IPI - Earnings call transcript Q2 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Q2 2021 Results Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. will opportunity there ask presentation, the be to an questions. After Instructions]. [Operator now I Vice the conference President to over turn Finance. would like to of Matt Preston, Please go ahead.

Matt Preston

uncertainties for Intrepid's Thanks, us call answer Bob Marketing, today Executive With following President, everyone. President as your in Jornayvaz. laws. them. with session, good to Co-Founder, Sherin, the based and are available uncertainties results U.S. securities assume actual defined no Q&A from Thanks Intrepid's are and to including and me These Commission, our Exchange on be by to statements information Adams. quarter materially and second Brian subject currently obligation incorporated the by described of and are periodic questions the will could risks and statements that Chairman anticipated. discuss is today, XXXX These we different Also which here our us cause reference. results. morning, statements forward-looking These to prepared joining CEO, advised during risks to and be Securities questions, and be those on Vice forward-looking Stone our Sales our update to reports remarks that Zachry Please remarks, today, are include our the to answers the filed available

to financial yesterday's to operational and in refer non-GAAP measures. these certain are we directly most the measures will comparable non-GAAP release. of During financial today's GAAP call, press included Reconciliations measures

call over at are on website the I'll and intrepidpotash.com. now releases filings turn Bob. press available SEC Our to our

Bob Jornayvaz

everyone. morning, and Matt, you, good Thank

quarter and We performance of line adjusted prior-year EBITDA demand first as resulted increasing Our and in XXXX. million, improvements income $XX.X strong million second the second $X.X and strong results. in Fertilizer significant our segments was adjusted of strong quarter by of the highlighted prices above bottom recorded net another quarter

in exceeding cash flow XXXX. impressive. alone, $XX.X With our for six already full-year operations operations million and cash from $XX.X first As for million our in flow was flow from XXXX, the second expected, cash the quarter of months

In on our loan Protection remaining our and senior addition full SBA paid from to notice million of $XX Program the down results, notes. received strong forgiveness on we Paycheck the

is sheet will the of significant execute balance clean and Our us market. us to and in allow the strong opportunities oilfield on in front

third to million. from quarter $X the million and South for tract of results acre Ranch Intrepid water acre sale permits associated satisfactory XXX ago benefited XXXX improved the in assets the that continued adjacent it, about in and spot at also above and purchased to global for business nutrient fuel in third at layering U.S. markets credit in the quarter. we our increasing to announcement our the levels. the down Potash facility quarter levels. dramatically price expect has pay another disposal gain million on our quarter price to sales $XXX hand $XX cash quarter, sales received years pricing summer considering per Second the of price layer and in for land, as small and Earnings XX,XXX located we're salt with the generating since with two revolving our agricultural million approximately improve both currently on we $X ton We $XX outstanding continue ended in

levels, in average quarter. layer prices in net to leading QX higher of sales another sales to realized spot pricing continue expect We during quarter to at increased the

restock and oil, distributors boost across spring our to been season, depleted of low Good have and markets, further but global across at from commodities potash firm inventory economics pricing. turn the agricultural the strengthen corn, the buyers cotton, sugar, for a and help which on wheat, rates most Ag the inventory other in eager global foundation farming soybeans, Solid coffee, levels. of application crops cornucopia end economy, palm provides

combined the an continue levels expect farm increased will of income half good to for demand second on-time potential the fertilizer harvest application. as with We remained supportive

Solutions quarter of of are and that graded wells $X.X in deferred slightly anticipation Ranch scale in million intentionally reduced although of were quarter the on XXXX, with Our schedule tied South Oilfield alone. half as closer sales sales in already to the Texas we sales July improved the second margins picking fracs to higher second based year from Water up in our intermediate. sliding pricing are and margin to West business water to our compared in a high third layer approximately the on sales

remains a are great our rights prior fully the the baring the our year near of activity Northern committed of looks the early for rest promising. half We supportive, Other highlighting outlook oilfield Delaware have second include and which the a caliche improved South the in into water and pricing for sales particularly and significantly year. XXXX runway Oil the use year to in the operations. water compared very revenue surface sources, the produced second quarter, improved royalty agreements Basin

full the we to look to expanding forward the cycle in quarter systems additional on the second services we offer the in investing Delaware. management water recycling cycle and and ESG friendly management continue products full We pivot water equipment during

-- bring XX,XXX the to XXX,XXX over the Matt the barrels to we over financial and outlook. the increase day units We And next per as recycling review day first now few to results steadily additional in turn next potential of per to I'll recycle barrel volumes a call expect online. quarters with few for mobilize per weeks our unit barrel our over

Matt Preston

Bob. you, Thank

demand in second across generated in improvements Bob The segments. drove all price significant increased going compared driving earlier, quarter the volumes consolidated our kept second to momentum the $XX.X Potash prior net year. As prices increases realized and fertilizer significant strong gross of higher segment in and quarter the margin results as sales in million noted rising the

make announced years. third to as delivery below restocked as a the the increased buyers Since $XX barge for seasons limited average as for us production May led two up after prior tons. quarter for XXXX and past busy price We to additional extend the Second last season booked quarter increase above the the year to volumes to an announcement, allowed months increases application enabled us across strong moved third in few over to good industries markets potash has of benefit saw in pond average as evaporation steady potash pricing to supply in up and production saw were compared The eager quarter compete in delivery. season historic spring. warehouses inland a potash farmers the weather pricing May average and commodity and demands above prices as warehouse all considerably distributors' harvest sell

per realized We average ton third between expect net fourth with quarter price additional the XXXX. $XXX into upside and will $XXX quarter be sales

XXXX. Our the Trio price of recorded second and quarter volumes compared a segment quarter on margin generating great to higher million $X.X in gross

First per ton half domestic Trio per $XX volume per to continued $XX than ton. and by ton which Trio third offset prior realize price this for robust reduced We realized sales international X,XXX potash more increase per the $XX customer delivery another increased June move QX orders the all to sales led after quarter We strong an year market of expect June to volumes. exceeded May between $XXX began tons record in as in expected in and deliveries, as and the of $XXX and demand relationships ton price with price taking increase in net higher.

year second year. quarter. now Our up Total we meet order booked as are the we ton is the similar posted third South prior fill to price $XXX through later to our -- summer were higher demand the million sales Ranch higher compared quarter demand mostly per $X.X and margin the manage levels to in in water

increased in expect other improving sources Bob quarter, in revenue in our sales margins segment we second water second results, the mentioned, increase as the As oilfield our and half.

end, to decreased was position of BMO. million which debt credit $XX revolving all quarter our discussed, Bob with outstanding our facility under at As

facility down the expect As to weeks. we million paid remainder of $XX all the back today, the and under pay in coming have but

under With we'll $X.X credit improving notes the facility full the look paid and that possibly and on facility at availability our spent in We quarters. coming now EBITDA, expanding we million down senior have capital and our ready $XX to remarks XXXX of concludes take million. prepared We're million to questions. $XX the year That of capital estimate the investments today. first between for through half now investment

Operator

We will begin Instructions]. now session. [Operator question-and-answer the

Jackson from comes Joel Please question go BMO with Capital ahead. first The Markets.

Bria Murphy

seems a these think business quarter? you ton is in it Murphy benchmarks the these How this aren't levels Hi, Thanks per these booking But prices We're are producers taking levels. now lot in of surge my questions. Bria And on with for fourth liquids transacting a you benchmark Midwest. for obviously $XXX around recently including Joel. do are? potash the at in global seeing

Bob Jornayvaz

very the let seeing which I'll that. in methodical demand, -- take. that orders question. give We're let color to we great timing the a That's answer I'll our that. very but strong been of We've region, some in Zach Zach in

Zachry Adams

Yes, the thanks question. for

on part going Midwest get the times liquidity far half most place I the the think this as in for started the of already in the they're fall. market current to buyers around what order the as levels, in to first or need

see today. from tons to a that demand lot don't have our We transacted liquidity at levels those of spot on So point. some we side certainly

we there later. to QX, tons and yet We're booking market QX address on from the ahead tight for hold what we'll and potash any QX for have feel comfortable we've we QX with going Looking not booked tons side. remains the to off and

Bria Murphy

for Oilfield half. obviously expect I down anticipation but second see? you've in believe level potential the the And the growth It's first margin the Thank steady of pointed half. higher revenue -- you Solutions in then second of to growth in Okay. sales do half, was to in you. What year-over-year in

Bob Jornayvaz

year. Certainly opportunistically question. back as really half from that a QX backwater just It's scheduled of down XXXX we of held and Yes. was the considerably for good QX the

our of South We expect Ranch. acre of sell out water the on to feet

hopefully revenue a I will but see number, the growth been we with kind of yes, give in where margin line we Sorry, had towards really year. you can't pre-COVID. second the We're half of in significant

Bria Murphy

back Okay. margins expand? rise you to guess, to the in margins your do rise is potash you the or Thanks. That's pricing cost expected also Trio, last How and helpful. just expect And trend do one third expect I then obviously quarter. on, to

Matt Preston

Yes.

we're So of kind the evaporation now. middle of season in half right back

that now pretty facilities at here going August, HB right to in week we'll say September. those start are our our be late should structure cost inventory production and up we're Our this early and selling tons Utah similar

pretty So bottom cost line, stay to to higher obviously roughly of lot where And see we're we fall selling the a that pricing, of. is when side just see royalties. with the and X.X% some we adjustments going consistent, on X%, out based

see increase, in fall the of XX% $XX we the cases. that to line most with So bottom

we so And that in QX. expect

Operator

Stanley. Morgan Please ahead. with The Andrews comes go next question from Vincent

Will Tang

Tang I'm guys, Will my wondering Hi you about for potash sales inventories guys if how thinking production and all can the question. taking we Vincent. this your is Thanks on as versus go year you're through and on for exit season? comment

Bob Jornayvaz

I'll as but small Matt you producer. inventory producer, a regional address let relatively the know, issue, we're

we've inventory. no our Matt and always sellout strength going I'll how not the tried is current the the to ability that to in see markets. commodity the manage the levels believe fertilizer book, of to continued let strength we've There So reason seeing to we're had address agricultural markets. our

been we've economy. of anticipation to book the sales in agricultural trying strong our really So manage

let specific levels. I'll you Matt, So this inventory to talk

Matt Preston

as really years half combine the to back We with very going I'd inventory, kept XXXX. of We're XX say XXXX. in sell able in since sure. tons to over really half we've coming those past certainly Certainly, that season. October demand average of the of XXXX strong evaporation kind the just middle off had Yes, application in a is months down we're above evaporation been

for we and season today. some pretty high any back and continued expect tons far holding we'll excuse early volumes for which hopefully see fall but continue where so we appreciation back you about year, don't netback to XXXX, our are to from And and production customers tons, be have certainly updates smart inventory we next -- as supplying me, historic holding a we price as or to XXXX

Will Tang

might more then thing wondering guys spring. foresee to move with I turn if And given soil like how you demand fall one question, do happening the I'm related it. guess, worst other potash I there's in and mine farmers applications high prices to this any words, and any Got the the next disruption if that are concern may, affordability? now

Bob Jornayvaz

to remotely through think increases in we're $XXX, demand up We and all we're the XXXX, when potash live demand don't I that once destruction the where price $XXX $XXX range. going near see pricing prices occurred in above got the destruction.

seeing that I across think look at extremely commodities at to doing and we're the use tend economics; farmer of now they're look potash significant all amounts We right when you well board. globally. strength

coffee focus So if we sugar, cotton, provides people to such at like the look on to solid it too have remind hitting a where everything and you at corn prices, look all they prices we else, are. often people foundation for because

So finally strength reasonable across we the given spectrum, market believe we're pricing. the entire is at what that

I we room not demand we've some and plenty think I'll got of any color. you we look at these economics, let Zach, see destruction farmers add at levels. should

Zachry Adams

Yes.

the as input from I fall increase these well. we for levels potash for for a up from rate levels long for it think customers not think growers, a covered as from these we're heightened as mean, and of makes growers Bob return our downtick We're of business well. potash specifically this at the on just with sense think financial in economics perspective at and things ground I growers. I even the from around bushels saw and we're fall we're just that, yet picking demand demand seeing seeing I still

Operator

Roberts Please ahead. UBS. go with The comes from question next John

John Roberts

and promotion. Thanks on Brian congratulations to

knowhow as the energy kind added board addition water any step strategy? in the member background energy Brian's oilfield plans during signal change well. also and the and here advancing Does the quarter of board You of a to

Bob Jornayvaz

to the I'll Absolutely. in her Bob. expertise victory oil and question. proud Lancaster space. the This his energy you John, Brian in addition gas for here of really minute. financial is and want take stress We're And really thank Lori the And of a lap let

putting energy emphasis the management, were on We've clearly to remit that up, the the trying but that the on on just projects not describing been we our our disposal interesting working units we're pivot recycling it's financial and work, experience, So full-cycle the experience. picked and units processed articulate water side. increased some to into

several anything we've to And lining so describing on been continued add past to if quarters the want up we just the over you that pivot execute that expertise Brian, that that. to that? and

Brian Stone

No.

we XXX from plus with you just willing Carlsbad ESG pivot that said what we water think there regulatory a market's I think business an asking for management, think standpoint, that standpoint, workforce highly well, think from our and market I this the full-cycle Bob. in it's with there's and think a very synergistic a we to is politically of employees.

we're in think market. And so that we really well-positioned

John Roberts

you Texas, And disposal disposed that the water? as does as that is grow the expecting mean then be water to recycled on and sale growth in recycled well wells to all land both you'll going be water or elsewhere grow just would water

Bob Jornayvaz

quarters. grow We'll the clearly not handle plans probably But in have to it, we grow about SWDs. ability opportunities. our disposal talk We through upcoming that to clearly

John Roberts

been? land the why in Texas also has And sale

Bob Jornayvaz

it look Well, adjacent. was we market. just we disposal I better opportunities guess have when the at

to adjacent was our plans XXX XX,XXX acres we it that for. So have bigger acres

like to there puzzle are that giant their Southeast -- a more if pieces they jigsaw them continuous look jigsaw if more New that have trading makes pieces people so of are puzzle. Mexico, their specific sense at so And that you puzzle,

literally operators, look it the capital. read trading And all so pieces piece of it useful one you is a if anything than land, trading the all pieces. for was infrastructure, at of wouldn't of something other allocation infrastructure, one just into else different I piece of different jigsaw

John Roberts

Thanks. Okay.

Brian Stone

management Xx. think to disposal, requires just it and Yes. large that And were this scale asset didn't also sell Bob, requirements. I we those felt full-cycle we demand I'd add meet into water on able

Bob Jornayvaz

Thank you, John.

Operator

Partners. comes Instructions]. ahead. Capital from go Farwell Please with [Operator question Matt next The ROTH

Matt Farwell

taking my question. Hi, thanks for

picture look versus just and give the of business talking been the we've months? of, evolve the might back business the the could oil what water blending, disposal. the in services over and in step and If like look it a sense XXXX infrastructure XXXX like? on to us What water you about source next How recycling, delivery, full-cycle management business is to going might XX

Bob Jornayvaz

got operate hope are a Throughout That's and New or Southeast negotiation of great water. ready we go under significant entirety it's have shut portion, currently that units ability the recycle that to literally or now to announce with fresh question. source water New brine We've Mexico. up and Southeast water we to day. the any Mexico running full to customer a brackish three deliver or entire Whether

the disposable quarters. the smack us our the given Southeast of Eddy That'll some be the we've in we've side, the the Big in New project On business, facilities the of very biggest units Mexico our upcoming unit state the location got that footprint in the middle with a unit of on location Lake creative and about New disposal Poker been and of Mexico. of we'll working put talking within that

the in goal water quarter, side at if and those the XXX,XXX levels now Did So I to and capacity side freshwater XXXX. but to be or barrels. to thousands is question? answer by same of hopefully our XXX,XXX deliver the right quarter a barrels able hundreds of to got hopefully your the fourth the disposing on at not first levels those mean, be recycling source same that going into delivering day we've

Matt Farwell

helpful. Yes, you. Yes, very that's it Thank did.

the is how In going terms -- funding to expense, so, some majority is cash funding XXXX. [ph] the through -- lot in of the them a flow look like of of but of the I And this if funding -- is imagine this flow what CapEx will you're statement? on

Bob Jornayvaz

the The spent. great has capital lot news of is been a

recycled infrastructure, if been our of if chunk has units, So you the the at spent. pipeline at look capital you big look a

revolver. talking are for flow on bite pieces cash with paid easily small we're that so a And drawdowns sized or about

puzzle earlier, together. describe to coming it's like that's try I giant as slowly -- jigsaw we've So a

happen drawdowns small or It in capital we're that flow of either at cash much pieces. be able very on bite sized should everything revolver. to looking the out So is

Matt Farwell

Okay, was you update great. your on to default don't disclosure, there but can litigation front on And alleged on either useful. take there well about just know as customer XX-Q a a -- a contract. on provide commentary the is be any rent the deposit any I one sales the in if as that's a on would

Bob Jornayvaz

love well. -- opinion. several the significant assume we taking are the eagerly update just being results complete. from legal be that news you. to time a rights, expenses able good days adjudicated. adjudication And those We And would Wechsler we're all announce us. We've that all write his can are had behind large the an in eagerly those we Judge thoughtful that outcomes. process We're for around to awaiting fighting large that wish awaiting only any trial. is the as procuring awaiting of got I permits, now water protests, adjudicating they're the in The to permits water We're we're expenses he's the just

Matt Farwell

default That's that the And great comment. -- of also the alleged contract nice and your assumed the commentary. south litigation in then is

Bob Jornayvaz

just words -- at say Yes. I they that. it got what the say and leave I'll

Operator

The ahead. go Ursaner with comes Please next Bumbershoot Jason Holdings. from question

Jason Ursaner

Kind for been it have -- of on long a asking question, about following last Kind you up of following Yes. the time.

to So you potash now, pretty And your even but market execute But looking capital of I a and a it might just in be cap improvement allocation capital strong brought guess a while net oilfield it. pretty come at you and been XXXX. structure that of strength just get for continued percentage premature first substantially can no into any you cash. then back on looking to out where on of in given answer that point, might with to and cash next could position position kind reason at significant the in has end focus grow that and to the it's meaning this cash about to shy year too to talk plans the

as it's yes, more have, even appropriate at there. It of part not to do maybe of buybacks strategy getting problem on that the at So are a is maybe sheet start unavoidable details in sit kind champagne today the going all to problem. the it where balance or a And what the but would be to to of you part strategy? point, financial willing terms of be or

Bob Jornayvaz

great you We a question. we're much sort shareholders we dividend, to with that be shareholder. say looking if it's glad it. I'm more very of you. would largest where Jason, We're special capital if very than as I would we love anything, will, aware a of to aligned to we're to are. more some nothing at are it, return inclined

feel like would And those so program discussions be a more much We we're having now very buyback efficient. tax earnestly.

so And I the can hard we timing that answer can as question, that ask so as time you working and eagerly you next size with and shape. we're

Jason Ursaner

did on it's just Okay, on actually one XXX sale, the that that. awesome. it last XXX And just a Texas acre, quick interest assuming get you if in you I'm or sold loving the the what land follow-up just please, bought? XX% carved the out --

Bob Jornayvaz

partitioned piece into that The of XXX%. XXX that we two a the the other was XXX and XXX% owned company owned a

as literally it sense a in And that land to track so was acre our land puzzle XX,XXX right our you was if I said, virtually pieces, will. made doubled It next XXX track trade more nice and a to what, XXXX. return just a money we

Operator

the Bob any back to remarks. question-and-answer concludes like conference the turn closing Jornayvaz would to session. for This I over

Bob Jornayvaz

willingness do day. your best. for strive you shareholder. want once your just and our thank perform in be you. Intrepid to and again, everybody continued interest Thank We hope your And to interest you to a for thank We a great and has

Operator

call. conference This today's concludes

you your day. Thank disconnect and may participating lines. a pleasant have You for

Intrepid Potash (IPI) 3 Aug 212021 Q2 Earnings call transcript