Q4 2019 Earnings Call
Thank you for standing by this is the conference operator, welcome to the Intrepid potash Inc. fourth quarter and yearend 2019 results conference call.
As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation. There will be an opportunity to ask questions to join the question Q You May Press Star then one on your telephone keypad should you need assistance during the conference call you makes a gold operator by pressing star and zero.
I would now like to turn the conference over to John Richardson Investor Relations. Please go ahead.
Thanks area.
Good morning, everyone. This is John Richardson and trumpets director of Investor.
Thanks for joining us so skus and Travis fourth quarter results for the period ended December 31st 2019.
With me today isn't trumpet scope out or executive Chairman, President and CEO, Bob Journalists, and then trumpets, Vice President Finance, Matt Preston.
Also available to answer questions. During the Q1 day session. Following our prepared remarks will be our chief operating officer, Brian Stone.
And our vice president of sales and marketing Mark Mcdonald.
Please be advised that our remarks today, including answers to your questions include forward looking statements as defined by the 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 them.
Those risks and uncertainties are described in our periodic reports filed with the Securities Exchange Commission, which are incorporated by reference.
During today's call, we will refer to certain non-GAAP financial operational measures reconciliations of these non-GAAP financial measures. The most directly comparable GAAP measures are included in last Night's press release.
So you see filings and press releases are available on our website <unk> Intrepid potash dotcom.
Following their prepared remarks, well open the call to your questions now I'll turn the call over to Bob. Thanks, John Good morning, everyone and thank you for joining us I first want to take this opportunity to think Slaney Martin from the entire trumpet family first 15 years of partnership and service on our board we wish him.
Well in his retirement and hope to visit him on the Sunny golf courses of Arizona, we truly thank you.
We executed well again last quarter with a year over year increase in water sales from our oilfield solution segment and improving cash cost for trumpet, South Texas while.
The fourth quarter results demonstrate a more stable cash flow profile than would have been possible part to development of our oil field solutions segment.
Our ability to quickly pivot and create additional value from a relatively small capital investment as a key differentiator and I'm proud of the agility our team has demonstrated.
The all tilt solutions business continues to grow as we had anticipated with fourth quarter water revenue, increasing 58% for the same period last year.
Total revenue for the segment increased 86% in the fourth quarter of 28 team. Thanks to contributions from other products and services offered within the segment.
Our M.D. customers completion activity consumes more than 60% of capital invested in oil and gas well in an effort to remain within their guided 2019 capital budgets, we saw fourth quarter completion activity and the associated water consumption.
Hello across all shale basins in the United States.
If you follow the large pressure pumping service providers in the U.S. and listen to their fourth quarter calls you have heard them talk about this reduction of completion activity at the end of the year.
However, since the ended the year, we've seen that completion activity, but getting to bounce back in the northern Delaware Basin as capital budgets have been reset.
We expect to have the majority of our infrastructure upgrade projects on a trip at South finished by mid year, which will enable us to more efficiently serve our customers and should lead to improving gross margins throughout the year for wells field solutions, we've already seen upto, 20% it decreasing the cost of moving water for our lowest margin.
Jobs on the South Ranch and have recently commissioned another 10 pound Brian station on the property, which we expect to be well received given the popularity of our 10, Tom brine station and trumpets H.B. facility.
Looking ahead to 20 Twond, we have a full order book for water at our South Ranch and are optimizing that book by actively moving lower margin sales to our Caprock water rights, where we have excess water and have the ability to service through our partnership with select energy.
We continue to expect for your water sales between 32 and $45 million were pleased with anticipated contributions from our recently acquired Dinwiddie ranch assets now refer to as Intrepid South.
The growth in oilfield solutions in the fourth quarter, partially offset a slowdown in domestic potash sales and lower netbacks for trio compared to the prior year for potash segment, we experienced softer sales and lower gross margin in the quarter, which is driven by poor weather for fall applications and customers choosing to delight potash.
Purchases in anticipation of a winter fill program.
Potash sales volumes decreased by 12% year over year in 2019, well volumes in the fourth quarter 2019 decreased by 39% versus the fourth quarter of 2018.
The fourth quarter comparison is difficult and that an October 2018 fill program lifted demand in that quarter and there was no corresponding fill program announced in the fourth quarter of 29 team.
Potash setbacks in the fourth quarter improved both year over year sequentially because of our focus on marketing segment diversity, allowing us to increase our mix of sales in the higher priced feed and industrial markets to reply slower demand in the AG market.
Full year, 2019, Netbacks improved 11% compared to the full year 2018.
Despite production curtailments of approximately 4 million times, our competitors in the second half of 29 team significant inventories of potash remained in early 2020.
In response to these inventories our competitors announced a winter fill program in January of 2020, reducing potash prices by $25 per tonne.
Intrepid took advantage of this opportunity as well and offered potash to our agricultural customers with good results at similar values a.
Immediately after the subscription window closed prices have moved back up $20. We've managed our order book very well, allowing us to transact current orders at that increased value.
Trio sales volume increased 20% in the quarter versus the prior year, primarily due to rising export volumes. However, these volumes represented lower gross margins for the segment.
The full year trio sales volumes were relatively unchanged when compared to 28 team while sales in the quarter were supported by strong exports to southeast Asia, which offset lower volumes domestically, we expect trail sales volumes to follow normal seasonal patterns and the.
First half of 2020, and we're seeing strong domestic subscription.
For our trail products in the first quarter of 2020, which will carry into the second quarter.
Trio Netbacks in the fourth quarter of 29 team turned it down compared to the third quarter because of the higher proportion of export sales volumes.
In addition for both potash and trio our commitment to diversifying our sales portfolio has produced continue improvement and byproduct sales, which were up which were up 2.5 million or 42% compared with the fourth quarter of last year.
Before wrapping up I'd like to remind everyone on the call today of the meaningful strategic moves we executed in 2019.
The expansion of our oilfield solutions segment throughout 2019 is paying off by reducing the volatility of our cash flows and Trump is well positioned geographically to provide necessary midstream services to producers in one of the most prolific and cost effective oil and gas basins in the United States.
Although potash and trio continue to be core assets. This diversity in our revenue stream enhances the value of and trap.
Although 2019 had its challenges with political turmoil and unfavorable weather patterns, our strong balance sheet and diverse revenue streams allowed us to manage through a soft patch in both fertilizer an oilfield services in great shape.
We have begun the new you're on solid footing with potash and trio sales exhibiting resilience early in the year and we're cautiously optimistic about the rest of 2025.
Given the recent strength in commodities like sugar rice, cocoa and palm oil, we're hopeful that corn and soybeans wont be far behind.
Falling three consecutive sub optimal application seasons farmers are indicating a strong desire to replenish soil nutrients during the spring 2020.
This combined with expectations of substantial acreage dedications for both corn and soybean planting in North America.
Should produce tailwinds for potash sales into the agricultural markets.
Finally, our oilfield solutions segment will continue to develop as we complete the infrastructure upgrades and expansions to our fresh water infrastructure discussed on last quarter's call.
We're also excited about the startup of our produced water disposal partnership with NGL Energy partners, which is expected to commence operations around the mid Europe 2020.
Significant progress has been made with respect to the build out of these facilities and their strong demand for water disposal services in the northern Delaware basin for the foreseeable future.
NGL has been a stellar partner and has done a great job and securing long term commitments for our new facilities. We're enthusiastic about the growth of this partnership and the growth that it will provide.
I'll now turn the call over to Matt Who'll discuss our financial results.
Thank you Bob Good morning, everyone and thanks for joining.
Full year sales improved by 6% compared to the prior year driven by our oilfield solutions segment.
Fourth quarter sales declined by 10% due to lower potash in domestic trio sales volumes as customers delayed purchases in anticipation of a winter fill program.
The majority of domestic trio sales in the quarter was carryover from the third quarter. While total trio segment sales was influenced by export volumes that push the average net realized price for trio lower.
Increased sales from the oil field solutions segment helped to offset lower nutrient sales during the quarter.
Gross margin in oilfield solutions improved 28% in the fourth quarter and 12% for the full year when compared to prior year periods.
Our combined nutrients segments experienced a decline in gross margin of 49% in the fourth quarter compared to the prior year due to reduced domestic sales volumes, but an improvement of 15% for the full year 2019 compared to 2018.
Net income for the fourth quarter was $2.1 million or two cents per diluted share and $13.6 million or 10 cents per diluted share for the full year.
Moving to our potash segment, our fourth quarter gross margin was impacted by lower sales volume in anticipation of the fill program that was announced in January 2020.
Full year sales were further impacted by poor weather in North America that reduced application rates and limited our byproduct production and sale of magnesium chloride.
Potash production decreased 4% and 5% in the fourth quarter and full year 2019, respectively compared to the same periods in 2018 due to increased salt production at the mill facility and timing of harvests are marsal declines.
Our trio segment fourth quarter gross margin decreased zero point $7 million compared to 2018 due to reduced domestic demand. However, the decline was partially offset by increased by product water sales.
For the full year trio gross margins benefited from higher domestic pricing earlier in the year as well as an increase in byproduct water sales throughout 2019.
Similar to potash our full year domestic trio sales were impacted by wet weather that reduce spring 2019 nutrient application. However, this was offset by increased byproduct sales and export sales in the fourth quarter.
For our oilfield solutions segment. The addition of Intrepid self water rights and other products and services contributed to the 85% growth in sales for the quarter and 60% growth for the full year.
When compared to prior periods margins were impacted by third party water transfer on Intrepid, South and some startup expenses that should have less of an impact overtime.
2019 results also had more water sales classified as byproduct water, which are recorded in either the trio or potash segment instead of oil field solutions.
Turning to liquidity, we ended the year with 20.6 million in cash and 54.2 million available to borrow under the $75 million cash flow revolver. We continue to manage our balance sheet conservatively through this down cycle in fertilizer and feel that our net debt to EBITDA of less than one times at year end 2019 gives us.
Considerable flexibility as we work through a lower than normal cash flow first quarter due to the slow sales from Q4.
We remain in a comfortable position to pay down the $20 million of senior notes that come due in April.
Cash provided by operations for the full year was $49 million and cash spend on investing activities was $81 million, primarily due to the intrepid south acquisition in May.
Capital investment excluding acquisitions for 2019 was $25 million, which includes opportunity capital investment related to our newly acquired assets. We expect to spend between 25 million and 35 million in capital in 2020, with 10 to 15 million for sustaining capital items and the remainder for opportunity capital.
Across our three business segments.
That concludes our prepared remarks, operator, we're ready to take questions.
Thank you we will now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear a child acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then too to join the question.
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Our first question comes from Vincent Andrews of Morgan Stanley.
Hi, This is chairman Rosemary out for Vincent Thanks for taking my questions I'm I want to started out on the winter fill program just just wondering.
Blow up on that if you just comment on on at this point.
Where your potash inventory levels are and just kind of how comfortable you are in terms of inventory.
You mean in terms of up being able to to meet the demand for the spring or do we have too much inventory.
Oh, the latter anybody have too much.
Matt I'll, let you.
I think were to very comfortable spot as far as our inventories as well, we're certainly seeing great subscription here under the winter fill program and you were holding some back to maybe see some higher prices here in.
The second quarter, and we've already started to see some spot sales at the $20 up I'll, let mark add on anything else to that.
I think reiterate the comments we are good subscription in January February or on the sales I think is not comment that Oh man Bob in his prepared remarks mentioned that I will well prepared our book is in good shape to to take care of some of the spot business and were transacting at that are currently with somebody business.
Opportunities.
Okay got it and then in just in terms of potash pricing and you mentioned that comment that you know netbacks her or better in the quarter, just because of the kind of mix was better and feed and industrial and I'm wondering for 2020, Jamie just kinda talk about that mix.
And just that makes between the AG tons in the industrial in feed tons and just how we should be thinking about potash pricing for you and 2020.
Well once again in 2019, we had a net realized price advantage of approximately 35% over our of our Canadian competitors.
And so as we continue to diversify our potash into more specialized markets. We hope to continue to capture those those premium prices.
As to the AG markets, that's really a function of what our Canadian competitors in Russian competitors.
Decide to do there's no question, we're going to see a strong demand season in the spring.
And there's great opportunities for substantial potash applications. It's a function of of what we see from are much larger competitors in terms of where they choose to take their price.
Given the demand and the the pricing that we're saying in a variety of commodities that tend to be the leading indicators. So when we look at the price of sugar, we look at rice, we look at cocoa, we look at a lot of other commodities that people don't pay as much of attention to here in North America restraint seeing strong.
Recoveries.
And a lot of those commodities, which are generally leading indicators and so we hope to see corn and soybeans ribbon rebound as well, we're clearly going to see big applications go down that this spring and it really is a function of how our larger competitors choose to treat this this opportunity in the marketplace.
Yes.
Okay got it and then just one last one I'm just thinking I'm thinking I'm potash just thinking about volumes. Obviously 2019 was most impacted by the weather better for thinking about 2020 volumes can we do you think we could get back to that that 2018 level of about 364000.
Some tons or.
You know just just any thoughts that volumes. Thank you.
There's no question that if we have normal application season. So if we just have normal weather, we have every opportunity to sell out of our potash.
So it's.
It really is a function if we have to normal application seasons. Then we just don't see any issues with selling out but if you look at the 19 application season.
Whether just could have been any worse.
Yeah, I'll just add on a little bit today, we always have a difficult time forecasting full year sales. This when you can see the fourth quarter swing by roughly 30 to 40000 tons, depending on what happened so completely agree with Bob's comments, we'll just have to wait and see but if you own average evaporation and normal.
Application season, because there's no reason we can't.
He is similar spots.
All right got it thanks guys.
Our next question comes from Mark Connelly of Stephens, Inc.
Thanks.
We had talked a quarter or two ago about.
Gain issues that affected Wendover and you had said that the availability will be pretty good but Q4 again I wonder <unk>, but you also said that overall upon inventories were going to be below normal so.
It sounds like you're all set for the spring how does play out across the second half a year and just went over pulled down your overall availability or are your other facilities able to up offset that.
Yes, I think as far as overall pond inventories now we've certainly already seen the impact of a a bad weather season on the potash side.
On the Mac chloride side as we talked about in Q3, we did hold back some so magnesium chloride to sell into our best markets pushes our de icing market.
But.
As I said before the impacts already happened I think with a normal event season, we should be right back to normal the second half of 2020.
On both potash and magnesium chloride.
Okay. That's helpful was was there any significant impact that we should be thinking about in terms of cost of production.
Thank you already seen that come through in our results today lower pond inventories is certainly going to increase the per ton cost out a wendover well you saw that in Q3 somewhat and certainly in Q4 already.
Right. Okay perfect I just one last question in that Capex guidance are there any notable K and trio investments.
Sure I mean, we always have some small opportunity project kind of bite sized <unk> recovery improvement projects process flow improvement projects that are potash and trio facilities.
But nothing that jumps out being.
The millions of dollar yeah, nothing in the five or $10 million range, it's kind of bite size.
Opportunity capital there on the potash and trio segments.
Perfect. Thank you very much.
Our next question comes from John Roberts of UBI, Yes.
Thank you you mentioned that customer capital budgets in the Delaware Basin had been reset at the started the year you do any capex surveys of your customers or anything that gives you some insight to their capital spending for 2020 versus 2019.
Yeah, we meet with them every week so in terms of contacting our customers.
We're circling with them literally every week going through Frac schedules and the reason is because in order to deliver the water.
To the individual Fracs, we've got to be totally in line with what they're frac schedules look like.
And so the answer the question is is an outstanding yes, no we're talking to them virtually every single week, Brian I want to introduce Bryant stone or new Chief operating officer, Brian I don't know if you want to add to that now I'd just echo what what Bob said you. We have regular meetings with producers. These are high quality producers we.
We're very involved in their frac schedules in.
It's important because we have to be able to deliver frac rate freshwater too.
Last year, you were able to provide some guidance on 2019 water sales expectations do you have any similar guidance for 2020.
We said that 30 to 45 million in water sales for 2020 on our last call. We just reiterated that for this call.
Yes. Thank you.
Our next question comes from Joel Jackson of BMO capital markets.
Hi, This is Robert on for John Thanks for taking my questions. On my first is on SRIO I'm. Just wondering if you don't improve from Q4 levels what are the mix impacts from lower expected international sales.
<unk>.
Well, we pretty much backed away from most international sales we had.
A very solid sales that we we've been working on for a relationship in Africa, that's going very well, we've pretty much backed out of the central and South American markets. So that we don't have to.
Compete with Chinese keys, right and so we've we've we've backed out of those lower netback markets and that really focused our activities on the domestic markets and the very limited a international markets that give us the best snap back opportunity. So I don't know if that gives you enough color.
Happy to.
Answered a little more if you'd like.
Well I guess it looking at Q4.
Pricing.
And a breakeven gross margin level I mean.
In the prices, where they stay the same assuming that Nick benefit.
I guess it if you assume the trio gross margin could shift back to positive territory and 2020.
Very easily I mean, there's a 10 dollar price increase announced on on as of April 1st. So we have every expectation.
Of saying that price continues.
Fill program that came out took it down a touch or no.
Held at steady and that it's got a price bomb happening in April and so we have every expectation of that if not a little bit more so.
Okay, great UBS shifting to oil field solutions, how are some of the other system enhancements progressing like pump automation and after the new pipelines.
So.
He said by mid year, how do you see oilfields.
And segment margins progressing progressing across the year from these benefits.
Well that the margin should should increase substantially as you as you put in that infrastructure to service customers throughout the ranch as well as customers off the ranch. So we've now made the connections.
And we'll be coming out with maps pretty quickly now that a select has completed their jarrett pipeline.
And they're Jarrett three pit, which is just on the very north side of our NGL and mine and the pipeline capacity. That's now been built out throughout the entire NGL and my area and allows us to now reach outside that am I just off the ranch as well as the the first disposal well that's now been drilled and.
Completed.
With NGL within that partnership in the pipelines that have built.
The handled up the produced water the long term commitments that Ngls successfully negotiated to begin to supply that so we see the the disposal facilities. The pipelines. The wells that are already drilled kick in from a revenue standpoint, hopefully in June of this year.
Great. Thank you.
Our next question comes from Deforest Hinman of Walthausen <unk> company.
Hi, Thanks for taking my questions just.
Bouncing around a little but on the balance sheet.
Some commentary on lower than expected.
Lower than normal.
20.
Operating cash flow.
But that aim in April.
Can you just help us understand the mechanics of that do have an ability to.
Use a credit facility.
That.
And then if necessary.
We absolutely do and but we have the cash in the bank pet so.
We just don't see any issues regarding liquidity, we were obviously always working on other transactions that intrepid South provides us I take your go to say over the course of time.
More diverse revenues that come out of the combination of the.
Trop at South in the NGL partnership that exists down there and its connection to the select your pipeline so at some.
We're just not concern at the lower first quarter cash flows are going to be a result.
Of the fourth quarter, you know decrease in potash sales, but we feel we've got a other levers to pull to hopefully make up for it.
That's the beauty of the diversification program, we've been working on.
Okay, and you spent some time talking about the ER.
The water sales opportunity a similar to what we had spoken about on the third quarter call.
Can you give us more.
Color or understanding of the margins expectations within the water sales and then even touch on the margin expectations will then.
Oil field services.
When those revenues initially came online are very high incremental margins and we've had.
A.
Good.
Contribution on a dollar basis, but we haven't had a.
Levels anywhere near where they were a in the past.
Well, what what you've seen us the progression of higher volume sales from different locations. So when we started our first water sales from our cap rock water that had existing infrastructure in place and no basis and that that was 95% margin as we moved over the past.
Forever and we built.
Substantial holding ponds and infrastructure to service the water on the Pegas water rights, our margins went down but we still had good margins on the Pegas and then as we bought the Intrepid South branch that really needed a almost a total revamp in the infrastructure those first six to nine months of margins.
Brought the entire margin structure down, but as we've said repeatedly as we continue to build those up we've already seen a decrease in our cost and an increase in our margin. So the reason that you saw it was we started with caprock sales that had existing infrastructure and no basis that delivered you extremely high.
Margins. You then saw the addition of additional water sales from Pegas and then finally saw the addition of water sales from Intrepid South that all have different margin regimes and cost structures. So as the infrastructure for each of those facilities continues to get built out you'll see operating costs.
Go down and margins increase.
And do you have anything you want to share in terms of what the full year gross margin expectation is.
[noise] now right now I think we'll continue to update as as we said in our prepared remarks.
Does those costs went down 20% and continue to go down I don't know how to better expire I know you're looking for an exact number as to our entire water sales because they're coming from three different places.
With three different basis in terms of our cost structure I'm, giving a combined margin answer I I know makes it hard to model us as a company, but I'm trying to give you the color as to why each of those geographic areas I'm deliver a different margin.
Okay, maybe a different like can you help us understand at some expectations.
Well around operating cash flow generation or free cash flow generation, you did give us your capex outlook.
Yeah, we certainly see a strong 2021, certainly the increase in water sales to 32 to 45 million then in revenue a lot of that will fall straight to the tour operating cash flow and then more kind of do a wait and see on potash places like we said in our prepared remarks, we're cautiously optimistic about 2020 it.
I was like we're coming out of a bottom of the fertilizer cycle here and seeing some some good early indications as far as capturing some increased price on potash and hopefully in the trio side and.
Those those things certainly point to a strong 2020 and cash flow generation.
Okay them again back to determine who really.
Go ahead.
No no please finish.
That's just gonna say on maintenance capex or in the $10 million to $12 million range on opportunity capital, we've got the ability to to ramp it up or slow it down depending upon how we're saying.
We all feel market move forward the great thing about produced water pace is we don't build the we don't build the infrastructure without the the water commitment and so in shell as I said in my prepared remarks has done a great job for the first.
Pieces getting 10 year tenure commitments for those assets that we're building out so the good news is the commitment comes first and then we spend the capital. So it's a it's working extremely well and we're just very proud of that partnership in that large am I with NGL.
In the last set of questions can you can you give us any color in terms of the.
[noise] legal I don't want to pay close water.
Huh.
Arbitration or whatever we're going to call. It and then any update on the mosaic litigation.
I'd say on the on the Pegas water, we've got a court date set for August in the adjudication Court.
I think that there's been a lot of noise from some of the opposing attorneys trying to continually run around and change venues, but we've we've got very.
Defined date in August coordinate and we feel very very confident in our legal position as to our water rights I.
I don't see I.
I don't see any any threat to.
To to losing our water rights.
As to the mosaic SCR I really don't have any comment other than we would we just don't believe it has any merit so I'll leave it at that.
Okay. Thank you.
Our next question comes from Jason Ursaner of membership holdings.
Morning.
Hi, Jason I guess, a little bit following up on some of the harvest questions there.
I'd like to energy indicated that their new Mexico.
Late in Q4 can you talk at all about.
Or would you guys on the order versus what might be a whole run rate and based on some of their commentary around 50% average utilization year, what expectations. Do you guys have for next year, that's built into the full year guidance on water cells.
Well the good news is we're working extremely well with select they're say a if you were looking to land map in terms of where the Jarrett pipeline stops and there and they're pit three stops and where our NGL.
Mike I'm stops, so whether pipeline stops going south and where am I stops going north.
Theres scenario in between that.
We have the ability to us to service and hopefully add at incremental capacity into the Gerra pipeline from our Caprock water and so we're working with the majority or was several operators that are sort of in that in between area. So that we can help select up.
A ramp up the utilization of that pipeline.
There's good strong water demand as we said we've got a sold out booked on it and trop at south and so to whatever degree we can supply water.
Using the select pipeline coming north and add to their incremental utilization. We're now seeing those synergies begin to develop so I think we're all cautiously optimistic that given our ability to surface water basically at the state line going up to Jira and their ability to service.
Coming down from the northern part of the Delaware.
To that boundary if you will we're working well with select to try to get maximum utilization of all the assets.
Okay, I guess, maybe asking right I looked at wells, 50% utilization.
2000, <unk> hundred 50000 barrel capacity and kind of take some of the average rates you guys had put out there from the.
The water story line back.
Are you predicting growth outside of that even the full year guidance.
Yeah versus the 25, so needed any Nike.
I mean that a contract alone this kind of applying some more value.
The large Scotch whisky path, which would.
Got it beautiful.
You know I don't want to step on selects.
Guidance that they've given you know those are their numbers I would just stayed very emphatically that we're working hard to provide them with incremental opportunities and so however, there.
Using to report their numbers is how they believe them to be and I just can't stress that we're working hard to provide them with incremental opportunities that exist out there in the marketplace.
Okay, and then just the past two years Ah you that's been around 50 million each each of the past few years free cash flow.
Did we I guess.
The fact 80 million range can be cash conversion, yes, 75% to 80% hasn't been a.
Crazy environment, especially when we talk about some of the tailwind that you're seeing and promote b.
Yeah. This some of the secular growth start talking about analytical services. So obviously I understand there are elements that are out of your control. When you look over the next three years or five years and even with some of the opportunity capital that you're talking about.
Well, you're still looking at excess free cash flow.
<unk> of 100 million two undervalued at whatever number that is above and beyond any sustaining capital needs says you're kind of sitting here right now with the enterprise value around 300 million.
Can you talk at all just long term capital allocation plans.
I have just seems like you're saying.
Repeatedly we don't see any we don't see any significant acquisitions on the horizon, we've got the opportunity for great bite size organic growth.
[noise] down at Intrepid <unk> when you combine the entirety of the water assets the water infrastructure. There. There's a lot of very small bite sized organic growth it adds significant margin opportunities. So.
You just not going to see us run off and buy something but you're going to see that that dinwiddie acquisition, which we bought it up at a at a five times cash flow is going to easily.
Do better than that the opportunities that continue to come up quarterly.
Just from our relationships that we've built down there and what's happening you're just going to say the intrepid south provide more and more cash flow opportunities to intrepid given that footprint.
And its location, that's just got an incredible location.
So for the time being I mean, when you just anticipate cashflow, adding to catch on the balance sheet. How are you thinking about.
I guess, either paying down debt or buybacks or anything like that.
Well right now we want it until we come out of this.
Period of volatility and not only corn soybeans crude prices stock market et cetera, we'd rather focus on our balance sheet to make sure. We have a strong balance sheet to get through some of these.
<unk> Black Swan occurrences.
Until we can continue to build up our cash flow out.
In a much more diversified fashion. So that we we have a firmer foundation I mean, I'll just stress that we believe 20 twond he's going to be better than 2019 and look at all the headwinds that we faced coming out of 2019 in terms of major volatility and all the commodity markets that we serve so the diversification is clearly.
We paid off and giving us a a firm foundation of cash Whoa I'm have we not done it and relied solely on potash and trio.
Think we'd been much worse shape.
Okay awesome. Thanks.
This concludes the question and answer session I would like to turn the conference back over to Bob Jornayvaz for any closing remarks.
I just want to thank everyone for their time I'm, an interesting and troponin, we really appreciate it and we look forward to speaking with everybody in the near future. Thank you again.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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