INTREPID POTASH INC (IPI, Financial) filed Quarterly Report for the period ended 2009-06-30.
INTREPID POTASH Inc. is the largest producer of potash in the U.S. and is dedicated to the production and marketing of potash and langbeinite another mineral containing potassium. Intrepid owns five active potash production facilities -- three in New Mexico and two in Utah INTREPID POTASH INC has a market cap of $1.95 billion; its shares were traded at around $25.97 with and P/S ratio of 4.7.
In the last weeks of July 2009, there have been several public announcements by global potash producers announcing lower pricing contracts for large volumes of product to be shipped into India. Additionally, the posted prices of several North American potash producers have been reduced by approximately $300 per short ton. The change in posted prices is not as dramatic as one might think at first look since the market had already largely moved to these prices over the last few months. To remain competitive, we have adjusted our red granular potash price to $482 per short ton FOB Carlsbad
foreseeable future. Sustained income growth and agricultural policies in the developing world also affect demand for fertilizer. Fertilizer demand is also affected by other geopolitical factors such as temporary disruptions in fertilizer trade related to government intervention and changes in the buying patterns of key consuming countries. We believe the fundamentals that drive fertilizer demand will continue on a long-term basis. However, we note that the U.S. and world economic crisis has led to volatility in agricultural commodity prices, which may have an impact on the decisions farmers make related to their fertilization program. Sales levels are well below those of a year ago, although at average prices more than one and a half times those of the second quarter of 2008. Also, the wholesale prices of nitrogen and phosphate fertilizers, the two other primary crop nutrients, have declined due primarily to a reduction in the cost of natural gas feed-stocks required to produce those products and due to supply dynamics in those industries. The combination of economic volatility and buyer hesitation has resulted in reduced demand for potash. Consequently, this has resulted in, and may continue to result in, production levels of our products exceeding sales levels and the building of inventory in our warehouses until agricultural commodity prices stabilize and growers start buying potash in volumes needed to maintain yields over several crop cycles. We believe that we can continue to carry a higher level of inventory, relative to a year ago, for a sustained amount of time given the overall capital structure of Intrepid in that we have cash and cash equivalents of $118.6 million as of June 30, 2009, no debt outstanding, and $124.9 million of available capacity under our senior credit facility.
Changes in fuel prices directly impact the cost of transporting potash from producing to consuming regions. Changes in natural gas prices also impact the cost of processing potash. The average cost per MMBTU of natural gas for the six months ended June 30, 2009, was lower than the average rate for the six months ended June 30, 2008, contributing to a decrease in our energy costs. We estimate that every $1 per MMBTU change in the cost of natural gas changes our cost of potash by $2 to $3 per short ton, in part dependent on our volume of production.
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INTREPID POTASH Inc. is the largest producer of potash in the U.S. and is dedicated to the production and marketing of potash and langbeinite another mineral containing potassium. Intrepid owns five active potash production facilities -- three in New Mexico and two in Utah INTREPID POTASH INC has a market cap of $1.95 billion; its shares were traded at around $25.97 with and P/S ratio of 4.7.
Highlight of Business Operations:
Intrepid was incorporated in the state of Delaware on November 19, 2007 for the purpose of continuing the business of Mining in corporate form after Intrepid s initial public offering (“IPO”). On April 25, 2008, Intrepid closed its IPO by selling 34,500,000 shares of common stock at $32.00 per share. Net proceeds of the offering were approximately $1.032 billion after underwriting discounts and commissions and transaction costs. Prior to April 25, 2008, Intrepid was a consolidated subsidiary of Mining, its predecessor. Since April 25, 2008, Mining s ongoing business has been conducted by Intrepid and includes all operations that previously had been conducted by Mining. On April 25, 2008, pursuant to the Exchange Agreement, Mining assigned all of its assets other than approximately $9.4 million of cash to Intrepid in exchange for 40,339,000 shares of Intrepid s common stock and approximately $757.4 million of the net proceeds of the IPO. For more information concerning our IPO and Formation Transactions, please see the section entitled “Management s Discussion and Analysis of Financial Condition and Results of Operations”—Overview—Our Company contained in our Annual Report filed on Form 10-K for the year ended December 31, 2008.In the last weeks of July 2009, there have been several public announcements by global potash producers announcing lower pricing contracts for large volumes of product to be shipped into India. Additionally, the posted prices of several North American potash producers have been reduced by approximately $300 per short ton. The change in posted prices is not as dramatic as one might think at first look since the market had already largely moved to these prices over the last few months. To remain competitive, we have adjusted our red granular potash price to $482 per short ton FOB Carlsbad
foreseeable future. Sustained income growth and agricultural policies in the developing world also affect demand for fertilizer. Fertilizer demand is also affected by other geopolitical factors such as temporary disruptions in fertilizer trade related to government intervention and changes in the buying patterns of key consuming countries. We believe the fundamentals that drive fertilizer demand will continue on a long-term basis. However, we note that the U.S. and world economic crisis has led to volatility in agricultural commodity prices, which may have an impact on the decisions farmers make related to their fertilization program. Sales levels are well below those of a year ago, although at average prices more than one and a half times those of the second quarter of 2008. Also, the wholesale prices of nitrogen and phosphate fertilizers, the two other primary crop nutrients, have declined due primarily to a reduction in the cost of natural gas feed-stocks required to produce those products and due to supply dynamics in those industries. The combination of economic volatility and buyer hesitation has resulted in reduced demand for potash. Consequently, this has resulted in, and may continue to result in, production levels of our products exceeding sales levels and the building of inventory in our warehouses until agricultural commodity prices stabilize and growers start buying potash in volumes needed to maintain yields over several crop cycles. We believe that we can continue to carry a higher level of inventory, relative to a year ago, for a sustained amount of time given the overall capital structure of Intrepid in that we have cash and cash equivalents of $118.6 million as of June 30, 2009, no debt outstanding, and $124.9 million of available capacity under our senior credit facility.
Changes in fuel prices directly impact the cost of transporting potash from producing to consuming regions. Changes in natural gas prices also impact the cost of processing potash. The average cost per MMBTU of natural gas for the six months ended June 30, 2009, was lower than the average rate for the six months ended June 30, 2008, contributing to a decrease in our energy costs. We estimate that every $1 per MMBTU change in the cost of natural gas changes our cost of potash by $2 to $3 per short ton, in part dependent on our volume of production.
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