Intrepid Reports Fourth Quarter and Full Year 2020 Results
DENVER, CO, March 01, 2021 (GLOBE NEWSWIRE) -- Intrepid Potash, Inc. (NYSE:IPI) ("Intrepid", the "Company", "we", "us", "our") today reports its financial results for the fourth quarter and full year of 2020.
Key Fourth Quarter Takeaways
- $9.5 million improvement in the bottom line compared to the third quarter of 2020 with positive momentum continuing into 2021 across all segments. Net loss of $0.7 million, or $(0.05) per share in Q4 2020, compared to net loss of $10.2 million, or $(0.78) per share in Q3 2020.
- Adjusted EBITDA(1) of $9.7 million for the fourth quarter of 2020.
- Cash flow from operations of $12.7 million for the fourth quarter of 2020.
- Strong domestic sales volume for potash and Trio® in Q4 2020 as favorable weather, rising commodity prices, and compelling farm economics drove early season fertilizer demand that is steadily continuing into 2021.
- Total company water sales were $5.8 million in fourth quarter of 2020, an increase of $2.2 million compared to the third quarter of 2020 as oilfield activity continues its upward trajectory.
Management Comment
"We are excited to move into 2021 and put the impacts of the COVID-19 pandemic gradually behind us as strong farmer economics will allow us to fully take advantage of higher potash and Trio® prices, which are currently $140 per ton and $60 per ton above summer-fill price levels, respectively." said Bob Jornayvaz, Intrepid's Executive Chairman, President, and CEO. "The fourth quarter was highlighted by solid cash flow and a significant increase in EBITDA compared to the prior two quarters as fertilizer markets and oilfield activity both rebounded sharply from this past summer. Under-application of potash from recent seasons, favorable weather, and very strong commodity pricing will continue to support our fertilizer markets through the spring season."
Jornayvaz continued, "We are expanding upon the existing and significant ES&G solar evaporation footprint of our environmentally friendly potash operations to further increase our commitment to provide creative ES&G solutions and services to oilfield operators as they focus their resources in the prolific Delaware Basin. We saw a significant increase in water sales during the fourth quarter as frac activity improved from prior months. We managed well through the worst part of the downturn and expect continued improvement in oilfield activity in 2021. We are committed to growing our oil and gas midstream business in the Delaware Basin. Intrepid is responding to political, regulatory, and ES&G emphasis on water conservation and re-use by providing full-cycle water management solutions to the numerous well-capitalized operators in the area. We are in the early stages of construction on a produced water disposal system near our South ranch and we are investing in recycling infrastructure and capabilities in the coming months as full-cycle water management becomes a central focus of our oilfield segment. Our expansion into full-cycle water management, including the transition of fresh water sales to brine water sales for oilfield drilling and fracing, will be key in achieving the environmental and sustainability goals of both oilfield operators and the New Mexico legislature."
Consolidated Results
Intrepid recorded net loss of $0.7 million, or $(0.05) per diluted share in the fourth quarter of 2020, contributing to full year 2020 net loss of $27.2 million, or $(2.09) per diluted share. Consolidated gross margin of $5.8 million and $10.5 million in the fourth quarter and full year 2020, respectively, was a decrease compared to the same year-ago periods due to reduced fertilizer pricing, and the COVID-19 pandemic which led to a reduction in water and other oilfield sales.
Segment Highlights
Potash
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||
| Sales | $ | 27,556 | $ | 25,556 | $ | 108,060 | $ | 124,648 | ||||||||
| Gross margin | $ | 3,847 | $ | 5,746 | $ | 11,551 | $ | 27,787 | ||||||||
| Potash production volume (in tons) | 106 | 110 | 308 | 328 | ||||||||||||
| Potash sales volume (in tons) | 78 | 58 | 317 | 319 | ||||||||||||
| Average potash net realized sales price per ton(1) | $ | 248 | $ | 278 | $ | 250 | $ | 284 | ||||||||
Gross margin decreased $1.9 million and $16.2 million in the fourth quarter and full year of 2020, respectively, compared to the same periods in 2019. Decreases in both periods were primarily driven by lower average net realized sales prices for potash sales and decreased byproducts sales. Byproduct sales decreased due to improved availability of salt in certain regions which reduced our sales footprint and due to COVID-19 which reduced sales of water and brine into oil and gas markets.
Fourth quarter and full year average net realized sales price per ton decreased year-over-year due to price decreases announced in the 2020 winter and summer-fill programs and fewer industrial sales. We announced three price increases during the fourth quarter of 2020 and another in February 2021, increasing our posted price by $140 per ton compared to summer fill price levels.
Fourth quarter production was similar to the prior year with all sites operating at full rates to meet strong early season fertilizer demand. We expect above average evaporation during the 2020 evaporation season will allow us to operate longer than normal during the spring of 2021. Full year production decreased 6% compared to 2019, due to reduced evaporation during the 2019 evaporation season which limited our production during the spring of 2020.
Trio®
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||||
| Sales | $ | 15,565 | $ | 15,669 | $ | 70,287 | $ | 69,551 | ||||||||||
| Gross (deficit) margin | $ | (375 | ) | $ | 23 | $ | (8,505 | ) | $ | 1,100 | ||||||||
| Trio® production volume (in tons) | 58 | 45 | 213 | 228 | ||||||||||||||
| Trio® sales volume (in tons) | 50 | 53 | 230 | 225 | ||||||||||||||
| Average Trio® net realized sales price per ton(1) | $ | 188 | $ | 170 | $ | 195 | $ | 195 | ||||||||||
Fourth quarter 2020 gross margin decreased $0.4 million compared to 2019, as strong early season demand in domestic markets was offset by increased per ton costs of goods sold. Fourth quarter 2019 results benefited from lower costs of goods sold primarily due to lower of cost or net realizable value adjustments recorded in prior quarters. Byproduct water sales increased $0.1 million compared to the fourth quarter of 2019 as oil and gas activity continued to improve in the Delaware Basin from mid-year lows. Full year 2020 gross margin decreased as reduced operating rates led to an increased per ton cost of goods sold and the summer-fill price decrease resulted in additional lower of cost of net realizable value adjustments.
Fourth quarter and full year sales were similar to the same periods in 2019, as strong domestic volumes offset a decrease in international shipments. Average net realized sales price per ton increased 11% in the fourth quarter when compared to 2019 due to reduced international shipments. Full year 2020 average net realized sales price equaled 2019 as reduced international shipments were offset by lower domestic Trio® pricing in the first nine months of 2020.
Production volumes decreased 7% for the full year of 2020 when compared to 2019, primarily due to reduced operating rates in order to manage inventory levels.
Oilfield Solutions
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Sales | $ | 5,390 | $ | 8,323 | $ | 18,929 | $ | 27,894 | ||||||||
| Gross margin | $ | 2,342 | $ | 4,421 | $ | 7,484 | $ | 14,591 | ||||||||
Sales decreased 35% and 32% for the fourth quarter and full year of 2020, respectively, when compared to the same periods in 2019, as the COVID-19 pandemic reduced activity in oil and gas markets which reduced our sales of water, brine, and other oilfield services. Water sales were most impacted during the summer of 2020 and rebounded considerably in the fourth quarter. Fourth quarter water sales in the oilfield solutions segment were $4.0 million, a significant increase compared to third quarter 2020 sales of $2.0 million.
Fourth quarter and full year 2020 gross margin decreased compared to 2019 primarily due to the reduced sales discussed above. Full-year cost of goods sold decreased $0.9 million in 2020, compared to 2019, as reduced expense related to our high-speed mixing service was offset by increased water transfer expenses and increased depreciation expense related to the Intrepid South assets. We also sold less water from our lower cost water rights and from our other revenue sources, such as caliche and a produced water royalty, in 2020 compared to 2019. These sales generally have very low cost of goods sold, which is why the decrease in sales did not result in a comparable decrease in cost of goods sold.
Liquidity
Cash provided by operations was $12.7 million during the fourth quarter of 2020 and cash used for investing activities was $2.4 million during the fourth quarter of 2020. As of December 31, 2020, Intrepid had $19.5 million in cash and cash equivalents and $20.4 million available to borrow under its credit facility.
Notes
1 Average net realized sales price per ton and Adjusted EBITDA 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 Tuesday, March 2, 2021 at 12:00 p.m. Eastern time (10:00 a.m. Mountain time) to discuss the results. A Q&A session will immediately follow the discussion of the results for the period.
Live event participation details
Domestic dial-in number: 800-319-4610
International dial-in number: +1-631-891-4304
Webcast: https://intrepidpotashinc.gcs-web.com/events-and-presentations/upcoming-events
Replay information available for 30 days following the live event
Conference ID #: 6236
Replay dial-in (Toll Free US & Canada): 800-319-6413
Replay dial-in (International): +1-631-883-6842
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 and cash flows, water sales, production costs, 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;
- challenges to Intrepid's water rights;
- Intrepid's ability to successfully identify and implement any opportunities to grow its business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;
- 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;
- Intrepid's ability to prevail in outstanding legal proceedings against it;
- 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;
- 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;
- the impact of the COVID-19 pandemic on Intrepid's business, operations, liquidity, financial condition, and results of operations; 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, 2019, as updated by 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 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, Vice President of Finance
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, 2020 AND 2019
(In thousands, except share and per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Sales | $ | 48,442 | $ | 48,849 | $ | 196,954 | $ | 220,075 | ||||||||||||
| Less: | ||||||||||||||||||||
| Freight costs | 8,736 | 9,581 | 37,135 | 40,056 | ||||||||||||||||
| Warehousing and handling costs | 2,149 | 1,995 | 9,431 | 8,621 | ||||||||||||||||
| Cost of goods sold | 31,743 | 26,735 | 135,843 | 126,110 | ||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | — | 348 | 4,015 | 1,810 | ||||||||||||||||
| Gross Margin | 5,814 | 10,190 | 10,530 | 43,478 | ||||||||||||||||
| Selling and administrative | 5,454 | 5,846 | 25,476 | 23,556 | ||||||||||||||||
| Accretion of asset retirement obligation | 435 | 446 | 1,738 | 1,793 | ||||||||||||||||
| Litigation settlement | — | — | 10,075 | — | ||||||||||||||||
| Loss (gain) on sale of assets | 191 | 362 | (4,250 | ) | 345 | |||||||||||||||
| Other operating expense | 241 | 633 | 735 | 1,424 | ||||||||||||||||
| Operating (Loss) Income | (507 | ) | 2,903 | (23,244 | ) | 16,360 | ||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Interest expense, net | (412 | ) | (773 | ) | (4,289 | ) | (3,031 | ) | ||||||||||||
| Other income | 255 | 13 | 384 | 355 | ||||||||||||||||
| Income Before Income Taxes | (664 | ) | 2,143 | (27,149 | ) | 13,684 | ||||||||||||||
| Income Tax Expense | (47 | ) | (61 | ) | (5 | ) | (53 | ) | ||||||||||||
| Net (Loss) Income | $ | (711 | ) | $ | 2,082 | $ | (27,154 | ) | $ | 13,631 | ||||||||||
| Weighted Average Shares Outstanding: | ||||||||||||||||||||
| Basic | 13,030,185 | 12,939,230 | 12,993,225 | 12,904,916 | ||||||||||||||||
| Diluted | 13,030,185 | 13,091,291 | 12,993,225 | 13,105,089 | ||||||||||||||||
| Income Per Share: | ||||||||||||||||||||
| Basic | $ | (0.05 | ) | $ | 0.16 | $ | (2.09 | ) | $ | 1.06 | ||||||||||
| Diluted | $ | (0.05 | ) | $ | 0.16 | $ | (2.09 | ) | $ | 1.04 | ||||||||||
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 2020 AND 2019
(In thousands, except share and per share amounts)
| December 31, | ||||||||||
| 2020 | 2019 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 19,515 | $ | 20,603 | ||||||
| Accounts receivable: | ||||||||||
| Trade, net | 22,516 | 23,749 | ||||||||
| Other receivables, net | 1,856 | 1,247 | ||||||||
| Inventory, net | 88,673 | 94,220 | ||||||||
| Other current assets | 3,228 | 5,524 | ||||||||
| Total current assets | 135,788 | 145,343 | ||||||||
| Property, plant, equipment, and mineral properties, net | 355,497 | 378,509 | ||||||||
| Water rights | 19,184 | 19,184 | ||||||||
| Long-term parts inventory, net | 28,900 | 27,569 | ||||||||
| Other assets, net | 10,819 | 7,834 | ||||||||
| Total Assets | $ | 550,188 | $ | 578,439 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Accounts payable | $ | 7,278 | $ | 9,992 | ||||||
| Income taxes payable | — | 50 | ||||||||
| Accrued liabilities | 12,701 | 13,740 | ||||||||
| Accrued employee compensation and benefits | 4,422 | 4,464 | ||||||||
| Other current liabilities | 32,816 | 19,382 | ||||||||
| Advances on credit facility | — | 19,817 | ||||||||
| Current portion of long-term debt | 10,000 | 20,000 | ||||||||
| Total current liabilities | 67,217 | 87,445 | ||||||||
| Advances on credit facility | 29,817 | — | ||||||||
| Long-term debt, net | 14,926 | 29,753 | ||||||||
| Asset retirement obligation | 23,872 | 22,140 | ||||||||
| Operating lease liabilities | 2,136 | 4,025 | ||||||||
| Other non-current liabilities | 961 | 420 | ||||||||
| Total Liabilities | 138,929 | 143,783 | ||||||||
| Commitments and Contingencies | ||||||||||
| Common stock, $0.001 par value; 40,000,000 shares authorized: | ||||||||||
| and 13,049,820 and 12,955,351 shares outstanding | ||||||||||
| at December 31, 2020, and 2019, respectively | 13 | 13 | ||||||||
| Additional paid-in capital | 656,837 | 653,080 | ||||||||
| Accumulated deficit | (245,591 | ) | (218,437 | ) | ||||||
| Total Stockholders' Equity | 411,259 | 434,656 | ||||||||
| Total Liabilities and Stockholders' Equity | $ | 550,188 | $ | 578,439 | ||||||
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||||||
| Net (loss) income | (711 | ) | 2,082 | (27,154 | ) | 13,631 | ||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation, depletion, and amortization | 9,411 | 8,976 | 35,788 | 34,121 | ||||||||||||||||
| Amortization of intangible assets | 81 | 26 | 322 | 214 | ||||||||||||||||
| Accretion of asset retirement obligation | 435 | 446 | 1,738 | 1,793 | ||||||||||||||||
| Amortization of deferred financing costs | 68 | 86 | 425 | 303 | ||||||||||||||||
| Stock-based compensation | 840 | 1,044 | 3,821 | 4,281 | ||||||||||||||||
| Reserve for obsolescence | — | — | 492 | — | ||||||||||||||||
| Allowance for doubtful accounts | (200 | ) | 25 | 75 | 75 | |||||||||||||||
| (Gain) loss on disposal of assets | 191 | 362 | (4,250 | ) | 345 | |||||||||||||||
| Lower of cost or net realizable value inventory adjustments | — | 348 | 4,015 | 1,810 | ||||||||||||||||
| Other | — | (38 | ) | (116 | ) | (34 | ) | |||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Trade accounts receivable, net | 955 | 7,363 | 1,158 | 1,337 | ||||||||||||||||
| Other receivables, net | 719 | 729 | (609 | ) | (650 | ) | ||||||||||||||
| Inventory, net | (3,391 | ) | (8,298 | ) | (291 | ) | (11,525 | ) | ||||||||||||
| Other current assets | 2,618 | (232 | ) | 2,305 | (1,019 | ) | ||||||||||||||
| Accounts payable, accrued liabilities, and accrued employee compensation and benefits | (1,740 | ) | (3,541 | ) | 2,331 | 2,280 | ||||||||||||||
| Income tax payable | — | 49 | (50 | ) | (865 | ) | ||||||||||||||
| Operating lease liabilities | (539 | ) | (616 | ) | (2,234 | ) | (2,090 | ) | ||||||||||||
| Other liabilities | 3,921 | 2,953 | 13,379 | 5,374 | ||||||||||||||||
| Net cash provided by operating activities | 12,658 | 11,764 | 31,145 | 49,381 | ||||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||||||
| Additions to property, plant, equipment, mineral properties and other assets | (2,356 | ) | (3,888 | ) | (16,443 | ) | (63,836 | ) | ||||||||||||
| Proceeds from sale of property, plant, equipment, and mineral properties | — | — | 4,786 | 68 | ||||||||||||||||
| Additions to intangible assets | — | — | — | (16,873 | ) | |||||||||||||||
| Long-term investment | — | — | (3,500 | ) | — | |||||||||||||||
| Net cash used in investing activities | (2,356 | ) | (3,888 | ) | (15,157 | ) | (80,641 | ) | ||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||||||
| Payments of financing lease | (74 | ) | — | (74 | ) | — | ||||||||||||||
| Repayment of long-term debt | — | — | (35,000 | ) | — | |||||||||||||||
| Debt prepayment costs | — | — | (1,869 | ) | — | |||||||||||||||
| Proceeds from loan under CARES Act | — | — | 10,000 | — | ||||||||||||||||
| Proceeds from borrowings on credit facility | — | — | 10,000 | 30,317 | ||||||||||||||||
| Repayments of borrowings on credit facility | — | — | — | (10,500 | ) | |||||||||||||||
| Capitalized debt costs | — | (46 | ) | (36 | ) | (503 | ) | |||||||||||||
| Employee tax withholding paid for restricted shares upon vesting | (76 | ) | (262 | ) | (172 | ) | (540 | ) | ||||||||||||
| Proceeds from exercise of stock options | 108 | 12 | 108 | 21 | ||||||||||||||||
| Net cash (used in) provided by financing activities | (42 | ) | (296 | ) | (17,043 | ) | 18,795 | |||||||||||||
| Net Change in Cash, Cash Equivalents, and Restricted Cash | 10,260 | 7,580 | (1,055 | ) | (12,465 | ) | ||||||||||||||
| Cash, Cash Equivalents, and Restricted Cash, beginning of period | 9,924 | 13,659 | 21,239 | 33,704 | ||||||||||||||||
| Cash, Cash Equivalents, and Restricted Cash, end of period | $ | 20,184 | $ | 21,239 | $ | 20,184 | $ | 21,239 | ||||||||||||
INTREPID POTASH, INC.
DISAGGREGATION OF REVENUE AND SEGMENT DATA (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(In thousands)
| Three Months Ended December 31, 2020 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 22,558 | $ | — | $ | — | $ | (69 | ) | $ | 22,489 | ||||||||||
| Trio® | — | 13,870 | — | — | 13,870 | ||||||||||||||||
| Water | 296 | 1,481 | 3,974 | — | 5,751 | ||||||||||||||||
| Salt | 2,311 | 214 | — | — | 2,525 | ||||||||||||||||
| Magnesium Chloride | 2,017 | — | — | — | 2,017 | ||||||||||||||||
| Brines | 374 | — | 141 | — | 515 | ||||||||||||||||
| Other | — | — | 1,275 | 1,275 | |||||||||||||||||
| Total Revenue | $ | 27,556 | $ | 15,565 | $ | 5,390 | $ | (69 | ) | $ | 48,442 | ||||||||||
| Year Ended December 31, 2020 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 92,500 | $ | — | $ | — | $ | (322 | ) | $ | 92,178 | ||||||||||
| Trio® | — | 65,344 | — | — | 65,344 | ||||||||||||||||
| Water | 1,253 | 4,444 | 14,701 | — | 20,398 | ||||||||||||||||
| Salt | 8,103 | 499 | — | — | 8,602 | ||||||||||||||||
| Magnesium Chloride | 4,855 | — | — | — | 4,855 | ||||||||||||||||
| Brines | 1,349 | — | 438 | — | 1,787 | ||||||||||||||||
| Other | — | — | 3,790 | — | 3,790 | ||||||||||||||||
| Total Revenue | $ | 108,060 | $ | 70,287 | $ | 18,929 | $ | (322 | ) | $ | 196,954 | ||||||||||
| Three Months Ended December 31, 2019 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 18,594 | $ | — | $ | 963 | $ | (590 | ) | $ | 18,967 | ||||||||||
| Trio® | — | 14,016 | — | — | 14,016 | ||||||||||||||||
| Water | 452 | 1,404 | 5,476 | — | 7,332 | ||||||||||||||||
| Salt | 3,917 | 249 | — | — | 4,166 | ||||||||||||||||
| Magnesium Chloride | 2,012 | — | — | — | 2,012 | ||||||||||||||||
| Brines | 581 | — | — | — | 581 | ||||||||||||||||
| Other | — | — | 1,884 | (109 | ) | 1,775 | |||||||||||||||
| Total Revenue | $ | 25,556 | $ | 15,669 | $ | 8,323 | $ | (699 | ) | $ | 48,849 | ||||||||||
| Year Ended December 31, 2019 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 103,403 | $ | — | $ | 2,973 | $ | (1,909 | ) | $ | 104,467 | ||||||||||
| Trio® | — | 64,299 | — | — | 64,299 | ||||||||||||||||
| Water | 1,823 | 4,495 | 19,339 | — | 25,657 | ||||||||||||||||
| Salt | 12,022 | 757 | — | — | 12,779 | ||||||||||||||||
| Magnesium Chloride | 4,907 | — | — | — | 4,907 | ||||||||||||||||
| Brines | 2,493 | — | — | — | 2,493 | ||||||||||||||||
| Other | — | — | 5,582 | (109 | ) | 5,473 | |||||||||||||||
| Total Revenue | $ | 124,648 | $ | 69,551 | $ | 27,894 | $ | (2,018 | ) | $ | 220,075 | ||||||||||
| Three Months Ended December 31, 2020 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | |||||||||||||||||
| Sales(1) | $ | 27,556 | $ | 15,565 | $ | 5,390 | $ | (69 | ) | $ | 48,442 | |||||||||||
| Less: Freight costs | 4,324 | 4,481 | — | (69 | ) | 8,736 | ||||||||||||||||
| Warehousing and handling costs | 1,186 | 963 | — | — | 2,149 | |||||||||||||||||
| Cost of goods sold | 18,199 | 10,496 | 3,048 | — | 31,743 | |||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | — | — | — | — | — | |||||||||||||||||
| Gross Margin (Deficit) | $ | 3,847 | $ | (375 | ) | $ | 2,342 | $ | — | $ | 5,814 | |||||||||||
| Depreciation, depletion, and amortization incurred(2) | $ | 7,051 | $ | 1,512 | $ | 718 | $ | 211 | $ | 9,492 | ||||||||||||
| Year Ended December 31, 2020 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | |||||||||||||||||
| Sales(1) | $ | 108,060 | $ | 70,287 | $ | 18,929 | $ | (322 | ) | $ | 196,954 | |||||||||||
| Less: Freight costs | 17,026 | 20,431 | — | (322 | ) | 37,135 | ||||||||||||||||
| Warehousing and handling costs | 4,857 | 4,574 | — | — | 9,431 | |||||||||||||||||
| Cost of goods sold | 73,496 | 50,902 | 11,445 | — | 135,843 | |||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | 1,130 | 2,885 | — | — | 4,015 | |||||||||||||||||
| Gross Margin (Deficit) | $ | 11,551 | $ | (8,505 | ) | $ | 7,484 | $ | — | $ | 10,530 | |||||||||||
| Depreciation, depletion, and amortization incurred(2) | $ | 26,536 | $ | 6,068 | $ | 2,663 | $ | 843 | $ | 36,110 | ||||||||||||
| Three Months Ended December 31, 2019 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | |||||||||||||||||
| Sales(1) | $ | 25,556 | $ | 15,669 | $ | 8,323 | $ | (699 | ) | $ | 48,849 | |||||||||||
| Less: Freight costs | 4,461 | 5,011 | 218 | (109 | ) | 9,581 | ||||||||||||||||
| Warehousing and handling costs | 972 | 1,023 | — | — | 1,995 | |||||||||||||||||
| Cost of goods sold | 14,377 | 9,264 | 3,684 | (590 | ) | 26,735 | ||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | — | 348 | — | — | 348 | |||||||||||||||||
| Gross Margin | $ | 5,746 | $ | 23 | $ | 4,421 | $ | — | $ | 10,190 | ||||||||||||
| Depreciation, depletion, and amortization incurred(2) | $ | 6,833 | $ | 1,567 | $ | 397 | $ | 205 | $ | 9,002 | ||||||||||||
| Year Ended December 31, 2019 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | |||||||||||||||||
| Sales(1) | $ | 124,648 | $ | 69,551 | $ | 27,894 | $ | (2,018 | ) | $ | 220,075 | |||||||||||
| Less: Freight costs | 18,715 | 20,514 | 936 | (109 | ) | 40,056 | ||||||||||||||||
| Warehousing and handling costs | 4,745 | 3,876 | — | — | 8,621 | |||||||||||||||||
| Cost of goods sold | 73,401 | 42,251 | 12,367 | (1,909 | ) | 126,110 | ||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | — | 1,810 | — | — | 1,810 | |||||||||||||||||
| Gross Margin | $ | 27,787 | $ | 1,100 | $ | 14,591 | $ | — | $ | 43,478 | ||||||||||||
| Depreciation, depletion and, amortization incurred(2) | $ | 25,796 | $ | 6,163 | $ | 1,566 | $ | 810 | $ | 34,335 | ||||||||||||
(1) Segment sales include the sales of byproducts generated during the production of potash and Trio®.
(2) Depreciation, depletion, and amortization 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, 2020 AND 2019
(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, 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 (Loss) Income and Adjusted Net (Loss) Income Per Diluted Share
Adjusted net (loss) income and adjusted net (loss) income per diluted share are calculated as net (loss) income or net (loss) 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 (Loss) Income to Adjusted Net (Loss) Income:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Net (Loss) Income | $ | (711 | ) | $ | 2,082 | $ | (27,154 | ) | $ | 13,631 | |||||||
| Adjustments | |||||||||||||||||
| Litigation Settlement | — | — | 10,075 | — | |||||||||||||
| Gain on land sale | — | — | (4,722 | ) | — | ||||||||||||
| Make-whole payment(1) | — | — | 1,868 | — | |||||||||||||
| Write-off of deferred financing fees(2) | — | — | 128 | — | |||||||||||||
| Total adjustments | — | — | 7,349 | — | |||||||||||||
| Adjusted Net (Loss) Income | $ | (711 | ) | $ | 2,082 | $ | (19,805 | ) | $ | 13,631 | |||||||
Reconciliation of Net (Loss) Income per Share to Adjusted Net (Loss) Income per Share:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Net (Loss) Income Per Diluted Share | $ | (0.05 | ) | $ | 0.16 | $ | (2.09 | ) | $ | 1.04 | |||||||
| Adjustments | |||||||||||||||||
| Litigation Settlement | — | — | 0.78 | — | |||||||||||||
| Gain on land sale | — | — | (0.36 | ) | — | ||||||||||||
| Make-whole payment(1) | — | — | 0.14 | — | |||||||||||||
| Write-off of deferred financing fees(2) | — | — | 0.01 | — | |||||||||||||
| Total adjustments | — | — | 0.57 | — | |||||||||||||
| Adjusted Net (Loss) Income Per Diluted Share | $ | (0.05 | ) | $ | 0.16 | $ | (1.52 | ) | $ | 1.04 | |||||||
(1) 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.
(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.
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, | ||||||||
| 2020 | 2019 | |||||||
| Total Segment Sales | $ | 27,556 | $ | 25,556 | ||||
| Less: Segment byproduct sales | 4,998 | 6,962 | ||||||
| Potash freight costs | 3,249 | 2,469 | ||||||
| Subtotal | $ | 19,309 | $ | 16,125 | ||||
| Divided by: | ||||||||
| Potash tons sold (in thousands) | 78 | 58 | ||||||
| Average net realized sales price per ton | $ | 248 | $ | 278 | ||||
| Potash Segment | ||||||||
| 2020 | 2019 | |||||||
| Total Segment Sales | $ | 108,060 | $ | 124,648 | ||||
| Less: Segment byproduct sales | 15,560 | 21,245 | ||||||
| Potash freight costs | 13,270 | 12,936 | ||||||
| Subtotal | $ | 79,230 | $ | 90,467 | ||||
| Divided by: | ||||||||
| Potash tons sold (in thousands) | 317 | 319 | ||||||
| Average net realized sales price per ton | $ | 250 | $ | 284 | ||||
| Trio® Segment | ||||||||
| Three Months Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Total Segment Sales | $ | 15,565 | $ | 15,669 | ||||
| Less: Segment byproduct sales | 1,695 | 1,653 | ||||||
| Trio® freight costs | 4,481 | 5,011 | ||||||
| Subtotal | $ | 9,389 | $ | 9,005 | ||||
| Divided by: | ||||||||
| Trio® tons sold (in thousands) | 50 | 53 | ||||||
| Average net realized sales price per ton | $ | 188 | $ | 170 | ||||
| Trio® Segment | ||||||||
| 2020 | 2019 | |||||||
| Total Segment Sales | $ | 70,287 | $ | 69,551 | ||||
| Less: Segment byproduct sales | 4,943 | 5,252 | ||||||
| Trio® freight costs | 20,416 | 20,514 | ||||||
| Subtotal | $ | 44,928 | $ | 43,785 | ||||
| Divided by: | ||||||||
| Trio® tons sold (in thousands) | 230 | 225 | ||||||
| Average net realized sales price per ton | $ | 195 | $ | 195 | ||||
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net (loss) 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 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 (Loss) Income to Adjusted EBITDA:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Net (Loss) Income | $ | (711 | ) | $ | 2,082 | $ | (27,154 | ) | $ | 13,631 | |||||||
| Adjustments | |||||||||||||||||
| Litigation Settlement | — | — | 10,075 | — | |||||||||||||
| Gain on land sale | — | — | (4,722 | ) | — | ||||||||||||
| Interest expense | 412 | 773 | 4,289 | 3,031 | |||||||||||||
| Income tax expense | 47 | 61 | 5 | 53 | |||||||||||||
| Depreciation, depletion, and amortization | 9,411 | 8,976 | 35,788 | 34,121 | |||||||||||||
| Amortization of intangible assets | 81 | 26 | 322 | 214 | |||||||||||||
| Accretion of asset retirement obligation | 435 | 446 | 1,738 | 1,793 | |||||||||||||
| Total adjustments | 10,386 | 10,282 | 47,495 | 39,212 | |||||||||||||
| Adjusted Earnings Before Interest, Taxes, Depreciation, | |||||||||||||||||
| and Amortization | $ | 9,675 | $ | 12,364 | $ | 20,341 | $ | 52,843 | |||||||||