• Adjusted EBITDA: $10 million, a $7.8 million improvement compared to the third quarter of last year.
• Potash Production: 178,000 tonnes for the first nine months of the year; full year 2024 expected range of 280,000 to 290,000 tonnes.
• Potash Segment Cost of Goods Sold: Improved by 14% compared to the prior year.
• Trio Sales Volumes: 45,000 tonnes at a net realized sales price of $312 per tonne.
• Trio Cost of Goods Sold: $272 per tonne, compared to $341 per tonne in the same prior year period.
• Trio Gross Margin: Positive $600,000, compared to a gross deficit of $4.3 million in the third quarter of last year.
• Oilfield Solutions Segment Margin: $3.1 million, more than double the prior year.
• Potash Sales Volume Guidance for Q4: 45,000 to 55,000 tonnes at an average net realized sales price of $340 to $350 per tonne.
• Trio Sales Volume Guidance for Q4: 40,000 to 50,000 tonnes at an average net realized sales price of $315 to $325 per tonne.
• Debt Status: No long-term debt and good liquidity.

• Warning! GuruFocus has detected 5 Warning Sign with IPI.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Intrepid Potash Inc (NYSE:IPI) reported an adjusted EBITDA of $10 million for the third quarter, marking a $7.8 million improvement compared to the same period last year.
• The company successfully completed Phase 2 of the new HB injection pipeline, which is expected to enhance production rates in upcoming potash production seasons.
• Potash segment cost of goods sold per tonne improved by 14% compared to the prior year, indicating better unit economics and margins.
• Trio segment showed significant improvement with sales volumes totaling 45,000 tonnes and a positive gross margin of about $600,000, compared to a gross deficit in the previous year.
• Intrepid Potash Inc (NYSE:IPI) maintains a strong financial position with no long-term debt and good liquidity, supported by potential payments from the copper development agreement with XTO.

Negative Points

• The CEO search process is ongoing with no additional updates, indicating potential uncertainty in leadership.
• Despite improvements, the potash market faces challenges with lower pricing impacting gross margins.
• The global potash market remains balanced but faces potential disruptions from geopolitical factors, such as proposed production cuts in Belarus and Russia.
• Oilfield Solutions segment margins are expected to return to lower first half rates in the fourth quarter, indicating potential volatility in this segment.
• The lithium project at Wendover is still in early stages with a multiyear timeline for commissioning, suggesting long-term uncertainty in this initiative.

Q & A Highlights

Q: How do you view the risk of demand destruction for potash next season given concerns about farmer income levels? A: Zachry Adams, Vice President, Sales and Marketing: Global demand for potash in 2024 has returned to normal levels, and we expect this trend to continue into 2025. Potash at current price levels is seen as a good value by growers, and application rates have been normal. We anticipate strong demand in the spring of next year, as yield maximization remains a priority even in a weaker agricultural price environment.

Q: Can you provide insights on the cost improvements in potash and expectations for next year? A: Matthew Preston, Chief Financial Officer: We are on track with our cost improvements, having seen a 20% to 30% reduction in cost of goods sold compared to 2023 levels. We expect to reach the lower end of this range by the second half of 2025, driven by increased production and improved unit economics.

Q: How should we think about the run rate for oilfield solutions following recent strong performance? A: Matthew Preston, Chief Financial Officer: The first half rates are a good baseline for our business, with fluctuations due to completion operations. We lack visibility into large completion operations for 2025, but will update as more information becomes available.

Q: What impact could potential production cuts in Belarus and Russia have on the global potash market? A: Matthew Preston, Chief Financial Officer: The market is currently balanced, and potential cuts could significantly impact the market. However, it's too early to predict the likelihood of these cuts. In the US, distributors are managing inventory carefully, and we expect good potash demand into the spring.

Q: How do byproduct sales factor into your cost projections and production improvements? A: Matthew Preston, Chief Financial Officer: Byproduct sales are steady and do not significantly impact our potash production costs, which are primarily driven by increased potash production over a large fixed cost base.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.