Intrepid Potash, Inc · NYSE:IPI
Intrepid Potash — Investor Presentation (June 2017)
38 slides from Intrepid Potash's investor presentation, Jun 13, 2017
Slide 1: Forward-looking statements
This presentation includes forward looking statements. Forward-looking statements include statements about our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, among other things. In some cases, you can identify these sta
Slide 2: Improved financial position supports Intrepid's business plan
Diversified and Strategic Assets Variety of products, by-products, and markets Well located production provides domestic competitive advantage Essential Products Consistent need for balanced crop nutrients Fresh water and by-products enhance our assets Timing Improved balance sheet, liquidity, and s
Slide 3: Intrepid Overview
Incorporated in 2007 and headquartered in Denver, Colorado The only US-based potash producer with approximately 400,000 tons of productive capacity Current potash production solely from lower-cost solar solution mines One of two global producers of langbeinite (Trio®), a low-chloride specialty crop
Slide 4: Diversified and strategic assets
Diversified and strategic assets
Slide 5: Transitioning to a more diversified production profile
Transitioning to a more diversified production profile 2017 Productive Capacity(1)(3) (tons) 6 Potash(4) Trio® Salt(5) Magnesium Chloride Intrepid also produces or sells: Fresh Water – see more detail on slides 22 and 23 Heavy Brines – new by-product in 2017 2015 Productive Capacity(1)(2) (tons) Pro
Slide 6: Strategic locations provide access to diverse markets
Strategic Locations provide access to Diverse markets Sole domestic potash producer within a US market that is heavily dependent on potash imports One of only two langbeinite (Trio®) producers in the world Nearby oil and gas basins provide access to oilfield service companies Fresh water, by-product
Slide 7: Strategic locations provide access to diverse markets
STRATEGIC LOCATIONS PROVIDE ACCESS TO DIVERSE MARKETS = Sole domestic potash producer within a US market that is heavily dependent on potash imports = One of only two langbeinite (Trio”) producers in the world = Nearby oil and gas basins provide access to oilfield service companies - Fresh water, by
Slide 8: Compelling fundamentals for crop nutrients
Compelling Fundamentals for crop nutrients Global Population (bln) (1) Global Middle Class (bln) (2) +33% Food Production (Index) (3)(4) Nutrient Consumption (Mt NPK) (3) Arable Land/Person (ha/person) (3) Essential for Farmers to Increase Yields +60% +58% 9 Note: Percentage changes in the above gra
Slide 9: Global Production, Capacity & Price
Global Production, Capacity & Price World Potash Production, Capacity & Consumption(1) 10 1986-2006 Price CAGR: 5% Industry supply-constrained in 2008, demonstrating true operational capacity Overcapacity Has Not Always Led To Oversupply Source: Fertecon Prices for Standard KCl FOB Vancouver (2) $0
Slide 10: U.S. Consumption Remains Steady & Robust
Sources : Fertecon, United States Department of Agriculture (USDA), NOAA National Climatic Data Center. Potash consumption is shown in marketing years (July – June) and includes MOP, SOP, and Mg-SOP, converted to KCl-equivalent tons based on K2O content. KCl equivalent consumption has remained relat
Slide 11: Solar Solution: Safe, low-cost, environmentally friendly production
Solar Solution: Safe, low-cost, environmentally friendly production 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 recrystallizes as wa
Slide 12: Solar Solution Advantages
Solar Solution Advantages Technologically-advanced mining and processing methods Improved recoveries Relatively lower production costs Environmentally friendly Only possible in arid climates Additional mill capacity at HB and Moab Opportunities to improve and increase production and efficiency: AMAX
Slide 13: Serving Diverse Markets for Potash
Includes: Barley Citrus Corn Cotton Hay Nuts Potatoes Rice Soybeans Tobacco Wheat Strong industrial sales opportunity pipeline in 2017 Selling into higher margin opportunities Flexibility to react to changes in demand Serving Diverse Markets FOR Potash Includes: Cattle Pet Food Pork Poultry Includes
Slide 14: US Production: Potash Competitive Advantage
2016 advantage +30% (1) Average net realized sales price per ton is a non-GAAP financial measure calculated as potash 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 measure calculated by us as the d
Slide 15: Potash Prices Have Recently Firmed
$ Per Short Ton Potash Prices Have Recently FIRMED Potash Price (FOB Cornbelt Warehouse) (1) 16 Source: Green Markets $0 $50 $100 $150 $200 $250 $300 $350 $400 $450
Slide 16: Growing our Trio market
Growing our trio® market Potassium, Magnesium and Sulfur in one delivery mechanism Low-chloride potassium crop nutrient ideal for high-value crops Immediately available nutrients Strong solubility profile – delivers nutrients when the plants need them 100% macronutrients Organic – OMRI® listed and C
Slide 17: Opportunities for Trio in domestic market
Recent price decreases have made Trio® more competitive in some row crop markets Aggressively expanding domestic warehouse footprint Only producer of OMRI® listed langbeinite Opportunities for Trio® in domestic market Chloride sensitive crops and magnesium deficient soils Row crops with magnesium de
Slide 18: Trio is well suited for magnesium-deficient soils
Trio® is well suited for magnesium-deficient soils Map source: Potassium Sulphates & Potassium Nitrate Market Outlook, 2012 Edition, CRU. Assuming Trio® commands 2% of the potassium market in Brazil (comparable to its market share in the US) We believe Trio®’s global addressable market is substantia
Slide 19: Strong global outlook for non-chloride sources of potassium
Steady demand growth for potassium sulfate and potassium magnesium sulfate Expected CAGR of 2% from 2017-2020 Minimal supply additions announced Non-Chloride K fertilizers include SOP, langbeinite, schoenite, and Patentkali (blend of MgSO4 & SOP) (2) Source: Fertecon Strong Global outlook for non-ch
Slide 20: Water has become a valuable resource in the Permian Basin
Significant acquisitions and new drilling activity surrounding Intrepid’s Carlsbad operations has made water a valuable resource in the Permian Basin Low-cost oil and gas operations Number of drilled but unfraced wells in the Permian Basin has increased 219% over the past few years(1) Typical frac j
Slide 21: Water presents a meaningful cash flow opportunity
Water presents a meaningful cash flow opportunity Intrepid owns over 30,000 acre feet of water rights that are well-located to service the oil & gas industry Well-capitalized, experienced companies involved in the Delaware sub-basin of the Permian basin operate in close proximity to our mines and wa
Slide 22: Increased by-product production, sales, and cash flow
Increased by-product production, sales, and cash flow Salt, magnesium chloride, and brines are used in a variety of markets including animal feed, industrial applications, consumer applications and the oil and gas industry Salt produced at all three solar facilities Goal to double salt sales in 2017
Slide 23: Improved balance sheet, liquidity, and strategic financial flexibility
Improved Balance Sheet, liquidity, and strategic financial flexibility $61 million reduction in debt, from $150 million at September 30, 2016 to $89 million at March 31, 2017 $57.5 million raised in secondary public offering in March 2017 Opportunity to reduce interest rates with improved performanc
Slide 24: Outlook and Initiatives for 2017 and Beyond
Continue to increase the diversity of the production profile Maintain operational discipline with a focus on continuous cost improvement Continue to optimize Trio® production and realize sales growth opportunities (international and domestic) Expand water and by-product sales by increasing customer
Slide 25: Outlook and Initiatives for 2017 and Beyond
OUTLOOK AND INITIATIVES FOR 2017 AND BEYOND = Continue to increase the diversity of the production profile = Maintain operational discipline with a focus on continuous cost improvement * Continue to optimize Trio® production and realize sales growth opportunities (international and domestic) = Expan
Slide 26: Intrepid's reserve summary
INTREPID’s reserve summary Reserve Summary (1) Intrepid’s reserves in aggregate contain ~77 million tons of potash and ~57 million tons of langbeinite Long reserve lives provide opportunity for long-term operations 28 Source: Intrepid’s Annual Report on Form 10-K for the year ended December 31, 2016
Slide 27: Global production susceptible to 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 28: Global production susceptible to shocks
GLOBAL PRODUCTION SUSCEPTIBLE TO “SHOCKS” Mine Closures Due to Water Inflows Mine Closures Due to Depletion Mines Currently With Less than Depleted Conventional Mines 15 Years Reserve Life ® Theodore, Amelie, Marie Louis mines- France © Carlsbad, NM, United States - Mosaic", closed ‘= Pasquasi and S
Slide 29: Financial Overview
Financial Overview Adjusted EBITDA (in millions) * Adjusted Net Loss per Diluted Share* Adjusted Net Loss (in millions) * * Adjusted net loss, adjusted net loss per diluted share, and adjusted EBITDA are non-GAAP measures. See the non-GAAP reconciliations set forth later in this presentation for add
Slide 30: Historical Segment Information
Historical Segment Information (1) Costs associated with abnormal production for the three months ended March 31, 2016 and June 30, 2016, include costs incurred in conjunction with the conversion of the East facility to Trio®-only production. (2) Depreciation, depletion and amortization incurred for
Slide 31: Historical Quarterly Production and Sales
Historical Quarterly Production and Sales 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. 33 In thousands of short tons 2016 2017 Q1 Q2 Q3 Q4 Q1 Production Volume Potash 215 116 52 110 118 Trio ® 44 71 85
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations To supplement the Company's condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses several non-GAAP financial measures to monitor and evaluate its performance. These non-GAAP financial measures include adjusted
Slide 33: Adjusted Net Loss and Adjusted Net Loss per Diluted Share
Adjusted net loss and adjusted net loss per diluted share are calculated as net loss or loss per diluted share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. The Company considers these non-GAAP financial measures
Slide 34: Adjusted Net Loss per Diluted Share (continued)
Adjusted net loss and adjusted net loss per diluted share are calculated as net loss or loss per diluted share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. The Company considers these non-GAAP financial measures
Slide 35: Adjusted EBITDA
Adjusted EBITDA Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net loss adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. The Company considers adjusted
Slide 36: Average Net Realized Sales Price
Average net realized sales price per ton is calculated as sales, less freight costs, divided by the number of tons sold in the period. The Company considers average net realized sales price per ton to be useful because it shows average per-ton pricing without the effect of certain transportation and
Slide 37: Investor Relations Contact
For more information visit our website at www.intrepidpotash.com Investor Relations Contact: Brian Frantz Phone: 303.996.3023 Email: brian.frantz@intrepidpotash.com For more information visit our website at www.intrepidpotash.com Investor Relations Contact: Matt Preston Phone: 303.996.3048 Email: ma
Slide 38: Investor Relations Contact
For more information visit our website at www.intrepidpotash.com Investor Relations Contact: Matt Preston Y INTREPID Phone: 303.996.3048 att. preston@intrepidpotash.com