Intrepid in loss column for 3Q and YTD; MOP 3Q sales volumes down 47 percent Citing “challenges” that included softer demand, lower prices, and a temporary production shutdown at its West mine, Intrepid Potash Inc. on Oct. 27 reported a third-quarter net loss of $8.1 million ($0.11 per diluted share) on sales of $53.7 million, compared with a year-ago net loss of $1.2 million ($0.02 per diluted share) on sales of $102.3 million.
For the first nine-months, Intrepid posted a net loss of $6.5 million ($0.09 per diluted share), compared with net income of $4.0 million ($0.05 per diluted share) in 2014. Adjusted EBITDA was of $6.0 million for the third quarter and $53.4 million for the first nine months, compared with $20.5 million and $65.9 million, respectively, in 2014.
Third-quarter potash sales volumes were down 47 percent, to 120,000 st from the year-ago 227,000 st, with Intrepid noting softness in both its agricultural and industrial markets. Nine-month potash sales volumes were reported at 498,000 st, down from 705,000 st for the same period in 2014.
“The third quarter was challenging given the fertilizer pricing and demand environment, our temporary shutdown of West, and the tests we have been running at East,” said Bob Jornayvaz, Intrepid’s executive chairman, president and CEO. “We are addressing these challenges and believe that the long-term market demand fundamentals are intact.”
Intrepid said agricultural customers delayed potash purchases normally made during the third quarter, in part because they entered the fall season with higher inventory levels and were anticipating potash price declines. Potash sales to industrial customers in the oil and gas industry were also impacted by the reduction in drilling rig counts.
Intrepid reported average net realized sales price for potash of $319/st for the third quarter, down 5 percent from last year and an 11 percent drop from second-quarter 2015 levels. Intrepid said “increased imports into the U.S. and greater market supply levels have influenced pricing throughout 2015.” For the first nine-months, average net realized sales prices for potash were reported at $351/st, up from $327/st in 2014.
Cash operating costs for potash was $198/st in the third quarter and $206 for the first nine months, compared with $204/st and $199/st, respectively, in 2014. Intrepid said solar production, most notably from its HB solution mine near Carlsbad, N.M., was higher in the third quarter and year-to-date compared with the same periods last year, while production from conventional facilities was lower.
Total potash cost of goods sold (COGS) was $280/st in the third quarter, compared with $289/st last year. Nine-month COGS was $296/st, compared with $278/st in 2014. Third-quarter and nine-month “costs related to abnormal production” for potash were reported at $43/st and $13/st, respectively. The company said total abnormal costs encompassed $4.9 million associated with the temporary West shutdown, and $2.0 million from production tests performed at the East mine.
Jornayvaz said Intrepid has accelerated efforts to convert its East facility to Trio-only production, which he said “will improve its reliability, remove our highest-cost potash facility from our portfolio, and allow us to grow Trio production as we gradually replace East’s potash tons with Trio tons over time.” As part of this process, Intrepid said it intentionally suspended potash production at the East facility during the quarter while Trio-only production tests were performed.
Potash production totaled 160,000 tons for the quarter and 550,000 tons for the first nine months, compared with 194,000 and 605,000 tons, respectively, in 2014. Intrepid said the year-over-year decreases were driven in part by the 15-day closure of the Wes