Intrepid Potash Q2 2026 Earnings Report

Intrepid Potash EPS Results

• Actual EPS: $0.56
• Consensus EPS: $0.78
• Beat/Miss: Missed by -$0.22
• One Year Ago EPS: N/A

Intrepid Potash Revenue Results

• Actual Revenue: $66.69 million
• Expected Revenue: $64.86 million
• Beat/Miss: Beat by +$1.83 million
• YoY Revenue Growth: N/A

Intrepid Potash Announcement Details

• Quarter: Q2 2026
• Date: 8/4/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 12:00PM ET

Intrepid Potash (NYSE:IPI). is a leading U.S.-based producer and marketer of potash and related specialty fertilizer products. The company’s primary business centers on potassium chloride, a key nutrient used in agricultural applications to enhance crop yield and quality. In addition to potash, Intrepid Potash produces magnesium chloride and sodium chloride, which serve a variety of markets including de-icing, dust control and industrial chemical production.

Intrepid Potash operates through a combination of solution mining, solar evaporation and conventional underground mining techniques. Its principal operating sites are located in New Mexico (Carlsbad), Utah (Moab and Wendover) and California (Trona), where natural brine deposits are converted into crystalline minerals. The company’s logistics network leverages rail, barge and truck transportation to serve domestic agricultural regions across the Midwest and export channels to Canada, Latin America and parts of Asia.

Headquartered in Denver, Colorado, Intrepid Potash was founded in 1995 and has been publicly traded on the New York Stock Exchange (NYSE:IPI) since its inception. The company is led by President and Chief Executive Officer Paul J. H. Beazley, under whose oversight Intrepid continues to advance resource management and sustainability initiatives, focusing on water conservation and reduced energy intensity in its operations.

Intrepid Potash Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Operational improvements lifted profitability: Q2 adjusted EBITDA rose to $17.5 million from $13.8 million year over year, while gross margin increased 35% to $16.6 million. Trio achieved its lowest cost of goods sold per ton since Q4 2019.
• Positive Sentiment: Intrepid raised 2026 production guidance to 290,000–300,000 tons for potash and 295,000–305,000 tons for Trio, citing better recoveries, throughput, reliability, and process control; management said the potash increase represents sustainable incremental production rather than pulled-forward 2027 volume.
• Positive Sentiment: The company ended the quarter with $185 million in cash, no revolver borrowings, and $149.8 million of revolver availability after receiving $62 million from the South Ranch sale. The board expanded its share-repurchase authorization to $50 million, with repurchases expected to begin in Q3.
• Neutral Sentiment: Potash pricing and global supply-demand conditions remain constructive, while sulfur disruptions are improving Trio’s sulfate and low-chloride positioning. However, Trio demand softened in late May and early June, and management expects seasonally lower Q3 Trio sales before customers return ahead of the spring application season.
• Positive Sentiment: Full-year 2026 capital-expenditure guidance was reduced to approximately $40 million as the company defers or lowers the expected cost of major projects, while continuing to evaluate longer-term investments in Trio capacity, MOP production, reliability, byproduct utilization, and the Wendover lithium project.

Presentation

[Operator]

Thank you for standing by. This is the conference moderator. Welcome to the Intrepid Potash Inc second quarter 2026 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 queue, you may press star then one on your telephone keypad. If you would like to withdraw your question, simply press star then one again. I would now like to hand the conference over to Alex Gorrell, Director of Finance. Please go ahead.

[Alex Gorrell, Director of Finance at Intrepid Potash Inc]

Good morning, everyone, and thank you for joining us to discuss Intrepid's second quarter 2026 results. With me today are Kevin Crutchfield, our Chief Executive Officer, Zachry Adams, our Vice President of Sales and Marketing, Rick Kim, our Vice President of Operations, and Jason Tremblay, our Chief Financial Officer. Please be advised that our remarks today include forward-looking statements as defined by U.S. securities laws. These statements are based on information currently available to us and are subject to risks and uncertainties described in our SEC filings, which could cause actual results to differ materially from those currently anticipated. We assume no obligation to update any forward-looking statements. During today's call, we will also refer to certain non-GAAP financial and operational measures. Reconciliations to the most directly comparable GAAP measures are included in today's press release and along with our SEC filings are available at intrepidpotash.com.

[Alex Gorrell, Director of Finance at Intrepid Potash Inc]

With that, I'll turn the call over to Kevin.

[Kevin Crutchfield, CEO at Intrepid]

Thank you, Alex, and good morning, everyone. I'd like to welcome Jason Tremblay to his first earnings call as Intrepid's Chief Financial Officer. Jason brings deep experience across mining, crop nutrition, capital markets, and corporate strategy, including many years of direct experience in potash. His financial discipline and industry perspective are well-aligned with our priorities as we improve execution, sharpen capital allocation, and build greater investor understanding of Intrepid's long-term value creation opportunity. Now, our message today is built around three themes: execution, opportunity, and capital discipline. I'll frame those themes at the company level, then Zach will provide additional market context. Rick will discuss the operating improvements behind the improving performance and guidance increase, and Jason will cover the financial results, capital allocation framework, and our outlook. First, execution improved.

[Kevin Crutchfield, CEO at Intrepid]

Better process control, improving reliability, and recovery performance helped deliver year-over-year earnings growth, stronger production results, better Trio unit economics, and improved margin quality. Second, the opportunity set is becoming clearer. Trio market dynamics, improved operating performance, and disciplined internal investments give us a path to improve the durability and long-term earnings power of the core fertilizer business. Third, capital discipline remains central to value creation. Our balance sheet gives us flexibility to fund ready opportunities, return a portion of excess capital to shareholders, and adjust the pace of returns as our investment priorities evolve and mature. These themes are reflected in our decision to raise full-year production guidance for both potash and Trio, supported by continued improvements in the core fertilizer business and a stronger foundation for the second half of 2026 and beyond.

[Kevin Crutchfield, CEO at Intrepid]

Pricing remained constructive across the business, particularly in Trio, where current market conditions are increasing the value of sulfate exposure. Zach will cover the market backdrop in more detail, but at a high level, Trio's naturally occurring sulfate content continues to reinforce differentiated positioning. At the same time, we're staying disciplined in how we frame the near-term opportunities. The market backdrop is encouraging, we'll continue to translate that opportunity into guidance in a measured way based on customer demand, production execution, and the timing of market development. We also made important progress on portfolio and capital allocation priorities. We completed the South Ranch sale for $68.9 million, net of customary transaction adjustments, including $62 million of cash proceeds in the second quarter, which further strengthened the balance sheet and sharpened our focus on the core fertilizer business.

[Kevin Crutchfield, CEO at Intrepid]

We maintained a very strong liquidity position with $185 million of cash on hand, no revolver borrowings, and $149.8 million of revolver availability at quarter end. That balance sheet is not an end in itself. It's a tool to create value. Our strategy is to improve the reliability and long-term earnings power of the base business, capture value from Trio market dynamics, and allocate capital when the timing, returns, and execution requirements are clear. We recognize investors want clarity on how we'll use our balance sheet. Jason will provide more detail on the capital allocation framework, including how we think about liquidity, ready investment opportunities, and capital returns to shareholders. At the highest level, our approach is to preserve flexibility, invest where returns and readiness are clear, and return capital where appropriate.

[Kevin Crutchfield, CEO at Intrepid]

We're also evaluating value-creating opportunities that can improve the durability and long-term earnings power of the core business, including east underground Trio capacity, MOP production, enhancements to reliability, and byproduct utilization where the economics are compelling. We'll share more as expected returns, timing, resource requirements, and execution risks become sufficiently defined. On lithium, our partners continue to advance engineering and permitting activities at Wendover. We view the project as part of a broader opportunity set, and we expect to provide additional detail as those efforts progress later this year. Our goal today is to be clear about what improved in the quarter, where we still have work to do, and how better execution, a cleaner portfolio, and balance sheet strength can drive long-term shareholder value creation. I'm really proud of the Intrepid team's performance, and I want to thank everyone for their dedicated work.

[Kevin Crutchfield, CEO at Intrepid]

With that, I'll now turn the call over to Zachry for a closer look at the market backdrop for Potash and Trio, and how those conditions inform our view of the second half.

[Zachry Adams, VP of Sales and Marketing at Intrepid]

Thank you, Kevin. I'll provide additional context for Potash and Trio, focusing on the demand, pricing, and sulfate-related dynamics that inform how we are thinking about the second half of the year. In potash, market conditions remain constructive. Global demand has been strong, with record first half shipments into key markets such as Brazil and China, while channel inventories remain broadly balanced. Current pricing remains healthy compared with longer-term historical levels, even as customer commitments remain disciplined. On the supply side, recently announced production reductions in Belarus for maintenance are expected to keep supply and demand balances tight through the remainder of the year. We do not see meaningful near-term incremental capacity coming online in time to materially impact supply for the fall or spring application seasons.

[Zachry Adams, VP of Sales and Marketing at Intrepid]

Potash remains well-positioned as an essential crop input, particularly with prices still relatively moderate compared to other nutrients as growers focus on optimizing yields. In North America, the summer fill program announced in June saw a good customer response with pricing stable to ending spring values. While commitments remain disciplined and just in time, the fall application season remains an important demand window. We expect growers will return for additional tons as the season begins. We believe our strategically located production points position us well to execute on those opportunities. For Trio, the market opportunity is increasingly tied to the value of sulfate nutrition, low chloride positioning, and broader sulfur-related dynamics. Global sulfur supply disruptions tied to recent geopolitical developments have reinforced the value of Trio's naturally occurring sulfate component.

[Zachry Adams, VP of Sales and Marketing at Intrepid]

Those disruptions are affecting not only phosphate production, also other sulfur-based fertilizers such as ammonium sulfate and sulfate of potash. Sulfate of potash operating rates are also under pressure from feedstock concerns, increasing the opportunity for Trio as both a source of sulfur and low chloride potassium. We will continue our focus on growing the overall Trio market through balanced nutrition messaging, reliable and ratable North American-based supply, and disciplined market development as customers evaluate nutrient programs for the remainder of the year and into next spring. From a macro ag market standpoint, corn and soybean values have seen some recent appreciation tied to weather risk and geopolitical tensions, which can help support grower economics and reinforce the importance of maximizing yields. At the same time, lower global phosphate application rates could pressure forward yields and further tighten end-use stock-to-use ratios over time.

[Zachry Adams, VP of Sales and Marketing at Intrepid]

We recognize the challenges growers continue to face, we expect they will remain careful in their input decisions. However, that approach also underscores the value of essential yield-supporting nutrients with clear agronomic benefits. With that market context, I'll turn the call over to Rick to discuss the operational improvements supporting the higher second half guidance.

[Rick Kim, VP of Operations at Intrepid]

Thanks, Zach. I'll focus on the operational execution behind the second quarter improvement and the specific operating drivers that support the higher second half production guidance. The Q2 improvement was broad-based. It reflected better operating discipline, stronger execution of maintenance plans, improved throughput, and continued focus on recoveries, reliability, and process control. Those operating gains are visible across both our Potash and Trio operations. As Kevin mentioned in his opening remarks, performance across all of Intrepid's operations continues to improve. We are focused on improving forecasting, planning, and execution of our operating plans, our results show these efforts. Across the organization, we continue to improve what we refer to as execution muscle, which leads to consistency in delivering to our commitments in a more predictable, reliable, and repeatable way. Development of execution muscle is also creating opportunities to produce incremental tons, lower unit costs, and develop organic growth opportunities.

[Rick Kim, VP of Operations at Intrepid]

In Potash, we saw meaningful progress across all three facilities. At HB, cross-functional teams implemented new mill operating procedures that improved recovery by 3% year to date, supporting first half production of 72,000 tons and better than projected tons through the balance of 2026. At Moab, improved mill recovery supported higher first half production, and better than expected early season evaporation has largely mitigated the impact of the late 2025 storms. Moab also achieved a 2% year-over-year recovery improvement in the first half, equating to over 1,000 tons of additional production. At Wendover, adjusting the production schedule, including idling in April and processing in May

[Rick Kim, VP of Operations at Intrepid]

allowed for additional evaporation and increased forecasted production for the remainder of 2026. These changes underpin the higher full-year production guidance and reinforce our confidence in the second half operating plan. In Trio, our focus on reducing downtime and improving process control increased mine tons per operating hour by over 7%. Stronger ore grades supported higher production, while mill process changes improved both recovery and throughput. First half recovery increased by four percentage points compared to 2025, adding over 5,000 tons of incremental production so far this year. Together, these improvements strengthen Trio unit economics and have us on track to surpass last year's Trio production by over 25,000 tons, as reflected in the increase to our full-year Trio production guidance. We also continue to manage our larger capital projects with discipline.

[Rick Kim, VP of Operations at Intrepid]

At HB, our current production outlook gives us flexibility to defer near-term capital spending on the AMAX project without impacting expected production volumes as we continue to evaluate the cavern. At Wendover, we have reduced the expected cost of Primary Pond 8 by applying a revised construction process while still supporting long-term ride management needs of the operation. We still have work to do, and disciplined execution remains a priority. The Q2 results show the business is moving in the right direction, with site level improvements supporting better reliability, higher recoveries, improved production visibility, and stronger cost performance. Our focus now is to sustain those gains through the second half of the year. With that, I'll turn the call over to Jason.

[Jason Tremblay, CFO at Intrepid]

Thanks, Rick. Before I review the financial results, I want to briefly share what excites me about joining the Intrepid team. It's clear to me that the company has a meaningful opportunity to capitalize on its current situation. What stands out is a business with strong market fundamentals, significant capital to allocate, clear growth opportunities, and a strong leadership team to drive improved execution while building long-term shareholder value. As CFO, my focus is to bring financial discipline, industry insight, and capital allocation rigor to the business while clearly communicating Intrepid's investment thesis and progress. Turning to financial performance, second quarter sales from continuing operations were roughly flat with the prior year quarter at $66.7 million. The more important takeaway is the improvement in margin quality. Gross margin increased by 35% to $16.6 million.

[Jason Tremblay, CFO at Intrepid]

Net income from continuing operations improved to $2.4 million or $0.18 per diluted share, which includes a $5 million accrual related to anticipated water repayment and associated obligations in the Pecos water rights matter. Adjusted EBITDA from continuing operations increased to $17.5 million from $13.8 million last year. The improvement was driven primarily by stronger Trio margins and better potash production performance, while cost discipline remains an important focus across the business. In Trio, segment sales increased to $35.7 million from $33.2 million in the prior year quarter, with flat sales volumes and a 6% increase in average net realized selling price. Importantly, the segment delivered stronger margins and the lowest Trio cost of goods sold per ton since the fourth quarter of 2019, reflecting the operational improvements Rick described. These improvements reinforce our decision to increase full-year Trio production guidance to 295,000 tons-305,000 tons.

[Jason Tremblay, CFO at Intrepid]

In potash, segment sales were $30.6 million, compared with $34 million in the prior year quarter. Sales volumes declined to 59,000 tons, while average net realized sales price increased 8% to $391 per ton. Segment gross margin was essentially flat year-over-year, as higher prices and improved production performance were offset by lower sales volumes and higher average COGS per ton. Production increased by 8,000 tons from the prior year quarter to 52,000 tons, supporting our decision to increase full-year potash production guidance to 290,000 tons-300,000 tons. Moving to cash flow and liquidity, year-to-date cash flow from continuing operations was $55.3 million, compared with $42.9 million in the prior year. Capital spending remained disciplined, with $8.5 million invested in the second quarter and $13.6 million year-to-date. Cash generation remains strong due to improved operating performance and disciplined capital deployment.

[Jason Tremblay, CFO at Intrepid]

During the quarter, we also received $62 million of cash proceeds from the Intrepid South Ranch transaction, allowing us to further strengthen the balance sheet with $185 million of cash and cash equivalents and no revolver borrowings at quarter end. Looking ahead, consistent with project updates Rick described earlier, we are reducing full-year 2026 capital expenditure guidance to approximately $40 million, reflecting the updated timing and expected cost for AMAX and Primary Pond 8 at Wendover. As Kevin mentioned, we are approaching capital allocation with a balanced framework focused on funding safe and reliable operations, preserving balance sheet flexibility, and evaluating investments against risk-adjusted return potential, execution readiness, and strategic fit. With that discipline in place, we'll also return excess capital to shareholders. When we look at our cash balance, we think about it in practical buckets.

[Jason Tremblay, CFO at Intrepid]

First, we expect to hold approximately $50 million to maintain balance sheet strength and protect the company through trough conditions. Second, given the seasonality of the business, we expect to keep roughly $35 million available for working capital and cash flow variability. After those needs are met, the remaining cash can be allocated to high return investments or returned to shareholders, depending on the relative opportunity and timing. Consistent with that approach, in June, the board expanded the share repurchase authorization to $50 million. We expect to begin repurchases in the third quarter while retaining flexibility to adjust the pace based on market conditions, liquidity needs, and the timing of investment opportunities. We will provide progress updates in future quarters.

[Jason Tremblay, CFO at Intrepid]

Looking ahead to the third quarter, we expect potash sales volumes of 55,000 tons-65,000 tons at an average net realized sales price of $380/ton-$390/ton, reflecting late season price increases, summer fill pricing, and a second half mix with a higher proportion of feed tons. For Trio, we expect sales volumes of 30,000 tons-40,000 tons at an average net realized sales price of $400/ton-$410/ton, reflecting our expectation that Trio pricing will trend up as we fully realize the late spring season increase across all tons and continue to benefit from its low chloride and sulfate fertilizer value. To summarize, the quarter demonstrated meaningful improvement in profitability, a cleaner portfolio following the South Ranch sale, and a strong balance sheet. From here, our focus is to sustain operating gains, manage costs, and deploy capital with discipline.

[Jason Tremblay, CFO at Intrepid]

Operator, we are now ready to begin the Q&A.

[Operator]

We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then one again. We will pause for a moment as callers join the queue. The first question comes from Vincent Andrews with Morgan Stanley. Vincent, your line is now open.

[Justin Pellegrino, Analyst at Morgan Stanley]

Good morning, everybody. This is Justin Pellegrino on for Vincent. Congratulations on the results. You mentioned demand softening for potash in the second half of the quarter. I'm curious if you saw a similar function for Trio, and if so, understanding 3Q is a smaller volume quarter, was that considered in the guidance for 3Q, and how much of an impact does it have?

[Zachry Adams, VP of Sales and Marketing at Intrepid]

Yes, Justin, thank you for the question. Related to that, we did see a little bit of softness as we moved into late May, early June on the Trio demand for second quarter. Really speaking about third quarter guidance for Trio, that's really a function just of the seasonality of the business. That's in line with what we did a year ago with Trio being primarily a spring applied product. We typically see a dip in the third quarter, and then we expect customers to come back to the table beginning in the fourth quarter to start positioning needs for next spring.

[Justin Pellegrino, Analyst at Morgan Stanley]

Understood. Thank you. Then I guess more so across both potash and Trio, we've seen a bit of an improvement in crop prices over the past couple of weeks. I'm just curious if that has helped stimulate some sort of demand and how farmers are reacting to recent prices. Thank you.

[Zachry Adams, VP of Sales and Marketing at Intrepid]

Yeah, I think on the crop prices, we're watching those closely. Any uptick in crop values will certainly help the outlook for the fall application season. We're a few weeks away from the fall application season really beginning in earnest. I think if crop prices continue to appreciate, we'll see that come through with additional increase and opportunities for both potash and Trio during the fall.

[Justin Pellegrino, Analyst at Morgan Stanley]

Great. Thank you for the time.

[Operator]

Your next question comes from Lucas Beaumont with UBS. Your line is open.

[Lucas Beaumont, Analyst at UBS]

Good morning. Thank you. I guess just looking at potash, I mean, you're pointing to sort of roughly flat pricing sequentially into the third quarter. We haven't seen any sort of seasonal decline at all this year, really. I guess, how do you kind of see this setting up the price environment for sort of 4Q and 1Q when demand picks up again?

[Jason Tremblay, CFO at Intrepid]

Yeah, Lucas, thanks for the question. As you noted, pricing into the summer field for potash was about flat to spring values, and we have that reflected in our guidance. Where that third quarter number lands will be a function of sales mix and the percent of ag versus feed versus industrial and also just the mix of where those ag tons are going as well as far as the freight involved and those dynamics. Overall pricing outlook for potash remains very good and constructive through the remainder of the year, just based on a balanced global picture and also recent news, particularly in Belarus, of a reduction in volume in the second half.

[Lucas Beaumont, Analyst at UBS]

Great, thanks. I guess just on the production sort of cost side in potash, you were able to sort of hold your cash costs per ton there roughly flat sort of year-on-year in the first half. You're sort of pointing to roughly flat production year-on-year in the second half. Should we, I guess, see that trajectory on the cost side continue? Just any other factors to think about there, and I guess how do you sort of see your outlook from here and being able to just take costs down at all going forward? Thanks.

[Rick Kim, VP of Operations at Intrepid]

Yeah, Lucas, this is Rick. Thanks for the question. I think we see some opportunities to make some cost improvements throughout the balance of the year. I don't think they're going to be major this year. We are continuing to focus on that and have some longer-term initiatives that we're working on to make some meaningful cost improvements in both potash and Trio throughout the remainder of this year, but really into 2027.

[Jason Tremblay, CFO at Intrepid]

If I can just add on to that response, Lucas. The other thing to keep in mind is that Rick and team are really focused on kind of operational improvements, volume increases. Just like any other mining company, we're highly levered to fixed costs. As those operational improvements come through, we will see kind of the cost benefits on a unit basis.

[Lucas Beaumont, Analyst at UBS]

Great. Is there anything this quarter that you can kind of update us on in terms of the potential lithium project, I guess the timeline and your latest view there? Thanks.

[Kevin Crutchfield, CEO at Intrepid]

Hey, Lucas. Kevin here. Thanks for the question. No, look, we don't have a whole lot to update on. They're progressing on the permitting front. They're progressing on the engineering, working towards a definitive feasibility study. I think it's going to be a pretty active fourth quarter, to be honest with you. I think we'll have good update on the next quarterly call. Things are progressing pretty much as planned on the lithium project.

[Lucas Beaumont, Analyst at UBS]

Great, thanks. I guess just on Trio, you've been making, I guess, more progress there more recently sort of on the cost side as sort of production's improved. I guess where do you think you sort of are in terms of that sort of journey now and the ability to sort of further reduce costs as we go forward from here? Thanks.

[Rick Kim, VP of Operations at Intrepid]

Yeah. Lucas, good question. We have made meaningful progress. A lot of that was due to the installation of the continuous miner earlier in the year and the benefits with that. We still see a lot of opportunity just outside of that machine and the rest of the process at the mine. We have been working very diligently on increasing our tons per operating hour. We've seen meaningful progress in that. We still have opportunity to improve that. As the mine production increases, we're starting to see some bottlenecks in our mill, and are working to address those. We still have some big opportunities out there to grow Trio over the next couple of years, and we'll stay focused on achieving those.

[Lucas Beaumont, Analyst at UBS]

Great. Thanks very much.

[Operator]

The next question comes from Jason Ursaner with Bumbershoot Holdings. Jason, your line is now open.

[Jason Ursaner, Analyst at Bumbershoot Holdings]

Thanks. Congrats on the improved results. I very much appreciate all the details included now in the prepared remarks around capital allocation plans and everything else. Just following up on Lucas's question there. I didn't quite hear some of it, but the increase in the full year guidance for MOP potash production, you'd previously also given guidance for next year, for fiscal 2027, because of how the tons were sliding and kind of split between the two years. Is the increase in this year now pulling some of that back forward, or is this kind of truly found tons in some way?

[Rick Kim, VP of Operations at Intrepid]

No. Jason, that's a good question, and you're right. The answer is no, we're not pulling tons into this year. We've actually made meaningful and sustainable improvements in the way that we operate our mills. This incremental tonnage is largely based on increased mill recoveries and throughput. We've been mindful to make sure that we're not pulling tons in from next year. No, this shouldn't have an adverse impact on 2027 production.

[Jason Ursaner, Analyst at Bumbershoot Holdings]

Okay. Just on the operational improvement side for the potash piece. All else equal, if production were to be consistent year-over-year, I didn't hear if you said, I guess what level of efficiency gains on COGS are we still expecting to see as you get the saturation levels, brine grades, water availability, kind of the full benefits of the CapEx program from the last couple of years to flow through? Is there still benefits on COGS that you expect to see? I know kind of previously you've tried to quantify some of it. I guess how does some of that square with how you guys are looking at it now?

[Rick Kim, VP of Operations at Intrepid]

Yeah, just kind of dovetailing on Jason's prior comment. Our focus initially has been incremental production. Trying to make more tons without increasing our fixed costs and having the COGS improvement with those additional tons.

[Rick Kim, VP of Operations at Intrepid]

We're still continuing to progress on that. We still have work to do on that. Also working on the cost side of it, how can we get cost out of the process? I think it's probably a little bit too early to give longer-term guidance on where we think we may be able to get there. I think we see opportunities for some meaningful improvements still yet to come.

[Jason Ursaner, Analyst at Bumbershoot Holdings]

Okay. Just the capital allocation plans, I guess, Jason, you kind of went through the want to hold $50 million, another $35 million of working capital, obviously a bit over-capitalized right now. Kevin, you talked about feeling some of the pressure from shareholders on that in terms of doing something, but wanting to do it in the right way. Does that change the timing or intensity of some of the capital plans change based on the timing of the next guaranteed $50 million from Exxon? Or if the customer is to go ahead with some of the production plans and hit targets on the next $100 million milestone payments, is there a difference in the timing and intensity of some of the capital plans at $185 million of cash versus $225 million or $300 million, or something like that?

[Kevin Crutchfield, CEO at Intrepid]

Let me take a shot at that, Jason, and then the other Jason can fill in with some details. It's a good question. We, as you pointed out, felt the pressure, felt the noise, and feedback from the shareholders to start returning some capital. That's why we announced the $50 million program, which will kick off this quarter. What we felt like was appropriate was to get something started, let's start buying in some shares. Let's continue to execute, as Rick mentioned in his opening remarks. We're building better execution muscle. Let us continue to execute. We're evaluating some internal projects, which we think we can share a little more in the next one or two quarters. As the Exxon money, to the extent it rolls in, we don't have any idea when that'll happen. That could decidedly change how we think about capital allocation.

[Kevin Crutchfield, CEO at Intrepid]

I think it's premature to commit to anything right now other than we're committed to getting this program started this quarter. Let's see how things go, and we'll adjust the plan accordingly based on how the environment's unfolding for us.

[Jason Ursaner, Analyst at Bumbershoot Holdings]

Okay, great. I really appreciate all the details and congrats on the quarter, and great call. Thanks.

[Kevin Crutchfield, CEO at Intrepid]

Thank you.

[Operator]

This concludes the question and answer session. I would now like to turn the conference back over to Kevin Crutchfield for any closing remarks.

[Kevin Crutchfield, CEO at Intrepid]

Thanks, operator, and really appreciate everyone joining the call today. Thank you also for your questions. I got to say, we're really encouraged by the progress in the quarter and frankly, the last few quarters, and the momentum that we're building across the business. From our perspective, our priorities remain clear. Operate safely, sustain the production and cost improvements we're seeing, advance value-creating opportunities with discipline, and return capital where appropriate while maintaining financial flexibility. Again, I want to call a special call out to our teams out in the field who make all this possible. We want to thank them for their continued focus and execution, and also thank our investors for their continued interest and support. Operator, you may now conclude our call. Thank you.

[Operator]

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

Participants

Executives

• Alex Gorrell, Director of Finance

Analysts

• Kevin Crutchfield, CEO at Intrepid
• Zachry Adams, VP of Sales and Marketing at Intrepid
• Rick Kim, VP of Operations at Intrepid
• Jason Tremblay, CFO at Intrepid
• Justin Pellegrino, Analyst at Morgan Stanley
• Lucas Beaumont, Analyst at UBS
• Jason Ursaner, Analyst at Bumbershoot Holdings