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Intrepid Announces Second Quarter 2022 Results

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Intrepid Potash, Inc
Intrepid Potash, Inc

Denver, CO, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Intrepid Potash, Inc. ("Intrepid", the "Company", "we", "us", "our") (NYSE:IPI) today reported its results for the second quarter of 2022.

Key Highlights for Second Quarter 2022

  • Total sales of $91.7 million, an increase of $23.8 million compared to $67.9 million in the second quarter of 2021, as potash and Trio® net realized sales prices(1) increased to $738 and $493 per ton, respectively.

  • Net income of $23.7 million (or $1.74 per diluted share), a $4.2 million improvement compared to the second quarter of 2021; adjusted net income(1) totaled $24.8 million, which compares to $7.4 million in the second quarter of 2021.

  • Gross margin of $41.8 million, a $27.6 million improvement over the prior year.

  • Cash flow from operations of $49.1 million, a $16.8 million improvement over the prior year.

  • Adjusted EBITDA(1) of $41.5 million, which was a $24.6 million improvement over the prior year.

  • As of July 31, 2022, Intrepid had approximately $85 million in cash and cash equivalents and $74 million available under its revolving credit facility, for total liquidity of approximately $159 million.

  • Incurred capital expenditures of $16.0 million in the second quarter of 2022 and expect full year 2022 capital investment to be in the range of $65 million to $75 million.

  • Continued progress on production improvement projects designed to capitalize on the strong commodity environment and improve our production cost per ton:

    • Replacing the injection pipeline at HB with an improved system designed to maintain higher flow rates and increase brine storage underground - expected in-service 1H 2023

    • Preparing to drill an additional potash cavern in Moab which is expected to increase production tons through higher overall extraction brine grade - expected in-service Q4 2022

    • Upgrading brackish and deep-brine wells in Wendover to increase brine availability and better manage variability in weather and evaporation rates - expected in-service Q4 2022

  • Initial development planning of a frac sand opportunity on our strategically located South ranch with the potential to produce over 600k tons per year of frac sand for sale into the Delaware Basin, starting in 2023.

Consolidated Results, Outlook, & Management Commentary

Intrepid generated second quarter 2022 sales of $91.7 million, which compares to second quarter 2021 sales of $67.9 million. Consolidated gross margin in second quarter of 2022 totaled $41.8 million, while adjusted net income in second quarter 2022 totaled $24.8 million, or $1.82 per diluted share, which compares to second quarter 2021 adjusted net income of $7.4 million, or $0.55 per diluted share. Net income for first half 2022 was $55.1 million compared to first half 2021 net income of $22.0 million. The Company delivered adjusted EBITDA of $41.5 million in the second quarter, bringing first half 2022 adjusted EBITDA to $91.6 million. The strong profitability continues to be primarily driven by high prices for potash and Trio®, which averaged $738 per ton and $493 per ton, respectively, in the second quarter.

Bob Jornayvaz, Intrepid's Executive Chairman and CEO commented: "Intrepid's financial performance in the second quarter and first half of 2022 has ranked among the best in nearly ten years. In the first half of the year, Intrepid generated adjusted EBITDA of $91.6 million on total sales of $196.1 million, for adjusted EBITDA margins of 47%. First half 2022 cash flow from operations totaled $83.2 million and we ended July with $85 million of cash and cash equivalents for total liquidity of $159 million.

Underpinned by strong cash flow generation, for 2022, we have budgeted for approximately $65 million to $75 million of capital spending, with a roughly 50-50 split between maintenance and growth. In terms of growth projects, over the past couple quarters, we've highlighted several initiatives at our Utah and New Mexico facilities to help increase production and improve unit economics, and today we're excited to announce a new sand project at our South ranch. We've already made progress on permitting and leasing, and are beginning equipment purchases. This project is still in its early phases but we estimate the sand resource has over ten years of potential, and is also strategically located in the heart of oil and gas activity in the Permian basin.

Looking ahead, the outlook for both the industry and Intrepid remains strong. The global fertilizer supply challenges - particularly for potash - remains unabated. Even with the announced potash supply additions, we believe the lack of supply versus historical levels of demand will result in potash prices remaining elevated. Moreover, despite recent pullback from multi-year highs, forward crop prices still point to historically strong US farmer economics. After nearly 18 months of strong demand in the potash market, we expect buyers will approach second half with significantly more restraint given inventory carryover following a compressed spring and heightened concerns over the increased credit and inventory exposure they face at current price levels. Despite the minor headwinds and a slower start to the third quarter than prior years, we expect agricultural demand will pick up as harvest progresses and we are ready to meet our customer's needs in today's dynamic market."

Segment Highlights

Potash

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands, except per ton data)

Sales

 

$

48,827

 

$

37,693

 

$

105,269

 

$

81,270

Gross margin

 

$

24,925

 

$

10,131

 

$

53,990

 

$

18,803

 

 

 

 

 

 

 

 

 

Potash sales volumes (in tons)

 

 

56

 

 

92

 

 

126

 

 

208

Potash production volumes (in tons)

 

 

25

 

 

51

 

 

128

 

 

164

 

 

 

 

 

 

 

 

 

Average potash net realized sales price per ton(1)

 

$

738

 

$

319

 

$

713

 

$

300

Potash segment sales in the second quarter of 2022 increased 30% to $48.8 million when compared to the same period in 2021. The higher revenue was primarily driven by a 131% increase in our average net realized sales price per ton to $738, despite potash sales volumes decreasing 39% year-over-year to 56k tons in the quarter. We sold fewer tons of potash in the second quarter of 2022 compared to the second quarter of 2021, as we had less potash available to sell. Below average evaporation rates across our facilities in 2021 led to decreased potash production during the second half of 2021 and the first half of 2022. Customers were also reluctant to replenish potash inventory during the back half of the second quarter of 2022, choosing instead to wait for summer programs with the expectation of those being announced during the third quarter of 2022. During the second quarter of 2021, a summer program was announced in May 2021 which incentivized customers to take delivery beginning in the back half of second quarter of 2021.

In the second quarter of 2022, potash production totaled 25k tons, a 51% decrease from the prior year period. Segment gross margin totaled $24.9 million, which was $14.8 million higher than the $10.1 million generated in the second quarter of 2021. In the first half of 2022, potash production totaled 128k tons, which compares to 164k tons in the prior year period, while potash gross margin totaled $54.0 million, a $35.2 million increase from the first half of 2021.

Trio®

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands, except per ton data)

Sales

 

$

35,467

 

$

26,924

 

$

76,519

 

$

50,619

Gross margin

 

$

13,052

 

$

3,162

 

$

29,191

 

$

3,093

 

 

 

 

 

 

 

 

 

Trio® sales volume (in tons)

 

 

59

 

 

75

 

 

131

 

 

145

Trio® production volume (in tons)

 

 

58

 

 

63

 

 

123

 

 

119

 

 

 

 

 

 

 

 

 

Average Trio® net realized sales price per ton(1)

 

$

493

 

$

271

 

$

476

 

$

251

Trio® segment sales of $35.5 million for the second quarter of 2022 were $8.5 million higher compared to the prior year, which was driven by a higher average net realized sales price per ton of $493 in the quarter, which was 82% higher than the prior year period. The higher sales price helped offset lower Trio® sales volumes, which totaled 59k tons, which compares to 75k tons in the prior year period. Our Trio® product is primarily applied during the spring application season, and similar to potash customers, Trio® customers were reluctant to hold much inventory exiting the spring season. Gross margin of $13.1 million was $9.9 million higher than the second quarter of 2021. Trio® production in the second quarter of 2022 totaled 58k tons, a modest decrease from the 63k tons produced in the second quarter of 2021.

In the first half of 2022, Trio® segment sales totaled $76.5 million, an increase of $25.9 million compared to the prior year period. The higher sales were primarily driven by a first half average net realized sales price of $476 per ton, which was 90% higher than the first half of 2021 average net realized sales price of $251 per ton, which helped offset a 10% decrease in sales volumes. Gross margin totaled $29.2 million, which was a $26.1 million improvement from the prior year period. Trio® production in the first half of 2022 totaled 123k tons, which compares to 119k tons in the first half of 2021.

Oilfield Solutions

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

(in thousands)

Sales

 

$

7,512

 

$

3,331

 

$

14,512

 

$

7,584

Gross margin

 

$

3,834

 

$

906

 

$

5,806

 

$

1,411

In the second quarter of 2022, our oilfield solutions segment sales totaled $7.5 million, an increase of $4.2 million compared to the same period in 2021. The increase was driven by a $1.9 million increase in water sales, a $1.4 million increase in surface use/rights-of-way/easement revenues, a $0.4 million increase in brine water sales, a $0.3 million increase in caliche sales, and a $0.2 million increase in produced water royalties.

In the first half of 2022, our oilfield solutions segment sales totaled $14.5 million, an increase of $6.9 million compared to the same period in 2021. The increase was driven by a $2.8 million increase in water sales, a $2.3 million increase in surface use/rights-of-way/easement revenues, a $1.0 million increase in brine water sales, a $0.5 million increase in produced water royalty revenues, and a $0.4 million increase in caliche sales.

The second quarter and first half 2022 increase in our oilfield solutions product sales was primarily driven by a higher level of oil and gas activity in the Permian basin. In the first half of 2022 in the Permian, the average active rig count was 321 rigs and ended the second quarter at 349 rigs, which compares to an average of 216 rigs in the first half of 2021 and 236 rigs at the end of the second quarter of 2021.

Liquidity
During the second quarter of 2022, cash provided by operations was approximately $49.1 million, while cash used in investing activities was approximately $26.0 million. As of July 31, 2022, we had approximately $85 million in cash and cash equivalents, no outstanding borrowings, and $74 million available to borrow under our revolving credit facility, for total liquidity of $159 million.

Notes
1 Adjusted net income, adjusted net income per diluted share, adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) and average net realized sales price per ton are non-GAAP financial measures. 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
Intrepid will host a conference call on Friday, August 5, 2022, at 12:00 p.m. Eastern Time to discuss the results and other operating and financial matters and answer investor questions.

Management invites you to listen to the conference call by using the toll-free dial-in number 1 (888) 210-4149 or toll-in dial-in 1 (646) 960-0145; please use conference ID 9158079. The call will also be streamed on the Intrepid website, intrepidpotash.com. A recording of the conference call will be available approximately two hours after the completion of the call by dialing 1 (800) 770-2030 for toll-free, 1 (647) 362-9199 for toll-in, or at intrepidpotash.com. The replay of the call will require the input of the conference identification number 9158079. The recording will be available through August 12, 2022.

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 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, cash flow from operations expectations, water sales, production costs, acquisition expectations and operating plans, its market outlook, and the impact of the COVID-19 pandemic on the Company. 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 our products and services;

  • challenges and legal proceedings related to our water rights;

  • our ability to successfully identify and implement any opportunities to grow our business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;

  • the costs of, and our 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;

  • our ability to prevail in outstanding legal proceedings against us;

  • our ability to comply with the terms of our revolving credit facility, including the underlying covenants, to avoid a default under that agreement;

  • 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 our 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;

  • our 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;

  • our inability to fund necessary capital investments;

  • the impact of the COVID-19 pandemic on our business, operations, liquidity, financial condition and results of operations; and

  • the other risks, uncertainties, and assumptions described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021, as amended, as updated by our subsequent Quarterly Reports on Form 10-Q.

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 obligation 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:
Evan Mapes, CFA, Investor Relations Manager
Phone: 303-996-3042
Email: evan.mapes@intrepidpotash.com

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(In thousands, except per share amounts)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Sales

 

$

91,740

 

 

$

67,888

 

 

$

196,139

 

 

$

139,351

 

Less:

 

 

 

 

 

 

 

 

Freight costs

 

 

9,227

 

 

 

10,115

 

 

 

19,464

 

 

 

22,193

 

Warehousing and handling costs

 

 

2,204

 

 

 

2,378

 

 

 

4,680

 

 

 

5,010

 

Cost of goods sold

 

 

38,498

 

 

 

41,196

 

 

 

83,008

 

 

 

88,841

 

Gross Margin

 

 

41,811

 

 

 

14,199

 

 

 

88,987

 

 

 

23,307

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

7,218

 

 

 

6,612

 

 

 

14,007

 

 

 

12,403

 

Accretion of asset retirement obligation

 

 

490

 

 

 

441

 

 

 

980

 

 

 

882

 

Loss (gain) on sale of assets

 

 

1,066

 

 

 

(2,567

)

 

 

1,166

 

 

 

(2,565

)

Other operating expense (income)

 

 

1,242

 

 

 

(583

)

 

 

975

 

 

 

(577

)

Operating Income

 

 

31,795

 

 

 

10,296

 

 

 

71,859

 

 

 

13,164

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(24

)

 

 

(918

)

 

 

(57

)

 

 

(1,344

)

Interest income

 

 

15

 

 

 

 

 

 

17

 

 

 

 

Other income

 

 

11

 

 

 

8

 

 

 

539

 

 

 

17

 

Gain on extinguishment of debt

 

 

 

 

 

10,113

 

 

 

 

 

 

10,113

 

Income Before Income Taxes

 

 

31,797

 

 

 

19,499

 

 

 

72,358

 

 

 

21,950

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

 

(8,089

)

 

 

 

 

 

(17,228

)

 

 

 

Net Income

 

$

23,708

 

 

$

19,499

 

 

$

55,130

 

 

$

21,950

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

13,246

 

 

 

13,089

 

 

 

13,203

 

 

 

13,071

 

Diluted

 

 

13,620

 

 

 

13,338

 

 

 

13,690

 

 

 

13,335

 

Earnings Per Share:

 

 

 

 

 

 

 

 

Basic

 

$

1.79

 

 

$

1.49

 

 

$

4.18

 

 

$

1.68

 

Diluted

 

$

1.74

 

 

$

1.46

 

 

$

4.03

 

 

$

1.65

 

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF JUNE 30, 2022 AND DECEMBER 31, 2021
(In thousands, except share and per share amounts)

 

 

June 30,

 

December 31,

 

 

 

2022

 

 

2021

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

81,927

 

$

36,452

Short-term investments

 

 

5,980

 

 

Accounts receivable:

 

 

 

 

Trade, net

 

 

32,639

 

 

35,409

Other receivables, net

 

 

1,635

 

 

989

Refundable income taxes

 

 

21

 

 

Inventory, net

 

 

82,644

 

 

78,856

Prepaid expenses and other current assets

 

 

4,379

 

 

5,144

Total current assets

 

 

209,225

 

 

156,850

 

 

 

 

 

Property, plant, equipment, and mineral properties, net

 

 

347,834

 

 

341,117

Water rights

 

 

19,184

 

 

19,184

Long-term parts inventory, net

 

 

26,622

 

 

29,251

Other assets, net

 

 

16,025

 

 

11,418

Non-current deferred tax asset, net

 

 

192,134

 

 

209,075

Total Assets

 

$

811,024

 

$

766,895

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,869

 

$

9,068

Income taxes payable

 

 

 

 

41

Accrued liabilities

 

 

12,775

 

 

22,938

Accrued employee compensation and benefits

 

 

6,038

 

 

6,805

Other current liabilities

 

 

34,330

 

 

34,571

Total current liabilities

 

 

63,012

 

 

73,423

 

 

 

 

 

Asset retirement obligation

 

 

28,004

 

 

27,024

Operating lease liabilities

 

 

1,859

 

 

1,879

Other non-current liabilities

 

 

1,310

 

 

1,166

Total Liabilities

 

 

94,185

 

 

103,492

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

Common stock, $0.001 par value; 40,000,000 shares authorized;

 

 

 

 

13,265,813 and 13,149,315 shares outstanding

 

 

 

 

at June 30, 2022, and December 31, 2021, respectively

 

 

13

 

 

13

Additional paid-in capital

 

 

657,453

 

 

659,147

Retained earnings

 

 

59,373

 

 

4,243

Total Stockholders' Equity

 

 

716,839

 

 

663,403

Total Liabilities and Stockholders' Equity

 

$

811,024

 

$

766,895

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(In thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

23,708

 

 

$

19,499

 

 

$

55,130

 

 

$

21,950

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

8,025

 

 

 

8,598

 

 

 

16,923

 

 

 

18,079

 

Accretion of asset retirement obligation

 

 

490

 

 

 

441

 

 

 

980

 

 

 

882

 

Amortization of deferred financing costs

 

 

60

 

 

 

126

 

 

 

120

 

 

 

194

 

Amortization of intangible assets

 

 

81

 

 

 

81

 

 

 

161

 

 

 

161

 

Stock-based compensation

 

 

1,391

 

 

 

765

 

 

 

2,558

 

 

 

1,655

 

Loss (gain) on disposal of assets

 

 

1,066

 

 

 

(2,567

)

 

 

1,166

 

 

 

(2,565

)

Allowance for parts inventory obsolescence

 

 

1,600

 

 

 

 

 

 

1,600

 

 

 

 

Gain on extinguishment of debt

 

 

 

 

 

(10,113

)

 

 

 

 

 

(10,113

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable, net

 

 

18,969

 

 

 

13,868

 

 

 

2,770

 

 

 

(235

)

Other receivables, net

 

 

(262

)

 

 

(173

)

 

 

(646

)

 

 

(893

)

Inventory, net

 

 

(3,606

)

 

 

4,474

 

 

 

(2,759

)

 

 

13,767

 

Prepaid expenses and other current assets

 

 

749

 

 

 

137

 

 

 

673

 

 

 

495

 

Deferred tax assets, net

 

 

7,941

 

 

 

 

 

 

16,941

 

 

 

 

Accounts payable, accrued liabilities, and accrued employee
compensation and benefits

 

 

(10,550

)

 

 

(1,955

)

 

 

(11,412

)

 

 

6,023

 

Operating lease liabilities

 

 

(438

)

 

 

(536

)

 

 

(1,233

)

 

 

(1,061

)

Other liabilities

 

 

(105

)

 

 

(318

)

 

 

257

 

 

 

3,097

 

Net cash provided by operating activities

 

 

49,119

 

 

 

32,327

 

 

 

83,229

 

 

 

51,436

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Additions to property, plant, equipment, mineral properties and other assets

 

 

(15,979

)

 

 

(4,266

)

 

 

(22,774

)

 

 

(6,626

)

Purchase of investments

 

 

(9,996

)

 

 

 

 

 

(10,899

)

 

 

 

Proceeds from sale of assets

 

 

22

 

 

 

5,995

 

 

 

46

 

 

 

6,042

 

Net cash (used in) provided by investing activities

 

 

(25,953

)

 

 

1,729

 

 

 

(33,627

)

 

 

(584

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Debt prepayment costs

 

 

 

 

 

(503

)

 

 

 

 

 

(505

)

Repayments of long-term debt

 

 

 

 

 

(14,978

)

 

 

 

 

 

(15,000

)

Payments of financing lease

 

 

 

 

 

(1,151

)

 

 

 

 

 

(1,258

)

Employee tax withholding paid for restricted stock upon vesting

 

 

(1,548

)

 

 

(176

)

 

 

(4,362

)

 

 

(380

)

Proceeds from exercise of stock options

 

 

20

 

 

 

8

 

 

 

110

 

 

 

51

 

Net cash used in financing activities

 

 

(1,528

)

 

 

(16,800

)

 

 

(4,252

)

 

 

(17,092

)

 

 

 

 

 

 

 

 

 

Net Change in Cash, Cash Equivalents and Restricted Cash

 

 

21,638

 

 

 

17,256

 

 

 

45,350

 

 

 

33,760

 

Cash, Cash Equivalents and Restricted Cash, beginning of period

 

 

60,858

 

 

 

36,688

 

 

 

37,146

 

 

 

20,184

 

Cash, Cash Equivalents and Restricted Cash, end of period

 

$

82,496

 

 

$

53,944

 

 

$

82,496

 

 

$

53,944

 

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, adjusted net income 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 and Adjusted Net Income Per Diluted Share

Adjusted net income and adjusted net income per diluted share are calculated as net income or income 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 to Adjusted Net Income:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

 

(in thousands)

Net Income

$

23,708

 

$

19,499

 

 

$

55,130

 

$

21,950

 

Adjustments

 

 

 

 

 

 

 

Loss (gain) on sale of assets

 

1,066

 

 

(2,567

)

 

 

1,166

 

 

(2,565

)

Gain on extinguishment of debt

 

 

 

(10,113

)

 

 

 

 

(10,113

)

Write-off of deferred financing fees

 

 

 

60

 

 

 

 

 

60

 

Make-whole payment

 

 

 

503

 

 

 

 

 

505

 

Total adjustments

 

1,066

 

 

(12,117

)

 

 

1,166

 

 

(12,113

)

Adjusted Net Income

$

24,774

 

$

7,382

 

 

$

56,296

 

$

9,837

 

Reconciliation of Net Income per Share to Adjusted Net Income per Share:

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

Net Income Per Diluted Share

$

1.74

 

$

1.46

 

 

$

4.03

 

$

1.65

 

Adjustments

 

 

 

 

 

 

 

Loss (gain) on sale of assets

 

0.08

 

 

(0.19

)

 

 

0.09

 

 

(0.19

)

Gain on extinguishment of debt

 

 

 

(0.76

)

 

 

 

 

(0.76

)

Write-off of deferred financing fees

 

 

 

 

 

 

 

 

 

Make-whole payment

 

 

 

0.04

 

 

 

 

 

0.04

 

Total adjustments

 

0.08

 

 

(0.91

)

 

 

0.09

 

 

(0.91

)

Adjusted Net Income Per Diluted Share

$

1.82

 

$

0.55

 

 

$

4.12

 

$

0.74

 

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net income 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, and believe it to be useful for investors, 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 to Adjusted EBITDA:

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

Net Income

 

$

23,708

 

$

19,499

 

 

$

55,130

 

$

21,950

 

Loss (gain) on sale of assets

 

 

1,066

 

 

(2,567

)

 

 

1,166

 

 

(2,565

)

Gain on extinguishment of debt

 

 

 

 

(10,113

)

 

 

 

 

(10,113

)

Interest expense

 

 

24

 

 

918

 

 

 

57

 

 

1,344

 

Income tax expense

 

 

8,089

 

 

 

 

 

17,228

 

 

 

Depreciation, depletion, and amortization

 

 

8,025

 

 

8,598

 

 

 

16,923

 

 

18,079

 

Amortization of intangible assets

 

 

81

 

 

81

 

 

 

161

 

 

161

 

Accretion of asset retirement obligation

 

 

490

 

 

441

 

 

 

980

 

 

882

 

Total adjustments

 

 

17,775

 

 

(2,642

)

 

 

36,515

 

 

7,788

 

Adjusted EBITDA

 

$

41,483

 

$

16,857

 

 

$

91,645

 

$

29,738

 

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 Net Realized Sales Price per Ton:

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

(in thousands, except per ton amounts)

 

Potash

 

Trio®

 

Potash

 

Trio®

Total Segment Sales

 

$

48,827

 

$

35,467

 

$

37,693

 

$

26,924

Less: Segment byproduct sales

 

 

4,942

 

 

780

 

 

4,812

 

 

584

Freight costs

 

 

2,563

 

 

5,609

 

 

3,486

 

 

6,037

Subtotal

 

$

41,322

 

$

29,078

 

$

29,395

 

$

20,303

 

 

 

 

 

 

 

 

 

Divided by:

 

 

 

 

 

 

 

 

Tons sold

 

 

56

 

 

59

 

 

92

 

 

75

Average net realized sales price per ton

 

$

738

 

$

493

 

$

319

 

$

271

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

(in thousands, except per ton amounts)

 

Potash

 

Trio®

 

Potash

 

Trio®

Total Segment Sales

 

$

105,269

 

$

76,519

 

$

81,270

 

$

50,619

Less: Segment byproduct sales

 

 

9,762

 

 

2,216

 

 

10,595

 

 

1,764

Freight costs

 

 

5,687

 

 

11,919

 

 

8,295

 

 

12,477

Subtotal

 

$

89,820

 

$

62,384

 

$

62,380

 

$

36,378

 

 

 

 

 

 

 

 

 

Divided by:

 

 

 

 

 

 

 

 

Tons sold

 

 

126

 

 

131

 

 

208

 

 

145

Average net realized sales price per ton

 

$

713

 

$

476

 

$

300

 

$

251

 

 

 

 

 

 

 

 

 


 

 

Three Months Ended June 30, 2022

Product

 

Potash Segment

 

Trio® Segment

 

Oilfield Solutions Segment

 

Intersegment Eliminations

 

Total

Potash

 

$

43,885

 

$

 

$

 

$

(66

)

 

$

43,819

Trio®

 

 

 

 

34,687

 

 

 

 

 

 

 

34,687

Water

 

 

363

 

 

724

 

 

3,692

 

 

 

 

 

4,779

Salt

 

 

2,658

 

 

56

 

 

 

 

 

 

 

2,714

Magnesium Chloride

 

 

1,199

 

 

 

 

 

 

 

 

 

1,199

Brine Water

 

 

722

 

 

 

 

648

 

 

 

 

 

1,370

Other

 

 

 

 

 

 

3,172

 

 

 

 

 

3,172

Total Revenue

 

$

48,827

 

$

35,467

 

$

7,512

 

$

(66

)

 

$

91,740

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022

Product

 

Potash Segment

 

Trio® Segment

 

Oilfield Solutions Segment

 

Intersegment Eliminations

 

Total

Potash

 

$

95,507

 

$

 

$

 

$

(161

)

 

$

95,346

Trio®

 

 

 

 

74,303

 

 

 

 

 

 

 

74,303

Water

 

 

1,137

 

 

1,926

 

 

7,880

 

 

 

 

 

10,943

Salt

 

 

5,292

 

 

290

 

 

 

 

 

 

 

5,582

Magnesium Chloride

 

 

2,014

 

 

 

 

 

 

 

 

 

2,014

Brine Water

 

 

1,319

 

 

 

 

1,387

 

 

 

 

 

2,706

Other

 

 

 

 

 

 

5,245

 

 

 

 

 

5,245

Total Revenue

 

$

105,269

 

$

76,519

 

$

14,512

 

$

(161

)

 

$

196,139


 

 

Three Months Ended June 30, 2021

Product

 

Potash Segment

 

Trio® Segment

 

Oilfield Solutions Segment

 

Intersegment Eliminations

 

Total

Potash

 

$

32,881

 

$

 

$

 

$

(60

)

 

$

32,821

Trio®

 

 

 

 

26,340

 

 

 

 

 

 

 

26,340

Water

 

 

520

 

 

514

 

 

1,783

 

 

 

 

 

2,817

Salt

 

 

2,008

 

 

70

 

 

 

 

 

 

 

2,078

Magnesium Chloride

 

 

1,880

 

 

 

 

 

 

 

 

 

1,880

Brine Water

 

 

404

 

 

 

 

229

 

 

 

 

 

633

Other

 

 

 

 

 

 

1,319

 

 

 

 

 

1,319

Total Revenue

 

$

37,693

 

$

26,924

 

$

3,331

 

$

(60

)

 

$

67,888

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021

Product

 

Potash Segment

 

Trio® Segment

 

Oilfield Solutions Segment

 

Intersegment Eliminations

 

Total

Potash

 

$

70,675

 

$

 

$

 

$

(122

)

 

$

70,553

Trio®

 

 

 

 

48,855

 

 

 

 

 

 

 

48,855

Water

 

 

1,679

 

 

1,498

 

 

5,125

 

 

 

 

 

8,302

Salt

 

 

4,047

 

 

266

 

 

 

 

 

 

 

4,313

Magnesium Chloride

 

 

3,908

 

 

 

 

 

 

 

 

 

3,908

Brine Water

 

 

961

 

 

 

 

434

 

 

 

 

 

1,395

Other

 

 

 

 

 

 

2,025

 

 

 

 

 

2,025

Total Revenue

 

$

81,270

 

$

50,619

 

$

7,584

 

$

(122

)

 

$

139,351


Three Months Ended
June 30, 2022

 

Potash

 

Trio®

 

Oilfield Solutions

 

Other

 

Consolidated

Sales

 

$

48,827

 

$

35,467

 

$

7,512

 

$

(66

)

 

$

91,740

Less: Freight costs

 

 

3,682

 

 

5,611

 

 

 

 

(66

)

 

 

9,227

Warehousing and handling
costs

 

 

1,209

 

 

995

 

 

 

 

 

 

 

2,204

Cost of goods sold

 

 

19,011

 

 

15,809

 

 

3,678

 

 

 

 

 

38,498

Gross Margin

 

$

24,925

 

$

13,052

 

$

3,834

 

$

 

 

$

41,811

Depreciation, depletion, and amortization incurred1

 

$

6,085

 

$

1,042

 

$

803

 

$

176

 

 

$

8,106

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30, 2022

 

Potash

 

Trio®

 

Oilfield Solutions

 

Other

 

Consolidated

Sales

 

$

105,269

 

$

76,519

 

$

14,512

 

$

(161

)

 

$

196,139

Less: Freight costs

 

 

7,705

 

 

11,920

 

 

 

 

(161

)

 

 

19,464

Warehousing and handling
costs

 

 

2,533

 

 

2,147

 

 

 

 

 

 

 

4,680

Cost of goods sold

 

 

41,041

 

 

33,261

 

 

8,706

 

 

 

 

 

83,008

Gross Margin

 

$

53,990

 

$

29,191

 

$

5,806

 

$

 

 

$

88,987

Depreciation, depletion, and amortization incurred1

 

$

13,033

 

$

2,050

 

$

1,590

 

$

411

 

 

$

17,084

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
June 30, 2021

 

Potash

 

Trio®

 

Oilfield Solutions

 

Other

 

Consolidated

Sales

 

$

37,693

 

$

26,924

 

$

3,331

 

$

(60

)

 

$

67,888

Less: Freight costs

 

 

4,138

 

 

6,037

 

 

 

 

(60

)

 

 

10,115

Warehousing and handling
costs

 

 

1,306

 

 

1,072

 

 

 

 

 

 

 

2,378

Cost of goods sold

 

 

22,118

 

 

16,653

 

 

2,425

 

 

 

 

 

41,196

Gross Margin

 

$

10,131

 

$

3,162

 

$

906

 

$

 

 

$

14,199

Depreciation, depletion, and amortization incurred1

 

$

6,460

 

$

1,376

 

$

700

 

$

143

 

 

$

8,679

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30, 2021

 

Potash

 

Trio®

 

Oilfield Solutions

 

Other

 

Consolidated

Sales

 

$

81,270

 

$

50,619

 

$

7,584

 

$

(122

)

 

$

139,351

Less: Freight costs

 

 

9,838

 

 

12,477

 

 

 

 

(122

)

 

 

22,193

Warehousing and handling
costs

 

 

2,762

 

 

2,248

 

 

 

 

 

 

 

5,010

Cost of goods sold

 

 

49,867

 

 

32,801

 

 

6,173

 

 

 

 

 

88,841

Gross Margin

 

$

18,803

 

$

3,093

 

$

1,411

 

$

 

 

$

23,307

Depreciation, depletion and amortization incurred1

 

$

13,637

 

$

2,883

 

$

1,388

 

$

332

 

 

$

18,240

(1) Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation, depletion, and amortization amounts absorbed in or relieved from inventory.