Intrepid Potash, Inc

Thank you for standing by. This is a conference operator. Welcome to the Intrepid Potash Inc Q2 2020 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 one on your telephone keypad. Should you need assistance during the conference call, you may signal operator by pressing star and zero. I would now like to turn the conference over to Matt Preston, Vice President of Finance. Please go ahead.

Thanks. Good morning, everyone. Thanks for joining us to discuss Intrepid's second quarter 2020 results. With me on the call today is Intrepid's co-founder, executive chairman, president and CEO, Bob Gernovas. Also available to answer questions during the Q&A session following our prepared remarks will be our Chief Operating Officer, Brian Stone, and our Vice President of Sales and Marketing, Mark McDonald. Please be advised that our remarks today, including answers to your questions, include forward-looking statements as defined by U.S. securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. These statements are based on the information available to us today, and we assume no obligation to update them. These risks and uncertainties are described in our periodic reports filed with the Securities and Exchange Commission, which are incorporated here by reference. During today's call, we will refer to certain non-GAAP financial and operational measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in yesterday's press release. Our SEC filings and press releases are available on our website at intrepidpodash.com. I'll now turn the call over to Bob.

Thank you, Matt, and good morning, everyone. The second quarter hopefully was the definition of unique in light of the considerable pressures presented by the pandemic and its economic impacts. We ended the quarter in a solid cash position, which enabled us to voluntarily and fully repay the Series C tranche of our senior notes in July. This had the effect of lowering our effective interest rate while providing us with considerably more flexibility as we execute on our strategic plan and seek opportunities to capitalize on the generational opportunities currently available in the oil and gas space. With available borrowing capacity of $44 million and a $75 million accordion feature under our existing credit facility and $14 million in cash on hand after the July repayment, We believe we are in solid leverage position as we continue to prudently manage our existing assets while considering unique acquisition opportunities during these unprecedented times. Our ability to execute during these uncertain times is testament to the strategic moves we've made to diversify our revenue streams, maximize our saleable assets, improve our leverage position, and infuse our business with cost and labor efficiencies, which enable us to be responsive to ever-changing conditions. Having entered this challenging period in a stronger position, and by continuing to improve our leverage position, we are better able to execute well as we navigate the roller coaster in the oil and gas markets, while providing essential services to the agricultural, animal feed, and oil and gas markets themselves. Considering the COVID-19 pandemic, we delivered a solid first half in our nutrients business, while the earlier spring application shifted volumes to earlier in the year. For potash, we continued to see strong volumes into our agricultural and animal feed segments, particularly early in the quarter, though margins continued to be pressured due to lower pricing compared to the prior year. We finished the spring production season earlier this year due to below average evaporation during 2019, but have seen a great 2020 evaporation season so far with minimal rainfall and above average temperatures at all three potash facilities. In fact, it's 107 degrees in Moab today. In June, a summer fill program announced by our competitors lowered prices $10 to $20 per ton compared to the winter fill price levels. This price applied to tons ordered in the June delivery window and delivered by the end of September. After the order window, pricing increased $15 per ton, and we have seen acceptance of this higher pricing on spot sales in the third quarter, although the majority of tons delivered in the third quarter will be at the fill pricing level. For TRIO, we delivered record domestic volumes in the second quarter as we pursued a more U.S.-focused strategy in light of favorable domestic weather conditions and solid demand for our granular and premium products. Our success in driving domestic sales in the second quarter, in turn, drove a 6% year-over-year increase in second quarter net realized sales prices. In June, a summer fill program, very similar to the PUDISH program, was announced by our sole competitor, lowering prices $5 to $10 per ton compared to the first quarter price levels. Pricing increased $15 per ton after the fill window. As we discussed last quarter, our oilfield solutions business remained well positioned, even in light of the pressures posed by the ongoing pandemic. The strategic moves we have made in our oilfield businesses have resulted in low cash operating requirements and a unique ability to deploy our labor force in Southeast New Mexico in real time to address our highest business needs. This gives us considerable flexibility as we manage through the oil and gas down cycle that is in the process of rebounding. Accordingly, our approach to the oil field market today is pragmatic. We acknowledge that the pullback in our customers' Second quarter products and the schedules and general lack of visibility in the market was painful for our business in the short term. However, we are reminded that the market pressures we are seeing today are inherently time bound. Even in light of considerable uncertainty in the short term, we know that by successfully managing through this part of the cycle, we open ourselves up to taking advantage of of all the down market can offer, including an abundance of unique opportunities to further strengthen and diversify our business. To that end, we continue to evaluate opportunities to organically expand and diversify our existing oil and gas midstream businesses, which include full cycle water management, which is defined as source water delivery, recycling, blending, and disposal. We also continue to evaluate synergistic and sometimes organic opportunities to expand further within the entire midstream and upstream oil and gas space, which includes the gathering of a variety of produced products, byproducts, and waste products. As we enter the second half of the year, we remain thoroughly optimistic. As we speak today, we are delivering water into a two million barrel frack and believe we're well positioned to withstand economic pressures presented by the pandemic and related downturn in the commodity cycle. Through diligent execution on our strategy and prudent management of our existing assets, we believe we can opportunistically improve and expand our business and emerge a stronger company once headwinds have banked. And now I'll turn the call over to Matt for a view of our financial results.