- Earnings call transcript Q3 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc.

Third Quarter 2022 Results Conference Call. [Operator Instructions] The conference is being recorded. now Investor turn Relations. would to conference I Mapes, Evan Instructions] like the to over [Operator Please ahead. go

Evan Mapes

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

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

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

Bob Jornayvaz

year the comparing year and financial net sales months $XXX for million. year margins of $XXX $XX the million been when what the of average performance both history. with in for delivered prices respective our in to sales of This and The X at million fertilizer and per XX% strong strong are brings among ton, third and per of of adjusted income for ton, results $XX net high net XX%, $XX exceptional approximately EBITDA realized in $XXX and of first million EBITDA million. Intrepid And first the figures has an quarter potash income primarily adjusted approximately first quarter, to to both you, highest continues the per the $XXX Evan. Thank show been Trio adjusted third we by execution for driven for in to Intrepid's company. the which and approximately months in X the the well price the adjusted total coming ton as of of $XXX In X per respectively, as year. months ton $XXX respectively, has

pullback the For just-in-time markets those few agricultural in drove surprise tracking for lower pricing turn third in seen seasonally and key past a preference in no with that the market we've potash, drivers it's being moderate transactions. global in purchasing higher months the which quarter inventories,

geographic which sales netbacks price contracts delayed operations to helped was longer realized our on the industrial feed While also net stability the location agricultural markets In completely Intrepid third almost drive are in total sales the to full a sheltered quarter, XX% market from Moreover, average sales our display. into having the helps third outlets be feed and company-wide industrial helping and for quarter, feed higher into of diversified turned our typically out comprised strength sales sales, of markets. to term, while and what slower-than-expected our offset strategic of wasn't industrial Intrepid. add the

still at XXXX healthy very roughly high per trading seen $X spot true harvest November $XX.XX range. range. bushel in trading the spot for per to strong Crop decade. year's into is trading Even up, just is crop bushel mid-$X higher And on broader dollar the bushel, $X.XX range as spot bushel with -- XXXX and This next in Spot agricultural markets. from $XX of the crop per bushel profits. the per just while the inflation, commentary input actually very than wheat futures current not resiliency held under higher cost soybeans much high a is fall September in per of has wraps futures also are United $X pricing Moving XXXX pricing bushel. with on a drive soybeans the year. farmers prices, benefiting should harvest December in for corn under States per corn are almost prices wheat are at the

palm longer-term the futures which period, per the way $X.XX late price slightly bushel. XXXX with per pound. of present but XXXX range a Quickly, current That the over even X,XXX in today's highs the from significantly above and present $X.XX from trading just around at level out, crops, at highest per XXXX the $X.XX is at with saw to at Today's of for crops. January Looking trading under is MYR under up oil robust is key per but the pound. coffee at positive are Spot corn supportive level. down is potash still earlier seen further in the level decade. contracts end trading on outlook the current run-up since everyone down the MYR trading MYR futures still XXXX the into at the are. palm urge September is market about And the potash how the a I trading futures international XXXX healthier spot year still understand into with said, next was other to a outlook just Spot industry XXXX, a oil XXXX fundamentals high X,XXX in Potash ton, all $X.XX large critical, very is, futures XX% past from highs currently time is in XXXX more international sugar pound, roughly roughly situation key course, to for our market. back than X,XXX compare we the global levels, pricing. December last at

spot looks XX% past help positive. of highs, the Tying price the medium-term near- are will United the low is corn global good demand and economics Farmers has application around XX%, during More that about inventory trading levels we current to beginning backdrop of for and for building supply pricing. fourth the think draw the and to from down specifically, over at enjoying for respectively. XX% late quarter and down volatile QX. this started end XXXX. very since outlook and on should needing a in the world we positions expect about year back warehouse it's strong While Fall potash highest in harvest situation, result crop which still Intrepid, support the the range steady and in XXXX demand the nutrient and States, spring the completion is in nearing buyers nutrients reengage progress beans also

the equipment significant way, the drilling start provide our long intense market on is have pieces lead With will updates of with purchased of to within a major expected the cavern our tons. an program that site. I out commentary month Intrepid's focus projects some solar already increasing Moab on now and time potash on

of pipeline greater into should high-grade additional quantities QX the we rights quarter the mine. to of XXXX. of potash inject of is mine our mine XXXX designed keeping efficiently of our have several successfully for new the our this to we will, production in future years, from you the brine and installation increase in HB volumes have HB high-grade fluid available and brine deep the we volume ore. of to This tons. brine spots completed the horizontal well system to correlates At season, on generate additional meet the new production At anticipate pipeline early production additional also drain track into drilling brine of injected will avoid through solution on first issues. evaporation tons. directly that which to Solar production. and in are helping significantly first which The HB first and or demands within original pipeline in cavern low Moab's we're collected improved Solar time turn historic believe brine Wendover, for will We for the More X from laterals XXXX. mine, brine rates remain water improved of Moab mine budget. significant fluid brine sumps, We recently to use potash water Solution while This, too, total various This into rig increase to flow be to injection if the capacity significantly scaling track the increase the future will Solution well system

well we've significantly to quarter either in second which Intrepid a delivery to holes, quarter continues drilling availability, to production upon the result, additional with in the last delayed of scope total and necessary are XX the grades as due into for ready expanded appropriate in in move sustain expected permits. production has we weather capital uncertain rates the remains flow the be We core come. increased in forward seasons. to numerous of first of in that XXXX. At to although of increase the timing evaporation receipt call, or further of brine start New and end We'll be Ranch, additional our sand of as XXXX. help We half core variability multiple our New site around better identified the to call, permits coming we've overwhelming agencies demand during in for And as mine the soon for as Southeast the Since brine areas immediately will last the project XXXX first from the be anticipate as could achieving holes of Initial introduced production Mexico. that the rates evaporation state drilled XXX overall BLM the South XXXX scheduled us on Mexico. our could receipt expected wells years which major the resource in first the our of manage a items will which the

program to began $X.X addition under our projects, repurchase with share quarter. approximately stock third million repurchase In program under repurchasing our third the in we the quarter share $XX our in million spent capital

markets are of by end potash the total. my industry global historically steady despite given This out. quarters our strong economics for create constructive increased futures share world yield equity the be to uniquely finish facing maximum farming we potash cost for some both prepared approximately and and think few positioned. should while for repurchases benefiting broader Persistent remarks through from are However, and outlook. million Intrepid sustained supply the well throughout $X potash in many highlighting a headwinds, the are our are prices driving I'll that factors supportive inflation. prices. Overall, have Farmers should strong market volatility crop input demand October,

Our our debt-free flow use our balance lower sheet to increase to and, in ability capital Intrepid productive capacity and give growth turn, strong cost the ton. production per cash put to

our to everyone increase you balance repurchase details Finally, to to our sheet us call who enables pass I'll to dialed solid execute on also financial program. now present performance our the share and thank Matt today. more outlook. potentially Again, fund, in and

Matt Preston

Bob. Thanks,

distributors sales the net purchases we more compared segment, totaled XXXX sales of prior high slow for up our tons, our and period initially tons sold facility, sold on than to tons Trio noted, sales third as to potash. for carry higher from a of the a potash more than HB as start volumes for and focus Intrepid being performance spring realized expected down goods the the sales. Bob potash XX,XXX financial another continue led from helped in just-in-time volumes per increased quarter cost potash Total In being year XX,XXX relative quarter strong prices to drive slower cost prior fall in despite with expected. buyers ended of season which to sales As to ton inventory ramp

sites. hampered improve into related we QX, increases inflation As goods by cost overall expect and to continue to ton per be across we although we labor persistent sold move our cost of

we average XXXX we evaporation year was Year-to-date is quarter. slightly production and through our facilities year, well experienced the through extraction availability shortened will our from our few not XXXX decreased evaporation now issues same to as midway overall XXXX, that are in remains expect last the in seen potash similar the HB due availability the in mine. months season production to Overall, at Wendover actively our grades The these quarter Bob the our experienced rates operations solar XXXX period news to through compared addition at across lower during an capital to the improved the bright. at of Third we brine we have for production facility be spring We've but we we XXXX below prior our year. back is mentioned which addressing saw begin the and last the down in XXXX the rates better production brine season. facilities but projects production good potash outlook spring

Looking on strong the could sidelines pushed up Buyers like and the harvest at XXXX. it will even fall if season to country. sales spring the of of the quarter. even most wraps remain will transact timing confident that remain tons winter quite be Despite sales we across get fourth uncertainty, into mostly continue the as application looks QX

$XXX average of net XX,XXX to between XX,XXX sales tons sell in fourth of per an quarter $XXX. price the potash to to ton at realized expect we now, For

place a the from sold a to XX,XXX with year tons sold, in restock potash inventory trend prior QX limited segment. similar followed in Moving shipments just-in-time tons as and during as preference quarter in volumes down for increased particularly Sales XX,XXX another will given the what carryover the Trio the strategic start, great of seasonality locations season of opportunity using months. we to Despite tons in be the application Trio we expect slower coming products. our are the ahead the

has downtime mining volumes We incurred price an be XX,XXX days. process current Trio as our XX,XXX tons per which consistent with increased our fleet, average quarter to at net sales prior sales to the realized tons run expect limited $XXX remains production of fourth year and despite ton. $XXX increased we've with between

and order We in and will on rates. on expect efficiency have miners production of new site we X be first XXXX, which half continuous improve these the should our

liquidity. our to Turning

cash Through flow quarters business the have one after Our mines, our has minerals believe recent $XX solution million in $XX $XX customer from of of And approximately in invest the core all assets of reserve cash of that and the approximately is best in uses in to the and spent as third to we flow been impressive. solar cash CapEx. firmly production highlighted, year, capabilities months mining quarter lives decades. generation our enhance million first of million approximately X we've generated the measured the we on operations prepayment even repaying Bob

operator, spent $XX investments quarter fourth begin $XX ramp as XXXX Q&A capital Our given behind investment to to in on the projects plan in up for capital our lag is we're months million at activity That spending last of now remains million to concludes couple the of the XXXX. significant the major expected slightly the of although cash our and portion call. prepared ready remarks,

Operator

comes Capital line Jackson Instructions] BMO [Operator the with question Markets. The first Joel of from

Joel Vaccaro

and activity week article just Joseph oil Mexico on is mines. Wall We Jackson. for New this on sites gas your production This wanted to Vaccaro your Journal Street on ask infringing the published earlier discussing Joel how are on drilling in and going

plans plans any of mitigate be going this forward? to to going your your in risks? impacting would production And area what how be is the So those or expansion

Bob Jornayvaz

Well, we're Order BLM. what Secretarial of with gives the industry primacy. I closely The would potash working XXXX call the

And to reserves. to so and infringe the clearly that and engage up gas map BLM companies enforce so regulatory it's that our road do oil exists on not the

that sure we of to only that our very of reserves. not for position So our to there ensure make safety the miners destruction no are but fighting stringently is

Operator

the line Vincent of Stanley. The next question comes from Morgan with Andrews

Will Tang

This for is Will on Tang Vincent.

reasons. cost gas mean on it decreases tons being expecting you out the still we cost sold sequential the kind understand similar cost quite magnitude quarter lower more I XQ much being volumes like and how or rate of at contributed a QX thinking more you're levels then higher holdover like that you called if the the I potash of here. get fourth the weak your looks as So wondering I of some we quarter? evaporation cost maybe absorption of inventory can But much fixed Should increased higher to cost XXXX? I'm us how of from HB third with basis. or due your the as know to kind the under of guess, of help elevated well, be -- natural into the in or, And versus significantly mines as to

Matt Preston

Yes. appreciate A fair it. question and I

decreased as mentioned grades we've certainly, some brine brine So call, I had availability. overall on the and

look You is a This kind mentioned about of roughly year. XXXX, That 'XX, 'XX XXX,XXX look. QX The taking really is those XXX,XXX to QX back we're at the -- tons. the XXXX tons. harvesting is tons. I when production This was

said XXX,XXX XXXX, that year slightly be expect I not the going XXXX forward that we'll back above So but we to level. for

And a of of sense the far in we magnitude you evaporation. due kind past year to gives of it of bad how off so kind the fell

mean overall far carrying there, to as our roughly I you, we're I royalty want sales. higher overall in with obviously As still remind higher COGS, prices, X% of expense

As normal, HB HB far facility. of goes, XX% tons our of about which which our in XX% of is sold as the is come HB QX, of above out roughly our we out usually tons

I'd So a are production overall forward. and going contributor, certainly say while the inflation just main small overall drivers rates

Bob Jornayvaz

more intense want to at evaporation brine emphasize facilities. our really on Just generating to add that. the I solar to focus

approximately in first a investment as as intense will that our of We've up cavern quarter. to brine as call system the $XX are So beginning to original wells well sumps mine increase brine in track to at and low Moab as the our on drain availability. Wendover. more deep already what drill million wells spots the or a HB well pipeline program potash we drilled and be significant At a operational program drilling investment, an Moab, in

additional can't a we long I'm I in in make cost your that various focus So brine XXXX basis. just high-grade on that started late costs that late focus stress XXXX these projects lower supply, appropriate fixed there's acquisition product with so turn tons equipment we that intense to all lead the enough time. which time in increasing leads sorry, could the -- an on and items of execute on

Will Tang

Got you.

you to of Okay. think, the call, of the significantly And But that for, tons then activity believe the on kind which remain historical recent kind you function of levels. your expected X mentioned? something that statements. kind strong. Or fourth just potash lower quarter, you've to reconcile the volume rates commented the earlier wondering in XX,XXX had, is I application below I there? to pretty you a lower production season guided that how those else of reduction pretty you fall I'm is XX,XXX of Is it the

Bob Jornayvaz

in urge fundamentals. look people futures think both. It's potash and at terms to potash in at go I in they're XXXX, we And extremely what farmers, robust. back look robust the to today terms of positive in difference of the folks But on price XXXX, in it's combination that run-up basis. we saw those years compared to between for facing we an exists annualized the the when hard market out outlook global to a of tell look and economics we're

you for by hard to the at while look in farm their say being for they're fertilization purchasing as farming rates but So delaying see going it's you're to annualized can. if we utilizing fact maximum maximum us yield. farmers that balanced you're as yield, Well, on definition, definitely much an basis steadfast

the marketplace positive the the mixed message fundamentals and this fundamentals the or create But wait going see. So and think, for in of is says message supply, create that volatility I to that outlook. occur the underlying apologize that I the

Operator

the next with line question [Operator of Instructions] from comes Josh UBS. Your Spector

Josh Spector

I peers comments follow-up if guess view other your on already. to in on reported what's mean curious risk similar that a the you have of comment just your I potash. But are turn? into into wait-and-see a next the or to first see as say, Is persisting when Or spring. quarter into things attitude do there this that? you inventory year, early allow inevitable

Bob Jornayvaz

down look will at at being yield robust. are economics extremely economics to look have we're the as economics I at of historically what will going wait-and-see remain that simple like, given we season I despite look attitude. I you've When farmers think to we would down They -- to farmers the that their XXXX got speak. think guess, robust we're use. but farmer analogy demand each farm and staring the potash a strong. all, inventories, because what you say they're it's fact want a drawn that's, first looks see farmer highest That other And potential -- I When to takes don't I I extremely do. to

Josh Spector

your Okay. mix. feed That sense. I the clarify your on just to And and portion makes industrial of wanted comment

more I I being those longer about duration. but typically, stable, priced as think lower think

that that's something think I higher priced. shifted the last price that were year? the they Or you normal? over run-ups that mentioned Is given is

Bob Jornayvaz

let I'll Zack answer that.

Zachry Adams

for for Yes. premium industrial our Typically, a question. sales. feed Thanks point and the the see we on price

unusual. those overall So And quarter, quarter the with sales our they we in of that's for and price the our noted, XX% as positively being not impacted potash. on

Josh Spector

I of helpful. Okay. the dissipate? just in quarter mean would margins about it margin over be there, Like or pricing? expand could the that unique? be Is oilfield? on Is the strong. pressures were you surprise that know, segment do how can don't the If it I year? I guess next, ask of If more we pretty performance given thinking some in a I just the should compression one sales the gross

Matt Preston

Yes.

going in I margins steady think we oilfield our forward. pretty saw segment

It just remains segment. from of pretty strong in in generator caliche and the of depreciation our oilfield products strong. that in here and if and some overall even prior we'll purchases. have of release, overall, mentioned in hamper some to the file cash agreements, surface very year. that of generating our increased some our some COGS experience As activity our can increased we robust But and press sales demand seeing us from quarter COGS services What flow sales, remains third-party water we're shortly compared remarks use you're in pretty margin I our sales, a in amortization third did Q kind mean the other brine general we the and we

Josh Spector

half I Okay. first margin you say obviously, guess. closer I When And mean, to was your margin, clarify, gross to just XX%.

would Is was less think it to rate? XX% than that? X%. right Is run quarter, What you the This close about? it much

Matt Preston

Yes. that margins that pretty slight low I varies A purchases. up lot really pass-through. ends with mean it water third-party with of being

versus depending So party. or we purchases, that sort if on around. period of either how overall of I Those of at shift we're third But sales water look really adjusts, that going can if Josh. compressed have third-party kind water higher sell to much own higher our lower levels margins more towards that makes sense,

Bob Jornayvaz

we Yes. that our margin. And a use clarify, to to Josh, sales able infrastructure just when water, run we're to say positive back-to-back have third-party

we words, So own. balanced less that that's in other we margin got on water the that the buy And is water than water a book. actually

So it's those infrastructure the terms margins ability in compression to in more you're existing maximize usage but that our the seeing revenue. of of the

Operator

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

Bob Jornayvaz

appreciate their interest really thank today anyone and I time to a for thank Intrepid. -- and with to We look in everybody questions We day. great Have to their want it. talking additional follow-ups. you forward

Operator

concludes This conference. today's

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

Intrepid Potash (IPI) 3 Nov 222022 Q3 Earnings call transcript