Intrepid Potash, Inc · NYSE:IPI
Intrepid Potash — Investor Presentation (May 2015)
35 slides from Intrepid Potash's investor presentation, May 18, 2015
Slide 1: Ingredients for Growth May 2015
Ingredients for Growth May 2015
Slide 2: Safe Harbor
This presentation contains forward-looking statements — that is, statements about future, not past, events. These forward-looking statements often relate to our future performance and management’s expectations for the future, including statements about our financial outlook. Our forward-looking stat
Slide 3: Agenda
Agenda 4 Focused on Expanding Trio® Sales and Production Creating a Stronger Intrepid Positioned to Increase Margin and Cash Flow Improved Capital Structure & Long Term Growth Initiatives Leveraging Low Cost Solar Solution Mining Expertise
Slide 4: Agenda
Agenda 5 Focused on Expanding Trio® Sales and Production Creating a Stronger Intrepid Positioned to Increase Margin and Cash Flow Improved Capital Structure & Long Term Growth Initiatives Leveraging Low Cost Solar Solution Mining Expertise
Slide 5: Strong Industry Fundamentals; Strong Demand Led to Improved Pricing
Balanced fertilization essential to maximizing yields Operating in markets that consume many multiples of Intrepid's annual production Favorable 2014 demand trends continued into 2015 Demand exceeding supply for Trio® driving pricing 6 Positioned to Increase Margin and Cash Flow Strong Industry Fund
Slide 6: Achieving Premium to North American Peers
Achieving Premium to North American Peers Q1 2015 + 34% * Average net realized sales price per ton is a non-GAAP financial 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 a non-GAAP financial measur
Slide 7: Serving Diverse Markets
Positioned to Increase Margin and Cash Flow Serving Diverse Markets Strategy is to maximize and sell all of our production Flexibility to react to changes in demand Selling into the highest margin opportunities Participation in specialty market – Trio® Potash Sales Mix Industrial Agricultural Animal
Slide 8: Optimizing Completed Projects Driving Flexibility, Growth and Margin
OBJECTIVE Respond to changing demand to pursue highest margin sales Ability to compact 100% of potash Sell more Trio® PROJECTS North compaction Trio® pellet plant FLEXIBILTY OBJECTIVE Increase production Lower costs PROJECTS HB Solar Solution mine Moab solution mining caverns West plant improvements
Slide 9: Agenda
Agenda 10 Focused on Expanding Trio® Sales and Production Creating a Stronger Intrepid Positioned to Increase Margin and Cash Flow Improved Capital Structure & Long Term Growth Initiatives Leveraging Low Cost Solar Solution Mining Expertise
Slide 10: Balance Sheet Strength
Cash and investments totaling $113 million $250 million unsecured credit facility in place $150 million in unsecured long-term debt Generated positive free cash flow* in Q1 2015 Capital Investments expected to be $40 - $ 50 million in 2015 Improved Capital Structure & Long Term Growth Initiatives Ba
Slide 11: Long Term Growth Focus
OBJECTIVE Lower cash operating costs PROJECTS Additional phases of HB Amax/Horizon Increase Solar Solution Production OBJECTIVE Produce more Trio® PROJECTS Recovery improvements Premium conversion process Grow Trio® Sales Improved Capital Structure & Long Term Growth Initiatives Long Term Growth Foc
Slide 12: Agenda
Agenda 13 Focused on Expanding Trio® Sales and Production Creating a Stronger Intrepid Positioned to Increase Margin and Cash Flow Improved Capital Structure & Long Term Growth Initiatives Leveraging Low Cost Solar Solution Mining Expertise
Slide 13: Solar Solution Mining Process
Leveraging Low Cost Solar Solution Mining Expertise Solar Solution Mining Process Inject brine into idled or created mine works Allow brine to circulate to dissolve the remaining potash Extract potash enriched brine and pump into solar evaporation pond Allow solar evaporation to occur; potash recrys
Slide 14: Solar Solution Advantages
Leveraging Low Cost Solar Solution Mining Expertise Solar Solution Advantages 15 Capturing previously unrecoverable potash Environmentally friendly Building on our proven expertise Hard for others to replicate Intrepid is Leader in Solar Solution Mining
Slide 15: Solar Solution Advantages: Meaningfully Lower Cash Operating Costs
Leveraging Low Cost Solar Solution Mining Expertise Solar Solution Advantages 16 Significant savings on two largest cost inputs, energy and labor Meaningful reserves create potential for increased production long term Meaningfully Lower Cash Operating Costs Additional HB areas: North, 2 East, South,
Slide 16: Incremental Production While Lowering Cash Operating Costs
Conventional Solar ~25% Leveraging Low Cost Solar Solution Mining Expertise Incremental Production While Lowering Cash Operating Costs 17 2013 Conventional Solar grows to ~36% 2016 Solar comprises growing percentage of Intrepid’s potash production Solar cash operating costs are at least $110 less th
Slide 17: Trio® Margin Opportunity
19 Trio’s® unique combination of low-chloride potassium, magnesium, and sulfur is highly valued Trio® pricing at a premium to potash Demand in excess of supply Trio® margin increasing Opportunity to Expand Trio® production Expand Trio® Sales and Production Trio® Margin Opportunity
Slide 18: Grow Trio® Production
Optimize recovery techniques Mining towards high ore grade reserves Improve pelletization conversion rate Increased production lowers per ton cash operating costs 20 Opportunity To Generate More Margin & Cash Flow Expand Trio® Sales and Production Grow Trio® Production
Slide 19: Why Intrepid?
Why Intrepid? Increased Cash Flow Generation North American Average Net Realized Sales Price Advantage Committed to Lowering Costs Leveraging Solar Solution Expertise Strong Capital Structure Focused on Growth, Flexibility, and Margin Expansion 21
Slide 20: Appendix
Appendix ® Supplying a Growing America® Appendix
Slide 21: 2015 Outlook as of April 28, 2015
2015 Outlook as of April 28, 2015 23 First-Half Second-Half Full-Year 2015 2015 2015 Potash Production (tons) 390,000 - 410,000 460,000 - 490,000 850,000 - 900,000 Sales (tons) 405,000 - 415,000 425,000 - 445,000 830,000 - 860,000 Cash operating costs ($/ton) $200 - $215 $190 - $205 $195 - $210 Tota
Slide 22: Financial Overview
Financial Overview Adjusted EBITDA* (in millions) Diluted Earnings (Loss) Per Share Net Income (Loss) (in millions) 24 Free Cash Flow* (in millions) * Free cash flow is a non GAAP measure that is calculated as net cash provided by operating activities less cash paid for capital expenditures. Adjuste
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use several non-GAAP financial measures to monitor and evaluate our performance. These non-GAAP financial measures may include adjusted net income (loss), adjust
Slide 24: Free Cash Flow
Free Cash Flow Free cash flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for capital expenditures. We consider free cash flow to be a useful measure of liquidity because it indicates cash generated by normal business operations, inc
Slide 25: Calculation of Adjusted EBITDA
Non-GAAP Reconciliation Calculation of Adjusted EBITDA 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 change in the allowance associated with the employment-related high w
Slide 26: Net sales and average net realized sales price
Net sales, average net realized sales price, and average net realized sales price advantage are non-GAAP financial measures. Net sales are calculated as sales less freight costs. Average net realized sales price is calculated as net sales, divided by the number of tons sold in the period. Average ne
Slide 27: Historical Quarterly Production and Sales
Historical Quarterly Production and Sales 29 Note: One short ton equals 2,000 pounds. One metric tonne, which many international competitors use, equals 1,000 kilograms or 2,204.62 pounds. In thousands of short tons 2012 2013 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Production Volume Potash
Slide 28: Intrepid's Locations
Intrepid’s Locations 30 Florida New Mexico Texas Oklahoma Kansas Nebraska South Dakota Montana Wyoming Colorado Utah Idaho Arizona Nevada Washington California Oregon Kentucky Maine New York Pennsylvania Michigan Vermont New Hampshire Virginia West Virginia Ohio Indiana Illinois North Carolina Tenne
Slide 29: Potash Consumption in Intrepid's Markets Greater than 5x Production
31 Average Potash Consumption in Intrepid’s Markets is Greater than 5x of Intrepid’s Average Production Low High Sources: Association of American Plant Food Control Officials (AAPFCO), The Fertilizer Institute (TFI), Fertecon, USDA, Intrepid Potash. New Mexico Texas Oklahoma Kansas Colorado Mississi
Slide 30: U.S. Potash Consumption Remains Steady and Robust
U.S. Potash Consumption Remains Steady and Robust 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 cons
Slide 31: Global Potash Consumption, Production & Capacity
Global Potash Consumption, Production & Capacity Demand exceeded Supply in 2008, so theoretical capacity has been challenged in recent years 33 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 1981 1982 1983 1984 1985 1986 1987 1988
Slide 32: Global Industry Susceptible to Production Interruption and Supply Shocks
Global Industry Susceptible to Production Interruption and 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-
Slide 33: 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 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 and A
Slide 34: Solar Evaporation Profile
Solar Evaporation Profile 36 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Harvest Season Mill operating, creating finished product Peak Evaporative Season Liquid evaporating off, potash crystals forming Harvest Season Mill operating, creating finished product
Slide 35: Investor Relations Contact
For more information visit our website at www.intrepidpotash.com Investor Relations Contact: Gary Kohn Phone 303.996.3024 Email: gary.kohn@intrepidpotash.com