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INTREPID POTASH INC (IPI) filed Quarterly Report for the period ended 2011-09-30.
Intrepid Potash has a market cap of $2.08 billion; its shares were traded at around $27.62 with a P/E ratio of 26.6 and P/S ratio of 5.7.
This is the annual revenues and earnings per share of IPI over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of IPI.
Highlight of Business Operations:
Our average net realized sales price of potash was $489 per ton in the third quarter of 2011, as compared to $343 per ton in the third quarter of 2010. We realized a $27 per ton increase in our average net realized sales price for potash in the third quarter of 2011 compared to the second quarter of 2011. The increase in our average net realized sales price resulted from previously announced price increases, in which we increased the posted price of red granular potash from $530 per ton effective June 1, 2011, to $560 per ton, effective July 8, 2011. We have historically seen the full impact of potash price increases to be realized approximately three months after the effective date as we typically have amounts of product already ordered at the time we announce a price increase. Given the amount of inventory in the dealer channel, as mentioned previously, we have seen prices stabilize in the market during this period before the fall field work begins. We were able to realize the benefit from the price increases during the third quarter and we continue to focus on obtaining the best net realized sales prices by opportunistically layering in sales where we can maximize our net realizable sales price. Due to the continued drought conditions in Texas, we have had to expand the geographic reach of our marketing efforts to sell certain tons of potash and we believe we have been successful in marketing some of these displaced potash volumes into other markets less affected by weather, albeit at higher freight costs. Our average potash gross margin as a percentage of net sales increased to 51 percent for the third quarter of 2011, as compared to 35 percent in the third quarter of 2010, and was largely attributable to the increased average net realized sales price. In the third quarter of 2011, our cash operating cost of goods sold, which we define as total cost of goods sold excluding depreciation, depletion, amortization and royalties, net of by-product credits, for potash was $175 per ton. This result compares to cash operating cost of goods sold, net of by-product credits, for potash of $171 per ton in the third quarter of 2010.Our average net realized sales price of potash was $464 per ton in the first nine months of 2011, as compared to $354 per ton in the first nine months of 2010. The increase in our average net realized sales price resulted from the realization of previously announced price increases, as well as trends described above. Our average potash gross margin as a percentage of net sales increased to 51 percent for the first nine months of 2011, as compared to 32 percent in the first nine months of 2010, and was attributable to both the increased average net realized sales price and to lower per unit cost of goods sold. In the first nine months of 2011, we had no abnormal production costs, and our cash operating cost of goods sold, net of by-product credits, for potash was $167 per ton. This result compares to cash operating cost of goods sold, net of by-product credits, for potash of $190 per ton in the first nine months of 2010, which excludes $0.5 million of abnormal production costs.
Total cash provided by operating activities was $129.6 million for the nine months ended September 30, 2011, compared to $76.5 million for the nine months ended September 30, 2010. The $53.1 million increase in cash provided by operating activities in the nine months ended September 30, 2011, was due primarily to the higher net income when comparing the nine months ended September 30, 2011, to the same period in 2010. The increase in cash was offset by an increase in inventory as product sales largely matched production levels, compared to the nine months ended September 30, 2010, in which our product sales were in excess of production levels. Additionally, we experienced an increase in other accounts receivable as of September 30, 2011, compared to the nine months ended September 30, 2010, due to the recoding of $8.5 million related to a refundable employment-related credit in the State of New Mexico.
Net sales of potash increased $16.9 million, or 22 percent, from $75.9 million for the three months ended September 30, 2010, to $92.8 million for the three months ended September 30, 2011. This change was the result of an increase in the average net realized sales price of $146 per ton, or 43 percent, offset by a decrease in sales volume of 14 percent. The decrease in sales volume was driven by poor weather conditions in certain areas of our primary markets, as discussed earlier.
Net sales of potash increased $72.9 million, or 35 percent, from $210.4 million for the nine months ended September 30, 2010, to $283.3 million for the nine months ended September 30, 2011. This change was the result of an increase in the average net realized sales price of $110 per ton, or 31 percent, in addition to an increase in sales volume of three percent. On a comparable basis, the levels of potash sales in the first nine months of 2011 were stronger than the same period of 2010 mainly due to improved commodity markets resulting in improved farmer economics that drive strong demand for our products. Our production volume of potash in the nine months ended September 30, 2011, was 616,000 tons, or 113,000 tons more than in the first nine months of 2010. Our production was higher in 2011 primarily due to the return to ramped-up production levels beginning in November of 2010 as we returned to full staffing levels at our facilities at that time following the market driven production reductions that occurred in 2009 through the first half of 2010. In addition, the benefit of capital invested in 2010 was evident as higher production was available from additional mining panels in Carlsbad. Further, the new compactor at Moab was fully operational during the first nine months of 2011, which allowed us maximum flexibility to adjust our production mix of granular-sized and standard-sized potash, as needed, based on market demand.
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