Intrepid Potash, Inc. (NYSE:IPI) announced third quarter 2011 financial results today, with quarterly net income of $25.5 million and $0.34 of earnings per diluted share. These results included the recognition of $0.03 per diluted share of income, net of tax, associated with recording an estimated additional refundable employment-related credit from the State of New Mexico. Adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA 1) for the third quarter of 2011 were $51.0 million.
“The domestic potash market, buoyed by solid crop prices and the strength of overall farmer economics, remained firm during the third quarter,” said Bob Jornayvaz, Intrepid’s Executive Chairman of the Board. “The flexibility we have built into our production facilities together with our marketing expertise resulted in solid sales for the quarter, despite the various weather challenges that impacted our customers. The sequential $27 per ton improvement in our average net realized sales price for potash from the second quarter reflects the upward pricing momentum during the quarter and our ability to reach out and fulfill customer demand. We believe that continued strong crop economics make clear the value of balanced fertilization and therefore will incentivize farmers to apply nutrients at normal rates this fall in preparation for the 2012 growing season.”
Third Quarter 2011 Highlights:
- Potash sales in the third quarter of 2011 were 190,000 tons as compared to 221,000 tons in the same period of 2010.
- Potash production increased four percent in the third quarter of 2011 to 173,000 tons compared to 166,000 tons in the same period a year ago.
- Average net realized sales price 2 for potash was $489 per ton ($539 per metric tonne) in the third quarter of 2011, compared to $343 per ton ($378 per metric tonne) in the third quarter of 2010 and $462 per ton ($509 per metric tonne) in the second quarter of 2011.
- Cash operating cost of goods sold, net of by-product credits 3, for potash was $175 per ton in the third quarter of 2011. This compares to $171 per ton in the third quarter of 2010.
- Sales of langbeinite, which Intrepid markets as Trio ®, were 54,000 tons in the third quarter of 2011 compared to 45,000 tons in the same period a year ago.
- Langbeinite production in the third quarter of 2011 was 35,000 tons compared to 32,000 tons in the third quarter of 2010.
- Average net realized sales price for Trio ® was $251 per ton ($277 per metric tonne) in the third quarter of 2011. This compares to $173 per ton ($191 per metric tonne) in the third quarter of 2010 and $222 per ton ($245 per metric tonne) in the second quarter of 2011.
- Average gross margin in the third quarter of 2011 for the sale of potash was $249 per ton or 51 percent, compared to $122 per ton or 36 percent in the third quarter of 2010. Average gross margin for the sale of Trio ® was $5 per ton or two percent compared to $3 per ton or two percent in the same period of 2010.
- Capital investment in the third quarter of 2011 totaled approximately $42.0 million.
- As of September 30, 2011, Intrepid had $168.8 million of cash, cash equivalents, and investments; no outstanding debt; and $250.0 million available under the company’s unsecured, revolving credit facility.
Intrepid’s third quarter results reflect our success in opportunistically marketing our products. “Continued severe drought conditions in Texas required us to look to other markets for this production. Through our longstanding customer relationships and new affiliations we have been able to develop, we were very successful in marketing these tons,” said Mr. Jornayvaz. “Our ability to address these challenges was greatly aided by the additional flexibility we have built into our production system to produce those products most highly valued in the market. Our focus on increasing granulation capacity has paid off as we are better able to respond to shifting market dynamics.”