Intrepid Potash, Inc · NYSE:IPI
Intrepid Potash — Investor Presentation (December 2011)
30 slides from Intrepid Potash's investor presentation, Dec 6, 2011
Slide 1: Investor Presentation December 2011
Investor Presentation December 2011 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: Strategically Located, Potash-Only Company
Intrepid Potash Strategically Located, Potash-Only Company Intense margin focus: Strategic marketing and production flexibility Capital investment is focused on production growth of incrementally lower per ton cash costs Capital investment execution excellence 3 Florida New Mexico Texas Oklahoma Kan
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 1 of 2 global producers of sulfate of potash magnesia, marketed as Trio® 5 active prod
Slide 5: Current Potash Market
Agricultural commodity prices continue to be supportive of farmer economics We believe farmers will seek to maximize yield with fertilization rates in-line with five year average application rates Steady fertilization rates and demand for potash is anticipated during fall application window Recharge
Slide 6: Current Crop Economics Offer Historically Strong Returns for Farmers
Dec. 11 Dec. 12 Farm Price $5.51 $5.26 Gross Margin $1.31 $1.06 Input Costs Potash $0.20 $0.20 Nitrogen $0.57 $0.57 Phosphate $0.17 $0.17 Other Fertilizer $0.03 $0.03 Other Variable $1.35 $1.35 Non-Land $0.95 $0.95 Land $0.92 $0.92 Total $4.20 $4.20 Current Crop Economics Offer Historically Strong R
Slide 7: Potash Deliveries Track Population Growth and Global Demand is Growing
Potash Deliveries Track Population Growth and Global Demand is Growing 7 Long-term correlation of potash deliveries to historical global population growth Population growth continues Utilizing the 1.1% growth rate in world population of 7 billion people: Each year there are approximately 77 million
Slide 8: 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 8 Note: Grains include corn, wheat, barley, oats and sorghum. Stocks to use ratio is average inventory / consumption for that year; data updated monthly. Sources: United Nations Food and Agr
Slide 9: Strategically Located Assets
Strategically Located Assets 9 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), Intrepid Potash. (1) AAPFCO, Fertecon, USDA. New Mexico
Slide 10: Intrepid's Potash Price Advantage: Strategically Located and Lower Royalties
2005 2006 2007 2008 2009 2010 2011 YTD Intrepid average net realized sales price $162 $179 $194 $486 $541 $363 $464 Intrepid advantage vs. N.A. competitors $29 $43 $39 $88 $151 $61 $86 Intrepid’s Potash Price Advantage: Strategically Located and Lower Royalties 10 Sources: Green Markets and Fertecon
Slide 11: Diversified Markets and Customer Base with Increased Flexibility in Product Mix
Industrial market primarily consists of oil and gas drillers 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 11 Potash Sales for 2011 YTD Industrial Agricultural Animal Fe
Slide 12: Capital Investment Strategy is 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 Upgrade 12 Growth in Mining Capacity HB Solar Solution Mine Additional Mine Panels Expans
Slide 13: Execution on Capital is Foundational to Intrepid's Growth
Major 2012 Capital Investments HB Solar Solution Mine North Compaction Execution on Capital is Foundational to Intrepid’s Growth 13 Since Inception Intrepid has invested approximately $450 million into its mines and facilities Major Capital Projects Milestones Facility Year Completed Horizontal Pota
Slide 14: Execution of 2011 Capital Investment Budget
The Execution of Our 2011 Capital Investment Budget of $140 to $165 million Represents the Highest Level of Capital Investment in Our History Capital Projects are Focused on Growth, Flexibility & Margin 14 Growth Flexibility Margin Incrementally lower cost tons HB represents a 25 percent increase in
Slide 15: Additional Granulation Capacity is Key to Marketing and Production Flexibility
Intrepid is focused on upgrading the capacity of its granulation capability throughout its operations Increased granulation efficiency and capacity provide flexibility of production between granular and standard and allow Intrepid to right size production to meet market demand This flexibility allow
Slide 16: Langbeinite Recovery Improvement Project
Langbeinite Recovery Improvement Project – Focused on Capturing Growth & Margin Expected to increase Trio® recoveries to approximately 50 percent Grow production by 100,000 – 120,000 additional tons per year representing a ~75% increase in Trio® production Expected to reduce cash production cost per
Slide 17: HB Solar Solution Mine – Production Growth through Incrementally Low-Cost Tons
HB Solar Solution Mine expected to be among the lower-cost potash mines in North America 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 vo
Slide 18: Final Thoughts
18 Final Thoughts The Only Western World Potash Pure-Play Macro Fundamentals Driving Real Demand Strategically Located Assets Serving Diversified Markets and Customer Base Growth, Flexibility and Margin Focused Decision Making Capital Execution Excellence Coupled with Growth Opportunities of Increme
Slide 19: Appendix
POTASH Appendix
Slide 20: Solid Financial Performance
20 Solid Financial Performance Adjusted EBITDA(1) (In millions) Balance Sheet as of September 30, 2011 (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 Inc
Slide 21: Calculation of Adjusted EBITDA
Calculation of Adjusted EBITDA 21 Non-GAAP Reconciliation Adjusted Earnings before income taxes, interest, depreciation and amortization (“EBITDA”) is computed as net income adjusted for the add back of income tax expense, interest expense including derivatives, depreciation, depletion, amortization
Slide 22: Calculation of Adjusted Net Income
Calculation of Adjusted Net Income 22 Non-GAAP Reconciliation Adjusted net income is calculated as net income adjusted for significant non-cash and unusual items. Examples of non-cash and unusual charges include insurance settlements from property and business losses, non-cash gains or losses associ
Slide 23: Historical Quarterly Production and Sales Summary
23 Historical Quarterly Production and Sales Summary Quarter ended September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, Potash 200 201 137 131 112 124 172 165 166 224 234 209 173 Trio® 50 34 42 45 60 4
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: United States Potash Consumption
United States Potash Consumption 27 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 ann
Slide 28: Potash Production and North American Inventory Levels
28 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) Global Production North American Production 5,000 15,000 25,000 35,000 45,000 55,000 65,000 75,000 500 1,0
Slide 29: Brazil, India and China Must Increase Demand to Reach Recommended Application Levels
29 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 30: Return on Potash Investment for Corn & Soybeans
Return on Potash Investment for Corn & Soybeans 30 ROI assumes 146.7 bu/acre and $5.51/bu for corn, 41.3 bu/acre yield and $10.96 for soybeans, $565/ton KCL (crop prices based on Dec. 2011 futures price minus $0.30 basis as of 12/06/11) Input Costs for Corn ($/bu) Input Costs for Corn ($/acre) Retur
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