Intrepid Potash, Inc

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Fourth Quarter 2022 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 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 Evan Mapes, Investor Relations. Please go ahead.

Thank you, Chris. Good morning, everyone. Thanks for joining us to discuss and review Intrepid's fourth quarter 2022 results. With me today is Intrepid's co-founder, executive chairman and CEO, Bob Dournatis, and CFO, Matt Preston. Also with me today and available to answer questions during the Q&A session following our prepared remarks is 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 arise that could cause actual results to be entirely different 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 SEC, 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 mostly directly comparable GAAP measures are included in yesterday's press release. Our SEC filings and press releases are available on our website at IntrepidPottage.com. I will now turn the call over to Bob.

Thank you, Evan, and good morning to everyone joining our fourth quarter 2022 earnings call. We appreciate your attendance and your interest in Intrepid. Before getting to our fourth quarter results, I will begin my remarks with some commentary on the current state of the potash market. Over the past 18 months, we've witnessed several extraordinary events. Two rounds of U.S. sanctions targeting the Belarusian potash industry, the EU and other countries adopting comparable measures, effectively removing Belarusian potash from Western markets, and three Russians' invasion of Ukraine and continued conflict. The resulting effect on the potash market has been high volatility in pricing, uncertainty around global production and exports, and a good reminder of the importance of having access to reliable supplies. While the second half of 2022 was slower than expected, we want to emphasize that we begin 2023 with a supply-constrained potash market, where an estimated 25 to 30 percent of global 2023 potash production is still coming from higher-risk regions in Eastern Europe, which is showing minimal signs of de-escalation. In the 2023 potash supply-demand equation, supply is still tight, and we think demand will show a solid rebound. Following that market overview, I'll now provide a quick recap of our 2022 financial performance. During 2022, we generated adjusted EBITDA of approximately $142 million while our adjusted net income totaled approximately $80 million. This financial performance is among the best in company history, with the key driver obviously being higher prices for our fertilizer products. Our 2022 average net realized sales price for potash was $713 per ton, up over 100% compared to the prior year. And for TRIO, our average net realized sales price was $479 per ton, of over 60% compared to 2021. In 2022, our cash flow from operations totaled $89 million, which is net of the third quarter $33 million customer refund. Our approach to using the strong cash generation was number one, to begin investments in numerous of our potash growth projects with the goal of increasing our production and improving our per unit economics directly benefiting from our solar solution mines at the HB, Moab, and Wendover. Secondly, to reward our shareholders with some of the cash, returning roughly $22 million in capital in the form of share repurchases, which reduced our shares outstanding by roughly 5%. For 2023, we plan to continue to invest in our potash assets to help ensure that our solar solution mines have more reliable high-grade brine. As a higher fixed-cost business, increased potash production can drive significant improvements on the cost side of our unit economics, and more reliable higher-grade brine will help reduce production variances and sustain cash generation throughout the cycle, which will allow us to fully take advantage of our potash assets, which have remaining reserve lives measured in many decades. We strongly believe now is the time to invest in these high-quality assets. As for where we stand today, potash pricing is back at levels where buyers are finding good value, and we've seen a strong start to 2023 as farmers prepare for the spring application season. During the back half of 2022, fertilizer affordability was a primary concern for farmers. However, their economics today look very good, particularly in the context of where futures have been trading. The forward curves for most commodities look extremely strong. At the start of January, new crop futures for corn traded at just over $6 per bushel, which was the highest level in the last 20 years for the first trading day of the year. Soybeans were similar with new crop soybeans trading just under $14 per bushel, also the highest level in 20 years for the first trading day of the year. Current futures prices for corn and soybeans are even higher, trading at roughly $6.50 per bushel and $15.50 per bushel, respectively with the new crop futures still trading at similar levels that we saw at the beginning of January 2023. Offering further support to futures prices, global and U.S. crop inventory levels are both at historically low levels. One region the market has been closely watching this year is Argentina and Brazil, corn and soybean production. While Brazil is still projected to have a very strong production year, Argentina has been experiencing a severe drought and even soft frost in the middle of February, which is putting downward pressure on the country's production estimates. Lastly, given where POTUS is now trading compared to crop prices, we're now seeing fertilizer affordability ratios back in line to more normal levels, which we believe will lead to strong application rates throughout the spring. To summarize my prepared remarks, global potash supply demand is still a supply-constrained market, with supply concerns in higher-risk areas like Eastern Europe obviously present. The futures market today for key crops is very strong and much better than we've seen historically. And three, potash affordability looks fine in the eyes of the U.S. farmers. the farmer we believe is ready to buy. Consequently, these farmers should be highly incentivized to maximize their yields this year, which in turn should drive steady demand for our key products throughout 2023. I'll now turn the call over to Matt. Please go ahead.