Intrepid Potash, Inc · NYSE:IPI
Intrepid Potash — Investor Presentation (November 2014)
28 slides from Intrepid Potash's investor presentation, Nov 10, 2014
Slide 1: Ingredients for Growth November 2014
Ingredients for Growth November 2014
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: Intrepid Overview: Building on Our History of Value Creation
Intrepid Overview Building on Our History of Value Creation 3 Optimizing new and upgraded assets Created opportunity to increase per ton margin and cash flow Creating a stronger Intrepid Completed multi-year modernization program Expanding low cost solar solution mining Close-to-market strategy
Slide 4: Intrepid's Unique Position
Intrepid’s Unique Position Participating in industry with strong fundamentals Geographically advantaged assets Value enhancing logistics strategy Serving diverse customers and markets Leveraging solar solution mining expertise Benefitting from a prudent capital structure Highest average net realized
Slide 5: Average Net Realized Sales Price Advantage
Intrepid generates strong cash margins through its net realized price advantage YTD Sep. 30 33% Note: 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 pr
Slide 6: Industry With Strong Fundamentals: Market Conditions
• Tight granular inventory • Logistic challenges • Commodity prices • Annual U.S. potash consumption relatively consistent for decades • Balanced fertilization key to maximizing yields Industry With Strong Fundamentals Market Conditions 6 Solid potash pricing and demand in fourth quarter of 2014
Slide 7: Strategically Positioned, Serving Diverse Customers and Markets
Strategically Positioned, Serving Diverse Customers and Markets Maximizing Sales and Margin • Marketing strategy geared towards maximizing margins • Close-to-the-market • Diverse end markets and customer base • Trio® expands customer base End Market Product Size 2012 2013 YTD Sep. 30, 2014 Agricultu
Slide 8: Leveraging Solar Solution Mining Expertise
Leveraging Solar Solution Mining Expertise Intrepid is a Leader in Solar Solution Mining 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 • Low per ton cash operating cost • Crea
Slide 9: HB Drives Cash Margin Opportunity
Leveraging Solar Solution Mining Expertise HB Drives Cash Margin Opportunity • Expected cash margin per ton from HB approximately double • Combined cash operating costs improve 9% • Potential to grow cash margin faster than production growth 9 Note: Calculation assumes cash operating cost per ton fo
Slide 10: Balance Sheet Strength and Optimal Capital Structure
• Cash and investments totaling $74 million • $250 unsecured credit facility in place. Availability of facility adjusts based on financial covenant results • $150 million in unsecured long-term debt outstanding, with average interest rate of less than 4% • Capital investments in 2014 of $40-$50 mill
Slide 11: Recent Capital Investments Designed to Achieve Greatest Returns
OBJECTIVE •Respond to changing demand to pursue highest margin sales •Ability to compact 100% of potash production PROJECTS •North compaction •Trio® pellet plant OBJECTIVE •Increase production PROJECTS •HB Solar Solution mine •Moab solution mining caverns •West plant improvements GROWTH OBJECTIVE •L
Slide 12: Targeted Capital Investment Program: HB Solar Solution Mine
Targeted Capital Investment Program to Achieve Greatest Returns HB Solar Solution Mine 12 Production growth at significantly lower cash operating costs • $80-$100 per ton, at full rates expected in 2016 Lowering cash operating costs • Lower by nearly 9% per ton Improves Intrepid’s overall cash opera
Slide 13: Targeted Capital Investment Program: North Compaction Facility
Targeted Capital Investment Program to Achieve Greatest Returns North Compaction Facility 13 • Flexibility to adjust production to pursue highest margin sales Create margin opportunity • Capacity to compact 100% of Carlsbad production Expands granulation capacity • Customer feedback that it is some
Slide 14: Why Intrepid?
Why Intrepid? Highest North American average net realized sales price over time and strong cash margin per ton Geographically advantaged assets and a logistics strategy to serve diversified markets and customer base Focused on growth, flexibility, and margin expansion Producing incremental low cost
Slide 15: Appendix
Supplying a Growing America Supplying a Growing America® ® Appendix ®
Slide 16: Intrepid's Locations
Intrepid’s Locations 16 Wendover Solar Evaporation Mine Moab Solar Solution Mine Carlsbad Assets including: West North East HB Solar Solution Mine Amax/ Horizon (potential Solar Solution development) Florida New Mexico Texas Oklahoma Kansas Nebraska South Dakota Montana Wyoming Colorado Utah Idaho A
Slide 17: HB Production Ramp Cycle
HB Production Ramp Cycle 17 First production following summer 2013 evaporation season Second evaporation season with full ponds for full year Second harvest and production begin following 2014 evaporation season Third evaporation season. Brine has had longer residence time in the mineworks Hit full
Slide 18: 2014 Outlook as of September 30, 2014
2014 Outlook as of September 30, 2014 18 Note: Total COGS does not include any lower of cost or market adjustment. In periods when the market prices for our products fall below our cost to produce them and the lower prices are not expected to be temporary, a lower of cost or market adjustment may be
Slide 19: Financial Overview
Financial Overview Adjusted EBITDA* (in millions) Balance Sheet as of Sep. 30, 2014 Net Income (Loss) (in millions) Diluted Earnings (Loss) Per Share Cash and Investments $ 74 million Current Assets $ 202 million Total Assets $1,167 million Debt Outstanding $ 150 million Total Liabilities $ 227 mill
Slide 20: 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 include adjusted net income (loss), adjusted n
Slide 21: Non-GAAP Reconciliation: Adjusted EBITDA
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 reversal of the allowance associated with the employment-related high wage tax credits in New Mexico
Slide 22: Non-GAAP Reconciliation: Net Realized Sales Price
Non-GAAP Reconciliation 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 i
Slide 23: Non-GAAP Reconciliation: Cash Operating Costs
Non-GAAP Reconciliation Cash operating costs is a non-GAAP financial measure that is calculated as total of cost of goods sold divided by the number of tons sold in the period and then adjusted to exclude per-ton depreciation, depletion, and royalties. Total cost of goods sold is reported net of by-
Slide 24: Historical Quarterly Production and Sales
Historical Quarterly Production and Sales 24 Note: One short ton equals 2,000 pounds. One metrictonne, which many international competitors use, equals 1,000 kilograms or 2,204.62 pounds. Historical Quarterly Production and Sales In thousands of short tons Production Volume Potash Trio Sales Volume
Slide 25: U.S. Potash Consumption Remains Steady and Robust
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% - 2,000 4,000 6,000 8,000 10,000 12,000 Grains Stocks to Use Ratio KCL Tons ('000) FERTECON U.S. Potash Consumption and Grains Stocks to Use Ratio KCL Tons Average KCl Consumption Stocks to Use Ratio U.S. Potash Consumption Remains Steady and Robust Source
Slide 26: 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 27: Fundamentals of Increasing Population Continue to Drive Grain and Potash Demand
- 1 2 3 4 5 6 7 8 - 10 20 30 40 50 60 70 Global Midyear Population (in billions) million tons KCl equivalent Collapse of Soviet Union 2008 Global Financial Crisis Fundamentals of Increasing Population Continue to Drive Grain and Ultimately Potash Demand Over the Long Term Note: Grains include corn,
Slide 28: 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
Intrepid Potash — Investor Presentation (November 2014) on 6ix