INTREPID POTASH, INC. DENVER, CO, Aug. 03, 2020 (GLOBE NEWSWIRE) -- Intrepid Potash, Inc. (Intrepid) (NYSE:IPI) today reported its results for the second quarter of 2020.
Key Takeaways for Q2 2020
- Cash flow from operations of $8.8 million
- Net loss of $8.9 million, or $0.07 per share
- Adjusted net loss(1) of $8.6 million, or $0.07 per share
- Adjusted EBITDA(1) of $0.6 million
Recent Developments
- Voluntarily repaid remaining $15 million of outstanding principal on Series C Senior Notes on July 17, 2020, leapfrogging our Series B Notes that mature in April 2023. This payment reduced our effective interest rate and provides us with considerable more flexibility with our remaining lenders. After the payment, we had $14 million in cash on hand, $15 million outstanding on our senior notes, and $30 million in borrowings under our revolving credit facility with $44 million available to borrow.
- On July 28, 2020, our shareholders voted to grant the Board of Directors authority to effect a reverse split of our common stock at a ratio between 1-for-3 and 1-for-15. Our board plans to convene on August 10, 2020, to discuss a possible split.
"Our second quarter results were clearly affected by the COVID-19 pandemic as oilfield activity and water sales decreased significantly from the first quarter of 2020. This overshadowed a strong finish to the spring application season and good 2020 evaporation rates at our potash facilities," said Bob Jornayvaz, Intrepid's Executive Chairman, President, and CEO. "We have good pond levels at our solar facilities and our magnesium chloride production is back at normal rates in Wendover. Well completion activity resumed in the Delaware Basin in recent weeks although we still expect a gradual climb back to our first quarter water sales rate. Given the uncertainty, we continue to thoughtfully manage our balance sheet with good availability remaining under our revolving credit facility at very favorable rates and the potential to expand that facility in the future. The early repayment of our Series C Notes not only lowers our effective interest rate, but paves the way for a simpler debt structure that will allow us to more effectively pursue our strategy. We have also used our entire Paycheck Protection Program loan to pay eligible payroll expenses and expect the loan will be forgiven later in the year."
Jornayvaz continued, "The underlying resource of the Delaware Basin hasn't changed and we are still optimistic about the long-term potential of an area that is full of well-financed and long-term focused operators. While we must remain prudent in our capital decisions, we are not shying away from what we believe are generational opportunities to expand our oilfield solutions assets in southeast New Mexico."
Consolidated Results
We generated a second quarter 2020 net loss of $8.9 million, or $0.07 per share and a negative gross margin of $0.6 million. Decreased earnings compared to the prior year were the result of lower water sales that were negatively impacted by the COVID-19 pandemic as oil demand decreased significantly leading to decreased oil and gas activity, reduced average net realized sales price(1) for potash, and increased production costs for potash and Trio®. We also recorded a $1.9 million lower of cost or net realizable inventory adjustment on our Trio® product in the second quarter due to a summer-fill price announcement in June 2020, which lowered the list price of Trio® $15-$20 per ton for deliveries through the third quarter.
First half 2020 net loss increased to $16.3 million, or $0.13 per share, while gross margin decreased to $5.0 million when compared to the prior year period. In addition to the second quarter results discussed above, first half net loss was further impacted by the first quarter accrual of a $10 million settlement payment agreed upon at our March settlement hearing relating to the Mosaic litigation and partially offset by a first quarter gain of $4.7 million on the restricted sale of 320 acres of fee land at the Intrepid South property.
We expect the economic disruptions caused by the COVID-19 pandemic will continue to have a material effect on revenue growth and overall profitability, particularly for our oilfield solutions segment, in future reporting periods.
Segment Highlights
Potash
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||
| Sales | $ | 24,526 | $ | 35,547 | $ | 58,317 | $ | 69,877 | ||||||||
| Gross margin | $ | 2,015 | $ | 8,228 | $ | 6,349 | $ | 17,592 | ||||||||
| Potash sales volumes (in tons) | 74 | 95 | 173 | 183 | ||||||||||||
| Potash production volumes (in tons) | 4 | 56 | 140 | 167 | ||||||||||||
| Average potash net realized sales price per ton(1) | $ | 256 | $ | 299 | $ | 256 | $ | 294 | ||||||||
Gross margin decreased compared to the same periods in 2019, due to the decrease in average net realized sales price per ton, increased per ton production costs, and a decrease in potash and byproduct sales.
Sales in the second quarter of 2020 decreased compared to the same period in 2019, due to a 22% decrease in sales volume, a 14% decrease in average net realized sales price per ton, and a $0.6 million decrease in byproduct sales. Agricultural sales were down in the second quarter compared to the prior year, due to good early season weather which moved the spring season to earlier in the year. First half agricultural volumes were similar to the prior year. Second quarter and first half industrial potash sales were negatively impacted by the COVID-19 pandemic as oil demand decreased significantly leading to decreased oil and gas activity.
Average net realized sales price per ton was lower due to price decreases announced in the summer of 2019 and under the winter-fill program announced in January 2020. Intrepid also sold fewer tons into the industrial market which generally carries higher pricing. Potash segment byproduct sales decreased as reduced oil and gas activity resulted in decreased byproduct water and brine sales. Salt sales decreased compared to 2019 as salt availability improved in certain regions of the country in the first half of 2020 which reduced our sales footprint. In June 2020, a summer-fill program was announced by our competitors that lowered the price $40 per ton and $30 per ton in the corn belt and western United States, respectively, from current list prices. This is in effect a decrease of $20 per ton and $10 per ton for the corn belt and western United States, respectively, when compared to the winter-fill pricing from the first quarter of 2020. We expect to sell at the summer-fill pricing levels through at least the third quarter.
Cost of goods sold decreased in the second quarter of 2020, compared to the same period in 2019, due to a 22% decrease in sales volume offset by higher per-ton production costs across our facilities as a result of the below average evaporation in 2019. First half cost of goods sold were similar to the prior year due to the same factors.
Potash production decreased compared to the second quarter and first half of 2019 as we finished the 2020 spring production season earlier than the previous year due to reduced pond inventory as a result of below average evaporation rates in the summer of 2019.
Trio®
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (in thousands, except per ton data) | ||||||||||||||||||
| Sales | $ | 19,251 | $ | 21,435 | $ | 41,832 | $ | 39,245 | ||||||||||
| Gross (deficit) margin | $ | (3,225 | ) | $ | 1,454 | $ | (6,780 | ) | $ | 2,186 | ||||||||
| Trio® sales volume (in tons) | 64 | 71 | 140 | 127 | ||||||||||||||
| Trio® production volume (in tons) | 50 | 66 | 100 | 129 | ||||||||||||||
| Average Trio® net realized sales price per ton(1) | $ | 208 | $ | 196 | $ | 200 | $ | 200 | ||||||||||
Trio® generated a negative gross margin of $3.2 million and $6.8 million in the second quarter and first half of 2020, respectively. Margins were lower compared to the prior year due to increased production costs, lower domestic pricing, and reduced byproducts sales.
Sales decreased 10% in the second quarter as compared to the same period in 2019 due to a 10% decrease in Trio® sales volume. International Trio® sales volumes decreased significantly in the second quarter of 2020 compared to the second quarter of 2019 due to our focus on domestic sales and the timing of shipments to international customers.
Cost of goods sold increased 13% and 34% in the second quarter and first six months of 2020, respectively, compared to the same periods in 2019. Increases in both periods were due to increased losses in the pelletization process and reduced fine langbeinite recovery levels in order to manage inventory levels. In addition, a higher percentage of tons sold in the prior year had been written down in prior quarters through lower of cost or net realizable value adjustments which resulted in lower per ton costs of product sold. During the first six months of 2020, we also sold a higher percentage of premium Trio® which carries a higher per-ton cost than other Trio® products.
We recorded a $1.9 million lower of cost or net realizable value inventory adjustment in the second quarter of 2020 due to the summer-fill price announced by our competitor in June 2020 which lowered the list price on Trio® by $15-$20 per ton. We expect to sell at these reduced prices through at least the third quarter of 2020.
Production volume decreased 24% and 22% in the second quarter and first six months of 2020, respectively, compared to the same periods in 2019, as we used fewer tons of work-in-process inventory to convert to premium Trio®, we decreased our fine langbeinite recovery to manage inventory levels, and we experienced increased losses in our pelletization process.
Oilfield Solutions
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Sales | $ | 2,747 | $ | 5,641 | $ | 10,488 | $ | 12,263 | ||||||||
| Gross margin | $ | 611 | $ | 3,489 | $ | 5,455 | $ | 6,561 | ||||||||
Sales decreased $2.9 million in the second quarter of 2020, compared to 2019, due to reduced sales of water and other oilfield products and services as the COVID-19 pandemic pressured oil prices and reduced oil and gas completion activity. First half 2020 sales decreased compared to 2019 primarily due to a decrease in demand for our high-speed mixing service.
The COVID-19 pandemic and subsequent decrease in oil and gas activity has led to reduced demand for water and our high-speed mixing service. We expect this will continue to decrease water sales in the second half of 2020, when compared to prior year periods, although the unprecedented conditions resulting from COVID-19 make forecasting future demand difficult.
Liquidity
Cash provided by operations was $8.8 million during the second quarter of 2020. Cash used in investing activities was $8.4 million, which included a $3.5 million equity investment in W.D. Von Gonten Laboratories, an industry leader in drilling and completion chemistry and a strong supporter of the use of potassium chloride in oil and gas drilling and completion activities. As of June 30, 2020, we had $34.6 million in cash and cash equivalents.
On July 17, 2020, we made an early voluntary repayment on our Series C Senior Notes in the amount of $17.1 million, which included $15.0 million in remaining principal, a reduced make-whole payment, and accrued interest. Our Series B Notes were unchanged and still mature in April 2023. This payment reduces our effective interest rate, and provides us with considerable more flexibility with our remaining lenders to pursue our strategy. After the payment, we had $14 million in cash on hand, $15 million outstanding on our senior notes, $10 million outstanding from the Paycheck Protection Program, and $30 million in borrowings under our revolving credit facility with $44 million available to borrow.
Reverse Stock Split Announcement
As announced previously, on July 28, 2020 our shareholders voted to grant the Board of Directors authority to effect a reverse split of our common stock at a ratio between 1-for-3 and 1-for-15. We plan to convene our Board to discuss a possible split on August 10, 2020. In accordance with the approved proposals, the exact ratio and effective date of the split, if the Board elects to pursue one, will be set within the approved range at the sole discretion of the Board without further approval or authorization of Intrepid's stockholders.
Notes
1 Adjusted net (loss) income, adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) and average net realized sales price per ton are non-GAAP financial measures. See the non-GAAP reconciliations set forth later in this press release for additional information.
Unless expressly stated otherwise or the context otherwise requires, references to tons in this press release refer to short tons. One short ton equals 2,000 pounds. One metric tonne, which many international competitors use, equals 1,000 kilograms or 2,204.62 pounds.
Conference Call Information
A teleconference to discuss the quarter is scheduled for August 4, 2020, at 12:00 p.m. ET. The dial-in number is 1-800-319-4610 for U.S. and Canada, and is +1-631-891-4304 for other countries. The call will also be streamed on the Intrepid website, intrepidpotash.com.
An audio recording of the conference call will be available at intrepidpotash.com and by dialing 1-800-319-6413 for U.S. and Canada, or +1-631-883-6842 for other countries. The replay will require the input of the conference identification number 4965.
About Intrepid
Intrepid is a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed, and the oil and gas industry. Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, Intrepid produces a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also provides water, magnesium chloride, brine, and various oilfield products and services.
Intrepid serves diverse customers in markets where a logistical advantage exists and is a leader in the use of solar evaporation for potash production, resulting in lower cost and more environmentally friendly production. Intrepid's mineral production comes from three solar solution potash facilities and one conventional underground Trio® mine.
Intrepid routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investor Relations tab. Investors and other interested parties are encouraged to enroll at intrepidpotash.com, to receive automatic email alerts for new postings.
Forward-looking Statements
This document contains forward-looking statements - that is, statements about future, not past, events. The forward-looking statements in this document relate to, among other things, statements about Intrepid's future financial performance, cash flow from operations expectations, water sales, production costs, acquisition expectations and operating plans, its market outlook, and the impact of the COVID-19 pandemic on the company. These statements are based on assumptions that Intrepid believes are reasonable. Forward-looking statements by their nature address matters that are uncertain. The particular uncertainties that could cause Intrepid's actual results to be materially different from its forward-looking statements include the following:
- changes in the price, demand, or supply of Intrepid's products and services;
- challenges to Intrepid's water rights;
- Intrepid's ability to successfully identify and implement any opportunities to grow its business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;
- Intrepid’s ability to integrate the Intrepid South assets into its existing business and achieve the expected benefits of the acquisition;
- Intrepid's ability to sell Trio® internationally and manage risks associated with international sales, including pricing pressure and freight costs;
- the costs of, and Intrepid's ability to successfully execute, any strategic projects;
- declines or changes in agricultural production or fertilizer application rates;
- declines in the use of potassium-related products or water by oil and gas companies in their drilling operations;
- Intrepid's ability to prevail in outstanding legal proceedings against it;
- Intrepid's ability to comply with the terms of its senior notes and its revolving credit facility, including the underlying covenants, to avoid a default under those agreements;
- further write-downs of the carrying value of assets, including inventories;
- circumstances that disrupt or limit production, including operational difficulties or variances, geological or geotechnical variances, equipment failures, environmental hazards, and other unexpected events or problems;
- changes in reserve estimates;
- currency fluctuations;
- adverse changes in economic conditions or credit markets;
- the impact of governmental regulations, including environmental and mining regulations, the enforcement of those regulations, and governmental policy changes;
- adverse weather events, including events affecting precipitation and evaporation rates at Intrepid's solar solution mines;
- increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise;
- changes in the prices of raw materials, including chemicals, natural gas, and power;
- Intrepid's ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations;
- interruptions in rail or truck transportation services, or fluctuations in the costs of these services;
- Intrepid's inability to fund necessary capital investments;
- the impact of the COVID-19 pandemic on Intrepid's business, operations, liquidity, financial condition, and results of operations;
- Intrepid's ability to regain compliance with the continued listing criteria of the New York Stock Exchange ("NYSE"); and
- the other risks, uncertainties, and assumptions described in Intrepid's periodic filings with the Securities and Exchange Commission, including in "Risk Factors" in Intrepid's Annual Report on Form 10-K for the year ended December 31, 2019, as updated by subsequent Quarterly Reports on Form 10-Q.
In addition, new risks emerge from time to time. It is not possible for Intrepid to predict all risks that may cause actual results to differ materially from those contained in any forward-looking statements Intrepid may make.
All information in this document speaks as of the date of this release. New information or events after that date may cause our forward-looking statements in this document to change. We undertake no duty to update or revise publicly any forward-looking statements to conform the statements to actual results or to reflect new information or future events.
Contact:
Matt Preston, Vice President - Finance
Phone: 303-996-3048
Email: matt.preston@intrepidpotash.com
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(In thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Sales | $ | 46,450 | $ | 62,512 | $ | 110,434 | $ | 120,066 | ||||||||||||
| Less: | ||||||||||||||||||||
| Freight costs | 8,735 | 11,293 | 20,595 | 21,749 | ||||||||||||||||
| Warehousing and handling costs | 2,065 | 2,230 | 4,969 | 4,466 | ||||||||||||||||
| Cost of goods sold | 34,008 | 35,818 | 77,055 | 67,512 | ||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | 2,241 | — | 2,791 | — | ||||||||||||||||
| Gross (Deficit) Margin | (599 | ) | 13,171 | 5,024 | 26,339 | |||||||||||||||
| Selling and administrative | 6,673 | 6,355 | 13,272 | 12,162 | ||||||||||||||||
| Accretion of asset retirement obligation | 434 | 417 | 869 | 834 | ||||||||||||||||
| Litigation settlement | — | — | 10,075 | — | ||||||||||||||||
| Loss (gain) on sale of asset | 234 | 20 | (4,462 | ) | 39 | |||||||||||||||
| Other operating expense (income) | 269 | (38 | ) | 258 | 463 | |||||||||||||||
| Operating (Loss) Income | (8,209 | ) | 6,417 | (14,988 | ) | 12,841 | ||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||
| Interest expense, net | (635 | ) | (806 | ) | (1,427 | ) | (1,409 | ) | ||||||||||||
| Interest income | — | — | 116 | — | ||||||||||||||||
| Other (expense) income | (28 | ) | — | (12 | ) | 334 | ||||||||||||||
| (Loss) Income Before Income Taxes | (8,872 | ) | 5,611 | (16,311 | ) | 11,766 | ||||||||||||||
| Income Tax Benefit | — | — | 42 | — | ||||||||||||||||
| Net (Loss) Income | $ | (8,872 | ) | $ | 5,611 | $ | (16,269 | ) | $ | 11,766 | ||||||||||
| Weighted Average Shares Outstanding: | ||||||||||||||||||||
| Basic | 129,786 | 128,896 | 129,679 | 128,813 | ||||||||||||||||
| Diluted | 129,786 | 131,043 | 129,679 | 130,985 | ||||||||||||||||
| Earnings Per Share: | ||||||||||||||||||||
| Basic | $ | (0.07 | ) | $ | 0.04 | $ | (0.13 | ) | $ | 0.09 | ||||||||||
| Diluted | $ | (0.07 | ) | $ | 0.04 | $ | (0.13 | ) | $ | 0.09 | ||||||||||
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF JUNE 30, 2020 AND DECEMBER 31, 2019
(In thousands, except share and per share amounts)
| June 30, | December 31, | |||||||||
| 2020 | 2019 | |||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 34,552 | $ | 20,603 | ||||||
| Accounts receivable: | ||||||||||
| Trade, net | 19,256 | 23,749 | ||||||||
| Other receivables, net | 1,982 | 1,247 | ||||||||
| Inventory, net | 81,041 | 94,220 | ||||||||
| Prepaid expenses and other current assets | 4,100 | 5,524 | ||||||||
| Total current assets | 140,931 | 145,343 | ||||||||
| Property, plant, equipment, and mineral properties, net | 368,008 | 378,509 | ||||||||
| Water rights | 19,184 | 19,184 | ||||||||
| Long-term parts inventory, net | 28,603 | 27,569 | ||||||||
| Other assets, net | 11,102 | 7,834 | ||||||||
| Total Assets | $ | 567,828 | $ | 578,439 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Accounts payable | $ | 8,228 | $ | 9,992 | ||||||
| Income taxes payable | 49 | 50 | ||||||||
| Accrued liabilities | 12,184 | 13,740 | ||||||||
| Accrued employee compensation and benefits | 6,353 | 4,464 | ||||||||
| Advances on credit facility | — | 19,817 | ||||||||
| Current portion of long-term debt, net | 24,872 | 20,000 | ||||||||
| Other current liabilities | 24,044 | 19,382 | ||||||||
| Total current liabilities | 75,730 | 87,445 | ||||||||
| Advances on credit facility | 29,817 | — | ||||||||
| Long-term debt, net | 14,909 | 29,753 | ||||||||
| Asset retirement obligation | 23,003 | 22,140 | ||||||||
| Operating lease liabilities | 3,098 | 4,025 | ||||||||
| Other non-current liabilities | 1,063 | 420 | ||||||||
| Total Liabilities | 147,620 | 143,783 | ||||||||
| Commitments and Contingencies | ||||||||||
| Common stock, $0.001 par value; 400,000,000 shares authorized; | ||||||||||
| 130,061,248 and 129,553,517 shares outstanding | ||||||||||
| at June 30, 2020, and December 31, 2019, respectively | 130 | 130 | ||||||||
| Additional paid-in capital | 654,784 | 652,963 | ||||||||
| Retained deficit | (234,706 | ) | (218,437 | ) | ||||||
| Total Stockholders' Equity | 420,208 | 434,656 | ||||||||
| Total Liabilities and Stockholders' Equity | $ | 567,828 | $ | 578,439 | ||||||
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(In thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||||||
| Net (loss) income | $ | (8,872 | ) | $ | 5,611 | $ | (16,269 | ) | $ | 11,766 | ||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||||||
| Allowance for doubtful accounts | — | — | 275 | — | ||||||||||||||||
| Depreciation, depletion and amortization | 8,043 | 8,073 | 17,629 | 16,819 | ||||||||||||||||
| Accretion of asset retirement obligation | 434 | 417 | 869 | 834 | ||||||||||||||||
| Amortization of deferred financing costs | 75 | 69 | 161 | 137 | ||||||||||||||||
| Amortization of intangible assets | 81 | — | 161 | — | ||||||||||||||||
| Stock-based compensation | 963 | 1,231 | 1,995 | 2,262 | ||||||||||||||||
| Litigation settlement | (10,075 | ) | — | — | — | |||||||||||||||
| Lower of cost or net realizable value inventory adjustments | 2,241 | — | 2,791 | — | ||||||||||||||||
| Loss (gain) on disposal of assets | 234 | 20 | (4,462 | ) | 39 | |||||||||||||||
| Allowance for parts inventory obsolescence | 492 | — | 492 | 4 | ||||||||||||||||
| Other | (116 | ) | — | (116 | ) | — | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Trade accounts receivable, net | 12,606 | 3,664 | 4,218 | 607 | ||||||||||||||||
| Other receivables, net | (427 | ) | (770 | ) | (735 | ) | (1,132 | ) | ||||||||||||
| Inventory, net | 3,885 | 4,181 | 8,861 | 90 | ||||||||||||||||
| Prepaid expenses and other current assets | 573 | 1,088 | 1,430 | 1,191 | ||||||||||||||||
| Accounts payable, accrued liabilities, and accrued employee compensation and benefits | (6,591 | ) | (1,852 | ) | 1,528 | 603 | ||||||||||||||
| Income tax payable | (1 | ) | (98 | ) | (1 | ) | (98 | ) | ||||||||||||
| Operating lease liabilities | (498 | ) | (491 | ) | (1,050 | ) | (970 | ) | ||||||||||||
| Other liabilities | 5,730 | 2,474 | 5,771 | (414 | ) | |||||||||||||||
| Net cash provided by operating activities | 8,777 | 23,617 | 23,548 | 31,738 | ||||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||||||
| Additions to property, plant, equipment, mineral properties and other assets | (4,935 | ) | (51,559 | ) | (10,645 | ) | (55,517 | ) | ||||||||||||
| Additions to intangible assets | — | (13,581 | ) | — | (13,581 | ) | ||||||||||||||
| Long-term investment | (3,500 | ) | — | (3,500 | ) | — | ||||||||||||||
| Proceeds from sale of assets | — | 68 | 4,786 | 68 | ||||||||||||||||
| Deposit on asset purchase | — | 3,250 | — | — | ||||||||||||||||
| Net cash used in investing activities | (8,435 | ) | (61,822 | ) | (9,359 | ) | (69,030 | ) | ||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||||||
| Repayments of long-term debt | (20,000 | ) | — | (20,000 | ) | — | ||||||||||||||
| Proceeds from short-term borrowings on credit facility | — | 30,000 | 10,000 | 30,000 | ||||||||||||||||
| Repayments of short-term borrowings on credit facility | — | (10,000 | ) | — | (10,000 | ) | ||||||||||||||
| Capitalized debt fees | (36 | ) | — | (36 | ) | — | ||||||||||||||
| Employee tax withholding paid for restricted stock upon vesting | (125 | ) | (166 | ) | (174 | ) | (278 | ) | ||||||||||||
| Proceeds from loan under CARES Act | 10,000 | — | 10,000 | — | ||||||||||||||||
| Proceeds from exercise of stock options | — | — | — | 9 | ||||||||||||||||
| Net cash (used in) provided by financing activities | (10,161 | ) | 19,834 | (210 | ) | 19,731 | ||||||||||||||
| Net Change in Cash, Cash Equivalents and Restricted Cash | (9,819 | ) | (18,371 | ) | 13,979 | (17,561 | ) | |||||||||||||
| Cash, Cash Equivalents and Restricted Cash, beginning of period | 45,037 | 34,514 | 21,239 | 33,704 | ||||||||||||||||
| Cash, Cash Equivalents and Restricted Cash, end of period | $ | 35,218 | $ | 16,143 | $ | 35,218 | $ | 16,143 | ||||||||||||
To supplement Intrepid's consolidated financial statements, which are prepared and presented in accordance with GAAP, Intrepid uses several non-GAAP financial measures to monitor and evaluate its performance. These non-GAAP financial measures include adjusted net (loss) income, adjusted net (loss) income per diluted share, adjusted EBITDA, and average net realized sales price per ton. These non-GAAP financial measures should not be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, because the presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.
Intrepid believes these non-GAAP financial measures provide useful information to investors for analysis of its business. Intrepid uses these non-GAAP financial measures as one of its tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. Intrepid believes these non-GAAP financial measures are used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.
Adjusted Net (Loss) Income and Adjusted Net (Loss) Income Per Diluted Share
Adjusted net (loss) income and adjusted net (loss) income per diluted share are calculated as net (loss) income or (loss) income per diluted share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. We consider these non-GAAP financial measures to be useful because they allow for period-to-period comparisons of its operating results excluding items that we believe are not indicative of its fundamental ongoing operations.
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| (in thousands) | |||||||||||||||||
| Net (Loss) Income | $ | (8,872 | ) | $ | 5,611 | $ | (16,269 | ) | $ | 11,766 | |||||||
| Adjustments | |||||||||||||||||
| Litigation Settlement | — | — | 10,075 | — | |||||||||||||
| Loss (gain) on sale of asset | 234 | — | (4,462 | ) | — | ||||||||||||
| Total adjustments | 234 | — | 5,613 | — | |||||||||||||
| Adjusted Net (Loss) Income | $ | (8,638 | ) | $ | 5,611 | $ | (10,656 | ) | $ | 11,766 | |||||||
Reconciliation of Net (Loss) Income per Share to Adjusted Net (Loss) Income per Share:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| Net (Loss) Income Per Diluted Share | $ | (0.07 | ) | $ | 0.04 | $ | (0.13 | ) | $ | 0.09 | |||||||
| Adjustments | |||||||||||||||||
| Litigation settlement | — | — | 0.08 | — | |||||||||||||
| Loss (gain) on sale of asset | — | — | (0.03 | ) | — | ||||||||||||
| Total adjustments | — | — | 0.05 | — | |||||||||||||
| Adjusted Net (Loss) Income Per Diluted Share | $ | (0.07 | ) | $ | 0.04 | $ | (0.08 | ) | $ | 0.09 | |||||||
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net (loss) income adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers adjusted EBITDA to be useful, and believe it to be useful for investors, because the measure reflects Intrepid's operating performance before the effects of certain non-cash items and other items that Intrepid believes are not indicative of its core operations. Intrepid uses adjusted EBITDA to assess operating performance.
Reconciliation of Net (Loss) Income to Adjusted EBITDA:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (in thousands) | ||||||||||||||||||
| Net (Loss) Income | $ | (8,872 | ) | $ | 5,611 | $ | (16,269 | ) | $ | 11,766 | ||||||||
| Litigation settlement | — | — | 10,075 | — | ||||||||||||||
| Loss (gain) on sale of asset | 234 | — | (4,462 | ) | — | |||||||||||||
| Interest expense | 635 | 806 | 1,427 | 1,409 | ||||||||||||||
| Income tax benefit | — | — | (42 | ) | — | |||||||||||||
| Depreciation, depletion, and amortization | 8,043 | 8,073 | 17,629 | 16,819 | ||||||||||||||
| Amortization of intangible assets | 81 | — | 161 | — | ||||||||||||||
| Accretion of asset retirement obligation | 434 | 417 | 869 | 834 | ||||||||||||||
| Total adjustments | 9,427 | 9,296 | 25,657 | 19,062 | ||||||||||||||
| Adjusted EBITDA | $ | 555 | $ | 14,907 | $ | 9,388 | $ | 30,828 | ||||||||||
Average Potash and Trio® Net Realized Sales Price per Ton
Average net realized sales price per ton for potash is calculated as potash segment sales less potash segment byproduct sales and potash freight costs and then dividing that difference by the number of tons of potash sold in the period. Likewise, average net realized sales price per ton for Trio® is calculated as Trio® segment sales less Trio® segment byproduct sales and Trio® freight costs and then dividing that difference by Trio® tons sold. Intrepid considers average net realized sales price per ton to be useful, and believe it to be useful for investors, because it shows Intrepid's potash and Trio® average per ton pricing without the effect of certain transportation and delivery costs. When Intrepid arranges transportation and delivery for a customer, it includes in revenue and in freight costs the costs associated with transportation and delivery. However, some of Intrepid's customers arrange for and pay their own transportation and delivery costs, in which case these costs are not included in Intrepid's revenue and freight costs. Intrepid uses average net realized sales price per ton as a key performance indicator to analyze potash and Trio® sales and price trends.
Reconciliation of Sales to Average Net Realized Sales Price per Ton:
| Three Months Ended June 30, | |||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||
| (in thousands, except per ton amounts) | Potash | Trio® | Potash | Trio® | |||||||||||||||||||||||
| Total Segment Sales | $ | 24,526 | $ | 19,251 | $ | 35,547 | $ | 21,435 | |||||||||||||||||||
| Less: Segment byproduct sales | 2,977 | 419 | 3,527 | 1,073 | |||||||||||||||||||||||
| Freight costs | 2,600 | 5,523 | 3,604 | 6,471 | |||||||||||||||||||||||
| Subtotal | $ | 18,949 | $ | 13,309 | $ | 28,416 | $ | 13,891 | |||||||||||||||||||
| Divided by: | |||||||||||||||||||||||||||
| Tons sold | 74 | 64 | 95 | 71 | |||||||||||||||||||||||
| Average net realized sales price per ton | $ | 256 | $ | 208 | $ | 299 | $ | 196 | |||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||||||
| (in thousands, except per ton amounts) | Potash | Trio® | Potash | Trio® | |||||||||||||||||||||||
| Total Segment Sales | $ | 58,317 | $ | 41,832 | $ | 69,877 | $ | 39,245 | |||||||||||||||||||
| Less: Segment byproduct sales | 6,950 | 1,799 | 9,312 | 2,332 | |||||||||||||||||||||||
| Freight costs | 7,140 | 12,057 | 6,847 | 11,507 | |||||||||||||||||||||||
| Subtotal | $ | 44,227 | $ | 27,976 | $ | 53,718 | $ | 25,406 | |||||||||||||||||||
| Divided by: | |||||||||||||||||||||||||||
| Tons sold | 173 | 140 | 183 | 127 | |||||||||||||||||||||||
| Average net realized sales price per ton | $ | 256 | $ | 200 | $ | 294 | $ | 200 | |||||||||||||||||||
| Three Months Ended June 30, 2020 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 21,549 | $ | — | $ | — | $ | (74 | ) | $ | 21,475 | ||||||||||
| Trio® | — | 18,832 | — | — | 18,832 | ||||||||||||||||
| Water | 112 | 404 | 2,029 | — | 2,545 | ||||||||||||||||
| Salt | 1,701 | 15 | — | — | 1,716 | ||||||||||||||||
| Magnesium Chloride | 952 | — | — | — | 952 | ||||||||||||||||
| Brine Water | 212 | — | 161 | — | 373 | ||||||||||||||||
| Other | — | — | 557 | — | 557 | ||||||||||||||||
| Total Revenue | $ | 24,526 | $ | 19,251 | $ | 2,747 | $ | (74 | ) | $ | 46,450 | ||||||||||
| Six Months Ended June 30, 2020 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 51,367 | $ | — | $ | — | $ | (203 | ) | $ | 51,164 | ||||||||||
| Trio® | — | 40,033 | — | — | 40,033 | ||||||||||||||||
| Water | 695 | 1,651 | 8,690 | — | 11,036 | ||||||||||||||||
| Salt | 3,797 | 148 | — | — | 3,945 | ||||||||||||||||
| Magnesium Chloride | 1,711 | — | — | — | 1,711 | ||||||||||||||||
| Brine Water | 747 | — | 192 | — | 939 | ||||||||||||||||
| Other | — | — | 1,606 | — | 1,606 | ||||||||||||||||
| Total Revenue | $ | 58,317 | $ | 41,832 | $ | 10,488 | $ | (203 | ) | $ | 110,434 | ||||||||||
| Three Months Ended June 30, 2019 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 32,020 | $ | — | $ | 218 | $ | (111 | ) | $ | 32,127 | ||||||||||
| Trio® | — | 20,362 | — | — | 20,362 | ||||||||||||||||
| Water | 457 | 938 | 4,270 | — | 5,665 | ||||||||||||||||
| Salt | 2,368 | 135 | — | — | 2,503 | ||||||||||||||||
| Magnesium Chloride | 206 | — | — | — | 206 | ||||||||||||||||
| Brine Water | 496 | — | — | — | 496 | ||||||||||||||||
| Other | — | — | 1,153 | — | 1,153 | ||||||||||||||||
| Total Revenue | $ | 35,547 | $ | 21,435 | $ | 5,641 | $ | (111 | ) | $ | 62,512 | ||||||||||
| Six Months Ended June 30, 2019 | |||||||||||||||||||||
| Product | Potash Segment | Trio® Segment | Oilfield Solutions Segment | Intersegment Eliminations | Total | ||||||||||||||||
| Potash | $ | 60,565 | $ | — | $ | 2,040 | $ | (1,319 | ) | $ | 61,286 | ||||||||||
| Trio® | — | 36,913 | — | — | 36,913 | ||||||||||||||||
| Water | 797 | 1,879 | 8,375 | — | 11,051 | ||||||||||||||||
| Salt | 5,369 | 453 | — | — | 5,822 | ||||||||||||||||
| Magnesium Chloride | 1,946 | — | — | — | 1,946 | ||||||||||||||||
| Brine Water | 1,200 | — | — | — | 1,200 | ||||||||||||||||
| Other | — | — | 1,848 | — | 1,848 | ||||||||||||||||
| Total Revenue | $ | 69,877 | $ | 39,245 | $ | 12,263 | $ | (1,319 | ) | $ | 120,066 | ||||||||||
| Three Months Ended June 30, 2020 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | ||||||||||||||||||
| Sales | $ | 24,526 | $ | 19,251 | $ | 2,747 | $ | (74 | ) | $ | 46,450 | ||||||||||||
| Less: Freight costs | 3,286 | 5,523 | — | (74 | ) | 8,735 | |||||||||||||||||
| Warehousing and handling costs | 1,204 | 861 | — | — | 2,065 | ||||||||||||||||||
| Cost of goods sold | 17,650 | 14,222 | 2,136 | — | 34,008 | ||||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | 371 | 1,870 | — | — | 2,241 | ||||||||||||||||||
| Gross Margin (Deficit) | $ | 2,015 | $ | (3,225 | ) | $ | 611 | $ | — | $ | (599 | ) | |||||||||||
| Depreciation, depletion, and amortization incurred1 | $ | 5,742 | $ | 1,516 | $ | 657 | $ | 209 | $ | 8,124 | |||||||||||||
| Six Months Ended June 30, 2020 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | ||||||||||||||||||
| Sales | $ | 58,317 | $ | 41,832 | $ | 10,488 | $ | (203 | ) | $ | 110,434 | ||||||||||||
| Less: Freight costs | 8,727 | 12,071 | — | (203 | ) | 20,595 | |||||||||||||||||
| Warehousing and handling costs | 2,500 | 2,469 | — | — | 4,969 | ||||||||||||||||||
| Cost of goods sold | 40,370 | 31,652 | 5,033 | — | 77,055 | ||||||||||||||||||
| Lower of cost or net realizable value inventory adjustments | 371 | 2,420 | — | — | 2,791 | ||||||||||||||||||
| Gross Margin (Deficit) | $ | 6,349 | $ | (6,780 | ) | $ | 5,455 | $ | — | $ | 5,024 | ||||||||||||
| Depreciation, depletion, and amortization incurred1 | $ | 13,054 | $ | 3,025 | $ | 1,289 | $ | 422 | $ | 17,790 | |||||||||||||
| Three Months Ended June 30, 2019 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | ||||||||||||||||||
| Sales | $ | 35,547 | $ | 21,435 | $ | 5,641 | $ | (111 | ) | $ | 62,512 | ||||||||||||
| Less: Freight costs | 4,742 | 6,471 | 80 | — | 11,293 | ||||||||||||||||||
| Warehousing and handling costs | 1,319 | 911 | — | — | 2,230 | ||||||||||||||||||
| Cost of goods sold | 21,258 | 12,599 | 2,072 | (111 | ) | 35,818 | |||||||||||||||||
| Gross Margin | $ | 8,228 | $ | 1,454 | $ | 3,489 | $ | — | $ | 13,171 | |||||||||||||
| Depreciation, depletion, and amortization incurred1 | $ | 6,120 | $ | 1,520 | $ | 232 | $ | 201 | $ | 8,073 | |||||||||||||
| Six Months Ended June 30, 2019 | Potash | Trio® | Oilfield Solutions | Other | Consolidated | ||||||||||||||||||
| Sales | $ | 69,877 | $ | 39,245 | $ | 12,263 | $ | (1,319 | ) | $ | 120,066 | ||||||||||||
| Less: Freight costs | 9,382 | 11,506 | 861 | — | 21,749 | ||||||||||||||||||
| Warehousing and handling costs | 2,586 | 1,880 | — | — | 4,466 | ||||||||||||||||||
| Cost of goods sold | 40,317 | 23,673 | 4,841 | (1,319 | ) | 67,512 | |||||||||||||||||
| Gross Margin | $ | 17,592 | $ | 2,186 | $ | 6,561 | $ | — | $ | 26,339 | |||||||||||||
| Depreciation, depletion and amortization incurred1 | $ | 12,915 | $ | 3,078 | $ | 423 | $ | 403 | $ | 16,819 | |||||||||||||
(1) Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation, depletion, and amortization amounts absorbed in or relieved from inventory.
