Intrepid Potash, Inc

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Podash, Inc. First Quarter 2021 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll 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 an 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, Ariel. Good morning, everyone. Thanks for joining us to discuss Intrepid's first quarter 2021 results. With me on the call today is Intrepid's Chief Operating Officer, Brian Stone. Also available to answer questions during the Q&A session will be our Vice President of Sales and Marketing, Zachary Adams. Our CEO, Bob Gernobis, is currently navigating the complex quarantine system in Australia to visit his newly born granddaughter and is unable to join the call today. 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. 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 intrepidpotash.com. I'll now turn the call over to Brian.

Thank you, Matt, and good morning, everyone. Intrepid's first quarter was highlighted by robust performance in the fertilizer segments as strong demand and increasing prices drove significant increase in bottom line results compared to the prior year. We recorded first quarter adjusted net income of $2.5 million and adjusted EBITDA of $12.9 million, an increase of $4.5 and $4 million respectively, compared with the first quarter of 2020, and much better than the pandemic-related losses from the second and third quarters. Cash flow from operations was a robust $19.1 million in the first quarter, and we expect that this will continue into the second quarter. We ended the first quarter with approximately $36 million in cash and eagerly await the SBA to give us some guidance on when the proposed PPP forgiveness process might restart, given our 100% usage directly to payroll-related expenses. Our fertilizer and nutrient business, led by strong global agricultural commodity prices and slightly weaker dollar, continued momentum from the fourth quarter as demand for potash and trio exceeded our forecast in the first quarter on both realized price and volumes. As a reminder, our posted price for potash is now $140 a ton above summer fill level, while our trio price is currently posted $80 per ton higher than summer fill value. Customers remain eager to secure volumes and we are fully booked on potash and trio through the second quarter. We are currently allocating our trio premium and trio granular deliveries and hope to see this tightness result in stronger performance. MOP pricing in Brazil has moved up $55 a ton over the last 60 days and now sits at a $15 per ton premium to U.S. NOLA barge market. This combined with the renegotiation of the standard potash Indian contract from $247 a ton to $280 a ton, supports stability and strength heading into the second half of the year. Reports from the field are that strong early season application levels and increased nutrient rates have depleted inventories on all nutrients, including potash and trio, much quicker than expected. The prospect of any product carryover after heavy buying since last fall now looks unlikely across the US market. We believe that strong commodity values will lead to good farmer income supporting another strong fall application season if weather and harvest schedules cooperate. Oil commodity pricing continues to be supportive of duct well completions and new well development. We have seen rigs, frack crews, and approved permits consistently throughout the first quarter of 2021. During the first quarter, we also sourced water from third parties to supplement our own water rights. to meet increasing water volume requirements of operators on our south ranch, which increases margin as we continue to optimize our water book. As the oil field outlook improves, we expect water sales will continue to grow through the back half of the year. We hope to have our multi-year PECOS litigation resolved in the next 120 days as the trial ended in December and all briefing was finalized in April, which will allow us a much clearer and wider runway to diversely serve our customers. We continue to pivot to ESG-friendly full-cycle water management systems that we described in our last earnings call. In the first quarter, we've invested in additional recycling equipment, infrastructure, and resources as we expand on the full-cycle water management products and services demanded by customers in the Delaware Basin. We are fully equipped for our first recycled job and have acquired major long lead time components for additional jobs number two and three. We plan to have our first unit in place hopefully anchored by a service contract with a large producer toward the end of the second quarter. This initial operation will be able to recycle approximately 75,000 barrels per day with additional recycling units in service in the third quarter. As operators, regulators, and politicians increasingly focus on environmental and sustainability goals, full cycle water management includes source water, recycled water, and produced water handling will continue to become a central focus of our oil field services segment. In addition to our source water and increasing recycled capabilities, we have significant brine water sources near our operations that have the potential to supplement the increasing needs for long lateral multistage fracts. As we first mentioned in our last call, we had hoped to have an analyst day soon after our fourth quarter call, but delayed a bit as COVID vaccinations ramped up in Colorado. We now expect to host an Analyst Day call in mid-June and we'll announce a final date and attendance information soon. And now I'll turn the call back over to Matt for review of our financial results and outlook.