Intrepid Potash, Inc. Q1 FY2025 earnings call

• CEO Kevin Crutchfield appreciated employees' efforts and highlighted strong safety, operational, and financial results.
• Intrepid generated adjusted EBITDA of $16.6 million and adjusted net income of $4.6 million in Q1 2025, improving from prior year's adjusted EBITDA $7.7 million and adjusted net loss $3.1 million.
• Revitalizing core assets positively impacted business. Potash production increased, COGS per ton improved. Trio saw higher efficiencies, new miners, and cost discipline leading to production and unit economics improvements. Oilfield Solutions remained a consistent contributor.
• Potash and agriculture market commentary: Price increases in Q1, expected to be realized in Q2; global market with mine maintenance in Eastern Europe and domestic consumption in Russia; US agricultural exports supported by tariff treatment and weak dollar; optimism for trade deals and potential farmer support.

Potash

• First quarter production: 93,000 tons. COGS per ton: $313, a 17% improvement from 2023 baseline and 25% from Q4 2023.

Trio

• First quarter production: 63,000 tons. COGS per ton: $235, a 22% improvement Y/Y. Quarterly sales record of 110,000 tons with average price $345 per ton.

Oilfield Solutions

• First quarter revenue: $4.4 million. Gross margin: $1.7 million (38% of revenue).

• Potash production expected 285,000 to 295,000 tons in 2025.
• Trio production expected 235,000 to 245,000 tons in 2025, with 5%-10% unit economics improvement in H2 2025.
• Q2 potash sales guidance: 60,000 to 70,000 tons at average net realized price $350 to $360 per ton.
• Q2 Trio sales guidance: 57,000 to 67,000 tons at average net realized price $365 to $375 per ton.
• 2025 CapEx guidance: $36 million to $42 million, mostly for sustaining capital including sample well at AMAX cavern at HB.

Q: Good morning. I just wanted to start with the potash pricing expectations for 2Q. So at kind of the 355 [ph], you're going to be kind of roughly $10 above where you were in the fourth quarter. At the same time, benchmarks have kind of moved up about $60 a tonne. So I just kind of wanted to understand what the timing difference was there on pricing. And is there something sort of driving why you guys haven't really seen uplift in the realization there to the same degree that the branch marks, I guess, sort of pointed to? Thanks.

A: Yes, Lucas, this is Zachry, and kind of specific to that question. One piece of that is in the fourth quarter of last year, particularly in the second half of last year, we had contracts that were priced at a higher differential. So those made our overall pricing be higher than it would have been necessarily that were reflected where the ag market was at that time. And when we look at where our Q2 pricing is projected at for right now versus our Q1 pricing with those $55 of increases we talked about, we're showing a differential of about $43 a ton. So we're realizing almost all of that uptick that we saw during the first quarter, plus we've already kind of captured a little bit of that uptick in the first quarter in some of our results there.

Q: Thanks for the questions. And congratulations on a really strong quarter. Just wanted to ask, I guess, the cash figure for the end of April versus the end of the quarter is pretty significant cash flow generation in the month of April. Just wondering if maybe you could help frame some of the shape of the spring season or kind of cash conversion timing versus the accounting of the cash costs on tons and whether some of the costs kind of drop out as the season goes along, just because it's a pretty big number in April is what it seems like.

A: Yes. Thanks, Jason. This is Matt. Certainly, with the spring season, it's no secret Q2 is our best cash flow generation quarter, and this year is no exception, roughly $66 million at the start of May here. It's probably pretty close to a high point for the year, and that's really just normal with our general trend. So I think we'll be pretty steady there through Q2. And then you'll pull down a bit as we continue to invest capital here in the second half of the year. We just have a natural slowdown certainly from our -- on the Trio sales side.

Q: Okay. And in terms of the commentary on oilfield, kind of sounded steady as it goes in terms of what you guys do, but that the activity down there sounds pretty resilient. Any update on the next tranche of money from XTO and where the BLM is in the process of evaluating some of it?

A: No. Unfortunately, we don't really have any insight on XTOs plans. To the extent we do, we promise that you'll be the second to know. For everybody on the call, you'll be the second to know, but we don't have any insight into Exxon's near-term drilling plans, which we did.

Q: Okay. And just kind of maybe following up on Lucas' question on capital allocation. Just I guess, with the cash balance growing, obviously, you have the CapEx spend to get through for the year, but even with that, I guess, just update thoughts on where you're headed with that given that you're going to have kind of a net cash balance sheet for foreseeable future until you decide kind of what you want to do there?

A: Yes. We -- I think we addressed this a little bit last quarter, but it's worth reemphasizing that our goal is to buttress the core assets in such a way that they're predictable, they're resilient. They performed consistently and generate cash flows throughout the cycle. We've got enough cash on the balance sheet to get us through difficult times. But once we establish that kind of track record, I think the capital allocation discussion becomes a very real discussion with the Board on -- to the extent there is excess free cash flow beyond what we can redeploy internally than what's the right answer for that. And we get lots of recommendations and thoughts on that, which we greatly appreciate. But it's something that's becoming more and more poignant for our Board here with the passage of time as our performance continues to improve.