Intrepid Potash, Inc

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Podash Inc. Q1 2022 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 an operator by pressing star and zero. I would now like to turn the conference over to Evan Mates, Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us to discuss Intrepid's first quarter 2022 results. With me on the call today are Intrepid's co-founder, executive chairman and CEO, Bob Dornadus, and Intrepid CFO, Matt Preston. Also available to answer questions during the Q&A session following our required 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 materially differ from those currently anticipated. These statements are based on 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 referred 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. And our FTC filings and press releases are available on our website at IntrepidPottage.com. With that, I'll now turn the call over to Bob.

Evan, thank you very much. And good morning to everyone for joining us. And we really appreciate the attendance on the call and interest in Intrepid. First, I want to apologize in advance for any coughing, sniffling, or sneezing. It's just about everything is blooming in Denver, and we've all got allergies, so I apologize. I'd like to start with some commentary on the markets before diving into the first quarter and the outlook for Intrepid. As everyone is aware, we currently have a multitude of macro supply chain and geopolitical events of driving commodity prices near decades highs, and even record high prices in certain cases. Spot West Texas Intermediate started 2022, priced at just over $75, but now is well above $100 a barrel. In mid-April, natural gas futures eclipsed $8 per MMBTU, which previously hadn't occurred since 2008. Looking at key crops in North America, corn is currently trading at roughly $8 a bushel, a price not seen since 2012. Wheat and soybean prices show similar trends, with wheat trading just over $10 a bushel, the highest price since 2008, while soybeans are at almost $17 a bushel, which is the highest price since 2012. Prices for all agricultural commodities still support extremely strong margins for farmers. The December corn contract is trading at just under $7.50, September wheat is just under $11, and November beans are at about $15. Further to that, key international commodities that also use significant amounts of potash are showing significant strength. Oil prices reached a record high of over $1,900 per ton in early March and currently remain close to all-time high levels. Coffee is at roughly $2.20 a pound, was at the highest level seen since 2011, while the price of cocoa of just over $2,600 per ton is towards the upper boundary of the last five-year trading range. Lastly, cotton is trading at roughly $1.50 a pound, which is at an 11-year high and has more than tripled since March of 2020. While fertilizer prices are higher than we've seen in quite some time, and we're seeing what I would call a bit of demand thoughtfulness, some might call it destruction, owing both to high prices but also due to certain buyers simply not being able to source their needed product, we think the underlying crop economics still support the application of fertilizers. Moreover, and we think this is key, if we do see lower demand and less use of fertilizer this year, a likely outcome would be lower crop yields, which would be negative for supply and offer support for crop prices, which in turn help ensure solid demand for fertilizers in quarters ahead. With that out of the way, in the first quarter of 2022, the trend of high prices certainly across most fertilizer products continue. And we deliver an average net realized price, which was $703 per ton for potash and $469 per ton for trio, which represent respective increases of approximately 150% and 100% compared to the first quarter of 2021. In our potash segment, Our Q1 sales totaled just over $56 million, a 30% increase compared to the prior year quarter, and gross margin totaled $29 million. In our trio segment, our sales totaled $41 million, a roughly 73% increase compared to the prior year quarter, and gross margin totaled $16.1 million. On a consolidated basis, in the first quarter, Intrepid's revenue of approximately $104 million was 46% higher than in the first quarter of 2021, with the higher revenue primarily driven by higher net realized sales prices for Potash and Treo. Intrepid generated adjusted EBITDA of approximately $50 million, while net income totaled approximately $31 million for diluted earnings per share of $2.31 per share. This was Intrepid's most profitable quarter since the third quarter of 2012. During the first quarter, cash provided by operations came in at $34 million, while cash used in investing activities was only $7.7 million. As of April 30th, our balance sheet and short-term investments balance stood at just over $80 million, a roughly $44 million improvement from December 31st. Quickly, on oilfield solutions, this segment continues to be a steady performer with the first quarter gross margins of about $2 million. Performance in this segment is closely tied to activity in the Permian Basin. As of last week, the Permian has added over 40 rigs since the start of the year, while the Permian duck count of just over 1,300 wells is about 65% lower than the July 2020 peak, indicating the need for more drilling. As Permian drilling and completions continues to increase, we'll keep looking for opportunities to increase our own activity and capture additional margins. Overall, Intrepid's first quarter results clearly demonstrate a very strong start to 2022, and we expect the positive momentum to continue. Global potash supply will likely remain quite tight for the duration of 2022, as we've seen a severe supply shock that has impacted 30 to 40 percent of global potash production. Moreover, swing production capacity in North America and worldwide is quite limited. On the demand side, global markets demand-wise remain quite steady. Brazil has been particularly strong, with Brazilian potash prices of just under $1,200 per metric ton today, clearly being a very attractive market for the international supply versus the United States, where NOLA potash prices are currently about $800 per short-term. In summary, we think the U.S. market is tight on supply while demand remains solid and driven by strong commodity economics. Now, looking ahead for Intrepid, if fertilizer prices continue to remain elevated, which we believe they will, Intrepid will clearly continue to be a key beneficiary. That said, we won't be complacent in this market, and I quickly want to highlight some of our key initiatives to improve our per ton economics and increase our production. Starting with our east mine, in the first quarter, we continued to operate extra production shifts to increase production, and we have added two new continuous miners, which are on order for delivery in the next few quarters. At the HP Solar Solution Mine, weather last summer led to 2021 potash of only production of about 117,000 tons, or about 35,000 to 50,000 tons lower than previous averages. Although the double harvest of seven ponds helped offset the impact of lower production, adding a new injection pipeline in the works at HB in a more normal summer should help drive much higher volumes available for sale in the 2022 to 2023 fertilizer year. Now, looking at our Utah facilities, we have permitted, engineered, and are preparing to drill another cavern at Moab, which will also increased the production there. Further, while we fully expect that upgraded wells at our Windover facility will add production volume as early as the spring of 2023 and continue to increase production in conjunction with the existing cavern system. In summary, Intrepid delivered very strong results in the first quarter, and we expect a positive trend of high margins, cash flow generation, and improving costs per ton to continue. I'll now turn the call over to Matt for review of our financial results and more details on the outlook. Matt?