Intrepid Potash, Inc · NYSE:IPI
Intrepid Potash — Investor Presentation (May 2013)
27 slides from Intrepid Potash's investor presentation, May 14, 2013
Slide 1: Investor Presentation May 2013
Investor Presentation May 2013
Slide 2: Cautionary Statements Regarding Forward Looking Information
Cautionary Statements Regarding Forward Looking Information 2 Certain statements in this presentation, and other written or oral statements made by or on behalf of us, are “forward-looking statements” within the meaning of the federal securities laws. Statements regarding future events and developme
Slide 3: Company Overview
Company Overview The largest U.S. producer of potash Only western-world producer created and dedicated solely to potassium- related products Supplies ~ 1.5% of global demand and ~ 9.2% of U.S. demand One of only two global producers of the specialty product, sulfate of potash magnesia or langbeinite
Slide 4: Intrepid's Unique Position
4 Intrepid’s Unique Position Participating in market with favorable trends Utilizing geographic advantage and marketing strategy to earn highest average net realized sales price and cash margin per ton Serving diverse customers and markets Increased our mines’ reserve lives for long-term production
Slide 5: Current Potash Market – Favorable Trends
Farmers look to capitalize on favorable economics USDA forecasting highest farm income in past 40 years(1) Tight grain stocks-to-use ratio Strong commodity prices 97 million acre corn crop planting intentions estimate(2) Compressed spring application season Rapid, steep demand peak Poised to respond
Slide 6: United States Potash Consumption
United States Potash Consumption 6 Sources : Fertecon, United States Department of Agriculture (USDA), NOAA National Climatic Data Center. Potash consumption is shown in fertilizer years (July – June). Grains stocks include barley, corn, oats, sorghum and wheat. Potash fertilizer consumption has rem
Slide 7: Geographically Advantaged, Intense Margin Focus
New Mexico Texas Oklahoma Kansas Colorado Mississippi Arkansas Louisiana Idaho Washington Oregon Nebraska Missouri Iowa Illinois California Wyoming Utah Arizona Nevada Intrepid Potash Geographically Advantaged, Intense Margin Focus Strategic marketing, diverse customer base, and production flexibili
Slide 8: North American Price Advantage
North American Price Advantage 8 Notes: Average net realized sales price is an operating performance measure calculated as gross sales less freight costs, divided by the number of tons sold in the period. Average net realized sales price advantage is an operating performance measure calculated by us
Slide 9: North American Cash Margin Advantage
North American Cash Margin Advantage 9 (1) Cash Margin Advantage Notes: Average cash margin advantage is calculated as average per ton net realized sales price advantage plus cash COGS difference (calculated using the combined estimated average net realized sales prices and average estimated cash CO
Slide 10: Diversified Markets and Customer Base with Flexible Product Mix
Diversified Markets and Customer Base with Flexible Product Mix Trio® markets further diversify crops and customers Industrial market primarily consists of oil and gas drillers Potash used as a nutritional supplement in animal feed Investments will result in ability to granulate ~90% of our producti
Slide 11: We Have Successfully Increased Our Reserve Lives
11 We Have Successfully Increased Our Reserve Lives Ingredients for Growth – Extending Reserve Lives Extending reserves is a result of our lease acquisition and development strategy Expanding reserves at all of our existing sites Disciplined approach to core-hole drilling and reserve definition Mini
Slide 12: 2013 Capital Investments Focused on Growth, Flexibility & Margin
Our 2013 Capital Investments will be in range of $235 -$285 Million Capital Projects Are Focused on Growth, Flexibility & Margin 12 Growth Flexibility Margin HB will represent an estimated 20-25% increase in potash production volumes Incremental low cost tons through plant and mine expansion Project
Slide 13: HB Solar Solution Mine – Key Facts
Five million tons of proven and probable reserves Capital investment of $225-$245 million Cash production cost per ton estimated to be below $80 per ton, making HB one of the lowest cost potash mines in North America Estimated annual production of 150,000-200,000 tons Opportunity for further expansi
Slide 14: HB Solar Solution Mine – Construction Progress and Timeline
14 Construction commenced in March 2012, project currently on schedule Invested $151 million through Mar. 31, 2013 Well drilling - complete Pipeline construction - complete Pond construction – in process Mill construction – in process Leverages our solution mining and solar evaporation expertise Val
Slide 15: Expand Moab Solar Solution Mining
Expand Moab Solar Solution Mining – Incremental Production at Low Cost Expand solution mining footprint Cavern 1 began producing in 2002 and was expanded in 2012 Cavern 2 was constructed in 2012 and began producing in 2013 Cavern 3 is being drilled in 2013 with the benefit expected in late 2014 Exce
Slide 16: Additional Granulation Capacity Is Key to Marketing and Production Flexibility
Increases capacity and improves quality Flexibility to place the highest margin product into market Capacity to handle all of the new production from HB Solar Solution mine and increased production from our West mine Total capital investment is expected to be approximately $95 to $100 million On bud
Slide 17: Summary
17 Summary Only Western-World potash pure-play Highest average net realized sales price and cash margin per ton in North American Geographically advantaged assets serving diversified markets and customer base Focused on growth, flexibility, and margin expansion Capital investment program targeting i
Slide 18: Appendix
Appendix ® Supplying a Growing America®
Slide 19: Financial Outlook as of May 1, 2013
Financial Outlook as of May 1, 2013 19 Three Months Ended Year Ended June 30, 2013 December 31, 2013 Potash Production (tons) 190,000 - 210,000 860,000 - 890,000 Sales (tons) 190,000 - 220,000 850,000 - 870,000 Cash COGS, net of by-product credit ($/ton) $180 - $190 $170 - $180 Total COGS ($/ton) $2
Slide 20: Financial Overview
Financial Overview 20 Adjusted EBITDA* (In millions) Balance Sheet as of March 31, 2013 * These are financial measurements not calculated based on U.S. Generally Accepted Accounting Principles (Non-GAAP). Non-GAAP reconciliations available in the appendix to this presentation. Adjusted Net Income* (
Slide 21: Non-GAAP Reconciliation: Calculation of Adjusted EBITDA
Non-GAAP Reconciliation Calculation of Adjusted EBITDA (in thousands) 21 Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is a non-GAAP financial measure that is calculated as net income adjusted for the add back of interest expense (including derivatives
Slide 22: Non-GAAP Reconciliation: Calculation of Adjusted Net Income
Non-GAAP Reconciliation Calculation of Adjusted Net Income (in thousands) 22 Adjusted net income is a non-GAAP financial measure that is calculated as net income adjusted for certain items that impact comparability of results from period to period including, among other items, pension settlement exp
Slide 23: Investing to Increase Production and Significantly Lower Costs
Investing to Increase Production and Significantly Lower Costs 23 Intrepid has invested $750 million since inception underscoring our commitment to growth Major Capital Project Milestones Facility Year Completed / Estimated Completion HB Solar Solution Mine Carlsbad, NM – HB 2013E North Compaction P
Slide 24: Historical Quarterly Production and Sales Summary
Historical Quarterly Production and Sales Summary 24 2013 Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Jun. 30, Sep. 30, Dec. 31, Mar. 31, Potash 172 165 166 224 234 209 173 197 218 170 189 218 222 Trio® 57 39 32 31 31 44 35 31 30 33 35 34 46 Potash 243 129 221 21
Slide 25: Intrepid Production Volume History & Estimated Productive Capacity
Productive capacity is affected by achieving the benefit of designed capacity and recovery improvement investments, operating rates, recoveries, mining rates, and the amount of development work that Intrepid performs. Therefore, actual production rates for mining companies tend to be lower than esti
Slide 26: Global Industry Susceptible to Production Interruptions & Supply Shocks
Depleted Conventional Mines Mines Currently With Less than 15 Years Reserve Life Theodore, Amelie, Marie Louis mines- France Pasquasi and San Cataldo mines - Italy Salzdetfurth, Friedrichshall, Bergmannssegen-Hugo, Siegfried-Giesen, and Niedersachen-Riedel - Germany Trona, California Horizon-Amax, W
Slide 27: Increasing Population Continues to Drive Grain and Potash Demand
Fundamentals of Increasing Population Continue to Drive Grain and Ultimately Potash Demand Over the Long Term 27 Note: Grains include corn, wheat, barley, oats and sorghum. Stocks-to-use ratio is ending inventory / consumption for that crop year; data updated monthly. Sources: United Nations Food an