Intrepid Potash, Inc

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Pawdash, Inc. 3rd Quarter 2021 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 Matt Preston, Vice President of Finance. Please go ahead.

Thanks, Ariel, and good morning, everyone. Thanks for joining us to discuss Intrepid's third quarter 2021 results. With me on the call today is Intrepid's co-founder, executive chairman, and CEO, Bob Gernobis. Also available to answer questions during the Q&A session following our prepared remarks will be our President, Brian Stone, and our Vice President of Sales and Marketing, Zachary Adams. 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 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. Good morning to everyone.

We recorded third quarter net income of $4 million and adjusted EBITDA of $13.1 million with results benefiting from another strong performance in the sales through our fertilizer segments as increasing prices continue to drive improved bottom line results compared to the prior year. The third quarter is normally our lowest cash flow quarter of the year, and this year was no exception, with $8 million in cash from operations, increasing our year-to-date total to nearly $60 million through the first nine months of 2021. Our balance sheet remains in great shape and allows us to execute on the significant opportunities ahead of us in this strong commodity environment. We ended the quarter with $26 million in cash on hand and no debt outstanding on our revolving credit facility. Earnings for our nutrient segments continued to improve over the prior year as price levels increased for both potash and trio. We announced an $80 per ton potash price increase in August and have continued to move our posted pricing up to match rising spot prices during the past few months. Unfortunately, the Carlsbad, New Mexico region received more than double the amount of average rainfall during the latter half of the evaporation season, which not only added fresh water to our ponds that in turn dissolved harvestable potash back to a brine that we need to evaporate before producing potash. but also led to reduced overall evaporation rates. As a result, our HB facility will produce under a shortened initial harvest season this fall and winter, likely ending production in mid-January. To offset the delayed production, we plan to restart our HB production in March and run for a few months during the spring to increase the potash production during the spring season and capture what is likely to be continued strong pricing in the first half of 2020. Our trio segment continues to generate sequential quarter improvements in gross margin due to rising prices and steady demand. We announced a $50 per ton increase to our trio products in August, and similar to our potash segment, we continue to move spot pricing higher to match rising potash prices across the country during the last few months. We continue to see strong demand and have responded by adding an extra shift at our east plant using overtime labor. With low inventories of key products and the potential for strong demand in spring season, we expect to bring contract labor on at our east mine to continue our extra production shift through the spring season and to better supply our customers. This added shift is expected to increase production by 50,000 tons over the next 12 months, and we have the potential to add an additional 50,000 tons depending upon continuing market conditions. Our oilfield solutions revenue increased in the third quarter as oilfield activity and frac volumes increase in step with oil price. As source water refresh rates increase, we are bringing in an increasing amount of third-party water to supplement our JMA water, which has compressed margin percentages in the segment. Our south water rights remain fully committed for the year, We're beginning to bid for jobs for the first half as operators look to secure reliable supply. High refresh rates and frack rates are becoming the standard, and we're beginning to see operators increasingly value reliability from their water providers, which we believe puts us in great position given our history and capabilities in the Delaware Basin. Before wrapping up my comments, I want to recognize our East Mine one more time for being the winner of the National Mining Association's 2020 Sentinel of Safety Award in the large underground non-metal category. This is a testament to the safety culture and the leadership at our New Mexico operations, and we again congratulate every member of our East Mine on such a prestigious award. And now I'll turn the call over to Matt for a view of our financial results and the outlook.