Intrepid Potash Q1 2025 Earnings Report

Intrepid Potash EPS Results

• Actual EPS: $0.39
• Consensus EPS: -$0.12
• Beat/Miss: Beat by +$0.51
• One Year Ago EPS: N/A

Intrepid Potash Revenue Results

• Actual Revenue: $97.76 million
• Expected Revenue: $72.34 million
• Beat/Miss: Beat by +$25.42 million
• YoY Revenue Growth: N/A

Intrepid Potash Announcement Details

• Quarter: Q1 2025
• Date: 5/5/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 12:00PM ET

Intrepid Potash (NYSE:IPI), together with its subsidiaries, engages in the extraction and production of the potash in the United States and internationally. It operates through three segments: Potash, Trio, and Oilfield Solutions. The company offers muriate of potash for various markets, such as agricultural market as a fertilizer input; the industrial market as a component in drilling and fracturing fluids for oil and gas wells, as well as an input to other industrial processes; and the animal feed market as a nutrient supplement. It also provides Trio, a specialty fertilizer that delivers potassium, sulfate, and magnesium in a single particle; water for oil and gas services industry; salt for various markets, including animal feed, industrial applications, pool salt, and the treatment of roads and walkways for ice melting or to manage road conditions; magnesium chloride for use as a road treatment agent for deicing and dedusting; brines for use in oil and gas industry to support well workover and completion activities; and metal recovery salts. Intrepid Potash, Inc. was founded in 1999 and is based in Denver, Colorado.

Intrepid Potash Q1 2025 Earnings Call Transcript

Presentation

[Operator]

you for standing by. This is the conference operator. Welcome to the Intrepid Potash Inc. First Quarter twenty twenty five Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded.

[Operator]

After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Evan Mates, Investor Relations. Please go ahead.

[Evan Mapes, Investor Relations Manager at Intrepid Potash]

Good morning, everyone. Thank you for joining us to discuss and review Intrepid's first quarter twenty twenty five results. With me today is Intrepid's CEO, Kevin Crushfield and CFO, Matt Preston. Also available to answer questions during the Q and A is our VP of Sales and Marketing, Zachary Adams and VP of Operations, John Galassini. Please be advised that the remarks today include forward looking statements as defined by U.

[Evan Mapes, Investor Relations Manager at Intrepid Potash]

S. Securities laws. These forward looking statements are subject to risks and uncertainties, which could cause Intrepid's actual results to be different from those currently anticipated, are based upon information available to us today, and we assume no obligation to update them. These risks and uncertainties are described in the reports of the SEC, which are incorporated hereby reference. During today's call, we will refer to certain non GAAP financial and operational measures.

[Evan Mapes, Investor Relations Manager at Intrepid Potash]

Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release and along with Intrepid's SEC filings are available at intrepidpotish.com. I'll now turn the call over to our CEO, Kevin Crutchfield.

[Kevin Crutchfield, CEO at Intrepid Potash]

Thanks, Evan, and good morning, everyone. We appreciate your entrance interest and attendance for today's earnings call. I've now been with Intrepid for about six months and have been very impressed with the skill, dedication, and quality of work our employees at all of our locations. I want to thank them for their efforts and congratulate them on helping us achieve strong safety, operational and financial results to start 2025. In the first quarter, Intrepid generated adjusted EBITDA of $16,600,000 and adjusted net income of $4,600,000 which compares to prior year adjusted EBITDA of $7,700,000 and adjusted net loss of $3,100,000 The improvements in profitability are particularly impressive given that these are our best figures since the first quarter of twenty twenty three when potash prices were over 50% higher.

[Kevin Crutchfield, CEO at Intrepid Potash]

The solid performance was attributable to several factors, but I want to start by highlighting how our focus on revitalizing Intrepid's core assets has positively impacted our business. Starting in potash, the capital investments we've made over the past few years have helped us achieve our goals of increasing our potash production and improving our unit economics, and we're pleased to share that this continued into the first quarter of twenty twenty five. In the first quarter, we produced 93,000 tons and our COGS per ton came in at $313, which represents a 17% improvement from our 2023 baseline figure and a 25% improvement from our recent COGS per ton peak in the fourth quarter of twenty twenty three. In Trio, which again was the clear standout, the higher efficiencies from our new miners, restart of our fine langbonite recovery system and focus on cost discipline have helped to drive sustained improvements to our production and unit economics over the past year. In the first quarter, our production totaled 63,000 tons and our COGS per ton totaled two thirty five, which represents a 22% improvement compared to last year's first quarter.

[Kevin Crutchfield, CEO at Intrepid Potash]

In the first quarter, Trio also experienced positive market tailwinds a strong early season demand and a tight domestic sulfate market and strengthening potash fundamentals led to a quarterly sales record of 110,000 tons, while our pricing increased to an average of $345 per ton. Quickly on Oilfield Solutions, this segment remains a consistent contributor with high margin business lines. We continue to prioritize growing our brine sales, while oilfield activity near our South Ranch has so far remained resilient even with the lower oil prices. As for the ranch itself, we're keenly aware of the high demand for these types of assets in the Delaware Basin. It certainly has value to us, but as I said in the last earnings call, to the extent another party sees more value in it than we do, we're always up for conversation.

[Kevin Crutchfield, CEO at Intrepid Potash]

Before I pass the call to Matt, I'll end my remarks with some commentary on the broader potash and agriculture markets. Starting with potash. Following January winter field programs, the combination of strong demand and relatively tight supplies led to price increases of $55 per ton for potash and $40 per ton for Trio during the first quarter and we expect to realize a good portion of these increases in our second quarter results. As for the global market, third parties have estimated mine maintenance in Eastern Europe and a higher focus on domestic potash consumption in Russia has roughly removed 1,800,000 tons from the market. On the demand side, the world market is returning to trend line growth of roughly 2% per year and potash looks well balanced heading into the second half of twenty twenty five.

[Kevin Crutchfield, CEO at Intrepid Potash]

Moving on to agriculture markets. Beneficial tariff treatment for US MCA goods and a weakening dollar has helped support strong US agriculture exports this year. Even with all the noise, year to date exports for corn are up by about 25%, while soybean exports have also been solid. This is projected to add further support for forecasts of relatively low crop inventories and key futures are trading at higher levels compared to where they were during our last earnings call. In addition, we want to remind folks that about 70% of global potash is applied to non corn and non soybean crops, and key international crops like palm oil are still quite elevated compared to historical averages.

[Kevin Crutchfield, CEO at Intrepid Potash]

Lastly, while there's concern on behalf of domestic farmers on the potential impact of tariffs, Canadian potash imports are currently exempt and there seems to be more optimism for trade deals with key partners. Moreover, the current administration has made several comments about potentially offering extra monetary support for farmers for tariff relief, which we did see during their previous term. Putting this all together, we think the outlook for potash and agriculture market remains constructive. So with that, I'll now turn it over to Matt.

[Matthew Preston, CFO at Intrepid Potash]

Thank you, Kevin. Starting with our potash segment. In the first quarter, we produced 93,000 tons, an increase of 6,000 tons compared to last year. We've now had higher year over year production for four consecutive quarters and continue to see improvements in our unit economics. Solid demand in the first quarter coupled with the higher production and inventory levels to begin the year led to a 40% increase in potash tons sold, which helped partially offset the 20% decrease in our average net realized pricing when compared to last year.

[Matthew Preston, CFO at Intrepid Potash]

For 2025, we expect that our potash production will be pretty close to our 2024 results at two and eighty five thousand to 295,000 tons, and we look forward to seeing the benefits of our new primary pond in Wendover once our fall harvest begins later this year. Our Wendover potash has been our highest cost production in recent years, and improved production at this location is expected to help support our unit economics in the twenty twenty five-twenty twenty six production year. Moving on to Trio, improved production and operational efficiencies and increased pricing have helped turn Trio into a clear bright spot for Intrepid in the first quarter, where our gross margin of $10,400,000 was our third best quarterly result in Intrepid's history. As Kevin mentioned, Trio's COGS per ton have trended lower over the past year. With about a year of producing at these rates and with an improved cost structure, the expected improvements in our unit economics are fully reflected in our cost of goods sold.

[Matthew Preston, CFO at Intrepid Potash]

Looking ahead, we expect our full year 2025 production to be in the range of two and thirty five two hundred and forty five thousand tons, about 5% lower than our prior year figures. Given the slightly lower production and general increase in cost levels, we do expect about a 5% to 10% increase in our unit economics in the back half of twenty twenty five, but believe Trio remains well positioned given the strength in underlying nutrient pricing. Our Oilfield Solutions segment was steady in the first quarter with revenue of $4,400,000 and gross margin of $1,700,000 or approximately 38% of revenue. While this business remains a solid contributor for folks new to our story, this segment has experienced a bit of quarter to quarter volatility due to the timing of water sales and other oilfield related activity. For 2025, we don't expect any significant frac activity and associated water sales like we had in the third quarter of twenty twenty four, although we could still see some quarterly variability, particularly around surface use and easement revenue.

[Matthew Preston, CFO at Intrepid Potash]

Looking ahead, we see our first quarter results, both revenue and gross margin, as a good midpoint when modeling out the rest of the year. In terms of second quarter guidance in our Potash and Trio segments, we expect another solid quarter as spring application winds down and our potash facilities enter the summer evaporation season. For potash, we expect our sales volumes to be between 60,000 to 70,000 tons at an average net realized sales price in the range of $350 to $360 per ton. In Trio, we expect our sales volumes to be between 57,000 to 67,000 tons at an average net realized sales price in the range of $365 to $375 per ton. For our 2025 capital program, we have no changes to our CapEx guidance of 36,000,000 to $42,000,000 where most of this will be spent on sustaining capital, including the sample well at our Amax cavern at HB.

[Matthew Preston, CFO at Intrepid Potash]

We expect the permitting process to drill the sample well to be wrapped up in the second quarter with commissioning of the sample well complete by the July. Overall, it's been a good start to 2025 and we're excited to see the initiatives we've put into place over the past couple of years meaningfully pay off in the form of reduced COGS per ton for both potash and Trio and improved cash flow even with lower potash prices compared to last year. While there's been broader market uncertainty, we think we remain very well positioned with a debt free balance sheet and constructive potash fundamentals, and we look forward to continuing this positive momentum into the rest of 2025. Operator, we're now ready for the Q and A portion of the call.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Lucas Beaumont with UBS Financial. Please go ahead.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

Good morning. Yes, just wanted to start with the potash pricing expectations for 2Q. So at kind of the $355 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 if there's something sort of driving while you guys haven't really seen a uplift in the realization there to the same degree that the benchmarks, I guess, would have pointed to.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

Thanks.

[Zachry Adams, Vice President of Sales & Marketing at Intrepid Potash]

Yeah. Lucas, this is Zachary. 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 fee contracts that were priced at a higher differential. So those made our overall pricing be higher than it would have been necessarily if it 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've talked about, we're showing a differential of about $43 a ton.

[Zachry Adams, Vice President of Sales & Marketing at Intrepid Potash]

So we're realizing almost all of that uptick that we saw during first quarter plus we've already kind of captured a little bit of that uptick in first quarter in some of our results there.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

Great. And then I guess just on the production volume side, I mean, this seems like it's applicable to kind of both potash and Trio this year. So I mean, based on your production targets for the year and where you are to date for both of them, it's implying a year on year decline basically over 2Q to 4Q for the year. So I just wanted to maybe get some context on each, I guess, why you sort of think that will be softer in the rest of the year? Or is there maybe a degree of conservatism built in there and you think you might be able to do a little better when we sort of get to the actual results?

[John Galassini, Vice President of Operations at Intrepid Potash]

Yeah. Thanks for the question. This is John Gialesini. And our production profile is based on the last couple of years projects coming online. Also, the Wendover, as as Matt mentioned earlier, the Wendover project that with our primary pond, we'll see an increase in production from that facility.

[John Galassini, Vice President of Operations at Intrepid Potash]

With mother nature, it's difficult to sometimes predict that, but we have a good handle on it, and we feel our our forecasts are are in line with with the projects that we recently put in place.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

No worries. Then maybe I just wanted to go on to the Trio cost cut of improvements. So that's obviously like improved really strongly, especially this quarter given you're coming off the high production year and you're having sort of record look like record sales volumes there over the past ten years at least. So I was just wondering if you could kind of help us frame sort of how we should think about the cost outlook there going forward beyond this year. So I mean you mentioned the 5% to 10% improvement in the second half.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

So that's going to, I guess, slow down a little bit, which you'd expect as the volume improvement moderates. If you guys are kind of looking to stabilize your production and sales levels around this year around this sort of level? Should we see any further improvement into 2026? Or is 2025 kind of the end of the benefits there? Thanks.

[Matthew Preston, CFO at Intrepid Potash]

Yes. As said in the prepared remarks Lucas, I mean we're really pleased with the results we have so far at $235 per ton. But that really fully reflects the improvement not just in our production rates but also the change in our operating schedule and we removed roughly that 10,000,000 to $12,000,000 of annualized production costs that we talked about on prior quarters. So like I said, as we look forward, just general increases in price levels and cost levels as well as some slightly lower second half production. We do expect a bit of an uptick in our cost per ton in that 5% to 10% range.

[Matthew Preston, CFO at Intrepid Potash]

But the 235,000 to 245,000 tons of Trio production is a good steady state for us right now looking forward.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

Great. And then just lastly for Kevin, guess now that you've been here six months, just wanted to sort of get your assessment of what you think is going well with the company and, where your focus is gonna be to drive improvement over the next, one to two years. Thanks.

[Kevin Crutchfield, CEO at Intrepid Potash]

Yeah. Hey, Lucas. Good morning. Yeah. You know, first, kudos to the teams out in the field for delivering a a solid quarter.

[Kevin Crutchfield, CEO at Intrepid Potash]

I think the work that, you know, Intrepid's been doing well before I got here for the last couple years in terms of sort of renewed focus on core assets, focus on capital investment in in the core assets is really starting to pay dividends. Our focus obviously will be to continue that that level of focus on the core assets, making sure that we are resilient, we're predictable, and we keep the trends going in the in the right direction. What we don't want is like, you know, a high beta where we're inconsistent. So the focus now is being able to be very consistent, very predictable, and maintaining these these trend lines. So, again, one of our primary focuses is gonna be on, you know, you know, volume is the biggest driver that we have to control cost on the trajectory that we would like.

[Kevin Crutchfield, CEO at Intrepid Potash]

So there's gonna be an intense focus on that as well as our maintaining our cost structure going forward. So hopefully that gives you some context.

[Lucas Beaumont, Director Equity Research Analyst at UBS Group]

Right. Thanks very much.

[Kevin Crutchfield, CEO at Intrepid Potash]

Thank you.

[Operator]

Your next question comes from the line of Jason Ursana with Bumbershoot Holding. Please go ahead.

[Jason Ursaner, General Partner at Bumbershoot Holdings]

Thanks for taking the questions and congratulations on a really strong quarter. Just wanted to ask, I guess, the cash figure for the 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.

[Matthew Preston, CFO at Intrepid Potash]

Yeah. Thanks, Jason. This is Matt. You know, certainly with the spring season, it's it's no secret q two is our our best cash flow generation quarter, and and this year is no exception. You know, roughly $66,000,000 at the at the May here.

[Matthew Preston, CFO at Intrepid Potash]

Yeah. That 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 q two, and then you'll pull down a bit as we continue to, you know, invest capital here in the second half of the year. We just have a natural slowdown certainly from our, on the Trio sales side.

[Jason Ursaner, General Partner at Bumbershoot Holdings]

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

[Kevin Crutchfield, CEO at Intrepid Potash]

No. Unfortunately, we don't really have any insight on XTO's plans to the extent we do. We promise that you'll be the second to know or everybody on

[Kevin Crutchfield, CEO at Intrepid Potash]

the call would

[Kevin Crutchfield, CEO at Intrepid Potash]

be the second to know, but we don't have any insight into Exxon's near term drilling plans, which we did.

[Jason Ursaner, General Partner at Bumbershoot Holdings]

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?

[Kevin Crutchfield, CEO at Intrepid Potash]

Yeah. You know, we I I think we addressed this a little bit last quarter, but it's worth reemphasizing that our, you know, our goal is to buttress the core assets in such a way that they are they're predictable, they're resilient, they perform 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, you know, redeploy in internally, then what's the right answer for that? And, you know, 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.

[Jason Ursaner, General Partner at Bumbershoot Holdings]

Okay. Awesome. I appreciate the answers and congrats again on quarter.

[Kevin Crutchfield, CEO at Intrepid Potash]

Thank you.

[Operator]

And it seems that we have no further questions. That concludes the question and answer session. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks.

[Kevin Crutchfield, CEO at Intrepid Potash]

Thank you. I'd like to thank our team just one more time because we can't do this without them. Thank them for their hard work and dedication over the course of the quarter and the last few years, and thank you all for, patching in today to listen to our comments, and we look forward to keeping you updated as the quarters progress. Have a great day, everyone.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Participants

Executives

• Evan Mapes, Investor Relations Manager
• Kevin Crutchfield, CEO
• Matthew Preston, CFO
• Zachry Adams, Vice President of Sales & Marketing
• John Galassini, Vice President of Operations

Analysts

• Lucas Beaumont, Director Equity Research Analyst at UBS Group
• Jason Ursaner, General Partner at Bumbershoot Holdings