Slide 1: Investor Presentation May 2012 - Supplying a Growing America
Investor Presentation May 2012 Supplying a Growing America™
Slide 2: Cautionary Statements Regarding Forward-Looking Information
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 developments and our future performance, as well as management’s expect
Slide 3: Intrepid Potash: Geographically Advantaged, Potash-Only Company
Intrepid Potash Geographically Advantaged, Potash-Only Company Intense margin focus: Highest margin North American potash producer Strategic marketing and production flexibility Capital investment is focused on production growth of incrementally lower per ton cash costs 3 Florida New Mexico Texas Ok
Slide 4: Company Overview
Company Overview 4 The largest U.S. producer of potash Only western world producer created and dedicated solely to potassium- related products Supplies ~1.5 percent of global demand and ~9.4 percent of U.S. demand One of two global producers of sulfate of potash magnesia, marketed as Trio® Five acti
Slide 5: Current Potash Market
Current market conditions strongly incent farmers to apply the necessary nutrients to maximize the return on their crop investment Indications from our dealers point to near normal potash application rates through the spring season Dealers working to exit spring with very little inventory and will l
Slide 6: Geographically Advantaged Assets
Geographically Advantaged Assets 6 Average Potash Consumption in Intrepid’s Markets is Greater than 5x of Intrepid’s Average Production Intrepid Conventional Mine Locations Low High Sources: Association of American Plant Food Control Officials (AAPFCO), The Fertilizer Institute (TFI), Fertecon, USDA
Slide 7: Intrepid's Potash Sales Price Advantage
2005 2006 2007 2008 2009 2010 2011 Intrepid advantage vs. N.A. competitors $29 $43 $39 $88 $151 $61 $96 Intrepid’s Potash Sales Price Advantage 7 Notes: (1) Average net realized sales price is an operating performance measure calculated as gross sales less freight costs, divided by the number of ton
Slide 8: Intrepid's Consistent Potash Margin Advantage
Intrepid’s Consistent Potash Margin Advantage 8 Intrepid’s potash cash margin advantage(1) has averaged $30 per ton over the last five years (1) Average Net Realized Sales Price Advantage + Cash COGS Difference = Cash Margin Advantage Cash Margin Advantage Intrepid consistently generates more margin
Slide 9: Diversified Markets and Customer Base with Increased Flexibility in Product Mix
Industrial market primarily consists of oil and gas drillers Potash used as a nutritional supplement in animal feed Ability to granulate ~80% of current production, providing flexibility to meet end market demand Diversified Markets and Customer Base with Increased Flexibility in Product Mix 9 Potas
Slide 10: Capital Investment Strategy Focused on Growth, Flexibility & Margin
Intrepid’s Capital Investment Strategy is Focused on Growth, Flexibility & Margin Flexibility via Additional Granulation Capacity Moab Compactor Wendover Compactor Langbeinite Granulation Plant North Compaction Expansion 10 Growth in Mining Capacity HB Solar Solution Mine Additional Mine Panels Expa
Slide 11: 2012 Capital Investment Budget of $225-$300 Million
Our 2012 Capital Investment Budget of $225 - $300 million Represents the Highest Level of Capital Investment in Our History Capital Projects are Focused on Growth, Flexibility & Margin 11 Growth Flexibility Margin Incrementally lower cost tons HB will represent a 25 percent increase in potash produc
Slide 12: Additional Granulation Capacity is Key to Marketing and Production Flexibility
Increased granulation efficiency and capacity provides: Flexibility of production between granular and standard Ability to quickly right size production to meet specific market demands Production flexibility allows Intrepid to seek the highest returns on its products and maximize margin 12 Additiona
Slide 13: East Facility Recovery & Process Improvements
East Facility Recovery & Process Improvements Essential for Growth & Margin Investments being made at East facility to improve plant operating performance Comprehensive and detailed plan to make improvements to all aspects of the operation Implementation of new techniques and technologies to address
Slide 14: Langbeinite Recovery Improvement Project
Langbeinite Recovery Improvement Project – Focused on Capturing Growth & Margin The Dense Media Separation recovery process is functioning as designed and is currently wrapping up commissioning Anticipate project being fully operational by third quarter of 2012 Expected to increase Trio® recoveries
Slide 15: HB Solar Solution Mine – Production Growth through Incrementally Low-Cost Tons
15 HB Solar Solution Mine – Production Growth through Incrementally Low-Cost Tons Construction commenced in March 2012 HB Solar Solution Mine expected to be one of the low-cost potash mines in North America Leverages our solution mining and solar evaporation expertise Improves our overall cost profi
Slide 16: HB Solar Solution Mine Key Facts
5 million tons of proven and probable reserves Capital investment of $200-$230 million Production cost per ton estimated to be $60 to $80 per ton Estimated annual production – 150,000-200,000 tons with higher volumes in earlier years Total area available to be flooded is approximately 30 square mile
Slide 17: Final Thoughts
17 Final Thoughts The Only Western World Potash Pure-Play The High Margin North American Potash Producer Geographically Advantaged Assets Serving Diversified Markets and Customer Base Growth, Flexibility and Margin-Focused Decision Making Capital Investment Program Targeting Growth Opportunities wit
Slide 18: Appendix
POTASH Appendix
Slide 19: Solid Financial Performance
19 Solid Financial Performance Adjusted EBITDA(1) (In millions) Balance Sheet as of March 31, 2012 (1) This is a financial measurement not calculated based on U.S. Generally Accepted Accounting Principles (Non-GAAP). Non-GAAP reconciliation available in the appendix to this presentation. Net Income
Slide 20: Financial Outlook as of May 2, 2012
20 Financial Outlook as of May 2, 2012 Three Months Ended Year Ended June 30 , 2012 December 31, 2012 Potash Production (tons) 165,000 -185,000 790,000 - 830,000 Sales (tons) 125,000 - 175,000 810,000 - 860,000 Cash COGS, net of by-product credit ($/ton) $180 - $200 $175 - $195 Total COGS ($/ton) $2
Slide 21: Calculation of Adjusted EBITDA
Calculation of Adjusted EBITDA (in thousands) 21 Non-GAAP Reconciliation 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: Calculation of Adjusted Net Income
Calculation of Adjusted Net Income (in thousands) 22 Non-GAAP Reconciliation Adjusted net income is a non-GAAP financial measure that is calculated as net income adjusted for significant non-cash and infrequent items. Examples of non-cash and infrequent items include insurance settlements from prope
Slide 23: Historical Quarterly Production and Sales Summary
23 Historical Quarterly Production and Sales Summary 2010 2012 March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, Potash 172 165 166 224 234 209 173 197 218 Trio® 57 39 32 31 31 44 35 31 30 Potash 243 129 221 216 196 225 190 183 203 Trio® 70 63 45 2
Slide 24: Intrepid Production Volume History & Outlook
24 Intrepid Production Volume History & Outlook Tons (000’s) Intrepid’s Potassium Production Volume Growth Estimated Productive Capacity at Full Operating Rates(1) Historical ® ® Productive capacity is affected by operating rates, recoveries, mining rates and the amount of development work that Intr
Slide 25: Why Potash Only?
25 Why Potash Only? (1) Potash Corp. (2) Potash percentage represents 2007, nitrogen and phosphate percentages represent 2005 figures from Integer Research Ltd. (3) Estimated by Intrepid Potash based on publicly available historic production data. Operating capacity rates for nitrogen and phosphate
Slide 26: Global Industry Susceptible to Production Interruptions & Supply Shocks
26 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
Slide 27: Current Crop Economics
- Non-land fixed costs include: labor, opportunity cost of unpaid labor, taxes, insurance, general overhead, and machine and equipment expenses. - Other variable costs include: seed, chemicals, fuel, lube, electricity, repairs, water, interest, custom operations, and drying. - Land costs are shown a
Slide 28: Fundamentals of Increasing Population Continue to Drive Grain and Potash Demand
Fundamentals of Increasing Population Continue to Drive Grain and Ultimately Potash Demand Over the Long Term 28 Note: Grains include corn, wheat, barley, oats and sorghum. Stocks-to-use ratio is average inventory / consumption for that year; 2012E data updated monthly. Sources: United Nations Food
Slide 29: Nutrient Removal Has Increased Dramatically
Nutrient Removal Has Increased Dramatically 29
Slide 30: United States Potash Consumption
United States Potash Consumption 30 Sources : Fertecon, United States Department of Agriculture (USDA). Potash consumption is shown in fertilizer years (July – June). Grains stocks include: Barley, Corn, Oats, Sorghum, Wheat Potash fertilizer consumption has remained relatively constant with an annu
Slide 31: Potash Production and North American Inventory Levels
31 Potash Production and North American Inventory Levels N. American Inventory (000s Tons KCL Equivalent) Sources: IPNI, Fertecon, Intrepid Potash®. Potash Production (000s Tons KCL Equivalent) (1) Global Production North American Production 5,000 15,000 25,000 35,000 45,000 55,000 65,000 75,000 500
Slide 32: Brazil, India and China Must Increase Demand to Reach Recommended Application Levels
32 To Reach Recommended Application Levels, Brazil, India and China Must Increase Demand China Brazil India sources: IPNI, Potash Corp. (MM Tons KCL) Goal to attain self-sufficiency of food supply History of under-application of potash Need to increase yields Increasing land use for agricultural pur
Slide 33: Return on Potash Investment for Corn & Soybeans
Return on Potash Investment for Corn & Soybeans 33 Forward looking ROI assumes 166 bu/acre and $5.34/bu for corn, 43.9 bu/acre yield and $12.23 for soybeans, $523/ton KCL (crop prices based on July 2013 futures price minus $0.30 basis as of 05/18/12, KCL price based on Green Markets Midwest FOB ware