Intrepid Announces Financial Results for Second Quarter 2010
04.08.2010 | Business Wire
Highlights for the Second Quarter 2010: Market Conditions Second Quarter Results & Recent Performance Potash Langbeinite ? TrioTM Capital Investment Unless expressly stated otherwise or the context otherwise requires, Since adjusted net income and EBITDA are non-GAAP financial measures Conference Call Information 1 This is a financial measure not calculated in accordance 2 Average net realized sales price is calculated as gross 3 Potash cost of goods sold, net of by-product credits, is 4 This is a financial measure not calculated in accordance INTREPID POTASH, INC. SELECTED OPERATIONS DATA (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE 30, 2010 AND 2009 *On a per ton basis, by-product credits were $11 and $20 for INTREPID POTASH, INC. SELECTED OPERATIONS DATA (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 *On a per ton basis, by-product credits were $9 and $18 for INTREPID POTASH, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF JUNE 30, 2010 AND DECEMBER 31, 2009 (In thousands, except share and per share amounts) INTREPID POTASH, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (In thousands) INTREPID POTASH, INC. INTREPID POTASH, INC. Intrepid Potash, Inc.
Intrepid Potash, Inc. (NYSE:IPI) announced today second quarter 2010
financial results, with net income for the quarter of $3.6 million,
resulting in $0.05 of earnings per diluted share. Earnings before
interest, taxes, depreciation, and amortization (EBITDA1) for
the second quarter of 2010 were $13.3 million.
As of June 30, 2010, we had $136 million of cash and investments, no
outstanding debt, and $125 million of availability under our revolving
credit facility.
Potash sales in the second quarter of 2010 were 129,000 tons compared
to 80,000 tons in the second quarter of 2009.
The average net realized sales price2 for potash in the
second quarter 2010 was $376 per ton ($414 per metric tonne) compared
to $674 per ton ($743 per metric tonne) in the same period of 2009.
Our potash cost of goods sold, net of by-product credits3,
was $206 per ton in the second quarter of 2010 compared to $188 per
ton in the second quarter of 2009. There were no abnormal production
costs recognized in the second quarter of 2010, whereas, in the second
quarter of 2009, $5.2 million of abnormal production costs were
expensed in the period rather than included in cost of goods sold. Our
second quarter 2010 cost of goods sold per ton results fully absorbed
all costs attributed to production as we produced within normal ranges
during this period.
Potash production in the second quarter of 2010 increased to 165,000
tons compared to 131,000 tons produced in the second quarter of last
year.
Average net realized sales price for langbeinite, which we market
under the trademark TrioTM, was $162 per ton ($179 per
metric tonne) in the second quarter of 2010 compared to $338 per ton
($372 per metric tonne) in the second quarter of 2009.
Sales of TrioTM were 63,000 tons in the second quarter of
2010 compared to 45,000 tons in the second quarter of the prior year.
Langbeinite production in the second quarter of 2010 decreased to
39,000 tons compared to 45,000 tons produced in the second quarter of
2009.
Gross margin in the second quarter of 2010 for the sale of potash was
$114 per ton or 30 percent, compared to $426 per ton or 63 percent in
the three months ended June 30, 2009. Gross margin for the sale of TrioTM
was $3 per ton or two percent compared to $142 per ton or 42 percent
in the same period of 2009. The most significant drivers of the
decrease in margin for each product were the competitive forces in the
markets that impacted sales price.
Capital investments in the second quarter of 2010 totaled $9.8 million.
'The second quarter of 2010 represented the return to more normal
seasonal agricultural patterns in the United States potash market,? said
Bob Jornayvaz, Intrepid′s Executive Chairman of the Board. 'Demand for
potash during the quarter was more typical of a normal spring and start
of the summer, as we saw strong agricultural demand through April and
May, with demand tapering off normally as we entered the summer. Our
agricultural potash sales in the quarter were in line with our
expectations and we saw consistent demand from our feed customers. Our
industrial sales volumes, while up 43 percent from the same period a
year ago, have not returned as expected in the Rocky Mountain region, a
situation that we are addressing by adding a new compaction facility at
our Moab plant. In recent weeks, we have seen demand from large
fertilizer distributors begin to pick up as they prepare for what we
believe will be a strong fall fertilizer application season, and due to
certain summer price incentive programs instituted by our competitors.
During the second quarter, we continued to bolster our cash position
which will allow us to execute on our significant capital investment
program, including the Langbeinite Recovery Improvement Project, the
Moab Compaction Project and the HB Solar Solution Mine, all which are
designed to decrease our per ton operating costs and make our operations
more efficient. We believe demand in the agricultural markets we serve
will be strong for the remainder of the year. Finally, we have recently
reached our targeted staffing levels in our operations and we are seeing
good success in our mining efforts at our Carlsbad locations that are
well timed to fulfill the anticipated market demand.?
During the second quarter of 2010, spring purchasing of potash in the
agricultural sector reached its historically seasonal peak and then
demand ebbed as dealers made the decision to exit the planting season
with little to no inventory of potash. What we witnessed in the second
quarter is typical of a pre-2008 normal purchasing pattern in the United
States agricultural sector, which is that of strong demand during the
spring planting season followed by a seasonal lull during the summer
growing season. With recent improvements in commodity pricing, current
crop economics are even more favorable and this, in turn, should be
supportive of a return to more traditional fertilizer application
patterns.
In recent weeks, one of our competitors in North America announced its
summer price incentive program, which offers discounts and other
incentives for orders placed during the summer ahead of the normal fall
fertilizer application season. Intrepid chose to match the pricing under
this program in order to remain competitive in the domestic market. Due
to uncertainty about pricing, dealers worked hard to make sure that they
exited the spring season with little to no potash inventory and waited
to begin purchasing product for the fall fertilizer application season
until pricing in the market became clearer in connection with the
producer summer price incentive programs. As the summer season has
progressed, dealers are showing a willingness to take on risk and are
buying inventory in advance of the fall season. We believe the market is
shifting to a demand driven profile. Based on the current seasonal
demand levels, we believe that we could have committed our entire
granular inventory and second half 2010 production at today′s prices for
delivery during the remainder of 2010. We have, however, elected to be
selective of the orders we accept beyond the end of September, based on
our belief that stronger pricing will emerge as we exit the third
quarter and enter October.
Income before income taxes for the second quarter of 2010 was $6.1
million compared to $27.5 million in the second quarter of 2009. Cash
flows from operating activities were $32.1 million for the second
quarter of 2010, which compares to $34.8 million for the second quarter
of 2009. Adjusted net income4 for the second quarter of 2010
was $3.7 million compared to adjusted net income of $17.4 million in the
same period last year.
During the second quarter of 2010, Intrepid increased production to
165,000 tons of potash and sold 129,000 tons of potash. This compares to
131,000 tons produced and 80,000 tons sold in the second quarter of
2009. The 129,000 tons of potash we sold was at an average net realized
sales price of $376 per ton as compared to $674 per ton during the
second quarter of 2009. Our average net realized sales price for the
second quarter of 2010 increased as compared to the first quarter of
2010 due in large part to a price increase that went into effect during
March 2010. We do expect, however, that we will see a decline of
approximately $35 per ton in our average net realized sales price in the
third quarter due to the effect of the current summer price incentive
programs described above.
Our potash cost of goods sold, net of by-product credits of $11 per ton,
increased to $206 per ton in the second quarter of 2010 from $188 per
ton in the second quarter of 2009. As noted previously, all costs were
absorbed into the cost of goods sold calculation in 2010 whereas
abnormal production costs of $5.2 million were excluded from the cost of
goods sold calculation in 2009. Our higher cost of goods sold during the
second quarter of 2010 resulted primarily from higher per ton operating
costs from our East surface facility in Carlsbad, New Mexico. While the
underground mining operations have been operating as expected and
delivering the tons to the mill, the cost side of our East surface
facility was a challenge in the second quarter with higher than planned
maintenance costs, chemical costs, and lower energy efficiency which
drives our utility costs. As we actively rebuild this plant, construct
and improve its facilities, make staffing changes, develop new
maintenance systems, commission new equipment and, in general, undertake
the hard work of refurbishing and modernizing this asset, we are going
to experience a few operational challenges along the way to achieving
the Company′s long-term objectives.
Intrepid sold 63,000 tons of TrioTM in the second quarter of
2010, the majority of which was granular product, at an average net
realized sales price of $162 per ton. This compares to 45,000 tons sold
at an average net realized sales price of $338 per ton in the prior
year′s second quarter. Our net realized sales price per ton decreased
slightly compared to the first quarter due to the need to match market
pricing of our competitor. Included in our second quarter 2010 sales
volumes was a 14,000 ton export order of standard product, albeit at a
lower average net realized sales price than we have been receiving from
our domestic sales.
Demand for granular TrioTM continues to be robust and we
expect Trio? sales demand will exceed our production for the next few
quarters, resulting in the need to sell our granular product on an
allocated basis. Part of the reason that we need to allocate tonnage to
our TrioTM customers is that during July 2010, we shut down
our langbeinite plant at our East facility for a total of 14 days due to
unusually heavy rainfall. The Carlsbad, New Mexico region received
approximately nine inches of rain during late June and July 2010. For
perspective, average total precipitation in Carlsbad is approximately 14
inches per year, and the recent rains put Carlsbad on track to have one
of the five wettest years on record since 1912. This aberrant weather in
Carlsbad highlights the importance of our Langbeinite Recovery
Improvement Project, which is designed to reduce our freshwater usage in
the production of langbeinite, thereby reducing the risk of impacts from
significant or unusual weather events like those just experienced. The
recent weather event caused us to curtail langbeinite production so that
we could reduce our water consumption, maintain the brine storage
capacity of our tailings ponds, and preserve some additional pond
storage capacity for future rainfall. Langbeinite production did resume
during portions of July. We are currently operating at the East
facility, yet we will be subject to the impact of any significant
precipitation levels until the new plant is operational. In the interim,
we have committed additional resources to the already ongoing
construction of increased storm water management capacity and are making
improvements in storm water controls to minimize weather exposure until
the benefits of the Langbeinite Recovery Improvement Project are
realized.
We are taking active steps to mitigate the impact of lower industrial
demand for our standard-sized potash in the Rocky Mountain region by
installing a new compaction facility in our Moab, Utah plant which will
be able to compact all of our standard production, if necessary, into
granular-sized product for the agricultural market. We expect the Moab
compaction facility to be in production at the beginning of 2011. The
longer lead time equipment is already on site and the project is
proceeding as planned.
The recent performance of our East facility, while challenging,
emphasizes why we have committed to make long-term capital investments
in our assets, including the East facility. During the second quarter of
2010, Intrepid invested approximately $9.8 million related to our 2010
capital program. The investments in the second quarter of 2010 included
engineering for the Langbeinite Recovery Improvement Project and the new
Moab compaction facility described above. Additionally, we began the
construction of two new storage domes at our East facility and completed
and fully commissioned the wash thickener to improve potash recoveries
at the East mine. Our updated forecast for capital investment in 2010 is
$105 - $125 million and will include sustaining, improvement,
instrumentation and control projects in addition to the ones highlighted
above.
As we continue to invest and upgrade our facilities, hire new employees,
develop systems, and integrate new equipment, we may encounter
operational disruptions. We believe, however, that these actions should
lead to more reliable operations, with higher recoveries, and lower per
ton operating costs.
Intrepid routinely posts information about Intrepid on its website under
the Investor Relations tab. Intrepid′s website address is www.intrepidpotash.com.
references to 'tons? in this press release refer to short tons.One
short ton equals 2,000 pounds.One metric tonne, which many of
our international competitors use, equals 1,000 kilograms or 2,204.68
pounds.
it is necessary to reference the respective reconciliations in the
accompanying non-GAAP reconciliation tables towards the end of this
release.Average net realized sales price and cash operating cost
of goods sold are defined in the text of this release and the associated
financial tables provide the details to recalculate these numbers in
accordance with U.S. GAAP.
The conference call to discuss second quarter 2010 results is scheduled
for August 5, 2010, at 8:00 a.m. MDT (10:00 a.m. EDT). The call
participation number is (877) 419-5396. A recording of the conference
call will be available two hours after the completion of the call at
(800) 642-1687. International participants can dial (706) 902-2295 to
take part in the conference call and can access a replay of the call at
(706) 645-9291. All of the above calls will require the input of the
conference identification number 83725294. The call will also be
streamed on the Intrepid website, www.intrepidpotash.com.
In addition, the press release announcing second quarter 2010 results
will be available on the Intrepid website before the call under
'Investor Relations - Press Releases.' An audio recording of the
conference call will be available at www.intrepidpotash.com
through September 5, 2010.
with U.S. Generally Accepted Accounting Principles (Non-GAAP). See the
Non-GAAP reconciliations set forth later in this press release for
additional information.
sales less freight costs, divided by the number of tons sold in the
period.
defined as total cost of goods sold excluding royalties, depreciation,
depletion and amortization.
with U.S. Generally Accepted Accounting Principles (Non-GAAP). See the
Non-GAAP reconciliations set forth later in this press release for
additional information.
Certain statements in this press release, 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 expectations, beliefs, plans, estimates or projections
relating to the future, including statements regarding guidance, are
forward-looking statements within the meaning of these laws. Although we
believe that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, there can be no
assurance that the expectations will be realized. These forward-looking
statements are subject to a number of known and unknown risks and
uncertainties, many of which are beyond our control that could cause
actual results to differ materially and adversely from such statements.
These risks and uncertainties include: changes in the price of potash or
Trio?; operational difficulties at our facilities; the ability to hire
and retain qualified employees; changes in demand and/or production of
potash or Trio?/langbeinite; changes in our reserve estimates; our
ability to achieve the initiatives of our business strategy, including
but not limited to the development of the HB Solar Solution Mine as a
solution mine and the further development of our langbeinite recovery
assets; changes in the prices of our raw materials, including but not
limited to the price of chemicals, natural gas and power; fluctuations
in the costs of transporting our products to customers; changes in labor
costs and availability of labor with mining expertise; the impact of
federal, state or local government regulations, including but not
limited to environmental and mining regulations, and the enforcement of
such regulations; competition in the fertilizer industry; declines in
U.S. or world agricultural production; declines in oil and gas drilling;
changes in economic conditions; adverse weather events at our
facilities; our ability to comply with covenants inherent in our current
and future debt obligations to avoid defaulting under those agreements;
disruptions in credit markets; our ability to secure additional federal
and state potash leases to expand our existing mining operations;
governmental policy changes that may adversely affect our business and
the risk factors detailed in our filings with the U.S. Securities and
Exchange Commission. Please refer to those filings for more information
on these risk factors. These forward-looking statements speak only as of
the date of this press release, and we undertake no obligation to
publicly update or revise any forward-looking statement, whether as the
result of future events, new information or otherwise.
Three Months Ended June 30, 2010
June 30, 2009
Production volume (in thousands of tons):
Potash
165
131
Langbeinite
39
45
Sales volume (in thousands of tons):
Potash
129
80
TrioTM
63
45
Gross sales (in thousands):
Potash
$ 50,900
$ 56,052
TrioTM
$ 13,418
$ 17,340
Freight costs (in thousands):
Potash
$ 2,334
$ 2,034
TrioTM
$ 3,239
$ 2,088
Net sales (in thousands):
Potash
$ 48,566
$ 54,018
TrioTM
$ 10,179
$ 15,252
Potash statistics (per ton):
Average net realized sales price
$ 376
$ 674
Cost of goods sold, net of by-product
credits * (exclusive
of items shown
separately below)
206
188
Depreciation, depletion and amortization
29
20
Royalties
14
22
Total potash cost of goods sold
249
230
Warehousing and handling costs
13
18
Average potash gross margin (exclusive
of costs associated
with abnormal
production)
$ 114
$ 426
TrioTM statistics (per ton):
Average net realized sales price
$ 162
$ 338
Cost of goods sold (exclusive of items
shown separately
below)
125
150
Depreciation, depletion and amortization
16
14
Royalties
8
17
Total TrioTM cost of goods sold
149
181
Warehousing and handling costs
10
15
Average TrioTM gross margin (exclusive
of costs
associated with abnormal
production)
$ 3
$ 142
the three month period ended June 30, 2010, and 2009, respectively.By-product
credits were $1.4 million and $1.6 million for the three month period
ended June 30, 2010, and 2009, respectively.Costs associated
with abnormal production were zero and $5.2 million for the three month
period ended June 30, 2010, and 2009, respectively.
Six Months Ended June 30, 2010 June 30, 2009
Production volume (in thousands of tons):
Potash
337
268
Langbeinite
96
87
Sales volume (in thousands of tons):
Potash
372
179
TrioTM
132
83
Gross sales (in thousands):
Potash
$ 142,275
$ 130,081
TrioTM
$ 29,402
$ 32,212
Freight costs (in thousands):
Potash
$ 7,714
$ 4,399
TrioTM
$ 7,625
$ 4,430
Net sales (in thousands):
Potash
$ 134,561
$ 125,682
TrioTM
$ 21,777
$ 27,782
Potash statistics (per ton):
Average net realized sales price
$ 361
$ 703
Cost of goods sold, net of by-product
credits * (exclusive
of items shown
separately below)
201
215
Depreciation, depletion and amortization
26
19
Royalties
13
24
Total potash cost of goods sold
240
258
Warehousing and handling costs
10
14
Average potash gross margin (exclusive
of costs associated
with abnormal
production)
$ 111
$ 431
TrioTM statistics (per ton):
Average net realized sales price
$ 165
$ 335
Cost of goods sold (exclusive of items
shown separately
below)
122
147
Depreciation, depletion and amortization
16
15
Royalties
8
17
Total TrioTM cost of goods sold
146
179
Warehousing and handling costs
9
14
Average TrioTM gross margin (exclusive
of costs
associated with abnormal
production)
$ 10
$ 142
the six month period ended June 30, 2010, and 2009, respectively.By-product
credits were $3.4 million and $3.2 million for the six month period
ended June 30, 2010, and 2009, respectively.Costs associated
with abnormal production were $0.5 million and $6.4 million for the six
month period ended June 30, 2010, and 2009, respectively.INTREPID POTASH, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except share and per share amounts)
Three Months Ended Six Months Ended June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009 Sales
$ 64,318
$ 73,392
$ 171,677
$ 162,293
Less:
Freight costs
5,573
4,122
15,339
8,829
Warehousing and handling costs
2,317
2,098
5,041
3,627
Cost of goods sold
41,416
26,596
108,670
60,909
Costs associated with abnormal
production
-
5,179
470
6,374
Other
271
-
540
-
Gross Margin
14,741
35,397
41,617
82,554
Selling and administrative
7,969
7,763
14,582
14,546
Accretion of asset retirement obligation
176
173
352
341
Other
305
589
473
577
Operating Income
6,291
26,872
26,210
67,090
Other Income (Expense)
Interest expense, including realized and
unrealized derivative gains and losses
(478
)
251
(1,032
)
48
Interest income
177
15
273
32
Insurance settlements in excess of
property losses
-
(2
)
-
(16
)
Other income
102
323
148
182
Income Before Income Taxes
6,092
27,459
25,599
67,336
Income Tax Expense
(2,490
)
(13,023
)
(10,151
)
(28,219
)
Net Income
$ 3,602
$ 14,436
$ 15,448
$ 39,117
Weighted Average Shares Outstanding:
Basic
75,085,873
75,017,097
75,064,966
74,996,419
Diluted
75,125,620
75,030,347
75,128,691
75,006,579
Earnings Per Share:
Basic
$ 0.05
$ 0.19
$ 0.21
$ 0.52
Diluted
$ 0.05
$ 0.19
$ 0.21
$ 0.52
June 30, 2010 December 31, 2009 ASSETS
Cash and cash equivalents
$ 98,009
$ 89,792
Short-term investments
17,850
11,155
Accounts receivable:
Trade, net
12,263
19,169
Other receivables
816
471
Refundable income taxes
2,450
9,364
Inventory, net
50,563
61,949
Prepaid expenses and other current assets
2,054
2,632
Current deferred tax asset
6,873
9,807
Total current assets
190,878
204,339
Property, plant, and equipment, net of accumulated depreciation
of $53,780 and $41,787, respectively
237,709
221,403
Mineral properties and development costs, net of accumulated
depletion of $7,844 and $7,174, respectively
33,306
33,929
Long-term parts inventory, net
7,280
7,149
Long-term investments
20,446
6,189
Other assets
5,388
5,532
Non-current deferred tax asset
286,219
290,449
Total Assets
$ 781,226
$ 768,990
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Trade
$ 9,203
$ 13,523
Related parties
197
129
Accrued liabilities
10,872
12,403
Accrued employee compensation and benefits
8,999
7,028
Other current liabilities
1,525
2,849
Total current liabilities
30,796
35,932
Asset retirement obligation
8,981
8,619
Deferred insurance proceeds
10,124
10,124
Other non-current liabilities
5,246
5,093
Total Liabilities
55,147
59,768
Commitments and Contingencies
Common stock, $0.001 par value; 100,000,000 shares
authorized; and 75,100,546 and 75,037,124 shares
outstanding at June 30, 2010, and December 31, 2009,
respectively
75
75
Additional paid-in capital
557,780
556,328
Accumulated other comprehensive loss
(732
)
(689
)
Retained earnings
168,956
153,508
Total Stockholders' Equity
726,079
709,222
Total Liabilities and Stockholders' Equity
$ 781,226
$ 768,990
Three Months Ended Six Months Ended June 30, 2010
June 30, 2009 June 30, 2010
June 30, 2009 Cash Flows from Operating Activities:
Reconciliation of net income to net cash
provided by operating activities:
Net income
$ 3,602
$ 14,436
$ 15,448
$ 39,117
Deferred income taxes
2,631
11,303
7,164
18,033
Insurance reimbursements
-
2
-
16
Items not affecting cash:
Depreciation, depletion, amortization, and accretion
6,687
4,256
13,226
7,747
Stock-based compensation
1,128
952
2,115
1,287
Unrealized derivative gain
(28
)
(846
)
(117
)
(1,215
)
Other
303
393
484
577
Changes in operating assets and liabilities:
Trade accounts receivable
14,519
18,668
6,906
(3,827
)
Other receivables
(209
)
(428
)
(345
)
(279
)
Refundable income taxes
2,079
(5,045
)
6,914
3,386
Inventory
(8,566
)
(7,787
)
11,255
(14,169
)
Prepaid expenses and other assets
(267
)
1,541
594
1,728
Accounts payable, accrued liabilities and accrued
employee
compensation and benefits
10,068
(804
)
5,366
(1,492
)
Other liabilities
133
(1,809
)
(1,115
)
465
Net cash provided by operating activities
32,080
34,832
67,895
51,374
Cash Flows from Investing Activities:
Proceeds from insurance reimbursements
-
1,998
-
1,984
Additions to property, plant, and equipment
(23,733
)
(18,144
)
(37,683
)
(44,461
)
Additions to mineral properties and development costs
(381
)
(1,318
)
(381
)
(4,779
)
Purchases of investments
(12,002
)
(751
)
(23,638
)
(751
)
Proceeds from investments
2,201
-
2,687
-
Other
-
-
-
16
Net cash used in investing activities
(33,915
)
(18,215
)
(59,015
)
(47,991
)
Cash Flows from Financing Activities:
Restricted stock used for employee tax withholding
upon
vesting
(487
)
(415
)
(727
)
(1,283
)
Other
-
12
64
-
Net cash used in financing activities
(487
)
(403
)
(663
)
(1,283
)
Net Change in Cash and Cash Equivalents
(2,322
)
16,214
8,217
2,100
Cash and Cash Equivalents, beginning of period
100,331
102,459
89,792
116,573
Cash and Cash Equivalents, end of period
$ 98,009
$ 118,673
$ 98,009
$ 118,673
Supplemental disclosure of cash flow information
Cash paid (received) during the period for:
Interest, including settlements on derivatives
$ 519
$ 446
$ 1,095
$ 793
Income taxes
$ (2,371
)
$ 6,765
$ (4,142
)
$ 6,800
NON-GAAP ADJUSTED NET INCOME
RECONCILIATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
2010 AND 2009
(In thousands)
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 in
excess
of property losses, non-cash unrealized gains or losses associated
with derivative
adjustments, costs associated with abnormal
production and other infrequent items. The non-GAAP
measure
of adjusted net income is presented because management believes it
provides
useful additional information to investors for
analysis of Intrepid's fundamental business on a
recurring
basis. In addition, management believes that the concept of
adjusted net income is
widely used by professional research
analysts and others in the valuation, comparison, and
investment
recommendations of companies in the potash mining industry, and
many investors
use the published research of industry
research analysts in making investment decisions.
Adjusted net income should not be considered in isolation or as a
substitute for net
income, income from operations, cash
provided by operating activities or other income,
profitability,
cash flow, or liquidity measures prepared under U.S. GAAP. Since
adjusted net
income excludes some, but not all items that
affect net income and may vary among companies,
the adjusted
net income amounts presented may not be comparable to similarly
titled measures of
other companies.
Three Months Ended June 30, 2010
June 30, 2009
Net Income
$ 3,602
$ 14,436
Adjustments
Insurance reimbursements
-
2
Unrealized derivative gain
(28
)
(846
)
Costs associated with abnormal production
-
5,179
Other
271
586
Calculated tax effect *
(96
)
(1,929
)
Total adjustments
147
2,992
Adjusted Net Income
$ 3,749
$ 17,428
*Estimated effective tax rate of 39.7 percent for 2010 and 39.2 percent
for 2009.
NON-GAAP EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION,
AND AMORTIZATION
RECONCILIATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
2010 AND 2009
(In thousands)
Earnings before interest, taxes, depreciation, and amortization
('EBITDA?) is
computed as net income adjusted for the add
back of interest expense including derivatives,
income tax
expense, depreciation, depletion, amortization, asset retirement
obligation accretion,
and impairment. This non-GAAP measure
is presented since management believes that it
provides
useful additional information to investors for analysis of
Intrepid′s ability to internally
generate funds for capital
investment. In addition, EBITDA is widely used by professional
research
analysts and others in the valuation, comparison, and investment
recommendations of
companies in the potash mining industry,
and many investors use the published research of
industry
research analysts in making investment decisions. EBITDA should
not be considered in
isolation or as a substitute for net
income, income from operations, net cash provided by
operating
activities or other income, profitability, cash flow, or liquidity
measures prepared
under U.S. GAAP. Since EBITDA excludes
some, but not all items that affect net income and
net cash
provided by operating activities and may vary among companies, the
EBITDA amounts
presented may not be comparable to similarly
titled measures of other companies.
Three Months Ended June 30, 2010 June 30, 2009
Net Income
$ 3,602
$ 14,436
Interest expense, including derivatives (gain) loss
478
(251
)
Income tax expense
2,490
13,023
Depreciation, depletion, amortization, and accretion
6,687
4,256
Total adjustments
9,655
17,028
Earnings Before Interest, Taxes, Depreciation,
and
Amortization
$ 13,257
$ 31,464
William Kent, 303-296-3006