Intrepid Announces Second Quarter 2018 Results
DENVER, August 2, 2018 - Intrepid Potash Inc. (Intrepid) (NYSE:IPI) today reported its results for the second quarter of 2018.
Key Q2 Takeaways
· Cash flow from operations of $24.3 million, a $14.6 million increase compared to the prior year.
· Higher potash price drove potash segment gross margin of $6.3 million, a $2.3 million increase compared to Q2 2017.
· Strong domestic Trio® volumes, offset by a challenging international environment and reduced production schedule, resulted in segment gross deficit of $2.2 million, compared to the gross deficit of $0.3 million in the prior year.
· Net loss of $1.0 million, or $0.01 per share, compares favorably to Q2 2017 net loss of $5.9 million, or $0.05 per share.
· Water demand remained solid as drilling activity increases in the northern Delaware Basin around our mines.
"Our second quarter results reflect a strong finish to the spring season as we benefited from higher potash pricing and increased demand for Trio®," said Bob Jornayvaz, Intrepid's Executive Chairman, President and CEO. "This, in turn, drove improved cash flow from operations, which more than doubled year over year. Looking to the second half of the year, we expect continued solid cash flow from operations. In the first half of 2018, we received $13.4 million of cash for water and as of June 30th we had $5.4 million in accounts receivable related to water on our balance sheet. Moving forward, we are modifying our water guidance calculation and language to focus on cash and expect to receive $25 million to $35 million in cash relating to water in 2018. This amount includes $15 million in cash that we expect to receive under a long-term water commitment, but that is accounted for as deferred revenue until the underlying water is delivered. For our core nutrient business, we see positive pricing momentum in the domestic agricultural markets and we expect this to improve our bottom line in future periods."
Consolidated Results
Intrepid generated a second quarter net loss of $1.0 million, or $0.01 per share, and first half 2018 net income of $0.8 million, or $0.01 per share. Consolidated gross margin increased to $7.3 million and $14.5 million in the second quarter and first half of 2018, respectively, compared to the prior year. Increased gross margin was the result of increased water sales, improvement in the average net realized sales price of potash, and reduced lower-of-cost-or-market adjustments in the Trio® segment.
Cash provided by operating activities increased year over year to $24.3 million and $38.2 million for the second quarter and first half of 2018, respectively. Increases were driven by increased water sales, reduced interest expense, and payments received under a prearranged water commitment.
Segment Highlights
Potash
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||
| Potash sales | $ | 28,188 | $ | 27,814 | $ | 55,246 | $ | 55,034 | ||||||||
| Potash gross margin | $ | 6,279 | $ | 4,015 | $ | 11,248 | $ | 6,344 | ||||||||
| Potash production volume (in tons) | 45 | 63 | 170 | 181 | ||||||||||||
| Potash sales volume (in tons) | 98 | 103 | 195 | 204 | ||||||||||||
| Average potash net realized sales price per ton(1) | $ | 254 | $ | 235 | $ | 249 | $ | 238 | ||||||||
Potash sales volume was relatively flat compared to the prior year periods with robust demand in agricultural markets offset by a decrease in industrial volume. The potash facilities entered the summer evaporation season earlier than the previous year, reducing second quarter production compared to the prior year. The earlier summer shutdown was the result of improvements in potash processing, which allowed the solar facilities to operate at higher rates throughout the production season. A longer summer shutdown increases the overall evaporation capacity of the pond system and is expected to benefit production volumes for the next harvest year assuming similar evaporation rates.
Increases in gross margin when compared to year-ago periods were driven primarily by higher average net realized sales price, and increased by-product production and sales.
Trio®
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||
| Trio® sales | $ | 18,839 | $ | 16,096 | $ | 40,082 | $ | 37,208 | ||||||||
| Trio® gross deficit | $ | (2,237 | ) | $ | (318 | ) | $ | (4,307 | ) | $ | (5,503 | ) | ||||
| Trio® production volume (in tons) | 55 | 70 | 102 | 141 | ||||||||||||
| Trio® sales volume (in tons) | 69 | 59 | 146 | 135 | ||||||||||||
| Average Trio® net realized sales price per ton(1) | $ | 191 | $ | 198 | $ | 193 | $ | 200 | ||||||||
Sales volume increased 17% and 8%, respectively, compared to the second quarter and first half of 2017, driven by a strong domestic market, which offset lower sales into the international market. Production decreased compared to the prior year periods, as Intrepid began operating at a reduced rate in June 2017 to manage inventory levels and match production to expected demand.
Gross deficit increased in the second quarter of 2018 compared to same period in the prior year due to lower pricing on international shipments, increased freight rates and the reduced production schedule, which, all together, offset higher domestic prices. First half gross deficit decreased $1.2 million compared to the prior year due to a decrease in lower-of-cost-or-market adjustments related to international shipments.
Liquidity
Cash provided by operations was $24.3 million during the second quarter and cash spent on capital investments was $2.4 million. As of June 30, 2018, Intrepid had $26.2 million in cash and cash equivalents and $25.7 million available to borrow under its credit facility.
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 quarter is scheduled for August 2, 2018, at 10:00 a.m. ET. The dial-in number is 1-800-319-4610 for U.S. and Canada, and is +1-631-891-4304 for other countries. The call will also be streamed on the Intrepid website, intrepidpotash.com.
An audio recording of the conference call will be available through September 2, 2018, at intrepidpotash.com and by dialing 1-800-319-6413 for U.S. and Canada, or +1-631-883-6842 for other countries. The replay will require the input of the conference identification number 2500.
About Intrepid
Intrepid is the only U.S. producer of muriate of potash. Potash is applied as an essential nutrient for healthy crop development, utilized in several industrial applications and used as an ingredient in animal feed. Intrepid also produces a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also sells water and by-products such as salt, magnesium chloride, and brine.
Intrepid serves diverse customers in markets where a logistical advantage exists; and is a leader in the utilization of solar evaporation production, one of the lowest cost, environmentally friendly production methods for potash. Intrepid's 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 on the Intrepid website, intrepidpotash.com to receive automatic email alerts or Really Simple Syndication (RSS) feeds regarding 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, 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;
- Intrepid's ability to successfully identify and implement any opportunities to expand sales of water, by-products, and other non-potassium related products or other revenue diversification activities;
- challenges to Intrepid's water rights;
- 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 expand Trio® sales internationally and manage risks associated with international sales, including pricing pressure and freight costs;
- Intrepid's ability to successfully identify and consummate profitable growth opportunities;
- 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 SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(In thousands, except share and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Sales | $ | 51,014 | $ | 45,007 | $ | 104,208 | $ | 93,663 | |||||||||
| Less: | |||||||||||||||||
| Freight costs | 8,931 | 7,985 | 18,665 | 16,706 | |||||||||||||
| Warehousing and handling costs | 2,600 | 2,197 | 4,877 | 4,968 | |||||||||||||
| Cost of goods sold | 32,121 | 29,821 | 65,399 | 65,694 | |||||||||||||
| Lower-of-cost-or-market inventory adjustments | 76 | 317 | 781 | 4,141 | |||||||||||||
| Gross Margin | 7,286 | 4,687 | 14,486 | 2,154 | |||||||||||||
| Selling and administrative | 6,190 | 4,656 | 10,160 | 9,060 | |||||||||||||
| Accretion of asset retirement obligation | 417 | 389 | 834 | 778 | |||||||||||||
| Restructuring expense | - | 266 | - | 266 | |||||||||||||
| Care and maintenance expense | 118 | 419 | 247 | 1,111 | |||||||||||||
| Other operating expense | 703 | 641 | 869 | 2,291 | |||||||||||||
| Operating (Loss) Income | (142 | ) | (1,684 | ) | 2,376 | (11,352 | ) | ||||||||||
| Other Income (Expense) | |||||||||||||||||
| Interest expense, net | (878 | ) | (4,217 | ) | (1,756 | ) | (8,637 | ) | |||||||||
| Interest income | - | - | 99 | 4 | |||||||||||||
| Other income (expense) | 62 | (27 | ) | 80 | 384 | ||||||||||||
| (Loss) Income Before Income Taxes | (958 | ) | (5,928 | ) | 799 | (19,601 | ) | ||||||||||
| Income Tax Expense | - | (7 | ) | - | (12 | ) | |||||||||||
| Net (Loss) Income | $ | (958 | ) | $ | (5,935 | ) | $ | 799 | $ | (19,613 | ) | ||||||
| Weighted Average Shares Outstanding: | |||||||||||||||||
| Basic | 127,861,112 | 126,221,142 | 127,761,837 | 104,228,787 | |||||||||||||
| Diluted | 127,861,112 | 126,221,142 | 130,966,054 | 104,228,787 | |||||||||||||
| (Loss) Earnings Per Share: | |||||||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.05 | ) | $ | 0.01 | $ | (0.19 | ) | ||||||
| Diluted | $ | (0.01 | ) | $ | (0.05 | ) | $ | 0.01 | $ | (0.19 | ) | ||||||
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF JUNE 30, 2018 AND DECEMBER 31, 2017
(In thousands, except share and per share amounts)
| June 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 26,234 | $ | 1,068 | ||||
| Accounts receivable: | ||||||||
| Trade, net | 21,208 | 17,777 | ||||||
| Other receivables, net | 2,095 | 762 | ||||||
| Refundable income taxes | - | 2,663 | ||||||
| Inventory, net | 68,354 | 83,126 | ||||||
| Prepaid expenses and other current assets | 4,662 | 6,088 | ||||||
| Total current assets | 122,553 | 111,484 | ||||||
| Property, plant, equipment, and mineral properties, net | 353,920 | 364,542 | ||||||
| Long-term parts inventory, net | 31,858 | 30,611 | ||||||
| Other assets, net | 3,653 | 3,955 | ||||||
| Total Assets | $ | 511,984 | $ | 510,592 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Accounts payable: | ||||||||
| Trade | $ | 5,068 | $ | 11,103 | ||||
| Related parties | 28 | 28 | ||||||
| Income taxes payable | 172 | - | ||||||
| Accrued liabilities | 6,686 | 8,074 | ||||||
| Accrued employee compensation and benefits | 5,227 | 4,317 | ||||||
| Advances on credit facility | - | 3,900 | ||||||
| Current portion of long-term debt | 10,000 | 10,000 | ||||||
| Other current liabilities | 8,130 | 65 | ||||||
| Total current liabilities | 35,311 | 37,487 | ||||||
| Long-term debt, net | 49,504 | 49,437 | ||||||
| Asset retirement obligation | 22,310 | 21,476 | ||||||
| Other non-current liabilities | - | 102 | ||||||
| Total Liabilities | 107,125 | 108,502 | ||||||
| Commitments and Contingencies | ||||||||
| Common stock, $0.001 par value; 400,000,000 shares authorized; | ||||||||
| 128,232,942 and 127,646,530 shares outstanding | ||||||||
| at June 30, 2018, and December 31, 2017, respectively | 128 | 128 | ||||||
| Additional paid-in capital | 647,783 | 645,813 | ||||||
| Retained deficit | (243,052 | ) | (243,851 | ) | ||||
| Total Stockholders' Equity | 404,859 | 402,090 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 511,984 | $ | 510,592 | ||||
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(In thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||
| Net (loss) income | $ | (958 | ) | $ | (5,935 | ) | $ | 799 | $ | (19,613 | ) | |||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||
| Allowance for doubtful accounts | 379 | - | 379 | - | ||||||||||||
| Depreciation, depletion, and accretion | 7,977 | 8,297 | 16,909 | 17,620 | ||||||||||||
| Amortization of deferred financing costs | 184 | 529 | 367 | 1,350 | ||||||||||||
| Stock-based compensation | 1,347 | 696 | 2,294 | 1,685 | ||||||||||||
| Lower-of-cost-or-market inventory adjustments | 76 | 317 | 781 | 4,141 | ||||||||||||
| (Gain) loss on disposal of assets | (50 | ) | 5 | (84 | ) | 1,564 | ||||||||||
| Allowance for parts inventory obsolescence | 15 | - | 15 | - | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Trade accounts receivable, net | 8,018 | 7,642 | (3,810 | ) | (1,134 | ) | ||||||||||
| Other receivables, net | (1,126 | ) | (491 | ) | (1,333 | ) | (890 | ) | ||||||||
| Refundable income taxes | (181 | ) | 7 | 2,663 | 3 | |||||||||||
| Inventory, net | 6,718 | 3,341 | 12,727 | 4,984 | ||||||||||||
| Prepaid expenses and other current assets | 514 | 720 | 1,428 | 4,591 | ||||||||||||
| Accounts payable, accrued liabilities, and accrued employee compensation and benefits | (3,198 | ) | (5,496 | ) | (3,197 | ) | (5,560 | ) | ||||||||
| Income tax payable | 172 | - | 172 | - | ||||||||||||
| Other liabilities | 4,385 | 62 | 8,066 | (757 | ) | |||||||||||
| Net cash provided by operating activities | 24,272 | 9,694 | 38,176 | 7,984 | ||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||
| Additions to property, plant, equipment, and mineral properties | (2,408 | ) | (1,136 | ) | (8,878 | ) | (3,559 | ) | ||||||||
| Proceeds from sale of property, plant, equipment, and mineral properties | 58 | - | 92 | 5,554 | ||||||||||||
| Net cash (used in) provided by investing activities | (2,350 | ) | (1,136 | ) | (8,786 | ) | 1,995 | |||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||
| Issuance of common stock, net of transaction costs | - | 11 | - | 57,479 | ||||||||||||
| Repayments of long-term debt | - | (23,000 | ) | - | (69,000 | ) | ||||||||||
| Proceeds from short-term borrowings on credit facility | - | - | 13,500 | - | ||||||||||||
| Repayments of short-term borrowings on credit facility | (1,500 | ) | - | (17,400 | ) | - | ||||||||||
| Debt issuance costs | - | (99 | ) | - | (99 | ) | ||||||||||
| Employee tax withholding paid for restricted stock upon vesting | (309 | ) | (49 | ) | (371 | ) | (158 | ) | ||||||||
| Proceeds from exercise of stock options | 36 | - | 47 | - | ||||||||||||
| Net cash used in financing activities | (1,773 | ) | (23,137 | ) | (4,224 | ) | (11,778 | ) | ||||||||
| Net Change in Cash, Cash Equivalents and Restricted Cash | 20,149 | (14,579 | ) | 25,166 | (1,799 | ) | ||||||||||
| Cash, Cash Equivalents and Restricted Cash, beginning of period | 6,566 | 21,250 | 1,549 | 8,470 | ||||||||||||
| Cash, Cash Equivalents and Restricted Cash, end of period | $ | 26,715 | $ | 6,671 | $ | 26,715 | $ | 6,671 | ||||||||
| Supplemental disclosure of cash flow information | ||||||||||||||||
| Net cash paid (refunded) during the period for: | ||||||||||||||||
| Interest | $ | 1,481 | $ | 5,910 | $ | 1,576 | $ | 8,377 | ||||||||
| Income taxes | $ | 8 | $ | - | $ | (2,835 | ) | $ | 10 | |||||||
| Accrued purchases for property, plant, equipment, and mineral properties | $ | 651 | $ | 242 | $ | 651 | $ | 242 | ||||||||
INTREPID POTASH, INC.
SELECTED OPERATING AND SEGMENT DATA (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Production volume (in thousands of tons): | ||||||||||||||||
| Potash | 45 | 63 | 170 | 181 | ||||||||||||
| Langbeinite | 55 | 70 | 102 | 141 | ||||||||||||
| Sales volume (in thousands of tons): | ||||||||||||||||
| Potash | 98 | 103 | 195 | 204 | ||||||||||||
| Trio® | 69 | 59 | 146 | 135 | ||||||||||||
| Average net realized sales price per ton (1) | ||||||||||||||||
| Potash | $ | 254 | $ | 235 | $ | 249 | $ | 238 | ||||||||
| Trio® | $ | 191 | $ | 198 | $ | 193 | $ | 200 | ||||||||
| Three Months Ended June 30, 2018 (in thousands): | Potash | Trio® | Other | Consolidated | ||||||||||||
| Sales | $ | 28,188 | $ | 18,839 | $ | 3,987 | $ | 51,014 | ||||||||
| Less: Freight costs | 3,276 | 5,655 | - | 8,931 | ||||||||||||
| Warehousing and handling costs | 1,412 | 1,183 | 5 | 2,600 | ||||||||||||
| Cost of goods sold | 17,221 | 14,162 | 738 | 32,121 | ||||||||||||
| Lower-of-cost-or-market inventory adjustments | - | 76 | - | 76 | ||||||||||||
| Gross Margin (Deficit) | $ | 6,279 | $ | (2,237 | ) | $ | 3,244 | $ | 7,286 | |||||||
| Depreciation, depletion and accretion incurred(2) | $ | 6,129 | $ | 1,680 | $ | 168 | $ | 7,977 | ||||||||
| Six Months Ended June 30, 2018 (in thousands): | Potash | Trio® | Other | Consolidated | ||||||||||||
| Sales | $ | 55,246 | $ | 40,082 | $ | 8,880 | $ | 104,208 | ||||||||
| Less: Freight costs | 6,735 | 11,930 | - | 18,665 | ||||||||||||
| Warehousing and handling costs | 2,566 | 2,302 | 9 | 4,877 | ||||||||||||
| Cost of goods sold | 34,697 | 29,376 | 1,326 | 65,399 | ||||||||||||
| Lower-of-cost-or-market inventory adjustments | - | 781 | - | 781 | ||||||||||||
| Gross Margin (Deficit) | $ | 11,248 | $ | (4,307 | ) | $ | 7,545 | $ | 14,486 | |||||||
| Depreciation, depletion and accretion incurred(2) | $ | 13,268 | $ | 3,370 | $ | 271 | $ | 16,909 | ||||||||
| Three Months Ended June 30, 2017 (in thousands): | Potash | Trio® | Other | Consolidated | ||||||||||||
| Sales | $ | 27,814 | $ | 16,096 | $ | 1,097 | $ | 45,007 | ||||||||
| Less: Freight costs | 3,578 | 4,407 | - | 7,985 | ||||||||||||
| Warehousing and handling costs | 1,366 | 831 | - | 2,197 | ||||||||||||
| Cost of goods sold | 18,822 | 10,892 | 107 | 29,821 | ||||||||||||
| Lower-of-cost-or-market inventory adjustments | 33 | 284 | - | 317 | ||||||||||||
| Gross Margin (Deficit) | $ | 4,015 | $ | (318 | ) | $ | 990 | $ | 4,687 | |||||||
| Depreciation, depletion and accretion incurred(2) | $ | 6,555 | $ | 1,705 | $ | 37 | $ | 8,297 | ||||||||
| Six Months Ended June 30, 2017 (in thousands): | Potash | Trio® | Other | Consolidated | ||||||||||||
| Sales | $ | 55,034 | $ | 37,208 | $ | 1,421 | $ | 93,663 | ||||||||
| Less: Freight costs | 6,537 | 10,169 | - | 16,706 | ||||||||||||
| Warehousing and handling costs | 2,878 | 2,090 | - | 4,968 | ||||||||||||
| Cost of goods sold | 39,242 | 26,344 | 108 | 65,694 | ||||||||||||
| Lower-of-cost-or-market inventory adjustments | 33 | 4,108 | - | 4,141 | ||||||||||||
| Gross Margin (Deficit) | $ | 6,344 | $ | (5,503 | ) | $ | 1,313 | $ | 2,154 | |||||||
| Depreciation, depletion and accretion incurred(2) | $ | 14,118 | $ | 3,404 | $ | 98 | $ | 17,620 | ||||||||
(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) Depreciation, depletion and accretion incurred for potash and Trio® excludes depreciation, depletion and accretion amounts absorbed in or (relieved from) inventory.
INTREPID POTASH, INC.
UNAUDITED NON-GAAP RECONCILIATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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 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 June 30, | Six Months Ended June 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| (in thousands) | |||||||||||||||
| Net Income (Loss) | $ | (958 | ) | $ | (5,935 | ) | $ | 799 | $ | (19,613 | ) | ||||
| Adjustments | |||||||||||||||
| Restructuring expense(1) | - | 266 | - | 266 | |||||||||||
| Write-off of deferred financing fees(2) | - | 241 | - | 759 | |||||||||||
| Make-whole payment(3) | - | 1,760 | - | 2,554 | |||||||||||
| Total adjustments | - | 2,267 | - | 3,579 | |||||||||||
| Adjusted Net Income (Loss) | $ | (958 | ) | $ | (3,668 | ) | $ | 799 | $ | (16,034 | ) | ||||
Reconciliation of Net Income (Loss) per Share to Adjusted Net Income (Loss) per Share:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net Income (Loss) Per Diluted Share | $ | (0.01 | ) | $ | (0.05 | ) | $ | 0.01 | $ | (0.19 | ) | ||||
| Adjustments | |||||||||||||||
| Restructuring expense(1) | - | - | - | - | |||||||||||
| Write-off of deferred financing fees(2) | - | - | - | 0.01 | |||||||||||
| Make-whole payment(3) | - | 0.02 | - | 0.02 | |||||||||||
| Calculated income tax effect(4) | - | - | - | - | |||||||||||
| Total adjustments | - | 0.02 | - | 0.03 | |||||||||||
| Adjusted Net Income (Loss) Per Diluted Share | $ | (0.01 | ) | $ | (0.03 | ) | $ | 0.01 | $ | (0.16 | ) | ||||
(1) Intrepid recorded restructuring expense of $0.3 million in the second quarter of 2017, related to a scheduling change at its East facility.
(2) During the second quarter of 2017, Intrepid made an early repayment of $23.0 million of principal on its senior notes. As a result, Intrepid wrote off a portion of the financing fees that had previously been capitalized related to the senior notes. The write-off of deferred financing fees is reflected in Intrepid's financial statements as interest expense.
(3) During the second quarter of 2017, Intrepid made an early repayment of principal on its senior notes. The payment totaled $24.8 million, of which $1.8 million related to an additional make-whole payment.
(4) Due to Intrepid's valuation allowance against its deferred tax asset, this calculation assumes a 0% effective tax rate.
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net Income (Loss) | $ | (958 | ) | $ | (5,935 | ) | $ | 799 | $ | (19,613 | ) | |||||
| Restructuring expense(1) | - | 266 | - | 266 | ||||||||||||
| Interest expense | 878 | 4,217 | 1,756 | 8,637 | ||||||||||||
| Income tax expense | - | 7 | - | 12 | ||||||||||||
| Depreciation, depletion, and accretion | 7,977 | 8,297 | 16,909 | 17,620 | ||||||||||||
| Total adjustments | 8,855 | 12,787 | 18,665 | 26,535 | ||||||||||||
| Adjusted EBITDA | $ | 7,897 | $ | 6,852 | $ | 19,464 | $ | 6,922 | ||||||||
(1) Intrepid recorded restructuring expense of $0.3 million in the second quarter of 2017, related to a scheduling change at its East facility.
Average Net Realized Sales Price per Ton
Average net realized sales price per ton is calculated as sales, less freight costs, divided by the number of tons sold in the period. Intrepid considers average net realized sales price per ton to be useful because it shows 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, many of the 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 sales and pricing trends.
Reconciliation of Sales to Average Net Realized Sales Price per Ton:
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||||||||||
| Potash | Trio® | Total | Potash | Trio® | Total | |||||||||||||||||||
| Sales | $ | 28,188 | $ | 18,839 | $ | 47,027 | $ | 27,814 | $ | 16,096 | $ | 43,910 | ||||||||||||
| Freight costs | 3,276 | 5,655 | 8,931 | 3,578 | 4,407 | 7,985 | ||||||||||||||||||
| Subtotal | $ | 24,912 | $ | 13,184 | $ | 38,096 | $ | 24,236 | $ | 11,689 | $ | 35,925 | ||||||||||||
| Divided by: | ||||||||||||||||||||||||
| Tons sold | 98 | 69 | 103 | 59 | ||||||||||||||||||||
| Average net realized sales price per ton | $ | 254 | $ | 191 | $ | 235 | $ | 198 | ||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||||||||||
| Potash | Trio® | Total | Potash | Trio® | Total | |||||||||||||||||||
| Sales | $ | 55,246 | $ | 40,082 | $ | 95,328 | $ | 55,034 | $ | 37,208 | $ | 92,242 | ||||||||||||
| Freight costs | 6,735 | 11,930 | 18,665 | 6,537 | 10,169 | 16,706 | ||||||||||||||||||
| Subtotal | $ | 48,511 | $ | 28,152 | $ | 76,663 | $ | 48,497 | $ | 27,039 | $ | 75,536 | ||||||||||||
| Divided by: | ||||||||||||||||||||||||
| Tons sold | 195 | 146 | 204 | 135 | ||||||||||||||||||||
| Average net realized sales price per ton | $ | 249 | $ | 193 | $ | 238 | $ | 200 | ||||||||||||||||
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