Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Adjusted EBITDA totaled $9.2 million, showing a sequential increase of $1.5 million.
- Trio segment results improved with increased mining rates and lower production costs.
- US farmers' solid financial position is expected to support steady potash demand in the second half of the year.
- Second quarter potash production increased to 40,000 tons from 12,000 tons in the prior year period.
- Intrepid Potash Inc (IPI, Financial) has no long-term debt and a cash balance of $51 million.
Negative Points
- Adjusted EBITDA decreased from $15.8 million in the prior year period.
- Gross margin for potash dropped to $3.3 million from $12.9 million in the prior year period.
- Lower potash pricing and sales volumes negatively impacted financial performance.
- CEO Bob Jornayvaz remains on medical leave, and the search for his successor is ongoing.
- Potash cost per ton needs to improve to ensure better margins and cash flow.
Q & A Highlights
Q: Hi, this is Lucas going on for Josh. I'm just sort of just sort of start on the potash volumes. So you guys had a really good production performance during the first half, which will save up strongly. And you've kind of kept your target of growth for the year at sort of 15%, which sort of implies that the back half is going to grow sort of about 5% a year, which is still higher, which is directed less than sort of what you're seeing in the first half. So I just wonder if you could talk us through kind of the moving parts there and how you're thinking about that flowing through. And then you're set up looking into 2025? Thanks.
A: Yes, thanks for the question, Lucas. As we kind of said on a couple of calls prior, we had a goal of 10% to 15% increase in our potash production for the calendar year '24. And we're happy to be kind of on the high side of that guidance right now. As we move towards '25, we initially indicated kind of another 15% to 20% increase in volumes. You guys all have to kind of see where evaporation ends up for not just kind of this back half of the fall and what that means for the spring season, but certainly encouraged where we are today and you're glad to be at the higher end of the '24 guidance. And you're seeing those improve brine grades at HB and seeing the benefits of some of our mobile app projects. And so while we aren't going to give some updated guidance on '25 calendar year, just given kind of the movement between evaporation seasons and how long that spring season lasts And we're certainly encouraged by the progress so far.
Q: Right. And then just on the Trio side, you were previously sort of expecting volumes to sort of be flattish year on year, but you've had a really strong first half, particularly on the sell side. I mean, it looks like some of that probably pull that inventory with production being a bit high, but not quite as strong as the strong sales growth that you had. So just wanted to kind of help us frame how you're thinking about the full year now and so your production plans to keep adding similarly strong demand looks like things might be up a bit year-on-year. But just to I guess, how are you thinking about your ability to lift production to kind of meet that demand going forward as well? Thanks.
A: Yeah, I'll touch a little bit on the production side may pass over to Zach. As far as what we're seeing in the sales market, the certainly the IT and those new miners underground in restarting our fine langbeinite recovery. We've had great results, at least in the first half of the year lower overall costs, less contract labor and producing more tons than we did last year. So the production side has been a great success story for us at our East Mine this year, it was just given us some more product available to sell rooms that can touch on the great spring season we had and kind of the outlook towards the back half of the year?
Zachry Adams: Yeah, I think on the first half of the year, we had a really good year there, really good engagement across all of our regions historically, getting back to what I would say, kind of more normal volumes from what we saw several years ago. And so what we continue to see, there's an engagement on the value of the sulfur and magnesium part of Trio in addition to the potassium. As we kind of look at second half, obviously, we expect our volume in the second half to be less than we burned first half, but that's just more of a nature that Trio is more of a spring applied product versus a follow-on product. But we still think we'll see good engagement here in second half, and we just completed a field program on Trio here in the last few days and saw a good response to the effort for near term follow dates from our customers.
Q: Hi. Thanks for taking my questions. I'm just trying it out this quarter it feels a little bit like a story of two halves, you're kind of looking backwards or forwards, optically, obviously a tough quarter from a GAAP perspective in terms of the comparison year to year and getting through this low production period and I guess continuing maybe for another quarter or two with the summer fill. But looking forward, it sounds like everything's kind of coming together, production sounds like it's really on upswing and you're sort of stabilizing at the mid-cycle pricing. While CapEx is coming down, you kind of mentioned the cash on the balance sheet some. So I guess just do I sort of have that commentary right from you at the end there? And I mean, it just sounds a little bit like a tough balancing act right now because you're kind of head down in the short term kind of getting through this period versus more head up looking ahead to where things might be headed over the next year or so, but we're kind of not there yet. Is that kind of the commentary?
A: Yeah. I think that that's fair Jason, as I said in the prepared remarks, and we talked a little bit about in our last call, and unfortunately, it takes time with solar evaporation and the brine resonance time and availability. We really want to get a lot of confidence in that underground storage at HB or kind of how are our primary ponds and what our brine storage is at Wendover, for example, and really have that increased confidence on the two to five year production outlook to get to kind of a less cautious approach. Like I said, early indications from 2024 calendar year, production are great at the higher end of our guidance and so we're seeing the benefits of those projects, but we still have to hit those injection rate goals and our Phase two of our injection project should be complete here, probably end of August, early September, and we'll hope to be up to we've really improved brine injection rates on a gallons per minute rate, possibly hitting 2000 GPM. And so once we hit those and get that brine availability and residence time underground we can be more confident kind of in that outlook going forward. So yes, I mean, I think your take on the on kind of our approach is spot on.
Q: And just on the full year production outlook. Can you maybe it's kind of a follow-up on Lucas question, but just to clarify a little bit, because I guess as I understand that the production season doesn't really span a calendar year in terms of I guess when you then harvest the production and then that's the selling cycle for the next year for those tons produced. So maybe just kind of in context to the brine in the ponds now with the shaft, that's kind of a stop gap for this year to give you the added brine availability as for the evaporation currently and then moving into next year on the kind of what you had given is the 15% to 20% on top of this year is what it sounds like. Just maybe like trying to map from a timing perspective, the
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
