Earnings call transcript Q2 2023

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Operator

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

Second Quarter 2023 Results Conference Call.

As a reminder all participants are in a listen-only mode and 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

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

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

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

Bob Jornayvaz

first second in half totaling approximately appreciate quarter million, XXXX interest solid industry first million. We figure Thank with drove earnings and everyone. EBITDA company just bringing Intrepid Strong attendance $XX results you, Positive fundamentals for of adjusted $XX Evan, good and to second XX% our our quarters about call. your and under our quarter morning, XXX,XXX quarter key sold another potash highlight the volume than of the Intrepid. year. higher of volumes already we sales the approximately were second represents XXXX, three quarter, tons were in total And sales in quarter for second of our half last our XXXX. potash sales of again And the a for

improvement also remaining a our demand to of XX% was along agricultural in continues just geographic Behind for and markets combination under increased our from netbacks. of year. of this this with potash half into first A very the market comprising us, product premium logistical support important with sales advantages robust sales feed markets

than our second per in And QX. average $XXX ton realized pricing in approximately quarter, was price higher the for average sales net or roughly potash NOLA XX%

for the which touch the saw more of summer-fill strong of the netbacks will we trend we While announcement us Matt the continue, think detail recently resetting will call. in program, prices in on

in back much backdrop the As we -- market we positive XXXX the continues back and theme to of higher it levels. still half enjoy into as a agricultural look with intact markets into XXXX, that is look of very income key a

New soybeans levels story. tell crop with last strength futures seen into seeing Other commodities trade meaningfully higher than futures a for for corn markets and the international similar XXXX. both key decade over

world supply XX% Europe, around good in higher of Moreover, enjoy decade cocoa the all disruptions collapsing the wheat i.e., hot home profitability. to XX-year dry drive importance port and the unabated access in continue palm reliable such consecutive oil commodities potash. to war States, Eastern farmers than risk trade Overall, both deal Russian now highs, having are roughly very United to and and Sugar grain and the of will help while third as recent at deals, year the currently contribute weather average. futures a likely

the being normalize On after to drop with parallel close looking the profitability several levels common and to the We agricultural farm however, to then a highs for US farm to period incomes do not offer trends want What futures crop about for to profitability. of record had in some been late drought context market by acknowledge as And thereafter record that from uncommon certainly note, comparison to this it's at half has was decreased the years XXXX historic key slowly the declined. US summer aggregate XXXX, XXXX, year XXXX. incomes. annual in traded XXXX, of levels peaked in the following the markets

of in to still period, experienced potash cumulative very while potash X% potash demand global grew for growth demand at approximately the US CAGR. growth. solid during As XXXX Over annual XXXX, actually showed this demand rate a X%, US

on market scenario just help a this one again normal play, third can coming years. when forces of That and a is period While do example this remain historical optimistic with different the the demand we see -- more potential we growth form and the of are party the US for inform the project world at certainly emphasize that study and there agree profitability. we by outlook in rest potash forecast that recognizing said, eventually

around prepared commentary potash end some our my now projects. with I'll remarks growth

which ways. a are As designed residence maximizing impact our and operations our revitalize time these potash positively brine our by will underground, availability in business to brine projects reminder, two primary

more higher increase from cash revenue simply and production and flow byproducts. tons product selling will First, and more consistent

and we believe operations and our residence are brine where maximum Second, assets production each today. significantly higher at unit than top-tier can time significantly more each experiences will stand firmly production three economics. improve our evaporation potash when consistent higher and facility facility sufficient be that normal availability, We potash

our tons. and total tons at been achievable our last so, Moab we've decade XXX,XXX or the for for approximately Wendover levels higher guidance excitement This For higher investing HB of why and approximately or within was business almost approximately reference, production peak of while was XXX,XXX created have outlook a approximately XXX,XXX frame tons capital, tons. these XXX,XXX XXXX helps potash of XX% we than goals. annual the tons was XXX,XXX

Moab. XX, Well the is HB well for average Cavern completed as As the XX-mile for Phase new over of at years. successfully pipeline injection facility proven per the Phase XXX previous and to X in injection of injection injection as approximately recent XX Well rates pipeline a highlights, we in of minute projects potash triple up HB we our At have almost the X Carlsbad, at HB X, gallons minute, five per X,XXX gallons installation which various

we'll focus of rates. remainder scaling reduce X, to on flow is XXXX, pigging help the continue which ensure Phase of to consistent For installation the system a and

Eddy approximately rates XX% brine Until project. minute, already on average still an anticipate the project the target to recently gallons completion per of is received starting pool. than at HB we green measured the of roughly rates higher Also light HB, prior operating permitting Phase to at high-grade we X, injection which X,XXX shaft our

to expect ponds fourth quarter this in from this putting start We brine project our year. into early

designed was so a in is interlocking Cavern At solid high-grade Moab, project X XX X commissioned with have brine laterals Well July. operational far is of completely life new targets Bed have a three availability single Cavern system shown cavern for a designed long successfully Potash ore. well to the and ore that X measurement newly in and

was XX in to original additional designed mine Well XX a serves key purposes. is in X an three Bed in Well horizontal drilling workings pool recently commissioned. also and brine target Potash project the high-grade

medium longer-term serve access as injection other harvest ore And other when production a drill potash begins laterals brine backup third, access to create to extraction target wellbore in stranded pools. quarter; reliable or XXXX a our to additional contribute to the for second, wells. third First, unmined

after one Moab, on the commissioning X, successfully drill and At Wells crew kept rig horizontal lateral. site we XX and to more

lateral provide drilled access design For circulations a and time and as to effort, help our to brine well or production whipstock we caverns with to used well and access lateral time vertical better revitalization, to other Similar an we ensure this of then point maximize oil at this last an horizontally vertical gas our from caverns. horizontal occasionally resources. from one the existing Moab to reworking need our and horizontal oil workovers, new

project I'm for the far and potash in that execution of very brine for magnitude be the our long-life strong many and developing a confident we as that consistent to spending higher ensure reserves availability. more demonstrated reduce the capitalize help a well we're result decades encouraged that on so to lesser potash will fully Overall, cyclicality revitalized come our We as remain strong assets attempt the opportunity can in we've of the year. position capital production, this turn, by

now call over the turn Matt. I'll to Please ahead. go

Matt Preston

$XXX of trend Thanks, we EBITDA of generated $XXX per were net Bob. $X.X average $XX.X and adjusted In demand, and last net year's in and following $XXX which compares our figures $XXX ton, lower potash million. QX adjusted to per income of million seasonal continued Trio and per for prices second the quarter, ton. pricing ton has sales to peak Fertilizer and realized respectively,

quarter, and and in QX our early seen market has pricing expectations clearly good volumes found value the of the of expected Trio While reset, fertilizer in May. sales the came ahead in potash our

a In half compared last for our third sales XX,XXX of In comprised respective at sales, and in our short saw response approximately second window, the sales. volumes XX% in year. After very first price quarter $XX third $XXX and summer-fill feed year ton quarter. XXX,XXX XX% potash Midwest from positive while of XX% per total during represents up the of is the last tons half program up order segment, tons, for customers the respectively XX% deliveries. announcement XXXX Agricultural increases the which roughly to XX% first and for potash our warehouses a comprise July, of quarter our we now totaled of spot

how half quarter tons, year. second line with respectively, XXXX tracking sales and our roughly our XX,XXX totaled first sales were in Trio, XXX,XXX last and In volumes

began improved two of during back miners quarter. operating of new in first drove QX, half the the The continuous which production

took August. into new delivery operation it second the and miner by put end expect recently also of We the to of

Going XX,XXX new forward, we both tons, in operating. with of although rate produce that approximately see a we getting at efficiencies higher to quarterly should miners to plan figure run

moving second program, on the Before Oilfield I'll and on touch our segment. Solutions capital quickly half guidance to

use less the margins first drivers jobs which lower the surface we During last owing and sold frac of to fewer saw of reduced were half revenue, year. to water the XXXX, key compared agreement large

better continue activity half make to and the progress to on Our resource calendar Intrepid South. at we the capitalize second for of year, extensive on the project looks our currently sand

in drive we outlook expect the season the fertilizer of the of solid potentially strong and pricing, fall US. a the for fundamentals year, to attractive combination agricultural application earlier harvest a As

For of in net at of expect average $XXX the XXXX, per the range be realized currently XX,XXX to we the our sales volumes in sales XX,XXX potash to range price second of $XXX half an tons to ton.

For of to expect per sales XX,XXX average realized the XX,XXX tons ton. to to volumes $XXX sales price be our at net $XXX we between an range in Trio,

spend our second our approximately our $XX of of $XX spend Moving expenditures projects and being on capital the with major to our brings Moab to our Solar directed to million capital at potash six-month Solution program, quarter, the million in the HB first bulk mines.

conditions We which expect to be full remainder at million of million, the of Shaft sand of Eddy dependent Intrepid XXXX on will market and pipeline process permitting for include the injection year will time be Key program in lines. at on capital of continued Phase build and and and project projects development the our project our range $XX II South. successes recent HB project HB $XX

remain in capital our puts strength. a we $XXX priorities, sheet and Intrepid liquidity strong balance committed to balance For cash net of maintaining of our a approximately sheet current position allocation million,

we're remaining the execution but production very impacts seeing impacts the our as positive discussed to business. past we we've make already further investments projects our assess year, the and finish by encouraged As and will needed, over major capital

for we're call. the now the Q&A portion ready of Operator,

Operator

[Operator with from the comes line UBS. Joshua Spector Instructions] your first And question of

Lucas Beaumont

Lucas Josh. guys. for Beaumont Hi, It's on

the improve start like mean, second to that guide lot a wanted made from during going production. kind sort of just be basically your I to half to of quarter sounds year-on-year. the with on I volumes. of progress the It So flat is you potash initiatives

year just I your you into how the actually So could going give wondering volumes on kind view us kind XXXX? if and to of next that's latest there through of was flow

Matt Preston

the question. I No, appreciate Yeah.

the just yet. move us of. as certainly XXXX or in increased to XXX,XXX, project guidance XX see I back prepared think trend on of in give line potash towards puts kind capable a the brine, execution Well and that we're the But great XX start position far tons resonance of up that of time certainly, Cavern increased X, As XXX,XXX certainly XXXX, and not that to Well we're you'll to volumes

Bob Jornayvaz

facility. by Yeah. to by I want really just facility go

XX% If ago. you look at the now than to HB a at injecting few higher we're we XX% pipeline, were just years rates

additional the failed quarter, we construction So is point quarter HB withdrawal the IP as XXA shaft, on be Well. IP into be replacement by XXB targeted a the itself, first started which injecting will to fourth more the for mine an we'll completing as as brine -- just well

to the XX, off have we then revolving X And around very vertical whipstock Moab. existing move existing issues XX. Cavern Well which drilling. the pretty all Cavern of successful The executions is on Well X, been complex well in technological

each has additional now So is producing successfully. one one and been brine Each executed online. has

that at And a we're common like Wendover on really and more more theme HB, injecting withdraw is take we're you'll so each away the brine, very hearing shortly. that be you would here path at the same thing to about updates Moab, place, brine at to

thank question. So the you for

Lucas Beaumont

expenditure on free then of of cash sort And I on projects Thanks. the your flow. touch capital the sort just and wanted to

cash idea of this executing the free flow has the your of I And year. been just So just you side, half of on you're wondering the obviously, for kind then CapEx spend of could in projects. an if us second sort thinking sort what give was on of

just stay kind was around of kind the or as sort through of there million drop of back $XX lower expecting to I you off. of rolls continue of you're and as that that sort the how So Thanks. year next a work years of trend that wondering to kind couple

Matt Preston

for Certainly as million million out to in of of half sales far of spending back guidance I normal the going from year. half is the our $XX And see certainly year, for $XX slowdown ourselves too of the the not ahead back half. think to first we've the the get million given, we'll $XX

mind And apologize. projects half to question, I second as facility from the we I'm second operations our the That's in that? your as flow balance down sorry, so we of half. strong far credit you slow have sheet to cash a will the to why -- do and need execute repeating continue

Lucas Beaumont

just I Sorry to the CapEx, was like... CapEx side, trying yes, the understand

Matt Preston

far As rate, run as yes. the

Lucas Beaumont

the What engaging trying level years just on to you're spend the of fixed is in you're what rather next what normalized so projects basically the reasonably that, on term I I more mean going couple to spending expansions. potash So execute execute you spend is forward the so versus your, understand kind is maintenance near while think you guess, right? of

Matt Preston

Yes.

caverns. here of like Our progress increased the big this sustaining think kind major the the anywhere pipeline $XX lot brine is said, million I see And our projects. year, and continue million how and But I trend we on of as residence Moab from our with replacement in evaporation executed per we'll to we've those $XX projects and capital projects year depending improvement a to time of just get season kind HP we availability. opportunity next

side never fruit opportunity capital in slug in down do kind And holds, we expect of come years to capital coming the to HB. here XXXX, what that know exactly But in XXXX expect but big the that and future be kind of capital the XXXX number for the Moab low-hanging and less of in

Lucas Beaumont

pricing. lastly And Thanks. on then maybe Right. just

pricing gave that third for was you the number second that or quarter half? Sorry, was potash, the

Matt Preston

for That was and both Trio. second half potash

Lucas Beaumont

Okay. Yes.

of relative was expectations going about weeks. I of very sort here move So competitors up talking of have the then I kind strong to fourth moving in I ask just pricing of sort the summer-fill your higher quarter. third kind to guess, stabilized of also mean, benchmarks of program kind kind your been to in -- started into quarter with potentially recent have there about and

or mean, your shallow you to expecting going a I the average kind you all kind reset sounds I if going overall. move like seems -- probably second get up, it quarter in of mean, to to number, it's at it there any be was half to and pretty third of like take So I are that

Bob Jornayvaz

about or talking say a shallow shallow? You're correction when you

Lucas Beaumont

yes. Sorry,

realized your XQ. So was $XXX pricing in

sort I expecting $XXX quarter. we'll the half. second the uptick in You're seasonal of fourth $XXX in a to assume get

about the pricing? how you're there understand of sequential and kind quarter to potash fourth on trying just thinking So dynamics third

Bob Jornayvaz

are the extremely strong. fundamentals Well,

to So prices. reality, extremely corn, oil if cocoa, separate copper at crude we at at it's we coffee, soybeans elevated we want look entire want sugar, strong. at pricing, from to the look cycle, If we see if can you look pricing, fundamentals commodity wheat,

significantly So that deteriorate to entire entire at the is strong. cycle, the where we And given for no to shouldn't commodity if look farmer exist the from they be there income from to very reason there believe fundamental commodity standpoint cycle farmer levels economics, reason continue the no global for a today. supply-demand is economics prices and

markets, to both the agricultural justifies quite different markets, of which markets now fundamentals producers and the especially So, things, firm, pricing. but different current do commodity fertilizer markets may choose the remain underlying and are

Lucas Beaumont

Right. Thank you.

Operator

question next with Ursaner Jason from Holdings. the comes your And Bumbershoot of line

open. is line Your

Jason Ursaner

Good afternoon, taking and for questions. thanks the

some it don't it's your to felt the of ready. But fill I kind of happened. it. significantly guess, and Just before really like Ukraine a fill on summer of the to a where with in you're the of to continuing on XXXX it, your fundamentals, guys pricing I thoughts the was confusing, set I had big at were follow-up, point There kind invasion, to get then getting of try distributor invasion they wanted level because the strengthened you kind know more just little

distributors yield Farmers, where then have fundamentals where I a of I basked impacted really thought, is inventory is little in farmer distributors' that inventories and right is super took you're people which price on think potash the the of demand situation guess, ran bit, holiday, kind disruption, the and low. kind being now come down

of demand time off. I is? almost mean kind So but happening are people the for fill, it the they way thoughts rewarding fill seem summer taking the why what extraordinary for be your is on I like that feels surprised it will summer the guess of they're kind

trying just summer get on So how fill is thoughts playing out. to your that

Bob Jornayvaz

great a It's question.

of As you've especially know think a this fill in there was I'm the fill you programs, over summer, that program. a proponent I listened years, for not need no

However, we don't that drive market.

And so for knew fill I think the so that programs have they a they've conditioned saw demand fill then that program. in farmers the to -- chose that participate and were wait simply producers to

asked don't a Because the that we economics, of I other it's of better they producers And route. so choose question necessary. why was robust given it the think think some

Jason Ursaner

revitalization theme of some the of not number -- normal consistency more general, kind of where great side, your given you underground in just side then and operations, the But specifically gave have a time today, brine, this in haven't costs in cash what programs. to do on kind terms of year you more withdrawing And years, magnitude a mean extent Okay. just a pretty communicated on the and of the you know to the more And that. more of details I on asking cost I'm common is what elevated. seems you which cost normalized brine, of are could just

Bob Jornayvaz

throw just dollar a cost not XX%. throw should fixed by again, to percentages, at should a the reduction, production cost but literally enjoy but your for you in hate operation, out out And to I'm once dollar, to XX% XX% going if increase I cost you ballparks you reduction. see

online to these allow us address successfully those the brine reductions much to and production projects as so be achieved. ponds, kind targeted and what continue to able -- more look the guidance fully give we like measure as to precipitates. of intend come deliver we've then We high-quality levels what into the cost And we as to

Jason Ursaner

enough. Fair Okay.

isn't than where Just we being not where is, going stays to pricing CapEx if roughly opportunity with like costs be obviously the back maintenance now, your it going the net which flow, but are are in control. model less of it capital capital, program a position. if already pretty to But you're you're your and down, seems kind in making cash it coming good cash just does --

capital So to kind I think thinking? you guess, when where allocation lead does you about term, start of to that longer

Bob Jornayvaz

leverage levels quote strong we and the we back leverage that sheet on you've -- a verbal the year, year production once get We reasonable the can to so. we you've of to can production sustainable a said to achieve. been We've to back after then consistent maintain achieved do a amount unquote want able feel put always balance want we've that sheet. achieved you balance Once that

modest willingness profile, clearly and leverage leverage to we are and that to So on this buyback we hope shown we right now, a evaluate a out way. at be that XXXX, capital to once much pretty it's to program, leverage, back and in to buy And we get think begin basis. our to stock remains. We've different levels. then able have you and finish when at take on if more But our stock to can be regular significant program a back the very results, already in look and our willingness I demonstrated going willingness

Jason Ursaner

Great. you. your time. Appreciate Thank Okay.

Operator

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

Bob Jornayvaz

and I the on thank Intrepid, seeing look interest to time line a each and taking to appreciate the on everyone the road. you in questions want forward today. be the Have day. great of to We the for

Operator

today's this And conference call. concludes

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

Intrepid Potash (IPI) 3 Aug 232023 Q2 Earnings call transcript