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Intrepid Potash, Inc. (IPI) Q1 2021 Results - Earnings Call Transcript

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SA Transcripts

Intrepid Potash, Inc. (NYSE:IPI) Q1 2021 Results Conference Call May 4, 2021 12:00 PM ET

Company Participants

Matt Preston - VP, Finance

Brian Stone - COO

Zachry Adams - VP, Sales and Marketing

Conference Call Participants

Bria Murphy - BMO Capital Markets

John Roberts - UBS


Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. First Quarter 2021 Earnings Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

I would now like to turn the conference over to Matt Preston, Vice President of Finance. Please go ahead.

Matt Preston

Thanks, Ariel. Good morning, everyone. Thanks for joining us to discuss Intrepid's first quarter 2021 results. With me on the call today is Intrepid's Chief Operating Officer, Brian Stone. Also available to answer questions during the Q&A session will be our Vice President of Sales and Marketing, Zachry Adams; our CEO, Bob Jornayvaz, is currently navigating the complex quarantine system in Australia to visit his newly born granddaughter, is unable to join the call today.

Please be advised that our remarks today, including answers to your questions, include forward-looking statements as defined by U.S. securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. These statements are based on the information available to us today, and we assume no obligation to update. These risks and uncertainties are described in our periodic reports filed with the Securities and Exchange Commission, which are incorporated here by reference.

During today's call, we will refer to certain non-GAAP financial and operational measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in yesterday's press release. Our SEC filings and press releases are available on our website at

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Comments (13)

Scared Bear profile picture
Royce & Associates LP, Royce Opportunity Fund and Legg Mason Royce, all part of the same family, just disclosed last week that they significantly increased their IPI holdings to close that 14% of the company. Now they are the 2nd largest shareholder. Some smart money coming in. Just saying...
No Called Strikes Investing profile picture
Hard to see a scenario where they don't reach at least $.20/share in earnings in Q2, especially with the extra $20/ton for both potash and TRIO announced this past week.
Kerkorian profile picture
lets see where buyers come in for ipi. The momo guys are out and now its just value guys to make a bottom. Company needs an investor day soon as even knowledgeable investors can't make heads or tails out of water segment. If any one has thoughts on margins and economics of water segment would love to hear it.
No Called Strikes Investing profile picture
@Kerkorian Water sales have certainly dropped in the last year or two, but the historical margins have been solid. In 2018 gross margin was as high as 75%, but that was before they really started ramping up their whole Oilfield Services segment. In 2019 gross margin was about 50% and was about 40% in 2020. The main thing seems to be that the fixed costs are fairly high, now that water sales are a full-fledged division of the company. Based on a limited sample size of two years, looks like about $12 million in fixed costs, so if they get back to around $5mil / qtr, looking at probably $5-$8 mil in margin? Something like that anyway.
Cue Ball profile picture
So IPI will way another 30 to 45 days to clarify Q1 poor margins . Its not like they care about the stock price . All the fertilizers reported good result - even IPI - but it always manages to disappoint .
Kerkorian profile picture
the disclosure for the water segment is ridiculous. No gallonage data for sales volumes , no dollar pricing of water gallons sold, no metrics on cost of goods.
The 4th q 2020 comments that much more water will be sold in 2021 than 2021 1st q results come in with no reasoning. Gross margins in water segment falling by 5 or 7 million annualized is around 50 cents a share hit right to bottom line. With potash we can see the operating leverage from tonnage increases and price changes but with water i have no clue.
Kerkorian profile picture
From 4th Q Conf Call

Robert P. Jornayvaz Intrepid Potash, Inc. – Executive Chairman, President & CEO
We're definitely going to sell a lot more water in 2021 than we did in 2020. I don't know how much you follow Department of Interior policy, New Mexico State Land Office policy. One of the benefits that Intrepid has is we also, on top of our fresh water rights on very significant non-potable water rights as well. So we have a unique ability to mix to -- as we mentioned earlier, service the water market on a full cycle basis, which means taking some freshwater, some brine water, also taking produced water and recycling it and reselling the recycling water, and so our full hope is in the next 30 to 45 days is to have an Investor Day where we really walk through the infrastructure that is under construction. Beyond the fly recycling that we're doing, the disposal projects that we have underway and give a much fuller, robust picture of everything that Intrepid has been working on during the 2020 COVID season.

This is why stock went down from what they said in 4th q they sold less water and much lower margin.
Cue Ball profile picture
What you get when management rides polo ponies...
Kerkorian profile picture
i would like to start a discussion on ipi water ( oilfield results) results this q which is reason stock has been smashed past two days.
The entire explanation is quite weak and no follow up in conference call. From earnings release "Cost of goods sold increased 29%, or $0.9 million in the first quarter of 2021, compared to the prior year, primarily a result of increased third-party water purchases to meet the significant daily refresh rates for certain fracs on our South ranch. During the first quarter of 2021, we sold a majority of our water from water rights on our South ranch, while in the first quarter of 2020 we sold a majority of our water from our Pecos and Caprock water rights. Our water sales from the South ranch water rights generally carry a higher cost of goods sold as compared to sales from our Pecos and Caprock water rights.
Gross margin decreased $4.3 million compared to the prior year, due to the factors discussed above."
Their you have it revenue declined from 7.7 mill in 2020 1st q to 4.25 this q which makes sense since drilling has been crushed but cgs went up from 2.897 mill to 3.75 mill.
The potash business has turned but now obviously concern about the water business and what margins look like going ahead. I have more to say but want to see if any other participants interested in discussing.
@Kerkorian New ways to screw up a qtr. Never ceases to amaze me.
@Kerkorian I'm invested in this stock and would love to hear more from you.
Thank you for your input!
Bumbershoot Holdings profile picture
@Kerkorian the answer that was given to the question - i.e. "optionality of the water book" - doesn't do a good job of clearing up the details for new potential investors. Very difficult to parse out what is happening with Pecos water vs. Caprock water vs. area-of-mutual interest water with NGL on the South Ranches vs. 3rd party water being sourced from NM and/or TX and more importantly how that fits back with all the prior commentary/guidance to provide confidence that the business is still on track in terms of being the right strategy to take advantage of the growth in Permian/Delaware over time. Optimistic that the company will be able to communicate it better in the next few months, especially with an investor day.
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