Intrepid Potash, Inc. Aktie

Thank you for standing by. This is the conference operator. Welcome to Intrepid Potash, Inc. First Quarter 2026 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Ryan Schultz, Interim Investor Relations Manager. Please go ahead.

Good morning, everyone. Thank you for joining us to discuss and review Intrepid's First Quarter 2026 results. With me today is Intrepid's CEO, Kevin Crutchfield; our Chief Accounting Officer, Cris Ingold; our VP of Sales and Marketing, Zachry Adams; and our VP of Operations, Rick Kim.

Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based upon information available to us today and are subject to risks and uncertainties that are described in the reports we file with the SEC and could cause our actual results to be different from those currently anticipated, and we assume no obligation to update them. During today's call, we will also refer to certain non-GAAP financial and operational measures. Reconciliations to the most directly comparable GAAP measures are included in today's press release and along with our SEC filings are available at intrepidpotash.com.

I'll now turn the call over to our CEO, Kevin Crutchfield.

Thank you, Ryan, and good morning, everyone. We appreciate your interest and attendance for today's earnings call. I'm pleased to report that 2026 is off to a strong start with solid first quarter results.

Our adjusted net income from continuing operations for the first quarter of $8.2 million and adjusted EBITDA of $19 million is a significant improvement from last year's first quarter adjusted net income of $3.9 million and adjusted EBITDA of $14.6 million. And we're looking forward to capitalizing on this momentum for the rest of the year. Our performance is a reflection of the hard work of all of our employees, and I'd like to thank our entire team for their commitment to safety and consistent execution across our core fertilizer business.

Our first quarter performance was driven by several factors. First, supportive pricing and resilient demand across our fertilizer products. In the first quarter, our average potash net realized sales price was $353 per ton, and our average Trio net realized sales price was $387 per ton. This represents a 13% increase year-over-year for potash, up from $312 a ton and a 12% increase for Trio, up from $345 per ton.

Second, sales volumes remained strong with our second highest quarterly sales total since idling the West mine in 2016. Combined potash and Trio sales volumes were 211,000 tons in the first quarter with potash sales volumes of 105,000 tons and Trio sales volumes of 106,000 tons. Finally, successful execution on key projects and operational efficiencies supported improved cost margins. Trio delivered its highest quarterly segment margin since 2022 and per ton cost improved 5% compared to the fourth quarter.

Before I pass the call to Zach, I want to highlight a few key developments and operational updates. On April 1, 2026, we sold the majority of the assets of the Intrepid South Ranch to HydroSource Logistics, LLC for total consideration of $70 million, which included the $8 million deposit we received in December 2025. We were able to transact on the ranch at a favorable valuation, unlocking decades worth of cash flows in a single transaction that will allow us to refocus our efforts exclusively on our fertilizer assets. The sale will also allow us to utilize a portion of our sizable deferred tax assets to offset the tax impact of the one-time gain.

On lithium, our partners continue to advance FEL-3 engineering and associated permitting. We remain confident in this project and look forward to sharing further details of the project economics as they develop. Overall, we're looking forward to a strong year. Continued steady support for our core business and solid cash position will allow us to capitalize on our unique position in the market and capture additional upside from opportunities like lithium, among others.

I'll now pass the call to Zach to provide some commentary on market. Go ahead, Zach.

Thanks, Kevin. Potash saw good subscription during the winter fill program with customers securing orders to meet most of their first quarter requirements. Following the closure of the order window, posted potash prices increased by $20 per ton, a change reflected in second quarter spot transactions. Trio demand remains resilient as customers value the individual components, particularly sulfate due to ongoing disruptions in raw sulfur supply from the Middle East, along with the low chloride potassium component.

Trio pricing was increased by $15 per ton in late March with this adjustment realized on spot second quarter sales. Globally, potash fundamentals have been supported by consistent production, broadly stable pricing and solid demand. Brazil and China imported potash at record levels in the first quarter, contributing to a balanced market and reinforcing a constructive outlook for the second half of the year.

Turning to agriculture markets. U.S. corn exports are on track to reach record levels for the '25-'26 marketing year. Commodity prices for corn, soybeans and cotton have strengthened in recent weeks, driven by weather concerns, supportive demand and geopolitical tensions affecting market stability. We do recognize the concerns regarding the financial health of growers within the U.S. market, particularly as affordability challenges have been intensified by volatility in input costs arising from the conflict in the Middle East. We anticipate growers will continue to make the input decisions carefully. Potash, whose prices have stayed comparatively stable relative to other nutrients remains a critical input as growers look to maximize yields.

I will now turn the call over to Rick Kim for an operations update.

Thanks, Zach. In our Trio segment, the commissioning of a new continuous miner has already increased our tons per operating hour and increased operational efficiency. Additional improvements in our mill have boosted recovery and increased operating hours per shift continues to drive higher production of both granular and premium products. We benefited from these improvements in the first quarter, and we expect to continue realizing further improvements through the rest of the year.

In our potash segment, we've seen promising returns this spring from the HB Mine with higher mill recoveries and improved pond deposition, extending our expected run time before our summer shutdown. Moab also continues to see improvements in overall plant efficiency, driving higher throughput and recovery. Early season evaporation looks promising, and we anticipate making up the tons lost due to last year's late season rain events.

At Wendover, we expect to commence construction on Primary Pond 8 this summer, which will expand our evaporative area, and we anticipate increased production in 2028 as a result. We also expect Primary Pond to start contributing more production this year. Overall, our focus on operational improvements and execution have resulted in higher production and reduced unit costs year-over-year in both potash and Trio.

I'll now turn the call over to Cris.

Thank you, Rick. To echo Kevin's remarks, Intrepid delivered a strong first quarter. Our continued focus on driving production to increase revenues and improved unit economics is visible in our first quarter results. Potash production was 104,000 tons in the first quarter compared to 93,000 tons in the first quarter of 2025. As Kevin and Rick mentioned, this production is due to operational improvements across our mines.

First quarter potash sales were $46.1 million, up $2.5 million from the prior quarter, driven primarily by higher realized pricing. Potash gross margin was $3.1 million versus $2.5 million last year as a result of higher realized pricing, partially offset by higher costs on a similar volume. We sold 105,000 tons at an average net realized sales price of $353 per ton compared to $312 per ton in the first quarter of 2025. Higher production from higher cost sites increased our average potash segment cost of goods sold to $334 per ton in the first quarter of 2026 compared to $313 per ton in the first quarter of 2025 and $332 per ton in the fourth quarter of 2025. For 2026, we expect our annual potash production to be at the upper end of our guidance of 270,000 to 285,000 tons given recent improvements at HB.

Turning to Trio. First quarter production was 69,000 tons, a 10% increase versus last year. This increase is largely attributed to the new continuous miner commissioned during the quarter and ongoing plant optimization projects. Sales were $52.5 million, up $2.7 million from the prior year, driven by a 12% increase in our average net realized sales price per ton. This offset a 4% decline in tons sold. Overall, Trio margin was $14.8 million for the quarter, up $4.4 million from last year. This was the highest quarterly segment margin since 2022 due to higher realized pricing and an improvement in COGS, offsetting the slight decline in sales volume. COGS per ton saw an improvement year-over-year and quarter-over-quarter with $229 per ton versus $235 per ton in Q1 last year and versus $242 per ton in the fourth quarter of 2025.

For 2026, Trio production, we are expecting to reach 285,000 to 300,000 tons with COGS of around $230 per ton. This is the expected result from our improvements with the new miner, increased recoveries and more operating hours per shift. In terms of second quarter guidance, we expect another solid quarter as spring application winds down and our potash facilities enter the summer evaporation season.

For potash, we expect our sales volumes to be between 50,000 to 60,000 tons at an average net realized sales price in the range of $380 to $390 per ton. In Trio, we expect our sales volumes to be between 70,000 to 80,000 tons at an average net realized sales price in the range of $390 to $400 per ton.

For our 2026 capital program, we expect to spend $40 million to $50 million, with most of our spend related to sustaining capital, specifically at our East Mine and for the beginning of a new Primary Pond at Wendover, which we expect will begin contributing to Wendover's production in 2028. We continue to consider investment opportunities that will upgrade our assets and optimize future production and efficiency. We are currently evaluating a number of additional high-return growth and productivity investment initiatives over the next 18 to 24 months.

In summary, 2026 is off to a strong start, and we're excited to see the results from the initiatives we put in place to meaningfully pay off in the form of increased production and improving costs.

Operator, we are now ready for the Q&A portion of our call.

[Operator Instructions] Your first question comes from the line of Lucas Beaumont from UBS.

I just wanted to start on kind of the sale of the South Ranch. I mean it sounded like you're sort of indicating that potentially you get the full $70 million in cash sort of net of the sort of DTA benefits. I guess, one, is that sort of correct? And then two, what are you kind of intending to do with the proceeds?

I'm sorry, Lucas, what was the last part of your question? What are we going to do with the cash?

Exactly. Yes, yes. So should we assume you're getting the full $70 million? And then what are your intentions in terms of deploying it? Are you going to sit on it to sort of put towards projects going forward? I mean do you see repurchases as attractive at the current level? Or sort of where would you like to use that?

Yes. Look, it's a good question. And let me just give you some context on how we're thinking about that right now. As I've mentioned a bunch of times before since I joined, this is a regular conversation amongst our Board, i.e., how to think about capital allocation. And frankly, it's becoming even more topical given the improved performance that we've seen over the last 18 months and the cash build that we're experiencing on the balance sheet at the moment.

So let me just kind of reiterate some priorities that I've discussed before, just so we're clear and you get a sense of how we think about this. As I laid out early in my tenure here, the first order of business was to reestablish an intense focus on the core assets. The goal was to make them more predictable, more reliable, more resilient. And I think we can all agree that we've seen improvements on that front, but we're not done there, and I'll address that momentarily.

From there, we wanted some time to look at our sustaining capital needs for the business over a reasonable period of time, say, 5 years or so. We're pretty much through that process now and believe long-term core operations should require something on the order of $35 million to $40 million a year of sustaining capital with an add-on every few years for larger sustaining items like making a new cavern or building a new pond like we're doing at Wendover right now.

So notably, I'll just give you a heads up that 2027 is expected to be one of those years, and we can talk about that a little later. And then next, and also importantly, we're really focused on across the company on ways we can increase volumes and reduce our cost. This effort is being ingrained into the culture of Intrepid as simply the way we need to think about our business. And to be frank, we don't see any silver bullets to increase production substantially in the short term, but we do see numerous opportunities to add incremental tons to the portfolio with attendant effects on costs and efficiencies. And I think a good example of that is what's happening at Carlsbad now. You can see that result improved over the past several quarters.

And then as I've also mentioned in the past, we wanted to review our portfolio to determine if there were assets that we held that might make sense in the hands of somebody else and the South Ranch fit that bill. Then as you saw, we monetized that asset and brought forward decades of cash flows and frankly, put that asset into a better set of hands than us given the dynamics of what's happening with water in the Permian Basin. So now that the assets -- core assets are performing better, and we've taken a look out into the future and assess our capital needs, we want to be thoughtful about maintaining an adequate amount of dry powder for organic projects or opportunities that exist across our portfolio and through continued performance to frankly earn the right to consider adjacency opportunities that might make strategic sense for the company.

And then last but not least, we want to retain adequate liquidity to buoy us through any rough times that might come our way. And for those of you that have been around this sector for a while, you'll know exactly what I'm talking about. I know, Lucas, that was a lot, I realized, but I thought it was important for you and others to hear how we think about capital allocation priorities. And suffice it to say, I think we've made great progress over the 1.5 years. And what I want to leave you with today is the following: a lot of requests that we return capital to shareholders. We hear you loud and clear. We always have. We simply had some work to do before this conversation could be had in earnest. And our Board is convening later this month to discuss a variety of matters. And what I'll leave you with is just know that this topic is chief among them.

So I'll just leave it at that for now, and hopefully, that gives you some nuggets at least on how we think about it and what might be on the near-term time frame.

Great. I mean that's very helpful. And then, I guess, just on the -- I'm trying to, kind of, talk to you about how the Trio market is going to kind of go as we look forward here. So I mean you're kind of pointing to like a $10 to $15 kind of sequential improvement in pricing into 2Q. I mean, sulfur markets have been impacted significantly globally from the Middle East disruption, and that's kind of raising production costs and raising the cost curve, I guess the synthetic production on that side. How do you kind of see that flowing into the Trio market and impacting pricing? Is there more of an impact to come as 2026 progresses? Or do you believe that's kind of incorporated in what you're sort of expecting for 2Q now?

Thanks, Lucas, for the question. So it's important to remember that customers typically lock in the majority of their spring requirements pretty early to start the year for Trio and potash. And so most of those commitments were made ahead of the Iran conflict beginning and certainly before the full extent of it was realized. So we expect to start seeing more and more of that realization and certainly as we kind of see those spot opportunities here in second quarter.

And for the balance of the year, we expect Trio to benefit from a constructive outlook amid a tightening global supply environment on sulfur, which should keep sulfate values firm, and you should see that kind of roll through our realized pricing as we kind of move through the rest of the year.

Great. And then just, Kevin, I mean, you kind of mentioned, I guess, the further efforts to kind of incrementally lift production progressively. So I guess switching over to potash, how do you kind of see the trajectory beyond this year to kind of push back above 300,000 tons over time?

You want to take that, Rick?

Yes, sure. Lucas, this is Rick. We see a number of different incremental opportunities at the core assets. As Kevin mentioned, kind of the past 12 to 18 months have really been focused in on operational improvements, identifying those and executing on them. So continue to see opportunities at HB. We're starting to realize those already, as I mentioned in the earlier comments.

And we're seeing similar opportunities around Wendover and Moab as well. The addition of the new Primary Pond at Wendover, it will start contributing in 2028. Primary Pond 7, which was commissioned a couple of years ago, we'll really start to see its full productive capacity coming online throughout this year and with the intent of getting that operation back up into the 75,000, 80,000 ton per year run rate that it's historically operated at.

Just one more little point, Lucas, in addition to what Rick said, as we've talked about before, we have the AMAX cavern. It still needs more work. We want to be very thoughtful about how we approach that. And to the extent that, that proves out, that would represent a meaningful upside opportunity for us. But we still have work to do there, and we'll keep you posted in the coming quarters on that project.

Great. And then I guess just on the lithium project, could you maybe just kind of share how you sort of see the time line on the milestones there as we sort of move through this year and beyond? And then I mean, investors are very keen to kind of get an understanding of like how you think the sort of unit cost economics are going to look there. I mean I think the sort of production target and the revenue side is sort of more well understood sort of depending on sort of what everyone does with market pricing. But to kind of really understand what it could mean to you guys in the medium term, we sort of need a better view on the cost side. So I don't know if there's anything you can kind of share there now or I guess, when you sort of think you'll be able to have a better view of that as we sort of work through the process there?

Yes. Good question. And look, I don't want to front-run our partners. The key milestone that's coming early this summer will be FEL-3. And that's when you have a pretty high degree of precision around your engineering, the build, the cost of the build and where your operating costs are going to come out. We have a sense of what those are, but it'd be way premature for me to start talking about that.

But look, given the concentrations that we have of the lithium ion relative to a lot of these other brine projects, we've kind of got a head start really when it comes down to it. So we feel good about the initial volumes coming out of the project in a couple of years, 5,000 tons LCE and continue to work very closely with our partners on assisting them from the footprint of their operations, assisting with permitting, getting through the regulatory hurdles, et cetera, all of which is actually going pretty well. So I think the big milestone, again, is FEL-3. And once that's done, that's when we'll be prepared to talk to the market about more precision around timing, cost to build and cash operating and full operating costs. So hopefully, that's incrementally helpful, Lucas.

That's great. And then maybe just one on sort of the cost side. So I just wanted to sort of understand how you're seeing sort of any cost pressures flowing through the business from the, I guess, the inflationary environment that we're in right now. Just is that sort of impacting either potash or Trio? And I guess, how would you sort of see that evolving as the year progresses? And then just lastly, is there any -- I mean, I think there's a small residual of the -- there's some small residual impacts left, I guess, even after the South Ranch sales. So I just kind of wanted to understand, are there any kind of stranded costs associated with that or just anything we should think about there going forward as well?

Maybe hitting the last part of your question first, to the extent I understood it properly. We had an Oilfield Services segment when we had South Ranch. We'll still have some oilfield services activity, but that will get subsumed into the other segment and we'll discontinue the Oilfield Services segment. And in terms of kind of cleanup post deal, I'm looking at Cris to see if I want to get this right. But I think it's pretty clean and you're not going to see any sort of tail effects permeating through the P&L of the balance sheet after the sale was concluded. Did I do okay there, Cris?

You did. Very minimal costs left behind that will be absorbed into the other parts of the business there.

And then I'll take a shot at the sort of the cost question Lucas, I mean, yes, I mean, we're seeing it kind of all over the place. It's not like radical or anything, but fuel clearly is the biggest nemesis and it's highly volatile. It's bouncing all over the place. We have some natural gas exposure over time. That's actually behaving pretty well kind of given the natural gas deck. Winter always portends for a potential spike. But beyond that, we're not seeing anything that I would characterize as material unless Rick has information to the contrary.

No, I agree with Kevin. I think one of the things that's probably important to call out is while we do see the fluctuations in fuel, if you look at the nature of our mining processes, we're probably not as impacted or exposed to those fuel fluctuations as surface -- traditional surface and underground miners. Our solution mining process does insulate us a bit from that.

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

Thank you for all the color and that wide slew of questions there. We really appreciate it. I just wanted to -- this is Justin Pellegrino on for Vincent. I just wanted to double-click on some of those. First being well understood on the capital allocation priorities. In the meantime, should we expect that the cash kind of generate some interest income on your P&L?

Yes. Yes, it will. Those cash balances are placed in very safe federal-type securities. So yes, you will see some interest income start to leak through the P&L as we move ahead. We've built up a pretty hefty balance. I know we reported as of the end of the first quarter. But clearly, the incremental $62 million for the Ranch transaction came in after the end of the quarter, and we've built some additional cash, too. So I think current cash balance stands on the order of $170 million or so. So definitely, you'll start to see some interest flow through.

Okay. And then one more on COGS for the rest of the year. Can you just kind of give us some cadence for COGS per ton in potash throughout the balance of the year? I know the press release kind of mentioned some higher cost mix in production towards higher cost sites. So can you just kind of give us some cadence for the balance of the year?

Yes. So Justin, typically, our COGS will fluctuate throughout the year, especially at our solar sites, largely due to the production volumes. So we're actually finishing up our harvest season here within the next few weeks, and each of the sites will go into their summer shutdown. So that does have an impact on the COGS that we will report for the next 2 quarters or we anticipate to see that. But once we get later in the year, I mean, we do expect to see some of those operational efficiencies that we've talked about starting to realize in both production and costs. So I think especially into the latter half of the year, we'll start to see those materialize.

Your next question comes from the line of Jason Ursaner from Bumbershoot Holdings.

Congrats on the quarter and the sale of Oilfield. I think I've asked you about capital allocation pretty much every quarter since you joined, Kevin. I appreciate the answers to Lucas. I'm not going to hammer too much on it. But just the last questioner, you said that the cash balance as of the end of April is around $170 million.

Yes, plus or minus. Correct.

Any -- I guess what was the -- any rationale why we didn't include it in the press release for this quarter to kind of let algorithms and whatever pick up on that, just given we've included it pretty much every quarter, kind of that month-end cash balance the last year or 2?

Yes. Look, that's a fair question. I mean, obviously, the press release pertains to the first quarter and the deal on the Ranch didn't close until the day after the first quarter. So technically, we took the view that we're going to just discuss everything inside the first quarter. Perhaps it would have made sense to address cash on hand and liquidity more pointedly actually in the press release, but we weren't trying to hide from it. It was just focused on the quarter.

Okay. And just any update on kind of the XTO Exxon permitting process, any update on where the BLM stands with that?

I'm sorry. We actually don't have any like information that's useful. We see kind of what's going on in that part of the world where we operate. It's super busy, lots of activity, but we don't have any insights as to Exxon's near-term plans. I mean we continue to be bullish on their Big Eddy development process, and it's going to come. We just don't know exactly when.

[Operator Instructions] At this time, there are no further questions. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks.

I'd like to give one final thank you today before we conclude to our team here in Denver, our teams in Utah and New Mexico for their hard work and dedication over the last quarter and, frankly, the last couple of years. And also to those of you who attended the call today, thank you for patching in, and we look forward to keeping you posted in the future. Thank you. Everybody, have a great day.

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

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Evan Mapes, Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us to discuss and review Intrepid's fourth quarter 2025 results. With me today is Intrepid's CEO, Kevin Crutchfield; and CFO, Matt Preston. During the Q&A session, our VP of Sales and Marketing, Zachary Adams; and VP of Operations, Rick Kim will also be available. Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based upon information available to us today and are subject to risks and uncertainties, which are described in the reports we have filed with the SEC.

These could cause our actual results to be different from those currently anticipated, and we assume no obligation to update them. During today's call, we will also refer to certain non-GAAP financial and operational measures. Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release and along with our SEC filings are available on intrepidpotash.com. I'll now turn the call over to our CEO, Kevin Crutchfield.

Thanks, Evan, and good morning, everyone. We appreciate your interest and attendance for today's earnings call. Intrepid again delivered strong results in the fourth quarter with adjusted net income and adjusted EBITDA of $6.5 million and $18.1 million, respectively, both of which were significant improvements compared to last year. For 2025 as a whole, our adjusted EBITDA of $63 million is one of the best prints since 2016 and represents an almost 80% improvement compared to 2024.

We're very proud of these results, which we also accomplished with best-in-class safety performance with just 1 recordable incident in 2025 across over 1.1 million hours worked. I'd like to thank and congratulate our site leaders and all of our team members for their hard work and dedication and want to encourage them to continue to stay focused and continue to deliver good results in 2026. Our solid 2025 performance was driven by several factors. First, steady demand for our core fertilizer products drove strong sales volumes. In 2025, our combined potash and Trio sales volumes of just over 590,000 tons was 20% higher compared to 2024 with 303,000 tons of Trio sales being a company record.

Second, we again delivered solid unit economics from higher overall production with our 2025 potash COGS per ton improving by approximately 5% versus last year and our Trio COGS per ton improving by over 10%.

And thirdly, we benefited from increasing pricing. This was most pronounced in Trio, where fourth quarter average realized price of $379 per ton was 20% higher than the first quarter of 2025. The solid sales volumes and pricing have continued into 2026 ahead of the spring application season and agricultural markets have also shown signs of optimism. For corn, year-to-date domestic exports are up almost 50% versus last year. And for soybeans, recent trade deals have improved the outlook with futures for both crops up by about 15% since the August lows.

Moreover, the $12 billion in government bridge payments to farmers are expected in the coming weeks, which should help further support solid fertilizer demand this spring. For the broader potash market, global supply and demand remains mostly balanced, where demand in key international markets has been resilient. In 2025, global potash shipments were estimated at roughly 75 million tons and 2026 is expected to see additional growth of about 1.5 million tons.

Moreover, by the end of the decade, third parties are forecasting global potash demand to be about 6 million tons higher than it was in 2025, which should help absorb additional supply coming from some of the larger-scale potash projects like Jansen. Before passing the call to Matt, I'll end my remarks with a couple of key project and operational updates. In potash, we've deferred a decision on our AMAX cavern into at least 2027 as we continue to evaluate the project.

Since we've never mined this cavern, which still requires additional investment, we want to be very sure we completely understand the mineralogy and the geology and feel it's most prudent to continue to demonstrate strong capital discipline until this evaluation is complete. In addition, we feel confident we can sustain our HB production over the next several years even without AMAX.

For Trio, our operational performance continues to be very strong, and we recently placed another new continuous miner into service, which should further improve our mining rates and continue our trend of year-over-year production increases. For 2026, we expect our Trio production to be in the range of 285,000 to 300,000 tons, which represents a year-over-year increase of about 7% at the midpoint. This will help offset what should be flat to slightly down potash production in '26, which is primarily due to the below average evaporation at HB over the summer.

Moving on to our lithium project in Wendover. We've published quite a bit of detail in recent press releases, but I'll provide a quick summary. For those new to the story, one of our key byproducts after producing potash at Wendover is magnesium chloride brine. This brine also contains lithium but requires a highly technical direct lithium extraction process. We've looked at various DLE options over the past several years and just recently, new technologies have made significant strides, which should now make the project viable at scale.

As for project updates, in January, we announced that we have a joint development agreement in place with Aquatech and Adionics, whereby our partners have already produced a sample of battery-grade lithium carbonate from our brine. As we noted in yesterday's press release, we'll be providing an updated technical report summary for Wendover along with our 2025 10-K, which will include maiden resource estimates for lithium and will show a measured and indicated resource of approximately 119,000 tons of lithium carbonate equivalent.

At the current estimated production capacity of 5,000 tons per year, this would support a project life of roughly 25 years. There's still plenty of work to be done, but we have high confidence in our partners, and we're optimistic we can move quickly with a goal for a definitive feasibility study later this year. Lastly, we're now under exclusivity with a potential buyer for the South Ranch. Negotiations are ongoing and subject to confidentiality provisions, but we're holding an $8 million deposit from the potential buyer, which demonstrates their very serious intent. Although we're still negotiating definitive agreements, we believe the potential deal will likely close sometime in the first half of 2026, and we'll update the market as appropriate.

Overall, it's an exciting time for Intrepid. We're delivering strong results and remain constructive on the outlook. With very strong support for critical minerals in the United States, there's probably been no better time to be a domestic producer of potash and Trio, while lithium provides significant potential upside. In addition, we want to highlight that our core products have long-term staying power, which is further enhanced by our multi-decade reserve lives, and we look forward to capitalizing on our unique positioning in 2026 and beyond. So with that, I'll now turn the call over to Matt. Please go ahead.

Thank you, Kevin. To echo Kevin's remarks, 2025 was a great year for Intrepid, where our total fertilizer sales volumes of 592,000 tons were almost 100,000 tons higher than 2024 and reached a level not seen since 2018. Our #1 focus is driving higher production, increase our revenues and improve our unit economics, and it's very encouraging to see our hard work pay off with strong results. For segment highlights, in potash, our fourth quarter gross margin of $4.6 million was in line with the prior year as a higher average net realized sales price of $387 per ton was offset by a slight decrease in sales volumes due to a compressed fall application season and limited engagement on spring potash needs in the latter part of the quarter.

Full year 2025 segment gross margin of $18.2 million was modestly higher compared to last year as the higher production that started in 2024 allowed us to sell 289,000 tons, a 20% increase from 2024, which offset a pricing decline of about $25 per ton. As we noted on our third quarter earnings call, our fourth quarter potash production was impacted by a delayed start-up at HB, which resulted in our full year 2025 production coming in at 280,000 tons. For 2026, we expect our annual potash production to be in the range of 270,000 to 285,000 tons. So we do expect a slight degradation in our unit economics this year.

That said, looking beyond 2026, we expect a recovery in our HB production and more tons out of our Wendover facility and project that our 2027 potash production will be in the range of 300,000 to 310,000 tons, which puts us back on track for our key potash production goal.

Moving on to Trio. The very strong performance continued as our fourth quarter and 2025 production, sales volumes and pricing were all higher compared to the respective prior year periods due to strong operational execution, modest market share gains and supportive sulfate values. This led to a $10.5 million in gross margin in the fourth quarter and $33.4 million in gross margin for 2025.

Outside of the significantly elevated pricing in 2022, this is the best Trio performance in our history. For 2026, as Kevin mentioned, we expect to produce 285,000 to 300,000 tons of Trio and anticipate our cost of goods sold per ton to show modest improvements from 2025 as consistent production increases continue to improve our overall unit economics. Our forecasted Trio production, coupled with continued strong pricing due to both the expected solid nutrient demand for spring application and supportive Trio component valuations should continue to result in strong Trio segment performance in 2026.

Turning to first quarter guidance. In potash, we expect our sales volumes to be between 95,000 to 105,000 tons at an average net realized sales price in the range of $345 to $355 per ton. For Trio, we expect our sales volumes to be between 105,000 to 115,000 tons at an average net realized sales price in the range of $380 to $390 per ton. For our 2026 capital program, we expect our capital investment will be in the range of $40 million to $50 million, with most of our spend related to sustaining capital, specifically at our East mine and for the beginning of a new primary pond at Wendover, which we expect will begin contributing to Wendover's production in 2028.

In summary, 2025 was a great year for Intrepid, and we look forward to carrying this momentum into 2026. Overall, fertilizer production and sales volumes look to be on par or slightly ahead of 2025 and pricing continues to be supportive. Production improvements in our Trio segment going from 216,000 tons in 2023 to nearly 300,000 tons in 2026 are sustainable and we see further upside as we continue to focus on improved mining and recovery rates. We will work through the recent weather and evaporation setbacks in potash during the 2026 spring season and remain confident in eclipsing 300,000 tons of potash production in upcoming production years. Operator, we're now ready for the Q&A portion of our call.

[Operator Instructions] The first question comes from Lucas Beaumont with UBS Investment Bank.

This is Nicole Grueneberg on for Lucas. Firstly, I was just wondering if you can walk us through current potash demand dynamics and how your order book is looking for 1Q? Have you seen any evidence of demand disruption due to affordability issues?

Yes. Thank you for the question. This is Zachary. We're almost fully committed for first quarter right now on potash, and we have not seen really any significant demand disruption at this time. Potash remains a very good value from the grower at the current price point, and we expect stable demand for the spring season amid strong acres of corn expected to be planted.

Great. And then just on the lithium project, can you walk through the unit economics there? What cash cost of production would you expect on a per ton basis?

We're not prepared to address that at this stage. We'll continue to provide updates to the marketplace. And as the engineering work progresses, we'll start laying those metrics out in the future.

Got it. And then last one for me. So oilfield sales are pretty -- were down pretty meaningfully in 2025. What's your outlook there going forward compared to this year? Are you expecting growth or further declines from here?

Well, I mean, given the nature of the asset and lots of inbounds and interest in oilfield services business that we felt like testing the market for valuation of our asset was appropriate under the circumstances, which we did, which is why we entered a letter of intent with the prospective buyer. So I think any comment that I would have beyond that would be speculation and almost irrelevant given that it's our intent to transact on this asset.

Your next question comes from Vincent Andrews with Morgan Stanley.

This is Justin Pellegrino on for Vincent. Congratulations on the results. My first question is kind of around sulfur prices. Given the conflict in the Middle East, we've seen a pretty significant increase in sulfur prices there. So -- and I know it's fairly recent, but could you just discuss any sort of increased interest you've had in Trio over the last few days? And any type of real-time update that you've seen there would be very helpful. And then likewise, could you just discuss expectations for prices relative to the potash products, how that will trend throughout the year?

Yes. First, Justin, on the sulfur component and kind of what that's kind of led to on Trio interest. I mean we're right in the heat of our kind of main Trio application season. So we're seeing really good response, I would say, just from a demand perspective for the rest of first quarter out into the second quarter at this point. I haven't seen those prices I'd say, roll through on sulfate values just yet. But I think to your point, that's something we're watching closely there as we move into the spring. And then just as far as potash pricing throughout the rest of the year here, not prepared to kind of project what second half looks like. But I think globally, we're in a very balanced potash market. And particularly here in the U.S., the U.S. potash prices are trading at a discount to almost all global benchmarks. So we think that supports stable pricing here in the U.S. and certainly some room for upside to get in line with where other global markets are currently trading at.

Great. And then just one more for me. If the South Ranch deal does go through, can you just kind of give us an update on any capital allocation priorities? Do you have any idea what you would do with the proceeds? Any thoughts there would be helpful.

Yes, sure. Thank you. Yes, assuming the sale goes through, I mean, I think my answer would be the same whether the sale goes through or not that I've referenced on pretty much every call since I took the mantle of the CEO here 15 months ago. Our first priority is an intense focus on our core operations, sort of restoring those back to predictable, resilient state, making sure that they're generating consistent free cash flow and that we can appropriately capitalize them to continue that predictability and reliability into the future and perhaps even grow production volumes modestly over the coming years.

And then from there, we obviously need to maintain sufficient liquidity to allocate capital internally to our operations. and address any sort of sustaining and growth capital requirements internally, but also to withstand any sort of body blow or shock that we take to the system on the pricing front. And then once we've satisfied those criteria, I think it's a very appropriate discussion for the Board to begin to think about capital allocations beyond that, that just entailed the internal needs. So to the extent that, that sale does go through, you can rest assured that, that discussion is top of mind and top of the agenda with the Board. So with that, I don't want to front run our Board any further than those comments, but that's our point of view on that.

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

Thanks to everybody again for attending today's call. And I would like to again thank all of our employees across all of our sites for a really great year and especially thank them for just an outstanding safety performance. And we look forward to continuing to keep you updated in the coming quarters. Thanks for attending today.

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

Thank you for standing by. This is your conference operator. Welcome to the Intrepid Potash, Inc. Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Evan Mapes, Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us to discuss and review Intrepid's third quarter 2025 results. With me today is Intrepid's CEO, Kevin Crutchfield; and CFO, Matt Preston. During the Q&A session, our VP of Sales and Marketing, Zachry Adams will also be available. Please be advised that comments we'll make today include forward-looking statements as defined by U.S. securities laws. These are based upon information available to us today and are subject to risks and uncertainties that are more fully described in the reports we file with the SEC. These risks and uncertainties could cause Intrepid's actual results to be different from those currently anticipated, and we assume no obligation to update them. During today's call, we will also refer to certain non-GAAP financial and operational measures. Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release and are available at intrepidpotash.com. I'll now turn the call over to our CEO, Kevin Crutchfield.

Thank you, Evan, and good morning, everyone. We appreciate your interest and attendance for today's earnings call. I'm pleased to report that Intrepid sustained its strong financial performance in the third quarter. This was highlighted by a net income of $3.7 million and adjusted EBITDA of $12 million, which compares to a net loss of $1.8 million and adjusted EBITDA of $10 million last year. Outside of the record pricing we saw in 2022, our year-to-date adjusted EBITDA of $45 million represents our best start since 2015. I'd like to take the time on our call to specifically recognize all of our employees and congratulate them on this excellent set of results, both for this quarter and year-to-date.

Our strong results were primarily driven by 2 key factors: first, higher pricing in Potash and Trio as we realize the entirety of the first half increases in both segments in quarter 3. And second, our higher production over the past year has led to better unit economics. Both Potash and Trio improved our cost of goods sold per ton by low-single-digit percentages during the quarter and year-to-date our Potash cost of goods sold improved by 9% to $327 per ton, while in Trio, the same figure improved by 15% to $238 per ton. For Trio, specifically, our production has been consistently exceeding our expectations quarter after quarter, and we're confident we can continue to sustain these higher run rates, which should further improve our unit economics in 2026.

Turning to market commentary. While sentiment in U.S. agriculture had softened over the past few months, there are some green shoots emerging. This was, of course, highlighted by last week's trade deal with China, which included soybean purchase commitments and yesterday's follow-through where they also confirmed they would remove retaliatory tariffs on certain U.S. farm goods including soybeans. While China soybean purchase commitments essentially put our exports back to historical levels, when those are combined with much higher recent domestic soybean crush, the total domestic soybean use has the potential to again reach recent historical highs. This, in turn, could also provide some relief for corn if we get lower planted acres next spring although corn exports have remained very strong regardless.

In summary, the U.S. agriculture landscape is certainly looking better, which is also evidenced by corn and soybean futures, both now being up by 15% since August lows. For the broader Potash market, global supply and demand remains relatively balanced where demand in key international markets has been resilient throughout the year. Given the lack of significant additional potash supply until mid-2027, we think the market will continue to see pricing support for the foreseeable future. Furthermore, potash is currently trading at similar levels to where it was this time in 2023, offering good relative value compared to other fertilizers.

Putting this together, we remain constructive on our sales volumes and pricing as we wrap up the year, and we'll continue to prioritize selling into our highest netback markets. Before passing the call on to Matt, I'll end my remarks with a couple of operational highlights. In potash, we're still working on the permitting and evaluation process for the AMAX Cavern at our HB facility and hope to have our permitting efforts wrapped up in the first quarter of 2026, which is consistent with the time line we outlined in the last earnings call.

In Trio, as I alluded to earlier, our financial and operating performance continues to exceed expectations. This has largely been driven by the 2 new continuous miners we placed into service in the second half of '23 as well as the restart of our fine langbeinite recovery circuit. In addition, in January 2026, we expect to take delivery of another continuous miner, which will further improve our mining rates and continue our trend of year-over-year production increases. Accordingly, we now forecast our quarterly Trio production will be in the range of 70,000 to 75,000 tons for 2026, and our team is continuing to challenge itself to find even more tons through improved mining efficiencies and increased mill recoveries. Higher production should drive another year of record Trio sales volumes for Intrepid. And given that Trio pricing is close to parity with potash, this will also help to offset the modestly lower 2026 potash production guidance we gave on the last earnings call.

Overall, Intrepid continues to deliver solid financial results and the recent improvements in U.S. ag markets is certainly a positive development. Looking ahead, we'll remain focused on strong operational execution, improving our margins and free cash flow through the cycle. As the only domestic producer of potash, we'll prioritize our investments into our core business to fully capitalize on our multi-decade reserve lives. So with that, I'll now turn the call over to Matt. So please go ahead.

Thank you, Kevin. Starting with our Potash segment. We delivered another quarter of solid results, primarily underpinned by improved pricing and higher sales volumes. Our Q3 average net realized sales price for potash totaled $381 per ton as we fully capture the approximately $60 per ton increase for sales into agriculture markets compared to the first quarter. Compared to the prior year, our higher sales volumes of 62,000 tons in the third quarter were driven by the increase in production over the past 12 months. As we noted on last quarter's call, during the third quarter, we did delay our production at HB with the goal of maximizing late season evaporation, which was the reason for our third quarter potash production decreasing to 41,000 tons. Despite the reduced production, we're still experiencing solid year in economics in potash particularly when you consider the other revenue streams of salt, magnesium chloride and brine that enhance our cash flows.

In terms of segment gross margin, our Q3 figure of $6.3 million was approximately $2.2 million higher than last year. And year-to-date, our segment gross margin totaled $13.6 million, which compares to $13 million in the same prior year period. Due to the above average rain at HB in the summer of 2025, we expect our annual potash production next year to be in the range of 270,000 to 280,000 tons. Moving on to Trio. In the third quarter, we sold 36,000 tons at an average net realized sales price of $402 per ton. The strong pricing was driven by the continuation of supportive potash values and improved realization of low chloride pricing premiums in key markets and also reflects realization of first half price increases which totaled approximately $60 per ton since the start of the year.

As for the lower Q3 Trio sales volumes, that was driven by 2 factors. First, our Trio demand was heavily weighted to the first half of 2025 and where we sold a record 181,000 tons and second, normal seasonality as customers focus exclusively on third quarter application needs. Last week, we announced the Trio fill program, where we reduced our reference pricing by $35 per ton for orders placed through the end of October, with pricing after the order period back up $25 to match levels seen during the spring season. We saw a very good subscription from our customers in the fill and expect to end the year with good sales momentum.

Our East mine production rates and mill recoveries continue to exceed expectations in the quarter with Trio production of 70,000 tons, again driving solid unit economics. Trio's COGS per ton totaled $257 in Q3, which compares to $272 per ton last year and $235 per ton in the second quarter of 2025, with the sequential increase in Q3 attributable to a higher mix of premium Trio sales, which have a higher carrying cost relative to our other products. Overall, a combination of operational efficiencies, improving unit economics and higher pricing have driven a significant improvement in our Trio results. Our Q3 gross margin of $4.4 million was approximately $4 million higher than last year. And through the first 3 quarters, our gross margin totaled approximately $23 million, which compares to $1.6 million in the same prior year period.

This is truly a step change in operating performance that we expect to not only maintain but continue to improve upon in 2026. For next year, we expect our Trio production to be in the range of 285,000 to 295,000 tons, which we expect will also drive a 5% to 7% improvement in our per unit costs and deliver another year of very solid margins.

In Oilfield Solutions, lower water sales and oilfield activity reduced our gross margin in the quarter with water significantly lower, mostly due to last year's Q3 having the largest frac job in company history. Despite the dip in Q3, our year-to-date revenues and profitability on the South Ranch have mostly been consistent with recent historical performance. While not included in our segment results, I want to highlight another strategic sale of land on our South Ranch in the third quarter, where we sold approximately 95 fee acres for a gain of $2.2 million.

These sales, while infrequent, highlight the strategic value of our ranch in New Mexico, and we will continue to pursue options to monetize our land position in the Delaware Basin. As for fourth quarter sales and pricing guidance, in Potash, we expect our sales volumes to be between 50,000 to 60,000 tons at an average net realized sales price in the range of $385 to $395 per ton. Compared to last year's fourth quarter, our Q4 volume should be roughly in line with pricing up approximately $45 per ton as our geographic advantage, diverse sales mix and limited sales into the corn belt are expected to insulate us from a potential slower start to the fall season. For Trio, we expect our fourth quarter sales volumes to be between 80,000 to 90,000 tons at an average net realized sales price in the range of $372 to $382 per ton.

Compared to last year's fourth quarter, our Trio volumes are expected to be almost 60% higher after the very good subscription to the fill program with pricing up roughly $45 per ton, and we expect this sales momentum will again carry into the spring season. For our 2025 capital program, we expect our spend will be in the range of $30 million to $34 million. Our 2025 spend includes approximately $5 million related to the HB AMAX Cavern with the balance directed to other sustaining projects across our Potash and Trio operations. Overall, we're pleased with our year-to-date results and encouraged by the outlook. While we've had some pricing tailwinds this year in both Potash and Trio, much of the success has also been driven by the operational improvements we put into place, particularly at our East mine.

Moreover, our debt-free balance sheet and cash position of roughly $74 million continues to put Intrepid in a position of strength and we're looking forward to a very strong finish to the year. Operator, we're now ready for the Q&A portion of the call.

[Operator Instructions] The first question comes from Vincent Andrews with Morgan Stanley.

This is Justin Pellegrino on for Vincent. I just wanted to touch on the AMAX Cavern and the permits. Can you give us an idea of what the CapEx would be associated with the injection well in the pipeline should those permits be obtained? And then within the overall capital allocation priorities for next year, I imagine this is impacting your decisions and how you're planning on going forward. But can you just give us an idea of where that falls within the potential for returning any other excess cash back to shareholders or any other projects that you might be taking on?

Yes. Thanks for the question, Justin. As we continue to evaluate the HB AMAX Cavern, if you recall, that capital will be spread out over a couple of years. Certainly disappointed that the cavern didn't have brine when we got the injection well or the extraction well, excuse me, drilled in the summer of '25. But as we evaluate it, I mean, the capital spend, it will really just kind of like I said, I mean, be over a couple of years. And kind of how that plays out is something we'll have a little more color on here as we get to the first part of the year. I mean, Kevin, I'll let you touch on the capital.

Yes. Yes, Justin. Thanks for your question on capital returns. I mean, I think the answer is consistent with the past. What we're really aimed at doing is continuing to reinvest in these core assets like we talked about before, to establish a position of resiliency, consistency, predictability, et cetera. So you've got repeatable results year-over-year-over-year. I think once we get to that point and are generating predictable steady free cash flows and cash flows, then that's when we can enter a period of what does a capital return policy begin to look like. And as we've said before, it's something that the Board registers very clearly and squarely with them, and it's something we talk about routinely. So I hate to give you the same answer, but it is the same answer. And we're kind of on the path as we begin to examine that going forward.

Your next question comes from the line of Lucas Beaumont with UBS.

So farmer economics has sort of been pressured in the U.S. There have been concerns around demand destruction kind of across some of the nutrients. So I just wanted get your view on sort of how your order book is looking for both Potash and Trio and if you're seeing any indications of that at all? Or it seems like a nonissue in terms of cost cutting from the growers so far?

Lucas, this is Zachry. I appreciate the question. I think first on Trio, as Matt noted in his remarks, we saw a really good response to the fill program we released last week there. So order book looks really strong on that front, and we're really fully committed for fourth quarter at this point there. And then on the potash side, a similar story. Order book looks good. We're almost fully committed here for the fourth quarter versus our guidance values. And -- and the 1 thing I'll highlight is just the diversity of our potash mix between our feed sales, industrial and the geographies that we focus on. So that insulates us a bit if there is a slower start, as Matt said, to demand for fall in the Corn Belt, for example, and we feel good about where we're sitting today.

Great. And I guess just as a follow-up then on the new well at AMAX. So I guess, could you maybe just give us a bit more detail around I guess, what the pathway forward would be. So if you get kind of -- if you get the permit in the first quarter, like when would you kind of look to sort of execute on that? And then what would sort of be the next steps if that's either successful or sort of not successful to then continue kind of moving the project forward?

Yes. I look to provide a little more color, Lucas. I mean depending on the permitting, we did the extraction well. It's about $5 million we spent on that. There's certainly a little more work to completely put that in service with pipeline. It'll only depend on timing of permitting and when we want to put the injection well in and what that time looks like to get that cavern full. When it comes to an injection well, it's about $5 million to $6 million for the well, a few million dollars for injection pipeline. But as far as exact timing of when that will spend and when that final completion capital around the extraction well will happen, that's something that I just will have more color on here as we get a little more clarity on permitting into the first part of 2026.

Great. And then just, I guess, while the potash volumes are kind of going to be impacted and be a bit lower heading into '26 in the near term, when should we sort of start to see the negative kind of cost absorption there flowing through? I don't know if you can kind of give us a view on sort of what portion of your cost base there in potash, you sort of view as fixed versus durable maybe to kind of help with that as well.

Yes. I mean given the slightly lower production guide here in '26, we'll start to see, all else equal, some higher cost per ton here in the first quarter as we start to start harvesting the tons that were laid down in our ponds in the summer of '25. I think it's probably 5% to 7% increase for the full year cost per ton for potash compared to '25, which we're pleased is kind of offset by that improvement in our Trio segment.

All right. And then I guess just in Trio, I mean you mentioned at the start that the pricing there has continued to be very attractive and they're sort of trading kind of in line with potash at the moment. How do you kind of see that dynamic that are playing out as we sort of move through 2026?

Yes. Lucas, I think we continue to see strength on Trio, and it's really due to the components of that product. Obviously, kind of year-to-date, we've seen strength across the potassium markets. And not just on the potash side as well on the SOP side, too, where we're seeing a greater realization of that low chloride K value in the Trio. And then kind of pivoting over to the sulfate component of Trio, we did see a bit of a seasonal adjustment in the summer as expected. But just looking at sulfur values overall, they're starting to trend back up here in the fall, and we think that provides support going into Trio into 2026 as well.

Great. And then just lastly on Oilfield Services, I mean, it's sort of in a tough water sales environment there that you called out with the low activity levels in the quarter. So how is kind of -- is the fourth quarter kind of tracking the same? And I guess, how should we kind of think about the outlook there for that business into '26, both on the sale side and I mean like you saw, you saw a fair bit of margin pressure there in the quarter as well, which I'm assuming the bulk of that is probably tied to the sales decline. But I mean, if there's anything else there to maybe roll out for us to kind of just help frame how we should think about the potential earnings if we're sort of running at a lower sort of sales level kind of going into next year?

Yes. I mean Q3 was certainly quite a bit lower, particularly when we compare it against last year's record frac. I mean, we're very exposed to kind of the drilling activity that's on our feed land there, and it's really kind of feast or famine with some of those bigger drilling jobs. As we look into Q4, we certainly expect it to be down a bit compared to what we saw in the first half of the year, where we were pretty consistent margins around $1.3 million and $1.6 million. So some improvement over Q3, but we see still a slower water environment here in the fourth quarter and likely into the first part of '26.

Your final question comes from the line of Jason Ursaner with Bumbershoot Holdings.

Just for Kevin, it's been, I guess, nearly a role since your were -- nearly a year since you were announced in the CEO role. But I think you've been pretty clear on the priority in terms of consistency of earnings, sustainability. Just looking at the results, it does feel like a lot of that work to get back to structural profitability, at least the heavy lifting is kind of either done or kind of on the path. So I guess, in your mind, what else sort of -- what are the big steps that you're looking for to kind of get you there?

Well, I mean, the focus has been intense just around the core assets. And look, I'll tell you that while we're posting more consistent, more reliable results, we're still not pleased with where we are. We think there's more work to be done, and we're going to continue that work because what we'd like to do is continue to take costs out of the system move ourselves down the cost curve. Some of that comes from the removal of cost that you can avoid because some of that comes through tweaking the volumes. And I'd like to just specifically recognize the Trio team for the work that they're doing at our East mine, have been dramatic improvements there over the last year. And I think they'll continue to outperform going into next year.

We've still got some work to do on the potash side. We had the AMAX disappointment and then the weather at the end of the year that kind of threw a little bit of a ranch into early part of next year, but we'd like to get that back on track and kind of get back over that magic 300,000 ton mark and even a little higher. So while we're pleased with what has been done, there still is more work to do to achieve that resilient, predictable, as you just said, structural reliability.

So that continues to be job one. And once we feel reasonably satisfied that we've accomplished that, then we can start to think about where we go from here. So bottom line is pleased with progress to date, but we still have more work to do and look forward to reporting out on those results in the coming quarters.

And in terms of the capital allocation stuff, I mean, is it waiting to see it? Or is it kind of a linear thing where, I guess, or is it -- at what point you kind of feel like it's in the works sort of, I guess, is where I'm trying to go, is it just obviously sitting with a pretty big percentage of your market cap in cash. So the commentary on waiting for capital returns, just sort of how does that go together?

Yes, the nature of this business and a lot of businesses, you can make a capital investment and see the result in a week. Here, it can take a year or 2 before that stuff starts to play out, just given the long-dated nature of largely the evaporation seasons and our -- the impact that weather can have on us. But I would say that a lot of that's in flight. We still have more work to do, specifically around Carlsbad and Wendover and frankly, Moab as well, making sure that those assets are performing at what we believe to be sort of their entitled level of performance. So we've sort of done a couple of years of catch-up capital. I think next year will be another one of those years. And you'll start to see the benefits of those manifest themselves late next year and moving into 2027, I think.

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

Again, I'd like to take just another moment to thank our team for their hard work and dedication this year and posting solid results year-to-date and look forward to continuing to work with them in the coming quarters. And thank you all for attending today's call, and we look forward to keeping you posted in the coming quarters. Everybody, have a good day. Thank you. .

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

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Second Quarter 2025 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Evan Mapes, Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us to discuss review Intrepid second quarter 2025 results. With me today is Intrepid's CEO, Kevin Crutchfield; and CFO, Matt Preston. Our VP of Sales and Marketing, Zachry Adams will also be available during the Q&A session. Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based upon information available to us today and are subject to risks and uncertainties that are more fully described in the reports we file with the SEC. These risks and uncertainties could cause Intrepid to actual results to be different from those currently anticipated, and we assume no obligation to update them. During today's call, we will also refer to certain non-GAAP financial and operational measures. Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release and along with our SEC filings are available at intrepidpotash.com.

I will now turn the call over to our CEO, Kevin Crutchfield.

Thanks, Evan, and good morning, everyone. We really appreciate your interest in attendance for today's earnings call. Intrepid has been off to a great start to the year, and our second quarter results again exceeded our expectations. While we've experienced tailwinds from the broader potash market, the focus on executing our key initiatives throughout the business is paying off, and I'd like to congratulate the team on achieving strong performance across the board.

In the second quarter, our results were highlighted by generating adjusted EBITDA of $16.4 million and adjusted net income of $6 million, which compares to our prior year adjusted EBITDA of $9.2 million and adjusted net loss of about $40,000. At a high level, our strong second quarter performance was driven by a combination of strong sales volumes for potash and Trio, improving pricing and solid unit economics resulting from higher production. Through the second quarter in potash, our year-to-date production of 137,000 tons was 8% higher than the same period in 2024 and our cost of goods sold per ton improved by 12% to $323 per ton.

In Trio, our year-to-date production of 132,000 tons was 8% higher than the same period last year and our cost of goods sold per ton improved by 18% to $234 per ton. Before getting into the market outlook, I want to first provide an update on our AMAX Cavern sample well project.

We successfully drilled the well in July, but unfortunately, we did not find the brine pool that our imaging had showed us as being present. Given this outcome, we're continuing our evaluation of options to pursue an injection well and pipeline that will connect the AMAX mine to our HB injection system. Timing of construction will depend on further technical review and quantifying permitting requirements. But we'll keep the market informed as we progress our efforts on this front. As for the implications without the AMAX brine pool available for our 2026 evaporative season we now expect a slightly overall brine grade into our HB ponds in 2026 as well as lower near-term potash production. While this wasn't our anticipated outcome, given the complexity of drilling these wells, we're pleased to have successfully drilled into our intended target area and to have also -- I have a well for future brine extraction at AMAX. In addition, potash fundamentals remain strong and improving pricing from the start of the year will help offset some of the impacts related to our modestly lower production forecast, which Matt will detail later in the call.

Turning to market commentary, I want to highlight 4 key points as it relates to potash. First, tight global supply and strong demand has outpaced supply additions so far in 2025. Second, key international contracts were settled at supportive levels that should help provide a pricing floor through year-end. Third, there was a successful summer field program where posted prices increased by $20 per ton following the conclusion of the order period. And lastly, the Janssen project that was set to come online late next year has been delayed 6 months to mid-2027 for first production with the expectation of a multiyear ramp to full capacity. Project delays such as this one will help contribute to the continuation of a more balanced market over the next several years.

As for agriculture markets, we've seen some weakness in corn and soybean futures over the summer, but there are positives that could help shift this narrative. A weak U.S. dollar has so far supported strong corn and soybean exports which remained well ahead of last year's volumes. Moreover, recent trade deals with major partners have featured U.S. agriculture, which we expect will continue to provide support for exports. Looking at international markets, key crops like palm oil, cocoa and coffee continue to trade at elevated levels as we always want to make sure that we mention that noncorn and soybean crops comprise about 70% of global potash consumption. So relative agriculture weakness in the U.S. doesn't necessarily have significant implication for our potash prices. Overall, we've had a great start to the year and remain constructive on the outlook. As I've emphasized on previous calls, we remain focused on making our core operations more durable and more consistent and we'll prioritize investments that support higher production and lower cost over the long term so that we can fully capitalize on our multi-decade reserve base.

So with that, I'll now turn the call over to Matt. So please go ahead, Matt. Thank you.

Thank you, Kevin. Starting with our potash segment. Our second quarter results wrapped up a great first half of the year. Strong pricing with multiple moves higher after the January fill program led to a net realized sales price of $361 per ton in the second quarter, which was up about $50 per ton compared to the first quarter. Second quarter sales volumes of 69,000 tons were 25% higher than last year and our segment gross margin of $4.9 million was the best quarterly figure in over a year. Second quarter potash production of 44,000 tons was 4,000 tons higher than the same prior year period while our potash segment cost of goods sold of $337 per ton was a 13% improvement compared to $386 per ton in the second quarter of last year. Looking ahead, and as we covered in yesterday's press release, core weather at our HB facility and the lack of brine in AMAX has reduced our near-term potash production forecast.

First, on the weather. We've had above-average rainfall at our HB mine over the past few months about 50% higher than average, resulting in below average evaporation and reduced potash inventory in our ponds compared to last year. Assuming we have average evaporation for the remainder of the summer, our production outlook for the upcoming harvest year has decreased by approximately 20,000 tons. Given fewer tons in our ponds, we'll see this impact in the first half of 2026 due to reduced run time and an earlier shutdown. In response to our lower pond inventory, we plan to shut down our HB mill for a few weeks in September so that we can maximize as much late season evaporation as possible. This will shift 15,000 tons of calendar year 2025 production into the spring of 2026. We have sufficient inventory at our HB facility to meet expected demand for the second half of 2025 and and do not expect any significant impacts to our forecasted sales volumes for the remainder of the year.

Turning to AMAX. The lack of brine in this Cavern will reduce our overall brine grades into our HB pond system in 2026 which we expect will decrease our production by an additional 25,000 tons compared to previous estimates. Putting this together, we now expect our potash production will be between 270,000 and 280,000 tons for both the 2025 and 2026 calendar years.

Moving on to Trio, which remains a clear standout for Intrepid. In the second quarter, we sold 70,000 tons at an average net realized sales price of $368 per ton. Trio's pricing continued to be supported by a tight domestic sulfate market and firm potash values while increasing corn acres supported an uptick in nutrient demand. Our mine production rates and mill recoveries continue to exceed our expectations with our Trio production totaling 70,000 tons in the second quarter. Trio's cost of goods sold per ton totaled $235 in Q2, which was flat sequentially and a 10% improvement from $261 per ton in the second quarter of 2024. Overall, our segment gross margin totaled $8.1 million, and we remain encouraged on the outlook for Trio.

Finally, our Oilfield Solutions segment was again a steady contributor in the second quarter with revenue of $4.3 million and gross margin of $1.3 million or 30% of revenue, which is in line with our historical average. As for third quarter sales and pricing guidance, in potash, we continue to see a stable market for the second half of the year as evidenced by no change to pricing for the summer fill program in June, which was followed by a $20 per ton increase after the order period. For Q3, we expect our potash sales volumes to be between 55,000 to 65,000 tonnes at an average net realized sales price in the range of $375 to $385 per ton. For Trio, we expect our sales volume to be between 27,000 to 37,000 tons at an average net realized sales price in the range of $383 to $393 per ton.

The third quarter is historically the slowest period for Trio sales, and we expect second half volumes will be in line with historical averages over the last several years. For our 2025 capital program, given the result of our AMAX well, we've reduced our CapEx guidance to $32 million to $37 million as we have deferred the remaining spend on the extraction well in pipeline, while we evaluate our options at HP. Overall, it's been a strong year for Intrepid on several fronts.

I want to emphasize that our top priorities are setting the company up for long-term success and creating sustained value for our shareholders, which starts with increasing our production to improve our unit economics. We've been quite successful since we began these efforts a few years ago. So while we hit a near-term speed bump with the AMAX news as well as the poor weather in Carlsbad this summer, I want to end my remarks by helping frame the context.

First, we've largely seen the increased production we anticipated when we began refocusing on our core assets a couple of years ago. Our strong project execution helped our 2024 production come in about 15% above our initial expectations which gives us confidence in our ability to execute on projects and get back to growing our production. Second, our performance so far this year has been strong, which shouldn't be overlooked particularly at our East mine, where Trio production costs and margins have improved significantly since the first quarter of 2024. Third, we continue to see improving potash market fundamentals and better-than-expected pricing which helps offset some of the impacts of lower near-term production. And finally, we remain in a strong financial position to navigate these near-term headwinds on production and execute on the projects necessary to position Intrepid for future sustained success.

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

[Operator Instructions] The first question comes from Lucas Beaumont with UBS.

So I just wanted to kind of start on the changes to the production timing. Just kind of bear with me on the different thoughts here. So I mean, I think it's kind of clear that the temporary piece linked to rainfall in the short term. So you sort of pushed 15,000 tonnes of production there into '26. And then you've also reduced '26 by 40,000 tons overall, which was the [ $25 million ] on AMAX plus another portion. I was just confused about out of the 15 that shifted into next year. Is that netting off against the change from this year? Or is there a larger gap there given the timing shift as well? I mean maybe if you can kind of just walk me through the different parts there and how to kind of think about that, that would be great.

Yes, happy to do that, Lucas. No, you're right. The total impact is the 45,000 tons of 2026, but we are netting that against kind of the shift to 15,000 tons from '25 into the '26 calendar year. So compared to previous forecast, we're down 30,000 tons for the calendar year '26.

Great. So what I was trying to think about then was what does that kind of mean on a multiyear kind of view going forward. So I mean the production weather-related factors are temporary. And I mean you would assume in a normal year that you get something normal there so that should reverse into the following year. So I would assume that would be a tailwind into '27 of 15,000 tons. Is that right? And then it will just be the 25,000 from the lack of the well being successful, that will be the medium-term challenge, I guess, until you're able to kind of work on another strategy there. Is that right?

Yes. No, you're looking it the right way. I mean it's pretty recent news for us on AMAX. We got actively evaluating the options to get brine into that AMAX mine, longer term and get the residence time underground. As we look forward into like '26 and '27, we do have our Wendover production, which will continue to increase with primary pond 7, starting to ramp up here in the back half of '25 in 2026. And so as we evaluate options and understand HB a little bit better, we'll certainly keep the market updated. But how fast we can get into that AMAX mine and get brine under there, we'll start to dictate the longer-term forecasts.

Despite the fact that the -- there wasn't any brine in AMAX, which was a little bit of a surprise to us based on all the recon that we've done that's still a very critical component of the long-term plan for Carlsbad. So it's just a function of finding the brine and the new injection well so we can start filling up that cavity and you'll see it show up in future forecasts.

Yes. I mean, I guess maybe just another way to help frame that for people then -- so I mean you've obviously gone through the project here where you thought there was the brine you've drilled the well, and unfortunately, is unsuccessful in this case. So I guess, how long was that sort of lead time in the period decided execute on that to help give us a feel for like what it would take to have another growth.

Yes. And if I'm understanding your question exactly. I mean that's what we're evaluating right now. We've got to look at the permit requirements to do an injection well and pipeline. We had hoped there was a brine, that had been under there for a while, and we have an extraction well, an extraction pipeline, we could tie into our AMAX system in the near term. But without that today, we've got to just kind of go through the the necessary steps to look at injection, much like we have for all the other mines at HB, whether it's North, South or Eddy mine, I think it's important to remember that these were empty when we started our HB project and all these started with us injecting brine and having residence time. And so in many ways, AMAX will just be like what we've done before for HB. We hope to get a bit of a head start there, but unfortunately, that wasn't the case.

Great. And then, I guess, just lastly, I mean, you guys have made solid progress on your lower production cost per ton in the last couple of years now. So just with the lower production outlook, I assume that's going to sort of be negative for cost absorption going forward. I mean if you could kind of just help frame that up for us for the second half and then into '26. That would be great.

Yes, I don't see a huge impact to the second half. I mean, obviously, it's kind of that cost of inventory starts to creep up with lower production. It's a bit progressive as you go go forward. For 2026, it's kind of as simple as the 40,000 tons is about 12% to 13% of our overall potash production. And so I mean, given our larger fixed cost load, I mean, we need to look at ways to get our costs down in light of this news. But at face value, I mean, you could expect an 8% to 10% increase in our cost per ton unless we can find ways to cut back, which we're actively looking at. It mitigated to some extent or at least a large extent sort of the price deck and price ideas that we're seeing out there in the marketplace. So net-net-net, hopefully, the the result that we generate is neutral, even despite of the downgrade in production guidance.

Your next question comes from Jason Ursaner with Bumbershoot Holdings.

All right. Just maybe following up a little bit on the production. I guess, can you try to frame all the CapEx that you did a lot of that started with injection with the resident time underground, this balance between 2025 and 2026 calendar year. How does that kind of look versus maybe more of a longer-term view of where your injection rates are overall into the system with some of that brine kind of getting saturated over time, maybe over a slightly longer time frame.

Yes, I'll do my best to answer that, Jason. I mean you're right. We've really focused on investing back in our core assets for HB. Our main focus has been keeping injection rates above our extraction rates to keep our caverns full, make sure that we're touching all that potash underground all the time. And so really maximizing the production out of each of our different caverns at I mean, going forward, it's largely the same. We just want to make sure that we're keeping our caverns as full as possible. Certainly, as we look to 2026, one of the impacts now is we'll have to just pull on those existing Caverns a little bit harder than we otherwise would have liked. Hopefully, we'd had one more kind of straw down there at the AMAX mine for 2026 production.

But we're encouraged by the trend. Obviously, the success we've had when we refocused on our core assets and getting that brine underground. We've seen the results. And so like we said on the call, it's a bit of a speed bump for us for sure, but confident in our ability to execute at HB over the long term.

And brine grade is that mostly the Eddy Shaft kind of top gap tailing off? Or I guess what is -- what would cause the brine grade to decline a bit?

Well, -- we certainly hope AMAX, if there was brine under there would have been significant residence time. So it would have been a pretty strong brine grade much like we saw out of the Eddy mine when we got back in there both from the Eddy Shaft as well as the new extraction well we completed a while back. I mean, just given that we have one less cavern to pull out of, we'll pull a little bit harder, which just decreases residence time overall. So we'll just see a lower brine grade given a general reduced residence time in our existing caverns in 2026.

Okay. And then great quarter in terms of cash flow. I think -- well, you gave the number as of August here with $87 million of cash. The outlook on pricing sounds relatively constructive. So in terms of future going forward, should be okay, at some point, hopefully get some of the money from Exxon, maybe even the next rounds of money from Exxon. And I think the last couple of calls have talked about Oilfield kind of noncore. So I guess at what point, cash is accumulating quickly on the balance sheet and if you look out a year or 2 if things go right, there could be a pretty significant amount of cash relative to your market cap. I know I've asked about it a number of times, but I guess at what point is the capital allocation question sort of become a pretty clear focus just given that you're going to have a significant portion of your market cap in cash.

Yes. Good question, good points. We did -- we are accumulating some cash and -- and you asked the question at what point does the capital allocation discussion become relevant. Look, it's always relevant. The Board talks about it all the time. And historically, what I've said is we need to continue to focus on the core operations, sort of a restoration plan, getting those things back to what I would refer to as entitled level of performance where we're predictable, reliable, we're durable over the long term and having adequate cash on the balance sheet to see you through sort of volatile market periods. So with that as a backdrop, then to the extent that something happened with Exxon, again, we have no idea around that. They have no obligation to share with us their long-term plans, but that is hanging out there, and we've spoken to the South Ranch in the past, then that would bring the capital allocation discussion to the the Board. I don't want to speculate on that. But things are stacking up in favor of a very robust discussion on that front. And what we've got to do is just continue to execute so that, that discussion remains relevant at all times. So hopefully, that's responsive to your inquiry.

I appreciate that. I mean I think there's a limit to the way you can say, but it is becoming apparent -- the company is a significant cash generator in the positive problem to have, I guess, at some point. But I appreciate it.

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

Thank you again for attending today, and I'd like to give one final thank you again to our team for their hard work and their their dedication over the course of the last couple of quarters and putting together solid levels of performance. So we'll keep you posted in the coming quarters, and thank you again for attending today. Have a good one.

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