Thank you for standing by. This is your conference operator. Welcome to the Intrepid Tadish, Inc. 3rd 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 zero. I would now like to turn the conference over to Evan Mates, 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, Zachary 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 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 intrepidpodge.com. On our 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 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 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. And 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 plot ash 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 will 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 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 23, as well as the restart of our fine Langbonite 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 relight 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, 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 the 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. And 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 to 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 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 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, and 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 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 oil field solutions, lower water sales and oil field activity reduced our gross margin in the quarter, with water significantly lower, mostly due to last year's Q3 having the largest frack 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. dollars. 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 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 to 90,000 tons at an average net relight 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 percent higher after very good subscription to the fill program with pricing up roughly 45 dollars 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 to 34 million our 2025 spend includes approximately 5 million dollars related to the hba max cavern with the balance directed to other sustaining projects across our cottage 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 dollars 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 with the call.

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.

Morning, this is and Pellegrino on for Vincent. I just wanted to touch on the AMEX cavern and the permits. Can you give us an idea what the CapEx would be associated with the injection well and 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 thank you yeah thanks for the question justin you know as we continue to evaluate the hb amex cavern if you recall you know that capital will be spread out over a couple years certainly disappointed that the cavern didn't have brian when we got you know the injection well or the extraction well excuse me drilled in the summer of 25 um you know 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 years and you know 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.

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, you know, 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 pre-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.

Great. Thank you for the call.

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

Good morning. So farmer economics has sort of been pressured in the US. There's been concerns around demand destruction kind of across some of the nutrients. So I just wanted to get your view on sort of how your order book's looking for both Potash and Trio, and if you're seeing any indications of that at all, or it sort of seems like a non-issue in terms of cost cutting from the growers so far?

Hey, Lucas, this is Zachary. 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, you know, a similar story. Order book looks good. We're almost fully committed here for the fourth quarter versus our guidance values and and you know the one thing i'll highlight is just the diversity of our potash mix you know between our feed sales industrial and the the geographies that we focus on so you know that insulates us a bit if there is a slower start as matt said to you know to demand for fall in the uh corn belt for example and we feel good about where we're sitting today great thanks and um i guess just as a follow-up then on the uh the new well at amax um so i guess could you maybe just give us a bit more detail around uh i guess what the pathway forward would be so if you get kind of you get the permit in the first quarter um

like when would you kind of look to sort of execute on that and then uh 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 yeah I look for a little more color Lucas I mean it's depending on the permitting you know that we did the extraction well it's about five million dollars we spent on that there's certainly a little more work to completely put that in service with pipeline you know it really depend on timing of permitting and you wouldn't want to put the injection well in and you know what that time looks like to get that cavern full you know when it comes to to an injection well like I said about five to six million dollars for the well a few million dollars for injection pipeline. But as far as exact timing of when that'll spend and when that final completion capital around the extraction well will happen, you know, that's something that just will have more color on here as we get a little more clarity on permitting into the first part of 2026.

Great. Thanks. And then just, I guess, while the Odash 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 um negative kind of cost absorption there uh flowing through um 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 variable maybe to kind of help with that as well yeah i mean given the the slightly lower production guide here in 26 and we'll start to see you know all else equals some higher cost per ton here in the first quarter as we start to start you know harvesting the tons that were laid

down in our ponds in the summer of 25. I mean, all I think is 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.

Great. Thanks. And then I guess just in Trier, I mean, you mentioned at the start that the pricing there has continued to be very attractive and this sort of trading kind of, you know, in line with potash at the moment.

How do you kind see that dynamic sort of playing out as we sort of move through 2026 yeah lucas i think we continue to see strength on trio and it's really due to the components of that product uh obviously kind of year-to-date we've seen strengths across the potassium markets and 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 uh k value in the trio and then kind of pivoting over to the sulfate uh component of trio we did see a bit of a seasonal adjustment in the summer as expected but uh just looking at sulfur sulfur values overall they're starting to trend back up here in the fall and we we think that provides

support going into trio in the 2026 as well great thanks and then just lastly on the oil field services so i mean it's sort of been a tough uh water sales environment there that you called out with uh the low activity levels in the quarter um is how is kind of is the fourth fourth quarter kind of tracking the same and i guess how should we kind of think about um the outlook there for the business into 26 uh both on the south side and um i think like you saw you saw a fair bit of margin pressure there in the quarter as well which uh i'll assume the bulk of that's probably tied to the sales decline, but I mean, if there's anything else there to maybe pull 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.

Yeah, I mean, Q3 was certainly, you know, quite a bit lower, especially when compared against last year's record frack. I mean, we're very exposed to kind of the drilling activity that's on our fee land there and it's really kind of feast or famine with some of those bigger drilling jobs you know 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're pretty consistent margins around you know million three and million six so some improvement over q3 but we see you know 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 Ersener with Bumbershoot Holdings.

You may go ahead.

Thanks for taking the questions. Just for Kevin, you know, 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 um so i guess in your mind what else sort of what are the big steps that are you're looking for to kind of get you there well i mean the uh the focus has been intense just around the core assets and look i'll tell you that while you know we're posting more consistent more reliable results we're still not pleased with where 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 um you know move ourselves down the down the cost curve some of that comes from the removal of cost that you can avoid but some of that comes through um tweaking the volumes and i'd like to just you know specifically recognize the um the trio team for the work that they're doing at our east mine 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 you know 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 uh early early part of next year but we'd like to get that back on track and kind of get you know back over that three 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 can 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 today, 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, you know, 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.

So the commentary on waiting for capital returns, just sort of how did that go together yeah the nature of this business and you know a lot of businesses you can make a capital investment and see the result in a week uh here you know it can take a year or two before that stuff starts to play out just given the long-dated nature of the largely the evaporation seasons and our um the the wet 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, you know, 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, you know, we've sort of done a couple 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. Okay. Thanks. Thank you.

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.

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