
|
$ |
17,378 |
|
|
|
|
|
|
Divided by: |
|
|
|
|
Potash
tons sold (in thousands) |
|
95 |
|
|
70 |
|
Average net realized sales price per ton |
|
$ |
270 |
|
|
$ |
248 |
|
|
|
Potash
Segment |
|
|
2018 |
|
2017 |
Total
Segment Sales |
|
$ |
124,058 |
|
|
$ |
107,917 |
|
Less:
Segment byproduct sales |
|
16,586 |
|
|
12,377 |
|
Potash freight costs |
|
14,194 |
|
|
11,818 |
|
Subtotal |
|
$ |
93,278 |
|
|
$ |
83,722 |
|
|
|
|
|
|
Divided by: |
|
|
|
|
Potash
tons sold (in thousands) |
|
364 |
|
|
352 |
|
Average net realized sales price per ton |
|
$ |
256 |
|
|
$ |
238 |
|
|
|
Trio®
Segment |
|
|
Three Months Ended December
31, |
|
|
2018 |
|
2017 |
Total
Segment Sales |
|
$ |
14,994 |
|
|
$ |
16,144 |
|
Less:
Segment byproduct sales |
|
1,251 |
|
|
298 |
|
Trio® freight
costs |
|
4,300 |
|
|
5,180 |
|
Subtotal |
|
$ |
9,443 |
|
|
$ |
10,666 |
|
|
|
|
|
|
Divided by: |
|
|
|
|
Trio® tons sold (in
thousands) |
|
44 |
|
|
65 |
|
Average net realized sales price per ton |
|
$ |
215 |
|
|
$ |
164 |
|
|
|
Trio®
Segment |
|
|
2018 |
|
2017 |
Total
Segment Sales |
|
$ |
66,808 |
|
|
$ |
63,686 |
|
Less:
Segment byproduct sales |
|
2,669 |
|
|
348 |
|
Trio® freight
costs |
|
19,367 |
|
|
18,104 |
|
Subtotal |
|
$ |
44,772 |
|
|
$ |
45,235 |
|
|
|
|
|
|
Divided by: |
|
|
|
|
Trio® tons sold (in
thousands) |
|
225 |
|
|
237 |
|
Average net realized sales price per ton |
|
$ |
199 |
|
|
$ |
191 |
|
Adjusted EBITDA
Adjusted earnings before interest, taxes,
depreciation, and amortization (or adjusted EBITDA) is calculated
as net income (loss) adjusted for certain items that impact the
comparability of results from period to period, as set forth in the
reconciliation below. Intrepid considers adjusted EBITDA to be
useful because the measure reflects Intrepid's operating
performance before the effects of certain non-cash items and other
items that Intrepid believes are not indicative of its core
operations. Intrepid uses adjusted EBITDA to assess operating
performance.
Reconciliation of Net Income
(Loss) to Adjusted EBITDA:
|
Three Months
Ended December 31, |
|
Year Ended
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
7,634 |
|
|
$ |
(1,636 |
) |
|
$ |
11,783 |
|
|
$ |
(22,567 |
) |
Restructuring expense(1) |
- |
|
|
- |
|
|
- |
|
|
266 |
|
Interest expense |
1,235 |
|
|
1,061 |
|
|
3,855 |
|
|
11,692 |
|
Income tax expense (benefit) |
62 |
|
|
(2,666 |
) |
|
108 |
|
|
(2,783 |
) |
Depreciation and depletion |
8,377 |
|
|
8,488 |
|
|
32,215 |
|
|
33,209 |
|
Accretion of asset retirement obligation |
417 |
|
|
390 |
|
|
1,668 |
|
|
1,558 |
|
Total
adjustments |
10,091 |
|
|
7,273 |
|
|
37,846 |
|
|
43,942 |
|
Adjusted Earnings
Before Interest, Taxes, Depreciation, |
|
|
|
|
|
|
|
and
Amortization |
$ |
17,725 |
|
|
$ |
5,637 |
|
|
$ |
49,629 |
|
|
$ |
21,375 |
|
(1) Intrepid recorded restructuring expense of
$0.3 million for the year ended December 31, 2017, related to a
scheduling change at its East facility.
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Intrepid Potash Inc via Globenewswire
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