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Intrepid Announces Second Quarter 2011 Financial Results

Stocks in this article: IPI

Intrepid Potash, Inc. (NYSE:IPI) announced today second quarter 2011 financial results, with net income for the second quarter of $30.7 million, resulting in $0.41 of earnings per diluted share. This result included the recognition of $0.04 per diluted share of income, net of tax, associated with a refundable employment-related credit obtained from the State of New Mexico. Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA 1) for the second quarter of 2011 were $59.9 million.

“We saw continued strength in the agricultural commodities markets that has provided a solid footing for the robust potash sales we experienced during the second quarter,” said Bob Jornayvaz, Intrepid’s Executive Chairman of the Board. “Because of the reliability of our production, our marketing strategy and our marketing flexibility, we have been able to continue to sell into the market and to work with our customers that have been affected by adverse weather conditions throughout the United States. Our results in the second quarter of 2011 demonstrate that the investments we have made and are continuing to make in our operations to increase our granulation capacity are providing us with greater flexibility and agility to respond to variations in demand in the potash markets we serve. The overall strength of the potash market is reflected in the improvement of our net realized sales price for potash to $462 per ton in the second quarter of 2011, a $20 per ton increase from the first quarter. Strong crop economics support our belief that nutrient demand will remain strong as farmers are incentivized to maximize yield in order to lock-in profitability many have never experienced before.”

Second Quarter 2011 Highlights:

  • Potash sales in the second quarter of 2011 were 225,000 tons as compared to 129,000 tons sold in the same period of 2010.
  • Potash production increased 27 percent in the second quarter of 2011 to 209,000 tons compared to 165,000 tons produced in the same period a year ago.
  • Average net realized sales price 2 for potash was $462 per ton ($509 per metric tonne) in the second quarter of 2011, compared to $376 per ton ($414 per metric tonne) in the second quarter of 2010 and $442 per ton ($487 per metric tonne) in the first quarter of 2011.
  • Cash operating cost of goods sold, net of by-product credits 3, for potash was $160 per ton in the second quarter of 2011. This compares to $206 per ton in the second quarter of 2010 and $166 per ton in the first quarter of 2011.
  • Sales of langbeinite, which we market as Trio ®, were 39,000 tons in the second quarter of 2011 compared to 63,000 tons in the same period a year ago.
  • Langbeinite production in the second quarter of 2011 increased to 44,000 tons from 39,000 tons produced in the second quarter of 2010.
  • Average net realized sales price for Trio ® was $222 per ton ($245 per metric tonne) in the second quarter of 2011. This compares to $162 per ton ($179 per metric tonne) in the second quarter of 2010 and $204 per ton ($225 per metric tonne) in the first quarter of 2011.
  • Average gross margin in the second quarter of 2011 for the sale of potash was $242 per ton or 52 percent, compared to $114 per ton or 30 percent in the second quarter of 2010. Average gross margin for the sale of Trio ® was $17 per ton or eight percent compared to $3 per ton or two percent in the same period of 2010.
  • Capital investment in the second quarter of 2011 totaled approximately $29.3 million.
  • As of June 30, 2011, we had $157.8 million of cash and investments and no outstanding debt. On August 3, 2011, we entered into a new $250.0 million unsecured, revolving credit facility with a five-year term, replacing our expiring facility.

Intrepid’s marketing advantage was a key contributor to the success of our second quarter results. “Demand for potash remained strong during the second quarter of 2011. Despite the severe drought in parts of the southwest, our nimble approach allowed us to be successful in selling our Carlsbad production into the Midwest market. We also saw strengthening in the local truck market served by our Utah plants during the quarter that helped us to achieve the best average net realized sales price among our North American peers. We are further expanding our marketing flexibility throughout our operations to build upon the success that we have realized with the Moab compaction project,” said Mr. Jornayvaz. “The advantage of flexibility in our product mix to be able to right-size our production of granular and standard product from our Moab, Utah compactor has become even more evident through the passage of time and reinforces the benefit of the planned capital investments to increase our granulation capability at both our Carlsbad and Wendover operations.”

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