Intrepid Potash(IPI) - 2018 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income improved by $9.3 million to$7.6 million in Q4 2018 and by $34.4 million to$11.8 million for the full year compared to the previous year [9][30] - Operating cash flow increased by $47.5 million year-over-year, with total cash received for water at$30.2 million [9][42] - The company generated earnings per share (EPS) of $0.06 for Q4 and$0.09 for the full year [30] Business Line Data and Key Metrics Changes - The Potash segment generated a gross margin of $10.7 million in Q4, driven by price increases and increased sales volumes [34] - The Trio segment achieved a positive gross margin of$700,000 for the first time since 2016, with year-over-year price increases contributing to this improvement [36] - The Oilfield Solutions segment saw sales growth attributed to increased water sales, reaching $3.5 million in Q4 compared to$2.9 million in the same period last year [40] Market Data and Key Metrics Changes - Potash net realized prices increased by 9% year-over-year in Q4, with expectations for a strong spring season [24] - International markets experienced meaningful price increases, contributing to overall revenue growth [26] - The company expects cash received from total water sales in 2019 to be between $25 million and$35 million [22] Company Strategy and Development Direction - The company is pursuing a strategic acquisition of a 51% interest in the Dinwiddie Jal Ranch, which will enhance its water rights and oilfield-related assets [10][11] - The acquisition is expected to contribute positively to the bottom line and expand the company's midstream water infrastructure [15][19] - The company aims to leverage its existing workforce and infrastructure to capitalize on growth opportunities in the oil and gas sector [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the Dinwiddie acquisition and the overall business model, emphasizing resilience and shareholder value enhancement [27][28] - The company anticipates continued strong cash flows and growth opportunities in 2019, driven by favorable market conditions and infrastructure developments [45][83] - Management noted that the water sales business is expected to grow organically, supported by ongoing infrastructure projects [120] Other Important Information - The company ended the year with 33 million in cash and no outstanding balance on its credit facility [44] - SG&A expenses for 2019 are expected to be between 24 million and 27 million due to increased legal expenses and stock compensation [43] Q&A Session Summary Question: Incremental investment costs for ongoing business development - Management clarified that additional spending related to ongoing development is minimal, significantly less than 4 million or $5 million [50] Question: Longevity of oil and gas activity in relevant geographies - Management highlighted the extensive reserves and well permits in the Northern Delaware Basin, indicating a strong focus on servicing the area [51] Question: Minority interest line after closing the Dinwiddie deal - Management confirmed that the revenue from Dinwiddie will be consolidated, but a minority interest will be reported due to the 51$13 million revenue from Dinwiddie in 2018 was a combination of water, caliche, and damages, with expectations for significant growth [88][90]