Intrepid Potash, Inc

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Q4 and year end 2021 results conference call. As a reminder, all participants are in a 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 an operator by pressing star and zero. I would now like to turn the conference over to Matt Preston, Chief Financial Officer. Please go ahead.

Thanks, Charisse, and good morning, everyone. Thanks for joining us to discuss Intrepid's fourth quarter and full year 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 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.

Matt, thank you very much, and good morning to everyone for joining us. We really appreciate your attendance and your interest in Intrepid. Declining physical inventories, strong demand, threats of railroad strikes, and now, unfortunately, turmoil in Eastern Europe has significantly contributed to rising fertilizer prices and a supportive commodity environment, which has now led to another quarter of improving consolidated results. We recorded adjusted net income of $8 million in the fourth quarter, bringing full-year adjusted net income to $21.8 million, a $40 million increase compared to 2020. In the fourth quarter, we released nearly all the valuation allowance against our deferred tax asset, which has led to approximately $7 million of income tax expense recorded for both the fourth quarter and the full year 2021, the first time we have recorded a material amount of tax expense since 2015. Our potash segment generated $12.5 million and $35.8 million of gross margin in the fourth quarter and full year 2021, respectively. As we capitalized on rising prices and continued strong demand, fourth quarter realized pricing for potash increased to $504 per ton, a $120 increase over the third quarter of 2021. Price increases announced in both the fourth quarter of last year and most recently in February of 2022 will continue our trend of rising prices through spring as we expect our realized price per ton to increase between $680 and $690 in the first quarter of 2022 an increase of approximately $180 per ton over the fourth quarter of 2021. In line with potash, our trio segment continued to deliver strong results on rising prices and strong demand. Posted prices moved up $30 to $40 per ton in December 2021, and we recently announced another $35 per ton price increase, which is in effect as we speak today. We expect our first quarter 2022 net realized price for TRIO will increase to between $440 and $450 per ton, and we are currently booking sales for second quarter shipments at the increased price level. which is approximately $215 more over last year. The extra production shift we recently added at our east mine is adding some much needed production and will help us match the strong demand and positive outlook for this specialty fertilizer through the first half. Sales and gross margin in our oil field segment increased over the third quarter of 2021 as revenue from oilfield products and services such as surface use, easements, and a produced water royalty continue to increase along with our oilfield activity. Recent increases in oil price continue to spur additional investment in the Delaware Basin with producers looking to capitalize on the highest oil prices in the last decade. As expected, our balance sheet remains in solid shape with $36 million of cash on hand at the very end of the year, a number which has since increased to well over $60 million as of early this week. With a strong balance sheet and a growing cash position, we announced in our earnings release a $35 million share repurchase program. As we stated on prior earnings calls, Once we reach the appropriate benchmarks, we would look to opportunistically repurchase shares depending upon market conditions, other factors, and begin to return value to shareholders in the form of a share repurchase program. As we noted in the earnings release, our strategy hasn't changed with the announcement of the buyback program. We still plan to invest across our business segments and remain open to opportunities both inside and outside our fence, that we believe would complement our existing businesses and generate long-term value. We view the share repurchase program as another tool available to our team to drive shareholder value. And with the approval in place, we will now be able to take advantage of that situation if the appropriate time presents itself. As the largest consumer of salt, saturated brine in New Mexico. We're also excited to announce a joint feasibility study with the New Mexico Produced Water Consortium as technical consultant for the New Mexico Environment Department to evaluate the opportunity to beneficially reuse produced water from oil and gas production in the New Mexico's portion of the Northern Delaware Basin. as an injectate for our HB solar solution mine. The pilot project is meant to prove the concept that treatment of produced water can meet the same constituent levels necessary to comply with the standards and requirements for injection into our HB solar solution mine. We are uniquely able to provide this service at its HB solar solution mine which currently utilizes naturally occurring salt brine in groundwater as permitted injectates, which could potentially turn our approximate 100,000-barrel-a-day injection system into a revenue stream with the opportunity to actually grow those volumes. As most of our investors know, the HB Solar Solution Mine uses a closed-loop system in coordination with solar evaporation ponds for the solution mining of potash in a very environmentally friendly manner, and it's already subject to numerous monitoring wells and a permit through the New Mexico Environment Department. The New Mexico Produced Water Consortium is a transdisciplinary public-private partnership comprised of academia, specifically New Mexico State University, government agencies, national laboratories, and the private sector whose mission is to advance scientific research and technology development required to guide future statewide produced water policy in New Mexico. The New Mexico Produced Water Consortium has already approved our submitted pilot proposal pursuant to and in compliance with the New Mexico Environment Department's 2022 requirements for pilot testing. This high priority green pilot project is already preliminary scheduled to begin testing as early as the third quarter of 2022. We are excited to cooperate with our public and private stakeholders in advancing the proposed environmentally friendly reuse of produced water. This project, if successful, will aid in conserving existing groundwater sources in addition to advancing and promoting Intrepid's ESG goals and values, as well as the stated mission of the New Mexico Produced Water Consortium. We look forward to keeping the market updated as we get closer to the pilot project later this year. Overall, the outlook in the potash market has arguably never been better. Commodity pricing and crop inventory levels remain extremely supportive, as do record farmer incomes globally. We are positioned to deliver significant growth in bottom line results and operating cash flow in 2022. And now I'll turn the call over to Matt for a review of our financial results and its outlook.