Bay Street News

Intrepid Announces First Quarter 2024 Results

Denver, CO, May 08, 2024 (GLOBE NEWSWIRE) — Intrepid Potash, Inc. (“Intrepid”, the “Company”, “we”, “us”, “our”) (NYSE:IPI) today reported its results for the first quarter of 2024.

Key Highlights for First Quarter 2024

Financial & Operational

Management & Board of Director Updates

Capital Expenditures

Project & Operational Updates

Liquidity

Consolidated Results, Management Commentary, & Outlook

In the first quarter of 2024, Intrepid generated sales of $79.3 million, a 9% decrease from first quarter 2023 sales of $86.9 million. Consolidated gross margin totaled $6.4 million, while net loss totaled $3.1 million, or a net loss of $0.24 per diluted share, which compares to first quarter 2023 net income of $4.5 million, or $0.35 per diluted share. The Company delivered adjusted EBITDA(1) of $7.7 million, down from $16.4 million in the same prior year period, with the lower profitability primarily being driven by lower pricing for our key products. Our first quarter 2024 net realized sales prices(1) for potash and Trio® averaged $395 and $300 per ton, respectively, which compares to $485 and $344 per ton, respectively, in the first quarter of 2023.

Matt Preston, Intrepid’s Chief Financial Officer and acting principal executive officer commented: “Intrepid started the year with a solid first quarter that was highlighted by robust demand and stable pricing in the potash market. Our quarterly Trio®sales volumes of 91 thousand tons exceeded expectations as consistent potash pricing and improving sulfate values drove strong in-season demand. Improved mining rates due to the two new continuous miners allowed us to adjust the production schedule at our East facility while maintaining consistent production rates in the near-term as we limit capital expenditures and mine development work. In potash, reduced production during the 2023-2024 production year has constrained our sales volumes and negatively impacted our unit economics, but we still expect our production to inflect higher starting in the second half of this year.

Getting our potash production back to the historical levels remains the number one focus for Intrepid and we look forward to seeing the improvement in our unit economics later this year. For a final comment, we want to extend our heartfelt best wishes to Bob for a swift recovery, and we appreciate the support and understanding during this time.”

Segment Highlights

Potash

    Three Months Ended March 31,
      2024     2023
    (in thousands, except per ton data)
Sales   $         37,576           $         52,497        
Gross margin   $         5,574           $         14,428        
         
Potash sales volumes (in tons)             74                     89        
Potash production volumes (in tons)             87                     90        
         
Average potash net realized sales price per ton(1)   $         395           $         485        

Potash segment sales in the first quarter of 2024 decreased 28% to $37.6 million when compared to the first quarter of 2023. The lower revenue was driven by a 19% decrease in our average net realized sales price per ton to $395, as well as a 17% decrease in our potash sales volumes to 74 thousand tons. Our potash sales volumes decreased due to our lower potash production at our HB and Wendover facilities in 2023.

Our potash segment cost of goods sold decreased 18% in the first quarter of 2024, compared to the first quarter of 2023, as we sold 17% fewer tons of potash. In addition, we had a lower weighted average carrying cost per ton to begin 2024 owing to the lower of cost or net realizable value inventory charge that was recorded during the fourth quarter of 2023. During the first quarter of 2024, we recorded total lower of cost or net realizable value inventory adjustments of $0.5 million as our weighted average carrying cost per ton for certain inventoried potash products was higher than our expected selling price per ton for those products.

Our potash segment gross margin decreased $8.9 million in the first quarter of 2024, compared to the first quarter of 2023, due to the factors discussed above.

Our potash production totaled 87 thousand tons in the first quarter of 2024, which compares to 90 thousand tons produced in the same prior year period. We continue to expect a positive inflection in our potash production in the second half of 2024.

Trio®

    Three Months Ended March 31,
      2024       2023
    (in thousands, except per ton data)
Sales   $         36,487             $         30,274        
Gross (deficit) margin   $         (1,140 )   $         1,452        
         
Trio® sales volume (in tons)             91                       65        
Trio® production volume (in tons)             54                       49        
         
Average Trio® net realized sales price per ton(1)   $         300             $         344        

Trio® segment sales increased 21% during the first quarter of 2024, compared to the first quarter of 2023. Trio® sales increased primarily due to a 40% increase in Trio® tons sold, partially offset by a 13% decrease in our average net realized sales price per ton. Sales volumes increased during the first quarter of 2024, compared to the first quarter of 2023, as customers found good value for Trio® relative to crop prices.

Trio® cost of goods sold increased 31% in the first quarter of 2024, compared to the first quarter of 2023, primarily due to higher sales volumes. However, our Trio® cost of goods in the first quarter of 2024 did benefit from the lower of cost or net realizable value inventory adjustment recorded in the fourth quarter of 2023 which reduced our beginning 2024 Trio® average carrying cost per ton. In addition, our weighted average carrying cost per ton was positively impacted by decreases in certain production costs incurred during the first quarter of 2024, such as production labor and benefits expense, as we moved to a reduced production schedule and restarted our fine langbeinite recovery system in the first quarter of 2024. Lastly, we produced more tons of Trio® in the first quarter of 2024, compared to the first quarter of 2023, which also helped lower our per ton production costs.

Our Trio® segment incurred a gross deficit of $1.1 million in the first quarter of 2024, compared to gross margin of $1.5 million in the first quarter of 2023, primarily due to the decrease in average net realized sales price per ton.

Our Trio® production totaled 54 thousand tons in the first quarter of 2024, which compares to 49 thousand tons in the prior year period.

Oilfield Solutions

    Three Months Ended March 31,
      2024     2023
    (in thousands)
Sales   $         5,324           $         4,250        
Gross margin   $         2,000           $         472        

Our oilfield solutions segment sales increased $1.1 million in the first quarter of 2024, compared to the first quarter of 2023, due to a $0.6 million increase in water sales, a $0.3 million increase in brine water sales, and a $0.2 million increase in other oilfield solution products and services. Our water sales increased compared to the prior year period due to increased sales of water on our South ranch. Our brine water sales and sales of other oilfield solutions products and services increased due to continued strong demand from oil and gas operators in the Permian Basin near Intrepid South.

        Our cost of goods sold decreased $0.5 million, or 12%, in the first quarter of 2024, compared to the first quarter of 2023, due to using less contract labor. In the first quarter of 2023, we used contract labor to complete various projects at Intrepid South.

Gross margin for the first quarter of 2024 increased $1.5 million compared to the first quarter of 2023, due to the factors discussed above.

Liquidity

During the first quarter of 2024, cash flow provided by operations was $41.5 million, while cash used in investing activities was $6.6 million. As of May 3, 2024, we had approximately $46.5 million in cash and cash equivalents, no outstanding borrowings, and $150 million available to borrow under our revolving credit facility, for total liquidity of approximately $196.5 million.

Notes

1 Adjusted net (loss) income, adjusted net (loss) income per diluted share, adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) and average net realized sales price per ton are non-GAAP financial measures. See the non-GAAP reconciliations set forth later in this press release for additional information.

Unless expressly stated otherwise or the context otherwise requires, references to tons in this press release refer to short tons. One short ton equals 2,000 pounds. One metric tonne, which many international competitors use, equals 1,000 kilograms or 2,204.62 pounds.

Conference Call Information

Intrepid will host a conference call on Thursday, May 9, 2024, at 12:00 p.m. Eastern Time to discuss the results and other operating and financial matters and answer investor questions.

Management invites you to listen to the conference call by using the toll-free dial-in number 1 (800) 715-9871 or International dial-in number 1 (646) 307-1963; please use conference ID 1179359. The call will also be streamed on the Intrepid website, intrepidpotash.com. A recording of the conference call will be available approximately two hours after the completion of the call by dialing 1 (800) 770-2030 for toll-free, 1 (609) 800-9909 for International, or at intrepidpotash.com. The replay of the call will require the input of the replay access code 1179359. The recording will be available through May 16, 2024.

About Intrepid

Intrepid is a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed, and the oil and gas industry. Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, Intrepid produces a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also provides water, magnesium chloride, brine, and various oilfield products and services. Intrepid serves diverse customers in markets where a logistical advantage exists and is a leader in the use of solar evaporation for potash production, resulting in lower cost and more environmentally friendly production. Intrepid’s mineral production comes from three solar solution potash facilities and one conventional underground Trio® mine.

Intrepid routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investor Relations tab. Investors and other interested parties are encouraged to enroll at intrepidpotash.com, to receive automatic email alerts for new postings.

Forward-looking Statements

This document contains forward-looking statements – that is, statements about future, not past, events. The forward-looking statements in this document relate to, among other things, statements about Intrepid’s future financial performance, cash flow from operations expectations, water sales, production costs, acquisition expectations and operating plans, and its market outlook. These statements are based on assumptions that Intrepid believes are reasonable. Forward-looking statements by their nature address matters that are uncertain. The particular uncertainties that could cause Intrepid’s actual results to be materially different from its forward-looking statements include the following:

In addition, new risks emerge from time to time. It is not possible for Intrepid to predict all risks that may cause actual results to differ materially from those contained in any forward-looking statements Intrepid may make. All information in this document speaks as of the date of this release. New information or events after that date may cause our forward-looking statements in this document to change. We undertake no obligation to update or revise publicly any forward-looking statements to conform the statements to actual results or to reflect new information or future events.

Contact:
Evan Mapes, CFA, Investor Relations Manager
Phone: 303-996-3042
Email: evan.mapes@intrepidpotash.com

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands, except per share amounts)

    Three Months Ended March 31,
      2024       2023  
Sales   $         79,287             $         86,920          
Less:        
Freight costs             12,830                       11,590          
Warehousing and handling costs             3,089                       2,733          
Cost of goods sold             56,431                       56,245          
Lower of cost or net realizable value inventory adjustments             503                       —          
Gross Margin             6,434                       16,352          
         
Selling and administrative             8,357                       8,858          
Accretion of asset retirement obligation             622                       535          
Impairment of long-lived assets             1,377                       —          
Loss on sale of assets             251                       200          
Other operating income             (1,132 )             —          
Other operating expense             1,265                       1,385          
Operating (Loss) Income             (4,306 )             5,374          
         
Other Income        
Equity in earnings of unconsolidated entities             149                       821          
Interest income             244                       85          
Other income             8                       13          
(Loss) Income Before Income Taxes             (3,905 )             6,293          
         
Income Tax Benefit (Expense)             775                       (1,787 )
Net (Loss) Income   $         (3,130 )   $         4,506          
         
Weighted Average Shares Outstanding:        
Basic             12,817                       12,694          
Diluted             12,817                       12,875          
(Loss) Earnings Per Share:        
Basic   $         (0.24 )   $         0.35          
Diluted   $         (0.24 )   $         0.35          

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF MARCH 31, 2024 AND DECEMBER 31, 2023
(In thousands, except share and per share amounts)

    March 31,   December 31,
      2024       2023  
ASSETS        
Cash and cash equivalents   $         34,067             $         4,071          
Short-term investments             2,971                       2,970          
Accounts receivable:        
Trade, net             41,826                       22,077          
Other receivables, net             1,201                       1,470          
Inventory, net             102,549                       114,252          
Prepaid expenses and other current assets             5,530                       7,200          
Total current assets             188,144                       152,040          
         
Property, plant, equipment, and mineral properties, net             354,809                       358,249          
Water rights             19,184                       19,184          
Long-term parts inventory, net             30,543                       30,231          
Long-term investments             6,297                       6,627          
Other assets, net             8,609                       8,016          
Non-current deferred tax asset, net             195,012                       194,223          
Total Assets   $         802,598             $         768,570          
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Accounts payable   $         11,029             $         12,848          
Accrued liabilities             13,374                       14,061          
Accrued employee compensation and benefits             6,299                       7,254          
Other current liabilities             8,748                       12,401          
Total current liabilities             39,450                       46,564          
         
Advances on credit facility             —                       4,000          
Asset retirement obligation, net of current portion             30,699                       30,077          
Operating lease liabilities             518                       741          
Finance lease liabilities             1,608                       1,451          
Deferred other income, long-term             47,170                       —          
Other non-current liabilities             1,166                       1,309          
Total Liabilities             120,611                       84,142          
         
Commitments and Contingencies        
Common stock, $0.001 par value; 40,000,000 shares authorized;        
12,875,520 and 12,807,316 shares outstanding        
at March 31, 2024, and December 31, 2023, respectively             13                       13          
Additional paid-in capital             666,326                       665,637          
Retained earnings             37,660                       40,790          
Less treasury stock, at cost             (22,012 )             (22,012 )
Total Stockholders’ Equity             681,987                       684,428          
Total Liabilities and Stockholders’ Equity   $         802,598             $         768,570          

INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands)

    Three Months Ended March 31,
      2024       2023  
Cash Flows from Operating Activities:        
Net (loss) income   $         (3,130 )   $         4,506          
Adjustments to reconcile net (loss) income to net cash provided by operating activities:        
Depreciation, depletion and amortization             9,304                       9,292          
Accretion of asset retirement obligation             622                       535          
Amortization of deferred financing costs             75                       75          
Amortization of intangible assets             80                       80          
Stock-based compensation             1,322                       1,746          
Lower of cost or net realizable value inventory adjustments             503                       —          
Impairment of long-lived assets             1,377                       —          
Loss on disposal of assets             251                       200          
Allowance for parts inventory obsolescence             53                       —          
Equity in earnings of unconsolidated entities             (149 )             (821 )
Distribution of earnings from unconsolidated entities             —                       320          
Changes in operating assets and liabilities:        
Trade accounts receivable, net             (19,749 )             (12,474 )
Other receivables, net             247                       (92 )
Inventory, net             10,835                       7,645          
Prepaid expenses and other current assets             922                       250          
Deferred tax assets, net             (789 )             1,661          
Accounts payable, accrued liabilities, and accrued employee
compensation and benefits
            (3,621 )             (5,305 )
Operating lease liabilities             (384 )             (401 )
Deferred other income             44,434                       —          
Other liabilities             (671 )             1,232          
Net cash provided by operating activities             41,532                       8,449          
         
Cash Flows from Investing Activities:        
Additions to property, plant, equipment, mineral properties and other assets             (11,673 )             (21,039 )
Purchase of investments             —                       (956 )
Proceeds from sale of assets             4,596                       65          
Proceeds from redemptions/maturities of investments             500                       1,500          
Net cash used in investing activities             (6,577 )             (20,430 )
         
Cash Flows from Financing Activities:        
Payments of financing lease             (324 )             (43 )
Proceeds from short-term borrowings on credit facility             —                       5,000          
Repayments of short-term borrowings on credit facility             (4,000 )             —          
Employee tax withholding paid for restricted stock upon vesting             (633 )             (1,037 )
Net cash (used in) provided by financing activities             (4,957 )             3,920          
         
Net Change in Cash, Cash Equivalents and Restricted Cash             29,998                       (8,061 )
Cash, Cash Equivalents and Restricted Cash, beginning of period             4,651                       19,084          
Cash, Cash Equivalents and Restricted Cash, end of period   $         34,649             $         11,023          

INTREPID POTASH, INC.
UNAUDITED NON-GAAP RECONCILIATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands)

To supplement Intrepid’s consolidated financial statements, which are prepared and presented in accordance with GAAP, Intrepid uses several non-GAAP financial measures to monitor and evaluate its performance. These non-GAAP financial measures include adjusted net (loss) income, adjusted net (loss) income per diluted share, adjusted EBITDA, and average net realized sales price per ton. These non-GAAP financial measures should not be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, because the presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.

Intrepid believes these non-GAAP financial measures provide useful information to investors for analysis of its business. Intrepid uses these non-GAAP financial measures as one of its tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. Intrepid believes these non-GAAP financial measures are used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.

Adjusted Net (Loss) Income and Adjusted Net (Loss) Income Per Diluted Share

Adjusted net (loss) income and adjusted net (loss) income per diluted share are calculated as net (loss) income or net (loss) income per diluted share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers these non-GAAP financial measures to be useful because they allow for period-to-period comparisons of its operating results excluding items that Intrepid believes are not indicative of its fundamental ongoing operations.

Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income:

  Three Months Ended March 31,
    2024       2023  
  (in thousands)
Net (Loss) Income $         (3,130 )   $         4,506          
Adjustments      
Impairment of long-lived assets           1,377                       —          
Loss on sale of assets           251                       200          
Calculated income tax effect(1)           (423 )             (52 )
Total adjustments           1,205                       148          
Adjusted Net (Loss) Income $         (1,925 )   $         4,654          

Reconciliation of Net (Loss) Income per Share to Adjusted Net (Loss) Income per Share:

  Three Months Ended March 31,
    2024       2023
Net (Loss) Income Per Diluted Share $         (0.24 )   $         0.35        
Adjustments      
Impairment of long-lived assets           0.11                       —        
Loss on sale of assets           0.02                       0.02        
Calculated income tax effect(1)           (0.03 )             —        
Total adjustments           0.10                       0.02        
Adjusted Net (Loss) Income Per Diluted Share $         (0.14 )   $         0.37        

(1) Assumes an annual effective tax rate of 26% for 2024 and 2023.

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net (loss) income adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers adjusted EBITDA to be useful, and believe it to be useful for investors, because the measure reflects Intrepid’s operating performance before the effects of certain non-cash items and other items that Intrepid believes are not indicative of its core operations. Intrepid uses adjusted EBITDA to assess operating performance.

Reconciliation of Net (Loss) Income to Adjusted EBITDA:

    Three Months Ended March 31,
      2024       2023
    (in thousands)
Net (Loss) Income   $         (3,130 )   $         4,506        
Impairment of long-lived assets             1,377                       —        
Loss on sale of assets             251                       200        
Interest expense             —                       —        
Income tax (benefit) expense             (775 )             1,787        
Depreciation, depletion, and amortization             9,304                       9,292        
Amortization of intangible assets             80                       80        
Accretion of asset retirement obligation             622                       535        
Total adjustments             10,859                       11,894        
Adjusted EBITDA   $         7,729             $         16,400        

Average Potash and Trio®Net Realized Sales Price per Ton

Average net realized sales price per ton for potash is calculated as potash segment sales less potash segment byproduct sales and potash freight costs and then dividing that difference by the number of tons of potash sold in the period. Likewise, average net realized sales price per ton for Trio® is calculated as Trio® segment sales less Trio® segment byproduct sales and Trio® freight costs and then dividing that difference by Trio® tons sold. Intrepid considers average net realized sales price per ton to be useful, and believe it to be useful for investors, because it shows Intrepid’s potash and Trio® average per ton pricing without the effect of certain transportation and delivery costs. When Intrepid arranges transportation and delivery for a customer, it includes in revenue and in freight costs the costs associated with transportation and delivery. However, some of Intrepid’s customers arrange for and pay their own transportation and delivery costs, in which case these costs are not included in Intrepid’s revenue and freight costs. Intrepid uses average net realized sales price per ton as a key performance indicator to analyze potash and Trio® sales and price trends.

Reconciliation of Sales to Average Net Realized Sales Price per Ton:

    Three Months Ended March 31,
      2024     2023
(in thousands, except per ton amounts)   Potash   Trio®   Potash   Trio®
Total Segment Sales   $         37,576           $         36,487           $         52,497           $         30,274        
Less: Segment byproduct sales             5,164                     203                     5,342                     1,221        
Freight costs             3,146                     8,974                     3,992                     6,685        
Subtotal   $         29,266           $         27,310           $         43,163           $         22,368        
                 
Divided by:                
Tons sold             74                     91                     89                     65        
Average net realized sales price per ton   $         395           $         300           $         485           $         344        

INTREPID POTASH, INC.
DISAGGREGATION OF REVENUE AND SEGMENT DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(In thousands)

    Three Months Ended March 31, 2024
Product   Potash Segment   Trio®Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $         32,412           $         —           $         —           $         (100 )   $         32,312        
Trio®             —                     36,284                     —                     —                       36,284        
Water             —                     —                     2,169                     —                       2,169        
Salt             3,144                     203                     —                     —                       3,347        
Magnesium Chloride             419                     —                     —                     —                       419        
Brine Water             1,583                     —                     1,127                     —                       2,710        
Other             18                     —                     2,028                     —                       2,046        
Total Revenue   $         37,576           $         36,487           $         5,324           $         (100 )   $         79,287        
    Three Months Ended March 31, 2023
Product   Potash Segment   Trio®Segment   Oilfield Solutions Segment   Intersegment Eliminations   Total
Potash   $         47,155           $         —           $         —           $         (101 )   $         47,054        
Trio®             —                     29,053                     —                     —                       29,053        
Water             80                     1,048                     1,619                     —                       2,747        
Salt             3,043                     173                     —                     —                       3,216        
Magnesium Chloride             1,137                     —                     —                     —                       1,137        
Brine Water             1,082                     —                     822                     —                       1,904        
Other             —                     —                     1,809                     —                       1,809        
Total Revenue   $         52,497           $         30,274           $         4,250           $         (101 )   $         86,920        
Three Months Ended
March 31, 2024
  Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales   $         37,576           $         36,487             $         5,324           $         (100 )   $         79,287        
Less: Freight costs             3,956                     8,974                       —                     (100 )             12,830        
Warehousing and handling
costs
            1,727                     1,362                       —                     —                       3,089        
Cost of goods sold             25,816                     27,291                       3,324                     —                       56,431        
Lower of cost or net
realizable value inventory
adjustments
            503                     —                       —                     —                       503        
Gross Margin (Deficit)   $         5,574           $         (1,140 )   $         2,000           $         —             $         6,434        
Depreciation, depletion, and amortization incurred1   $         6,971           $         884             $         1,071           $         458             $         9,384        
                     
Three Months Ended
March 31, 2023
  Potash   Trio®   Oilfield Solutions   Other   Consolidated
Sales   $         52,497           $         30,274             $         4,250           $         (101 )   $         86,920        
Less: Freight costs             5,005                     6,686                       —                     (101 )             11,590        
Warehousing and handling
costs
            1,480                     1,253                       —                     —                       2,733        
Cost of goods sold             31,584                     20,883                       3,778                     —                       56,245        
Gross Margin   $         14,428           $         1,452             $         472           $         —             $         16,352        
Depreciation, depletion, and amortization incurred1   $         7,051           $         1,206             $         907           $         208             $         9,372        

(1) Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation, depletion, and amortization amounts absorbed in or relieved from inventory.


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