Intrepid Potash, Inc · NYSE:IPI
Intrepid Potash — Investor Presentation (February 2012)
30 slides from Intrepid Potash's investor presentation, Feb 29, 2012
Slide 1: Investor Presentation February 2012
Investor Presentation February 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: Strategically Located, Potash-Only Company
Intrepid Potash Strategically Located, Potash-Only Company Intense margin focus: Strategic marketing and production flexibility Commitment to reinvest in the business Capital investment is focused on production growth of incrementally lower per ton cash costs 3 Florida New Mexico Texas Oklahoma Kans
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 Crop Economics Offer Historically Strong Returns for Farmers
2011/12 2012/13 Farm Price $6.20 $5.00 Gross Margin $2.08 $1.31 Input Costs Potash $0.20 $0.18 Nitrogen $0.55 $0.44 Phosphate $0.16 $0.11 Other Fertilizer $0.03 $0.03 Other Variable $1.30 $1.20 Non-Land $0.96 $0.89 Land $0.92 $0.85 Total $4.12 $3.69 Current Crop Economics Offer Historically Strong R
Slide 6: 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 7: 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 8: 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 9: Intrepid's Potash Price Advantage: Strategically Located and Lower Royalties
2005 2006 2007 2008 2009 2010 2011 Intrepid average net realized sales price $162 $179 $194 $486 $541 $363 $472 Intrepid advantage vs. N.A. competitors $29 $43 $39 $88 $151 $61 $98 Intrepid’s Potash Price Advantage: Strategically Located and Lower Royalties 10 Sources: Green Markets and Fertecon Not
Slide 10: 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 Industrial Agricultural Animal Feed I
Slide 11: 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 Upgrade 12 Growth in Mining Capacity HB Solar Solution Mine Additional Mine Panels Expans
Slide 12: 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 Nearly Half a Billion Dollars into its Mines and Facilities Major Capital Projects Milestones Facility Year Completed Horizontal P
Slide 13: 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 14 Growth Flexibility Margin Incrementally lower cost tons HB represents a 25 percent increase in potash production
Slide 14: 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 allows Intrepid to right size production to meet specific market demands This flexib
Slide 15: Langbeinite Recovery Improvement Project
Langbeinite Recovery Improvement Project – Focused on Capturing Growth & Margin Dense Media Separation component of project currently undergoing commissioning Anticipate project being fully operational during the first half of 2012 Expected to increase Trio® recoveries to approximately 50 percent Gr
Slide 16: 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 17: 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 Executing on Capital Investment Program Targeting Growth Opportunities w
Slide 18: Appendix
POTASH Appendix
Slide 19: Solid Financial Performance
20 Solid Financial Performance Adjusted EBITDA(1) (In millions) Balance Sheet as of December 31, 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 Inco
Slide 20: Financial Outlook as of February 15, 2012
21 Financial Outlook as of February 15, 2012 * Due to commissioning of the LRIP costs for Trio® are expected to be above normal during the first quarter of 2012. Three Months Ended Year Ended March 31, 2012 December 31, 2012 Potash Production (tons) 190,000 - 210,000 790,000 - 830,000 Sales (tons) 1
Slide 21: Calculation of Adjusted EBITDA
Calculation of Adjusted EBITDA 22 Non-GAAP Reconciliation Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) is computed as net income adjusted for the add back of interest expense (including derivatives), income tax expense, depreciation, depletion, and amo
Slide 22: Calculation of Adjusted Net Income
Calculation of Adjusted Net Income 23 Non-GAAP Reconciliation Adjusted net income is calculated as net income adjusted for significant non-cash and infrequent items. Examples of non-cash and infrequent items include insurance settlements from property and business losses, a portion of the income ass
Slide 23: Historical Quarterly Production and Sales Summary
24 Historical Quarterly Production and Sales Summary March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, Potash 137 131 112 124 172 165 166 224 234 209 173 197 Trio® 42 45 60 45 57 39 32 31 31 44 35 31 Potash 99 80
Slide 24: Intrepid Production Volume History & Outlook
25 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?
26 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
27 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 28 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 28: Potash Production and North American Inventory Levels
29 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 1,5
Slide 29: Brazil, India and China Must Increase Demand to Reach Recommended Application Levels
30 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 31 ROI assumes 147.2 bu/acre and $5.28/bu for corn, 41.5 bu/acre yield and $12.41 for soybeans, $540/ton KCL (crop prices based on Dec. 2012 futures price minus $0.30 basis as of 2/24/12, KCL price based on Green Markets Midwest FOB warehouse as of 2/2
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