Intrepid Potash - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 revenue rose to $53.2M, beating S&P Global consensus of $50.1M by ~6% on higher realized pricing in potash and Trio; adjusted EPS of $0.11 missed the $0.18 consensus as non‑GAAP add‑backs (notably a $2.24M asset sale gain) elevated GAAP EPS to $0.28 but did not flow to adjusted results. Consensus values marked with “” come from S&P Global.
• Segment mix was favorable: Potash gross margin improved on 15% higher volumes and +7% pricing; Trio posted a sharp margin inflection on +29% realized price, though volumes were seasonally light; Oilfield Solutions was a drag with water sales down sharply y/y after a record frac job last year.
• Management guided Q4 potash volumes of 50–60k tons at $385–$395/t and Trio 80–90k tons at $372–$382/t; 2025 CapEx trimmed to $30–$34M (from $32–$37M in Q2) with ~$5M for HB AMAX work; cash was ~$74M with no revolver borrowings as of Oct 31.
• Narrative/catalysts: constructive fertilizer pricing, visible Trio productivity and margin tailwinds into 2026 (70–75k t/quarter production cadence), offset by lower near‑term oilfield water activity and potash production constraints into 2026 pending HB AMAX progress; capital return remains deferred pending sustained, repeatable FCF.

What Went Well and What Went Wrong

• What Went Well

  • Realized pricing captured: “We delivered another quarter of solid financial results… third quarter net income of $3.7M and adjusted EBITDA of $12.0M” with price increases fully realized in potash and Trio, driving higher gross margins y/y.
  • Trio execution: Production 70k tons, COGS/t $257 (vs $272 LY; $235 Q2), gross margin $4.4M (vs $0.6M LY); management expects 2026 production 70–75k t/quarter and continued cost improvements.
  • Potash profitability: 62k t sold (+15% y/y) at $381/t (+7% y/y), segment GM up ~$2.2M y/y on volume and pricing; COGS/t improved to $340 (vs $348 LY; $337 Q2) despite weather‑driven production delays.

• What Went Wrong

  • Oilfield Solutions slump: Sales fell to $2.7M (-$7.6M y/y) with a $0.06M gross deficit on lower water sales and lapping the largest frac job in company history last year; Q4 expected to remain slow.
  • Adjusted EPS miss vs S&P: Adjusted EPS $0.11 vs ~$0.18* consensus on mix, seasonality, and normalization of non‑operating items (notably a $2.24M asset sale gain excluded from adjusted EPS); GAAP diluted EPS was $0.28. Consensus from S&P Global.*
  • 2026 potash headwinds: Above‑average 2025 HB rainfall and lack of an AMAX brine pool reduce 2026 potash production/absorption; management still targets 270–280k tons, implying 5–7% higher potash COGS/t next year (partially offset by Trio gains).

Transcript

Operator (participant)

Thank you for standing by. This is your conference operator. Welcome to the Intrepid Potash Third Quarter 2025 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press Star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star and 0. I would now like to turn the conference over to Evan Mapes, Investor Relations. Please go ahead.

Evan Mapes (Head of Investor Relations)

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.

Kevin Crutchfield (CEO)

Thank you, Evan. 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 net income of $3.7 million. 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 two key factors.

First, higher pricing in potash and Trio, as we realized the entirety of the first half increases in both segments in quarter three. Second, our higher production over the past year has led to better unit economics. Both potash and Trio improved their 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's 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 net back 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 timeline 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 two new continuous miners we placed into service in the second half of 2023, as well as the restart of our fine lignite 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 tons-75,000 tons for 2026, and our team is continuing to challenge itself to find even more tons through improved mining efficiencies and increased meal recoveries. Higher production should drive another year of record Trio sales volumes for Intrepid. 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 are certainly a positive development. Looking ahead, we will remain focused on strong operational execution, improving our margins and free cash flow through the cycle, as the only domestic producer of potash. We will prioritize our investments into our core business to fully capitalize on our multi-decade reserve lives.

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

Matt Preston (CFO)

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 captured 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 unit 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. 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 tons-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 two factors. First, our Trio demand was heavily weighted to the first half of 2025, where we sold a record 181,000 tons. Second, normal seasonality as customers focused exclusively on third-quarter application needs. Last week, we announced a 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 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 meal recoveries continued 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 a 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.

Through the first three 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 tons-295,000 tons, which we expect will also drive a 5%-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 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 tons-60,000 tons at an average net realized sales price in the range of $385 per ton-$395 per ton.

Compared to last year's fourth quarter, our Q4 volumes 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 tons and 90,000 tons at an average net realized sales price in the range of $372 per ton 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. 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-$34 million.

Our 2025 spend includes approximately $5,000,000 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've 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 (participant)

We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then one. We will pause for a moment as callers join the queue. The first question comes from Vincent Andrews with Morgan Stanley.

Justin Pellegrino (Equity Research Analyst)

Morning. 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 and the pipeline? Should those permits be obtained? Within the overall capital allocation priorities for next year, I imagine this is impacting your decisions and how you're planning on going forward. 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? Thank you.

Matt Preston (CFO)

Yeah. 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 did not have brine when we got the injection well or the extraction well, excuse me, drilled in the summer of 2025. As we evaluate it, the capital spend, it will really just kind of, like I said, be over a couple of years. Kind of how that plays out is something we will have a little more color on here as we get to the first part of the year. I mean, Kevin, I will let you touch on the capital.

Kevin Crutchfield (CEO)

Yeah. Yeah, 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've 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. 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. I hate to give you the same answer, but it is the same answer.

We're kind of on the path as we begin to examine that going forward.

Justin Pellegrino (Equity Research Analyst)

Great. Thank you for the call.

Operator (participant)

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

Lucas Beaumont (Director Equity Research Analyst)

Good morning. 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. I just wanted to get your view on how your order book is looking for both potash and Trio, and if you are seeing any indications of that at all, or it seems like a non-issue in terms of cost-cutting from the growers so far.

Zachry Adams (VP of Sales and Marketing)

Hey, 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. Order book looks really strong on that front, and we're really fully committed for a fourth quarter at this point there. 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. The one thing I'll highlight is just the diversity of our potash mix between our feed sales, industrial, and the geographies that we focus on. That insulates us a bit if there is a slower start, as Matt said, to demand for fall in the Corn Belt, for example. We feel good about where we're sitting today.

Lucas Beaumont (Director Equity Research Analyst)

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

Matt Preston (CFO)

Yeah. I'll [look for probably] 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 really 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, like I said, about $5 million-$6 million for the well, a few million dollars for injection pipeline. As far as exact timing of when that'll 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.

Lucas Beaumont (Director Equity Research Analyst)

Great. Thanks. And then just, I guess, while the potash volumes are kind of going to be impacted maybe a bit lower heading into 2026, in the near term, when should we sort of start to see the negative kind of cost absorption there flowing through? I do not 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 variable, maybe to kind of help with that as well.

Matt Preston (CFO)

Yeah. I mean, given the slightly lower production guide here in 2026, I mean, 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 2025. I mean, all in all, I think it's probably a 5%-7% increase for the full year cost per ton for potash compared to 2025, which we're pleased is kind of offset by that improvement in our Trio segment.

Lucas Beaumont (Director Equity Research Analyst)

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

Zachry Adams (VP of Sales and Marketing)

Yeah, 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. 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. 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.

Lucas Beaumont (Director Equity Research Analyst)

Great. Thanks. Then just lastly on oilfield services, I mean, it's sort of been a tough water sales environment there that you called out with the low activity levels in the quarter. Is the fourth quarter kind of tracking the same? I guess how should we kind of think about the outlook there for the business into 2026, both on the south 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's probably tied to the sales decline. If there's anything else there to maybe call 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. Thank you.

Matt Preston (CFO)

Yeah. I mean, Q3 was certainly quite a bit lower, particularly when compared against last year's record for [ACK]. I mean, we're very exposed to kind of the drilling activity that's on our [free 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. Some improvement over Q3, but we see still a slower water environment here in the fourth quarter and likely into the first part of 2026.

Operator (participant)

Your final question comes from the line of Jason Ursaner with Bumbershoot Holdings. You may go ahead.

Jason Ursaner (General Partner and Portfolio Manager)

Thanks for taking the questions. Just for Kevin, it's been, I guess, nearly a year since you were announced in the CEO role. And 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. 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?

Kevin Crutchfield (CEO)

I mean, the focus has been intense just around the core assets. Look, I'll tell you that while we're posting more consistent and 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, but some of that comes through tweaking the volumes. I'd like to just specifically recognize the Trio team for the work that they're doing at our East Mine. There 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 wrench into the early part of next year. We would like to get that back on track and kind of get back over that magic 300,000-ton mark and even a little higher. While we are pleased with what has been done, there still is more work to do to achieve that. Resilient, predictable, as you just said, structural reliability. That continues to be job one. Once we can feel reasonably satisfied that we have accomplished that, we can start to think about where we go from here. 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.

Jason Ursaner (General Partner and Portfolio Manager)

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 do you kind of feel like it's in the works sort of? I guess is where I'm trying to go. It's just obviously sitting with a pretty big percentage of your market cap in cash. The commentary on waiting for capital returns, just sort of how does that go together?

Kevin Crutchfield (CEO)

Yeah. 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 two before that stuff starts to play out, just given the long-dated nature of, largely, the evaporation seasons, or the impact that weather can have on us. I would say that a lot of that is 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. We have sort of done a couple of years of catch-up capital. I think next year will be another one of those years. You will start to see the benefits of those manifest themselves late next year and moving into 2027, I think.

Zachry Adams (VP of Sales and Marketing)

Okay. Thanks.

Matt Preston (CFO)

Thank you.

Operator (participant)

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

Kevin Crutchfield (CEO)

Again, I'd like to take just another moment to thank our team for their hard work and dedication this year in posting solid results year to date. I look forward to continuing to work with them in the coming quarters. 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.

Operator (participant)

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