SEC Form 10-Q filed by Intrepid Potash Inc

5/9/24 1:12:26 PM ET

$IPI

Mining & Quarrying of Nonmetallic Minerals (No Fuels)

Industrials

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________

FORM 10-Q

_______________________________________________________

☒

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended

March 31, 2024

☐

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission File Number: 001-34025

INTREPID POTASH, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		26-1501877
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
707 17th Street, Suite 4200
Denver,	Colorado	80202
(Address of principal executive offices)		(Zip Code)

(303) 296-3006

(Registrant’s telephone number, including area code)



(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

IPI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

As of April 30, 2024, the registrant had outstanding 13,269,062 shares of common stock, par value $0.001 per share.

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INTREPID POTASH, INC.

TABLE OF CONTENTS


						Page
			PART I - FINANCIAL INFORMATION			1
			ITEM 1. Condensed Consolidated Financial Statements (Unaudited)			1
			Condensed Consolidated Balance Sheets			1
			Condensed Consolidated Statements of Operations			2
			Condensed Consolidated Statements of Stockholders' Equity			3
			Condensed Consolidated Statements of Cash Flows			4
			Notes to Condensed Consolidated Financial Statements			6
			ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			21
			ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			36
			ITEM 4. Controls and Procedures			36
			PART II - OTHER INFORMATION			37
			ITEM 1. Legal Proceedings			37
			ITEM 1A. Risk Factors			38
			ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			39
			ITEM 3. Defaults Upon Senior Securities			39
			ITEM 4. Mine Safety Disclosures			39
			ITEM 5. Other Information			39
			ITEM 6. Exhibits			40
			Signatures			41

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PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

INTREPID POTASH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	March 31,		December 31,
	2024		2023
ASSETS
Cash and cash equivalents	$	34,067	$	4,071
Short-term investments	2,971		2,970
Accounts receivable:
Trade, net	41,826		22,077
Other receivables, net	1,201		1,470

Inventory, net	102,549		114,252
Prepaid expenses and other current assets	5,530		7,200
Total current assets	188,144		152,040

Property, plant, equipment, and mineral properties, net	354,809		358,249

Water rights	19,184		19,184
Long-term parts inventory, net	30,543		30,231
Long-term investments	6,297		6,627

Other assets, net	8,609		8,016
Non-current deferred tax asset, net	195,012		194,223
Total Assets	$	802,598	$	768,570
LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable	$	11,029	$	12,848


Accrued liabilities	13,374		14,061
Accrued employee compensation and benefits	6,299		7,254


Other current liabilities	8,748		12,401
Total current liabilities	39,450		46,564

Advances on credit facility	—		4,000

Asset retirement obligation, net of current portion	30,699		30,077
Operating lease liabilities	518		741
Finance lease liabilities	1,608		1,451
Deferred other income, long-term	47,170		—
Other non-current liabilities	1,166		1,309
Total Liabilities	120,611		84,142
Commitments and Contingencies
Common stock, 0.001 par value; 40,000,000 shares authorized;
12,875,520 and 12,807,316 shares outstanding
at March 31, 2024, and December 31, 2023, respectively	13		13
Additional paid-in capital	666,326		665,637

Retained earnings	37,660		40,790
Less treasury stock, at cost	(22,012)		(22,012)
Total Stockholders' Equity	681,987		684,428
Total Liabilities and Stockholders' Equity	$	802,598	$	768,570

See accompanying notes to these condensed consolidated financial statements.

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INTREPID POTASH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2024		2023
Sales	$	79,287	$	86,920
Less:
Freight costs	12,830		11,590
Warehousing and handling costs	3,089		2,733
Cost of goods sold	56,431		56,245
Lower of cost or net realizable value inventory adjustments	503		—

Gross Margin	6,434		16,352

Selling and administrative	8,357		8,858
Accretion of asset retirement obligation	622		535


Impairment of long-lived assets	1,377		—
Loss on sale of assets	251		200
Other operating income	(1,132)		—
Other operating expense	1,265		1,385
Operating (Loss) Income	(4,306)		5,374

Other Income

Equity in earnings of unconsolidated entities	149		821

Interest income	244		85
Other income	8		13


(Loss) Income Before Income Taxes	(3,905)		6,293

Income Tax Benefit (Expense)	775		(1,787)
Net (Loss) Income	$	(3,130)	$	4,506

Weighted Average Shares Outstanding:
Basic	12,817		12,694
Diluted	12,817		12,875
(Loss) Earnings Per Share:
Basic	$	(0.24)	$	0.35
Diluted	$	(0.24)	$	0.35

See accompanying notes to these condensed consolidated financial statements.

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INTREPID POTASH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)
















	Three-Month Period Ended March 31, 2024
	Common Stock			Treasury Stock		Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2023	12,807,316	$	13	$	(22,012)	$	665,637	$	40,790	$	684,428



Net loss	—	—		—		—		(3,130)		(3,130)
Stock-based compensation	—	—		—		1,322		—		1,322


Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	68,204	—		—		(633)		—		(633)
Balance, March 31, 2024	12,875,520	$	13	$	(22,012)	$	666,326	$	37,660	$	681,987















	Three-Month Period Ended March 31, 2023
	Common Stock			Treasury Stock		Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares	Amount
Balance, December 31, 2022	12,687,822	$	13	$	(22,012)	$	660,614	$	76,463	$	715,078



Net income	—	—		—		—		4,506		4,506
Stock-based compensation	—	—		—		1,746		—		1,746


Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	72,168	—		—		(1,037)		—		(1,037)
Balance, March 31, 2023	12,759,990	$	13	$	(22,012)	$	661,323	$	80,969	$	720,293

See accompanying notes to these condensed consolidated financial statements.

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INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
	Three Months Ended March 31,
	2024		2023
Cash Flows from Operating Activities:
Net (loss) income	$	(3,130)	$	4,506
Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation, depletion and amortization	9,304		9,292
Accretion of asset retirement obligation	622		535
Amortization of deferred financing costs	75		75
Amortization of intangible assets	80		80
Stock-based compensation	1,322		1,746
Lower of cost or net realizable value inventory adjustments	503		—
Impairment of long-lived assets	1,377		—
Loss on disposal of assets	251		200



Allowance for parts inventory obsolescence	53		—
Equity in earnings of unconsolidated entities	(149)		(821)
Distribution of earnings from unconsolidated entities	—		320
Changes in operating assets and liabilities:
Trade accounts receivable, net	(19,749)		(12,474)
Other receivables, net	247		(92)

Inventory, net	10,835		7,645
Prepaid expenses and other current assets	922		250
Deferred tax assets, net	(789)		1,661
Accounts payable, accrued liabilities, and accrued employee compensation and benefits	(3,621)		(5,305)

Operating lease liabilities	(384)		(401)
Deferred other income	44,434		—
Other liabilities	(671)		1,232
Net cash provided by operating activities	41,532		8,449

Cash Flows from Investing Activities:
Additions to property, plant, equipment, mineral properties and other assets	(11,673)		(21,039)

Purchase of investments	—		(956)
Proceeds from sale of assets	4,596		65

Proceeds from redemptions/maturities of investments	500		1,500

Net cash used in investing activities	(6,577)		(20,430)

Cash Flows from Financing Activities:


Proceeds from short-term borrowings on credit facility	—		5,000
Repayments of short-term borrowings on credit facility	(4,000)		—
Payments of financing lease	(324)		(43)

Employee tax withholding paid for restricted stock upon vesting	(633)		(1,037)



Net cash (used in) provided by financing activities	(4,957)		3,920

Net Change in Cash, Cash Equivalents and Restricted Cash	29,998		(8,061)
Cash, Cash Equivalents and Restricted Cash, beginning of period	4,651		19,084
Cash, Cash Equivalents and Restricted Cash, end of period	$	34,649	$	11,023

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INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
	Three Months Ended March 31,
	2024		2023

Supplemental disclosure of cash flow information
Net cash paid (received) during the period for:
Interest	$	185	$	59
Income taxes	$	(3)	$	9
Amounts included in the measurement of operating lease liabilities	$	412	$	460
Accrued purchases for property, plant, equipment, and mineral properties	$	4,739	$	7,410

Right-of-use assets exchanged for financing lease liabilities	$	495	$	1,677

See accompanying notes to these condensed consolidated financial statements.

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INTREPID POTASH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1— COMPANY BACKGROUND

We are a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed and the oil and gas industry. We are the only U.S. producer of muriate of potash (sometimes referred to as potassium chloride or potash), which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, we produce a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. We also provide water, salt, magnesium chloride, brine, and various oilfield products and services.

Our extraction and production operations are conducted entirely in the continental U.S. We produce potash from three solution mining facilities: our HB solution mine in Carlsbad, New Mexico, our solution mine in Moab, Utah, and our brine recovery mine in Wendover, Utah. We also operate the North compaction facility in Carlsbad, New Mexico, which compacts and granulates product from the HB mine. We produce Trio® from our conventional underground East mine in Carlsbad, New Mexico.

We have permitted, licensed, declared, and partially adjudicated water rights in New Mexico that support our mining and industrial operations. Water that is not used to support our mining and industrial operations is primarily sold to support oil and gas development in the Permian Basin in New Mexico near our Carlsbad facilities. We continue to work to expand our water business. See Note 15—Commitments and Contingencies below for further information regarding our water rights.

We also operate certain land, water rights, grazing leases, and other related assets in southeast New Mexico. We refer to these assets and operations as "Intrepid South." Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights, to customers where such sales provide a solution to such customer's operations in the oil and gas industry.

We have three segments: potash, Trio®, and oilfield solutions. We account for sales of byproducts as revenue in the potash or Trio® segment based on which segment generates the byproduct. Intersegment sales prices are market based and are eliminated.

"Intrepid," "our," "we," or "us" means Intrepid Potash, Inc. and its consolidated subsidiaries.

Note 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation—Our unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023.

Pronouncements Issued But Not Yet Adopted—In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold, certain disclosures of state versus federal income tax expenses and taxes paid. ASC 2023-09 is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the guidance and expect it to only impact disclosures with no impact to results of operations, cash flows and financial condition.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). This new guidance: (i) introduces a requirement to disclose significant segment expenses regularly provided to the chief operating decision maker ("CODM"), (ii) extends certain annual disclosures to interim periods, (iii) clarifies disclosure requirements for single reportable segment entities, (iv) permits more than one measure of segment profit or loss to be reported under certain conditions, and (v) requires disclosure of the title and position of the CODM. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance applies retrospectively to all periods

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presented in the financial statements. We are currently evaluating the guidance and expect it to only impact disclosures with no impact to results of operations, cash flows, and financial condition.

Reclassifications of Prior Period Presentation—Certain prior period amounts have been reclassified in order to conform to the current period presentation. These reclassifications had no effect on the reported results of operations.

Note 3— EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. For purposes of determining diluted earnings per share, basic weighted-average common shares outstanding is adjusted to include potentially dilutive securities, including restricted stock, stock options, and performance units. The treasury-stock method is used to measure the dilutive impact of potentially dilutive shares. Potentially dilutive shares are excluded from the diluted weighted-average shares outstanding computation in periods in which they have an anti-dilutive effect. The following table shows the calculation of basic and diluted earnings per share (in thousands, except per share amounts):


	Three Months Ended March 31,
	2024		2023
Net (loss) income	$	(3,130)	$	4,506

Basic weighted-average common shares outstanding	12,817		12,694
Add: Dilutive effect of restricted stock	—		125
Add: Dilutive effect of stock options	—		56

Diluted weighted-average common shares outstanding	12,817		12,875


Basic	$	(0.24)	$	0.35
Diluted	$	(0.24)	$	0.35

The following table shows the shares that have an anti-dilutive effect and are excluded from the diluted weighted-average shares outstanding computations (in thousands):


	Three Months Ended March 31,
	2024	2023
Anti-dilutive effect of restricted stock	348	187

Anti-dilutive effect of stock options outstanding	273	156

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Note 4— CASH, CASH EQUIVALENTS AND RESTRICTED CASH

We consider financial instruments with original maturities of three months or less to be cash equivalents. Total cash, cash equivalents and restricted cash, as shown on the condensed consolidated statements of cash flows are included in the following accounts at March 31, 2024, and 2023 (in thousands):


	March 31, 2024		March 31, 2023
Cash and cash equivalents	$	34,067	$	10,451
Restricted cash included in other current assets	25		25
Restricted cash included in other long-term assets	557		547
Total cash, cash equivalents, and restricted cash as shown in the statement of cash flows	$	34,649	$	11,023

Restricted cash included in other current and long-term assets on the condensed consolidated balance sheets represents amounts for which use is restricted by contractual agreements with various entities, principally the Bureau of Land Management or the State of Utah, as security to fund future reclamation obligations at our sites.

Note 5— INVENTORY AND LONG-TERM PARTS INVENTORY

The following summarizes our inventory, recorded at the lower of weighted-average cost or estimated net realizable value, as of March 31, 2024, and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Finished goods product inventory	$	57,794	$	66,033
In-process inventory	23,002		28,044
Total product inventory	80,796		94,077
Current parts inventory, net	21,753		20,175
Total current inventory, net	102,549		114,252
Long-term parts inventory, net	30,543		30,231
Total inventory, net	$	133,092	$	144,483

Parts inventory is shown net of estimated allowances for obsolescence of $1.0 million and $0.9 million as of March 31, 2024, and December 31, 2023, respectively.

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Note 6 — PROPERTY, PLANT, EQUIPMENT, AND MINERAL PROPERTIES

Property, plant, equipment, and mineral properties were comprised of the following (in thousands):


	March 31, 2024		December 31, 2023
Land	$	24,136	$	24,136
Ponds and land improvements	91,984		91,333
Mineral properties and development costs	159,775		159,775
Buildings and plant	90,150		90,150
Machinery and equipment	299,403		297,494
Vehicles	7,435		7,332
Office equipment and improvements	10,159		10,150
Operating lease ROU assets	5,045		5,274
Breeding stock	293		315
Construction in progress	26,888		23,942
Total property, plant, equipment, and mineral properties, gross	$	715,268	$	709,901
Less: accumulated depreciation, depletion, and amortization	(360,459)		(351,652)
Total property, plant, equipment, and mineral properties, net	$	354,809	$	358,249

During the year ended December 31, 2023, we recorded an impairment related to our Trio® segment assets because the estimated fair value of the assets exceeded the net book value of the assets. The fair value of the Trio® segment assets was primarily determined using the expected proceeds received in an orderly sale of the individual assets. For any Trio® segment capital spending during the first quarter of 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets. As a result, we recorded an additional impairment of $1.4 million in the first quarter of 2024.

We incurred the following expenses for depreciation, depletion, and amortization, including expenses capitalized into inventory, for the following periods (in thousands):


	Three Months Ended March 31,
	2024		2023
Depreciation	$	7,465	$	7,727
Depletion	1,472		1,177
Amortization of right of use assets	367		388
Total incurred	$	9,304	$	9,292

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Note 7 — OTHER LONG-TERM DEFERRED INCOME

Cooperative Development Agreement—In December 2023, we entered into the Third Amendment of Cooperative Development Agreement (the "Amendment") with XTO Holdings, LLC ("XTO Holdings") and XTO Delaware Basin LLC, as successors in interest to BOPCO, L.P. ("XTO Delaware Basin," and together with XTO Holdings, "XTO"). The Amendment had an effective date of January 1, 2024 ("Amendment Date"). The Amendment further amends that certain Cooperative Development Agreement, by and between us, BOPCO, L.P. and the other parties thereto, effective as of February 28, 2011 (as amended, including by the Amendment, the "CDA"), which was executed for the purpose of pursuing the cooperative development of potassium and oil and gas on certain lands. The Cooperative Development Agreement restricts and limits the rights of us and XTO, as successors in interest to BOPCO, L.P., to explore and develop their respective interests, including limitations on the locations of wells. Intrepid and XTO entered into the Amendment in an effort to further the cooperation, remove the restrictions and limitations, and allow for the efficient co-development of resources within the Designated Potash Area ("DPA") consistent with the United States Secretary of the Interior Order 3324.

Pursuant to the Amendment, among other things, we agreed to provide support to XTO's for development and operation of XTO's oil and gas interests withing the DPA. As consideration under the Amendment, XTO agreed to pay us an initial fee of $50.0 million (the "Initial Fee"). We received a partial payment of $5.0 million of the Initial Fee in December 2023, and we received payment of the remaining $45.0 million from XTO in January 2024.

The Amendment further provides that we shall receive an additional one-time payment equal to $50.0 million (the "Access Fee")," which XTO will pay within 90 days upon the earlier occurrence of (i) the approval of the first new or expanded drilling island within a specific area to be used by XTO or (ii) within seven years of the anniversary of the Amendment Date. XTO is also required to pay additional amounts to Intrepid as an "Access Realization Fee," up to a maximum of $100.0 million, (the "Access Realization Fee") in the event of certain additional drilling activities by XTO.

Because the cooperative development support we are providing under the Amendment is not an output of our ordinary business activities, ASC Topic 606, Revenue from Contracts with Customers ("ASC 606") does not apply to the Amendment. However, we apply the principles in ASC 606 by analogy to determine amounts of other income to recognize.

Under ASC 606, we are required to identify the performance obligations in the Amendment and to determine the transaction price. The transaction price may include fixed consideration, variable consideration, or both. Variable consideration may only be included in the transaction price if it is probable that a significant reversal of amounts recognized will not occur (referred to as the variable consideration constraint). The Access Realization Fee is considered variable consideration.

Our performance obligation under the Amendment is to "stand-ready" to provide support to XTO, when and as needed, during the term of the Amendment. We estimate the transaction price to be $100.0 million, which is comprised of the $50.0 million Initial Fee and the $50.0 million Access Fee. We are not including any amounts of the Access Realization Fee in the transaction price because of the variable consideration constraint. Since our performance obligation is a "stand-ready" obligation, we are recognizing the transaction price on a straight-line basis over the term of the Amendment which ends on February 28, 2046.

For the three months ended March 31, 2024, we recorded other operating income of $1.1 million from the Amendment. Because we have not yet been paid the Access Fee included in the transaction price, we recorded a long-term receivable for the amount of the Access Fee we earned during the three months ended March 31, 2024 of $0.6 million, which is included in "Other Assets" on the Condensed Consolidated Balance Sheets. For the amount of the Initial Fee we earned during the three months ended March 31, 2024, we reduced the "Deferred other income, long-term" liability recorded on our Condensed Consolidated Balance Sheets.

As of March 31, 2024, we had $2.3 million recorded in "Other current liabilities," and $47.2 million recorded in "Deferred other income, long-term" on the Condensed Consolidated Balance Sheets for the unearned portion of the Initial Fee. As of December 31, 2023, we had $5.0 million recorded in "Other current liabilities," and zero recorded in "Deferred other income, long-term" on the Condensed Consolidated Balance Sheets.

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Note 8 — DEBT

Revolving Credit Facility—We maintain a $150 million revolving credit facility with a syndicate of lenders with Bank of Montreal as administrative agent. The revolving credit facility has a maturity date to August 4, 2027. As of March 31, 2024, borrowings under the credit facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus an applicable margin of 1.50% to 2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. Borrowings under the revolving credit facility are secured by substantially all of our current and non-current assets, and the obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.

We occasionally borrow and repay amounts under the revolving credit facility for near-term working capital needs or other purposes and may do so in the future. During the three months ended March 31, 2024, we made no borrowings and made $4.0 million in repayments under the revolving credit facility. During the three months ended March 31, 2023, we made $5.0 million in borrowings, and we made no repayments under the revolving credit facility. As of March 31, 2024, we had no borrowings outstanding and no outstanding letters of credit under this facility. As of December 31, 2023, we had $4.0 million in borrowings outstanding and no outstanding letters of credit under this facility.

As of March 31, 2024, we were in compliance with all applicable covenants under the revolving credit facility.

Interest Expense—Interest expense is recorded net of any capitalized interest associated with investments in capital projects. We incurred gross interest expense of $0.2 million for the three months ended March 31, 2024 and 2023.

Amounts included in interest expense, net for the three months ended March 31, 2024, and 2023 were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Interest expense on borrowings	$	39	$	22
Commitment fee on unused credit facility	57		56
Amortization of deferred financing costs	75		75
Gross interest expense	171		153
Less capitalized interest	(171)		(153)
Interest expense, net	$	—	$	—

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Note 9 — INTANGIBLE ASSETS

We have water rights, recorded at $19.2 million at March 31, 2024, and December 31, 2023. Our water rights have indefinite lives and are not amortized. We evaluate our water rights at least annually as of October 1 for impairment, or more frequently if circumstances require.

We account for other intangible assets as finite-lived intangible assets and amortize those intangible assets over the period of estimated benefit, using the straight-line method. As of March 31, 2024, the weighted average amortization period for the other intangible assets was approximately 15.0 years. At March 31, 2024, and December 31, 2023, these intangible assets had a net book value of $4.8 million and $4.9 million, respectively, and are included in "Other assets, net" on the Condensed Consolidated Balance Sheets.

Note 10— FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS OF POSSIBLE FUTURE

PUBLIC DEBT

Intrepid Potash, Inc., as the parent company, has no independent assets or operations, and operations are conducted solely through its subsidiaries. Cash generated from operations is held at the parent-company level as cash on hand and cash equivalents and totaled $34.1 million and $4.1 million at March 31, 2024, and December 31, 2023, respectively. If one or more of our wholly-owned operating subsidiaries guarantee public debt securities in the future, those guarantees will be full and unconditional and will constitute the joint and several obligations of the subsidiary guarantors. The assets and liabilities of our other subsidiaries are immaterial. There are no restrictions on our ability to obtain cash dividends or other distributions of funds from the subsidiary guarantors, except those imposed by applicable law.

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Note 11 — ASSET RETIREMENT OBLIGATION

We recognize an estimated liability for future costs associated with the abandonment and reclamation of our mining properties. A liability for the fair value of an asset retirement obligation and a corresponding increase to the carrying value of the related long-lived asset are recorded as the mining operations occur or the assets are acquired.

Our asset retirement obligation is based on the estimated cost to close and reclaim the mining operations, the economic life of the properties, and federal and state regulatory requirements. The liability is discounted using credit adjusted risk-free rate estimates at the time the liability is incurred or when there are upward revisions to estimated costs. The credit adjusted risk-free rates used to discount our reclamation liabilities range from 6.9% to 12.0%. Revisions to the liability occur due to construction of new or expanded facilities, changes in estimated closure costs or economic lives, or to reflect new federal or state rules, regulations, or requirements regarding the closure or reclamation of mines.

Following is a table of the changes to our asset retirement obligation for the following periods (in thousands):


	Three Months Ended March 31,
	2024		2023
Asset retirement obligation, at beginning of period	$	30,359	$	26,864
Liabilities settled	—		—
Liabilities incurred	—		—

Accretion of discount	622		535
Total asset retirement obligation, at end of period	$	30,981	$	27,399
Less current portion of asset retirement obligation	$	(282)	$	(300)
Long-term portion of asset retirement obligation	$	30,699	$	27,099

The current portion of the asset retirement obligation is included in "Other current liabilities" on the Condensed Consolidated Balance Sheet as of March 31, 2024.

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Note 12 — REVENUE

Revenue Recognition—We account for revenue in accordance with ASC 606. Under ASC 606, we recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration we expect in exchange for those goods or services. The timing of revenue recognition, billings, and cash collection may result in contract assets or contract liabilities.

Contract Balances: As of March 31, 2024, and December 31, 2023, we had a total of $2.6 million and $2.3 million of contract liabilities, respectively, of which $1.4 million and $1.0 million were current as of March 31, 2024, and December 31, 2023, respectively, and included in "Other current liabilities" on the Condensed Consolidated Balance Sheets. Customer advances received before we have satisfied our performance obligations are accounted for as a contract liability (sometimes referred to in practice as deferred revenue).

Our deferred revenue activity for the three months ended March 31, 2024, and 2023 is shown below (in thousands):


	Three Months Ended March 31,
	2024		2023
Beginning balance	$	2,303	$	2,374
Additions	592		145

Recognized as revenue during period	(328)		(245)
Ending Balance	$	2,567	$	2,274

Disaggregation of Revenue: The tables below show the disaggregation of revenue by product and reconciles disaggregated revenue to segment revenue for the three months ended March 31, 2024, and 2023. We believe the disaggregation of revenue by products best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic conditions (in thousands):


	Three Months Ended March 31, 2024
Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	$	32,412	$	—	$	—	$	(100)	$	32,312
Trio®	—		36,284		—		—		36,284
Water	—		—		2,169		—		2,169
Salt	3,144		203		—		—		3,347
Magnesium Chloride	419		—		—		—		419
Brine Water	1,583		—		1,127		—		2,710
Other	18		—		2,028		—		2,046
Total Revenue	$	37,576	$	36,487	$	5,324	$	(100)	$	79,287


	Three Months Ended March 31, 2023
Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	$	47,155	$	—	$	—	$	(101)	$	47,054
Trio®	—		29,053		—		—		29,053
Water	80		1,048		1,619		—		2,747
Salt	3,043		173		—		—		3,216
Magnesium Chloride	1,137		—		—		—		1,137
Brine Water	1,082		—		822		—		1,904
Other	—		—		1,809		—		1,809
Total Revenue	$	52,497	$	30,274	$	4,250	$	(101)	$	86,920

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Note 13 — COMPENSATION PLANS

Equity Incentive Compensation Plan—Our Board of Directors and stockholders adopted a long-term incentive compensation plan called the Intrepid Potash, Inc. Amended and Restated Equity Incentive Plan (the "Plan"). The Plan was most recently amended and restated in May 2022. We have issued common stock, restricted stock, performance units, and non-qualified stock option awards under the Plan. At March 31, 2024, approximately 0.9 million shares remained available for issuance under the Plan.

In March 2024, the Compensation Committee granted an aggregate of 143,730 shares of restricted stock to executive officers and other key employees. These awards vest over three years, and in some cases, contain a market condition. In March 2023, the Compensation Committee granted an aggregate of 225,117 restricted shares to executive officers and other key employees. These awards vest over three years, and in some cases, contain a market condition.

As of March 31, 2024, the following awards were outstanding under the Plan (in thousands):



						Outstanding as of March 31, 2024
Restricted Shares						377

Non-qualified Stock Options						273

Total share-based compensation expense was $1.3 million and $1.7 million for the three months ended March 31, 2024, and 2023, respectively. As of March 31, 2024, we had $6.8 million of total remaining unrecognized compensation expense related to awards that is expected to be recognized over a weighted-average period of 1.5 years.

Note 14 — INCOME TAXES

Our anticipated annual tax rate is impacted primarily by the amount of taxable income associated with each jurisdiction in which our income is subject to income tax, permanent differences between the financial statement carrying amounts and tax bases of assets and liabilities, and the benefit associated with the estimated effect of the percentage depletion deduction.

A summary of our provision for income taxes is as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Current portion of income tax expense	$	14	$	126
Deferred portion of income tax (benefit) expense	(789)		1,661
Total income tax (benefit) expense	$	(775)	$	1,787

Our effective tax rate for the three months ended March 31, 2024 was 19.8%. Our effective tax rate differed from the statutory rate during this period primarily from the permanent difference between book and tax income for the first three months of 2024 for the deduction for stock compensation. Our effective tax rate for the three months ended March 31, 2023 was 28.4% which differed from the statutory rate primarily from the estimated permanent difference between book and tax income for the officers' compensation deduction.

Note 15 — COMMITMENTS AND CONTINGENCIES

Reclamation Deposits and Surety Bonds—As of March 31, 2024, and December 31, 2023, we had $26.9 million and $26.8 million, respectively, of security placed principally with the State of Utah and the Bureau of Land Management ("BLM") for eventual reclamation of our various facilities. As of March 31, 2024, $0.5 million consisted of long-term restricted cash deposits and $26.4 million was secured by surety bonds issued by an insurer. As of December 31, 2023, $0.5 million consisted of long-term restricted cash deposits and $26.3 million was secured by surety bonds issued by an insurer. The restricted cash deposits are included in "Other assets, net" on the condensed consolidated balance sheets and the surety bonds are held in place by an annual fee paid to the issuer.

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We may be required to post additional security to fund future reclamation obligations as reclamation plans are updated or as statutory and regulatory requirements change.

Legal—We are subject to claims and legal actions in the ordinary course of business. We expense legal costs as they are incurred. While there are uncertainties in predicting the outcome of any claim or legal action, except as noted below, we believe the ultimate resolution of these claims or actions is not reasonably likely to have a material adverse effect on our financial condition, results of operations, or cash flows.

Water Rights and Other Legal Contingencies

On March 17, 2022, following an expedited inter se proceeding, a court entered a subfile order and partial final judgment and decree ("Order") determining the validity of our claim to 20,000 acre feet of Pecos River surface water rights. The Order found that our predecessors in interest had forfeited all but approximately 5,800 acre feet of water per year, and that of the remaining 5,800 acre feet of water that had not been forfeited, all but 150 acre feet of water had been abandoned prior to 2017. The Order limited our right to 150 acre fee per annum of water for industrial-salt processing use. We appealed the Order to the New Mexico Court of Appeals ("NMCA"), which, on July 7, 2023, affirmed the Order. On November 17, 2023, we filed a request for the New Mexico Supreme Court ("NMSC") to reconsider and review the NMCA's decision to affirm the Order's abandonment determination. The NMSC agreed to review the NMCA's abandonment determination on February 7, 2024, where it is still currently being briefed for the court's determination.

In 2017 and 2018 the New Mexico Office of the State Engineer ("OSE") granted us preliminary and emergency authorizations to sell approximately 5,700 acre-feet of water per year from our Pecos River Water rights. The preliminary and emergency authorizations allowed for water sales to begin immediately, subject to repayment if the underlying water rights were ultimately found to be invalid. If the New Mexico Court of Appeals' decision is ultimately affirmed, we may have to repay for the water we sold under the preliminary and emergency authorizations. Repayment of this water can be up to two times the amount of water removed from the river. Repayment is customarily made in-kind over a period of time but can take other forms including cash repayment. If we are not able to repay in-kind due to the lack of remaining water rights or logistical constraints, we may need to purchase water to meet this repayment or be subject to a cash repayment. We cannot reasonably estimate the potential volume, timing, or form of repayment, if any, and have not recorded a loss contingency in our Condensed Consolidated Statement of Operations related to this legal matter.

We have estimated contingent liabilities recorded in "Other current liabilities" on the condensed consolidated balance sheets of $2.5 million as of March 31, 2024, mainly related to the potential underpayment of royalties from 2012 to 2016. As of December 31, 2023, we had $3.4 million in contingent liabilities mainly related to the potential underpayment of royalties from 2012 to 2016 and potential royalties on water revenues in 2019 to 2022. During the three months ended March 31, 2024, we paid $1.9 million to the New Mexico State Land Office to resolve the matter related to potential royalties on water revenues from 2019 to 2022.

Note 16 — FAIR VALUE

We measure our financial assets and liabilities in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date:

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Inputs, other than Level 1, that are either directly or indirectly observable.

Level 3 - Unobservable inputs developed using estimates and assumptions which reflect those that market participants would use.

The classification of fair value measurement within the hierarchy is based upon the lowest level of input that is significant to the measurement.

Other financial instruments consist primarily of cash equivalents, accounts receivable, refundable income taxes, investment securities, accounts payable, accrued liabilities, and, if any, advances under our credit facility. With the exception of investment securities, we believe cost approximates fair value for our financial instruments because of the short-term nature of these instruments.

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Cash Equivalents—As of March 31, 2024, we had no cash equivalents. As of December 31, 2023, we had cash equivalents of $0.5 million.

Held-to-Maturity Investments—As of March 31, 2024, and December 31, 2023, we owned debt investment securities classified as held-to-maturity because we have the intent and ability to hold these investments to maturity. Our held-to-maturity debt investment securities consist of investment grade corporate bonds and U.S. government issued bonds. These debt securities are carried at amortized cost and consist of the following (amounts in thousands):


	As of March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term
Corporate bonds	$	994	$	—	$	(6)	$	988
Government bonds	1,977		—		(13)		1,964
Total	$	2,971	$	—	$	(19)	$	2,952
Long-term
Corporate bonds	$	—	$	—	$	—	$	—
Government bonds	475		—		(2)		473
Total	$	475	$	—	$	(2)	$	473


	As of December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term
Corporate bonds	$	991	$	—	$	(9)	$	982
Government bonds	1,979		—		(13)		1,966
Total	$	2,970	$	—	$	(22)	$	2,948
Long-term
Corporate bonds	$	—	$	—	$	—	$	—
Government bonds	954		1		(4)		951
Total	$	954	$	1	$	(4)	$	951

Our long-term held to maturity investments are recorded in "Long-term investments" on the Condensed Consolidated Balance Sheets. As of March 31, 2024 and December 31, 2023, we had $3.4 million and $3.9 million in held-to-maturity debt investment securities, respectively. As of March 31, 2024, our long-term held-to-maturity investments mature in less than 2 years.

Equity Investments without a Readily Determinable Fair Value—In May 2020, we acquired a non-controlling equity investment in W.D. Von Gonten Laboratories ("WDVGL") for $3.5 million. We account for this investment as an equity investment without a readily determinable fair value and elected to measure our investment, as permitted by GAAP, at cost plus or minus any adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairment. As of March 31, 2024, and December 31, 2023, we had not recorded any adjustments to the carrying value of this investment since the purchase in May 2020. We include this investment in "Long-term investments" on the Condensed Consolidated Balance Sheets.

In July 2022, WDVGL entered into a purchase agreement with another company (“Acquiror”), a foreign issuer whose shares are traded on the Nasdaq Capital Market (“Nasdaq”). Under the terms of the purchase agreement, WDVGL would be combined with the consulting business owned by W.D. Von Gonten (“Consulting”) to form a new entity, W.D. Von Gonten Engineering, LLC (“Engineering”), and Acquiror would then purchase Engineering in a majority stock transaction at an agreed upon selling price. Stock received from the sale of Engineering would be distributed to investors in WDVGL and Consulting.

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Acquiror delivered equity shares and a nominal amount of cash to WDVGL for purchase of Engineering in July 2022, with the number of shares equal to the selling price divided by an assumed $10 share price. At the time the purchase agreement was signed, the Acquiror was working to file restated financial statements for the fiscal years ending December 31, 2018, 2019 and 2020. On April 27, 2023, Acquiror disclosed it had not been able to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2021 with the SEC by April 25, 2023, which was the deadline set by the Nasdaq Hearings Panel in connection with a delisting proceeding, and Acquiror's shares were subsequently delisted from Nasdaq. Acquiror also disclosed on April 27, 2023 that it has shifted its focus to filing audited financial statements with the SEC for the fiscal years ended December 31, 2020, 2021 and 2022 to regain compliance with Nasdaq listing standards before the end of 2023.

Pursuant to the purchase agreement with Engineering, if the Acquiror did not file current financial statements with the SEC by June 30, 2023, Engineering had the option to terminate the purchase agreement, beginning on July 1, 2023. Although Acquiror did not file current financial statements by June 30, 2023, Engineering agreed to proceed with the purchase agreement to allow Acquiror additional time to file updated financial statements.

On December 29, 2023, Acquiror disclosed it had filed its audited financial statements for the years ended December 31, 2022, 2021, and 2020, with the SEC.

We have not impaired our investment in WDVGL because our share of the estimated selling price exceeds the carrying value of our investment in WDVGL.

Equity Method Investments—We are a limited partner with a 16% interest in PEP Ovation, LP ("Ovation") as of March 31, 2024, and December 31, 2023. This investment is accounted for under the equity method whereby we recognize our proportional share of the income or loss from our investment in Ovation on a one-quarter lag. This investment is included in "Long-term investments" on the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2024, and March 31, 2023, our proportional share of Ovation's net income was $0.1 million and $0.8 million, respectively.

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Note 17 — BUSINESS SEGMENTS

Our operations are organized into three segments: potash, Trio® and oilfield solutions. We determine reportable segments based on several factors including the types of products and services sold, production processes, markets served and the financial information available for our CODM. We evaluate performance based on the gross margins of the respective business segments and do not allocate corporate selling and administrative expenses, among others, to the respective segments.

Intersegment sales prices are market-based and are eliminated in the "Other" column. Information for each segment is provided in the tables that follow (in thousands).


Three Months Ended March 31, 2024	Potash		Trio®		Oilfield Solutions		Other		Consolidated
Sales	$	37,576	$	36,487	$	5,324	$	(100)	$	79,287
Less: Freight costs	3,956		8,974		—		(100)		12,830
Warehousing and handling costs	1,727		1,362		—		—		3,089
Cost of goods sold	25,816		27,291		3,324		—		56,431
Lower of cost or net realizable value inventory adjustments	503		—		—		—		503

Gross Margin (Deficit)	$	5,574	$	(1,140)	$	2,000	$	—	$	6,434
Depreciation, depletion, and amortization incurred1	$	6,971	$	884	$	1,071	$	458	$	9,384












Three Months Ended March 31, 2023	Potash		Trio®		Oilfield Solutions		Other		Consolidated
Sales	$	52,497	$	30,274	$	4,250	$	(101)	$	86,920
Less: Freight costs	5,005		6,686		—		(101)		11,590
Warehousing and handling costs	1,480		1,253		—		—		2,733
Cost of goods sold	31,584		20,883		3,778		—		56,245


Gross Margin	$	14,428	$	1,452	$	472	$	—	$	16,352
Depreciation, depletion, and amortization incurred1	$	7,051	$	1,206	$	907	$	208	$	9,372

1 Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation, depletion and amortization amounts absorbed in or relieved from inventory.

The following table shows the reconciliation of reportable segment sales to consolidated sales and the reconciliation of segment gross margins to consolidated income before taxes (in thousands):

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	Three Months Ended March 31,
	2024		2023
Total sales for reportable segments	$	79,387	$	87,021
Elimination of intersegment sales	(100)		(101)
Total consolidated sales	$	79,287	$	86,920

Total gross margin for reportable segments	$	6,434	$	16,352
Elimination of intersegment sales	(100)		(101)
Elimination of intersegment expenses	100		101
Unallocated amounts:
Selling and administrative	8,357		8,858
Impairment of long-lived assets	1,377		—
Loss on disposal of assets	251		200
Accretion of asset retirement obligation	622		535
Other operating income	(1,132)		—
Other operating expense	1,265		1,385
Equity in earnings of unconsolidated entities	(149)		(821)

Interest income	(244)		(85)
Other non-operating income	(8)		(13)
(Loss) income before income taxes	$	(3,905)	$	6,293

Total assets are not presented for each reportable segment as they are not reviewed by, nor otherwise regularly provided to, the CODM.

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933, as amended. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this Quarterly Report other than statements of historical fact are forward-looking statements. Forward-looking statements include statements about, among other things, our future results of operations and financial position, our business strategy and plans, our expected capital investments and our objectives for future operations. In some cases, you can identify these statements by forward-looking words, such as "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," and "continue." Forward-looking statements are only predictions based on our current knowledge, expectations, and projections about future events.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including the following:

•changes in the price, demand, or supply of our products and services;

•challenges and legal proceedings related to our water rights;

•our ability to successfully identify and implement any opportunities to grow our business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;

•the costs of, and our ability to successfully execute, any strategic projects;

•declines or changes in agricultural production or fertilizer application rates;

•declines in the use of potassium-related products or water by oil and gas companies in their drilling operations;

•our ability to prevail in outstanding legal proceedings against us;

•our ability to comply with the terms of our revolving credit facility, including the underlying covenants;

•further write-downs of the carrying value of assets, including inventories;

•circumstances that disrupt or limit production, including operational difficulties or variances, geological or geotechnical variances, equipment failures, environmental hazards, and other unexpected events or problems;

•changes in reserve estimates;

•currency fluctuations;

•adverse changes in economic conditions or credit markets;

•the impact of governmental regulations, including environmental and mining regulations, the enforcement of those regulations, and governmental policy changes;

•adverse weather events, including events affecting precipitation and evaporation rates at our solar solution mines;

•increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise;

•our reliance on key personnel, including our ability to identify, recruit, and retain key personnel;

•changes in the prices of raw materials, including chemicals, natural gas, and power;

•our ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations;

•interruptions in rail or truck transportation services, or fluctuations in the costs of these services;

•our inability to fund necessary capital investments;

•global inflationary pressures and supply chain challenges;

•the impact of global health issues, such as the COVID-19 pandemic, and other global disruptions on our business, operations, liquidity, financial condition and results of operations; and

•the other risks, uncertainties, and assumptions described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023.

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In addition, new risks emerge from time to time. It is not possible for our management to predict all risks that may cause actual results to differ materially from those contained in any forward-looking statements we may make.

In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in these forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements to conform those statements to actual results or to reflect new information or future events.

Throughout this Quarterly Report, we refer to average net realized sales price per ton, which is a non-GAAP financial measure. More information about this measure, including a reconciliation of this measure to the most directly comparable GAAP financial measure, is below under the heading "Non-GAAP Financial Measure."

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Company Overview

We are a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed and the oil and gas industry. We are the only U.S. producer of muriate of potash (sometimes referred to as potassium chloride, KCl or potash), which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, we produce a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. We also provide water, magnesium chloride, brine, and various oilfield products and services.

Our extraction and production operations are conducted entirely in the continental U.S. We produce potash from three solution mining facilities: our HB solution mine in Carlsbad, New Mexico, our solution mine in Moab, Utah, and our brine recovery mine in Wendover, Utah. We also operate our North compaction facility in Carlsbad, New Mexico, which compacts and granulates product from the HB mine. We produce Trio® from our conventional underground East mine in Carlsbad, New Mexico. Until mid-2016, we also produced potash from our East and West mines in Carlsbad, New Mexico.

We have permitted, licensed, declared, and partially adjudicated water rights in New Mexico under which we sell water primarily to support oil and gas development in the Permian Basin near our Carlsbad facilities. In May 2019, we acquired certain land, water rights, grazing leases, and other related assets from Dinwiddie Cattle Company. We refer to these assets and operations as "Intrepid South." Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights to customers, where such sales provide a solution to customers' operations in the oil and gas industry.

We have three segments: potash, Trio®, and oilfield solutions. We account for the sale of byproducts as revenue in the potash or Trio® segment based on which segment generated the byproduct. Intersegment sales prices are market based and are eliminated.

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Significant Business Trends and Activities

Our financial results have been, or are expected to be, impacted by several significant trends and activities, which are described below. We expect that the trends described below may continue to impact our results of operations, cash flows, and financial position.

• Potash pricing and demand. Our potash average net realized sales price per ton(1) decreased to $395 for the three months ended March 31, 2024, compared to $485 for the same period in 2023. Sales volume declined 17% in the first quarter of 2024 compared to the same period in 2023 as we had less inventory to sell because of lower production at our HB and Wendover facilities. In January 2024, a winter-fill agricultural potash program was announced decreasing the list price to $385 per ton in January 2024 during a ten-day order window, before the list price increased by $30 per ton. We saw a good response to the program and captured a portion of the price increase as customers placed additional orders towards the end of the first quarter.

As a small producer, domestic pricing of our potash is influenced principally by the price established by our competitors. The interaction of global potash supply and demand, ocean, land, and barge freight rates, currency fluctuations, and crop commodity values and outlook, also influence pricing. Our price expectations could be affected by, among other things, weather, planting decisions, rail car availability, commodity price decreases and the price and availability of other potassium products.

We experience seasonality in potash demand, with more purchases historically occurring in February through May and September through November when purchasers are looking to have product on hand for the spring and fall application seasons in the U.S. Various factors affect potash sales and shipments, thereby increasing volatility of sales volumes from quarter to quarter and season to season. The specific timing of when farmers apply potash remains highly weather dependent and varies across the numerous growing regions within the U.S. The timing of potash sales is also significantly influenced by the marketing programs of potash producers, as well as storage volumes closer to the farm gate.

• Trio® pricing and demand. Our Trio® average net realized sales price per ton(1) decreased to $300 for the three months ended March 31, 2024, compared to $344 in 2023. Sales volumes increased 40% in the first quarter of 2024 compared to the same period in 2023 as stable potash price levels and improving sulfate values led to strong demand from historical customers. In response to the strong demand during the first quarter, we increased our Trio® pricing $25 per ton and expect to capture the majority of that increase in the second quarter.

We also experience seasonality in domestic Trio® demand, with more purchases coming in the first and second quarters in advance of the spring application season in the U.S. In turn, we generally have increased inventory levels in the third and fourth quarters in anticipation of expected demand for the following year.

• Water sales. In the first quarter of 2024, total water sales were $2.2 million compared to $2.7 million during the same period of 2023. Water sales decreased compared to the prior year due to less water sold from our Caprock water rights.

See Note 14 of our unaudited condensed consolidated financial statements included in "Item 1. Condensed Consolidated Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q regarding legal proceedings related to our water rights.

• Byproduct sales. We sell byproducts such as salt, magnesium chloride, brines, and water that are derived from our potash and Trio® operations. Byproduct sales were $5.4 million during the first quarter of 2024, compared to $6.6 million for the same period of 2023 as increased brine sales were offset by decreased sales of magnesium chloride and water.

• Strategic Focus on our Solar Solution Mining Facilities. Key current and future projects include:

–We substantially completed the replacement extraction well at our HB Solar Solution Mine, IP30B, in April 2024 and expect the well will be commissioned in the second quarter of 2024. This new extraction well is designed to have a long-term operational life and will initially target approximately 330 million gallons of high-grade brine from the Eddy Cavern at HB, with this additional brine being at lower depths than the Eddy Shaft project can access.

–Phase Two of the HB Injection Pipeline Project is the installation of an in-line pigging system to clean the pipeline and remove scaling to help ensure more consistent flow rates. We have received all permits and started construction in April 2024 with commissioning expected in the third quarter of 2024. Upon Phase Two commissioning, we expect our brine injection rates to be the highest in company history, which is key for maximizing brine availability and residence time.

–We continue to progress on a new primary pond in Wendover to increase the brine evaporative area, which will result in two primary ponds when complete. Similar to our caverns at Moab and HB, the primary ponds at Wendover

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serve as the brine storage area, and adding another primary pond will help us meet our goals of maximizing brine availability, increasing brine grade, and improving production. We expect this project to be commissioned in the second quarter of 2024.

• Diversification of products and services. In addition to the products discussed above, Intrepid generates revenue from right-of-way agreements, surface damages and easements, caliche sales, a produced water royalty, and sales of cattle.

We continue to progress on a sand mine opportunity at Intrepid South and have received all necessary permits to begin construction and full operation. We are currently evaluating the market and our options, including the potential to add a strategic partner.

(1) Average net realized sales price per ton is a non-GAAP financial measure. More information about this non-GAAP financial measure is below under the heading "Non-GAAP Financial Measure."

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Consolidated Results


(in thousands, except per ton amounts)	Three Months Ended March 31,
	2024		2023
Sales1	$	79,287	$	86,920

Cost of goods sold	$	56,431	$	56,245

Gross Margin	$	6,434	$	16,352

Selling and administrative	$	8,357	$	8,858

Net (Loss) Income	$	(3,130)	$	4,506

Average net realized sales price per ton2
Potash	$	395	$	485
Trio®	$	300	$	344

1Sales include sales of byproducts which were $5.4 million and $6.6 million for the three months ended March 31, 2024, and 2023, respectively.

2Average net realized sales price per ton is a non-GAAP financial measure. More information about this non-GAAP financial measure is below under the heading "Non-GAAP Financial Measure."

Consolidated Results for the Three Months Ended March 31, 2024, and 2023

Sales

Our total sales for the first quarter of 2024 decreased $7.6 million, or 9%, compared to the first quarter of 2023, as potash segment sales decreased $14.9 million, or 28%, partially offset by a $6.2 million, or 21%, increase in Trio® segment sales and a $1.1 million, or 25%, increase in oilfield solutions segment sales.

Our total potash segment sales decreased $14.9 million for the first quarter of 2024 compared to the first quarter of 2023, as potash sales decreased $14.7 million and potash segment byproduct revenues decreased $0.2 million. Our average net realized sales price per potash ton decreased 19%, and we sold 17% fewer tons. We saw good potash demand during the first quarter of 2024 as farmers look to maximize crop yields to capitalize on continued supportive crop commodity prices. However, potash tons sold decreased compared to the prior year because we had fewer tons of potash available to sell due to decreased potash production from our HB and Wendover facilities.

Our Trio® segment sales increased $6.2 million in the first quarter of 2024, compared to the first quarter of 2023, as Trio® sales increased $7.2 million, or 25%, partially offset by a $1.0 million decrease in Trio® segment byproduct water sales. We sold 40% more tons of Trio® in the first quarter of 2024, compared to the first quarter of 2023, partially offset by a 13% decrease in our Trio® average net realized sales price per ton. Our Trio® tons sold increased during the first quarter of 2024, compared to the first quarter of 2023, as we sold more Trio® tons domestically and internationally. We sold less Trio® segment byproduct water as we increased the volume of water used for injection at our HB plant and had fewer overall sales of water from our Caprock water rights.

Our oilfield solutions segment sales, which includes sales of water, brine water, and surface use agreements and easements, increased $1.1 million, or 25%, in the first quarter of 2024, compared to the first quarter of 2023, mainly driven by a $0.6 million increase in water sales, a $0.3 million increase in brine water sales, and a $0.2 million increase in other products and services. Continued robust oil and gas activity near Intrepid South has driven strong demand for products and services offered through our oilfield solutions segment.

Our total byproduct sales, which are recorded in either our potash segment or Trio® segment, decreased $1.2 million in the first quarter of 2024, compared to the first quarter of 2023, due to a decrease in byproduct water sales. We did not sell any byproduct water as we increased the volume of water used for injection at our HB plant and had fewer overall sales of water from our Caprock water rights.

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Cost of Goods Sold

Our total cost of goods sold increased $0.2 million during the first quarter of 2024, compared to the first quarter of 2023. Our Trio® cost of goods sold increased $6.4 million, partially offset by a decrease of $5.8 million in our potash cost of goods sold and a $0.5 million decrease in our oilfield solutions cost of goods sold.

Our potash segment cost of goods sold decreased $5.8 million, or 18%, mainly due to selling 17% fewer tons in the first quarter of 2024, compared to the first quarter of 2023. In addition, our beginning 2024 weighted average carrying cost per ton was reduced by the lower of cost or net realizable value inventory adjustment that was recorded during the fourth quarter of 2023.

Our Trio® segment cost of goods sold increased $6.4 million, or 31%, during the first quarter of 2024, compared to the first quarter of 2023, mainly due to selling 40% more tons of Trio®. Our cost of goods sold was positively impacted by decreases in certain production costs, such as production labor and benefits expense, as we stopped operating an additional underground shift in early 2024 at our East facility and restarted our fine langbeinite recovery process in March 2024. In addition, the beginning 2024 weighted average carrying cost per ton of our finished goods was reduced by the lower of cost or net realizable value inventory adjustment recorded in the fourth quarter of 2023. Finally, we produced more tons of Trio® in the first quarter of 2024, compared to the first quarter of 2023, which lowered our per ton production costs. A significant portion of our production costs are fixed and an increase in tons produced decreases our per ton production costs.

Our oilfield solutions cost of goods sold decreased $0.5 million, or 12%, during the first quarter of 2024, compared to the first quarter of 2023, mainly due to a decrease in contract labor expenses.

Lower of Cost or Net Realizable Value Inventory Adjustments

In the first quarter of 2024, we incurred $0.5 million of lower of cost or net realizable value inventory adjustments in our potash segment, as our weighted average carrying costs for certain potash products exceeded our expected selling price for those products. We did not incur any lower of cost or net realizable value inventory adjustments in the first quarter of 2023.

Gross Margin

During the first quarter of 2024, we generated gross margin of $6.4 million compared to gross margin of $16.4 million during the first quarter of 2023. As discussed above, our gross margin decreased due to the lower average net realized sales price per ton for potash and Trio® products. In addition, we sold fewer tons of potash in the first quarter of 2024, compared to the first quarter of 2023.

Selling and Administrative Expense

During the first quarter of 2024, selling and administrative expenses decreased 6% compared to the first quarter of 2023, mainly due to a decrease in share-based compensation expense.

Income Tax Expense

During the first quarter of 2024, we incurred income tax benefit of $0.8 million, compared to income tax expense of $1.8 million during the first quarter of 2023, as we incurred a net loss during the first quarter of 2024, compared to net income in the first quarter of 2023.

Net Income

We generated a net loss of $3.1 million during the first quarter of 2024, compared to net income of $4.5 million for the first quarter of 2023, due to the factors discussed above.

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Potash Segment


	Three Months Ended March 31,
(in thousands, except per ton amounts)	2024		2023
Sales1	$	37,576	$	52,497
Less: Freight costs	3,956		5,005
Warehousing and handling costs	1,727		1,480
Cost of goods sold	25,816		31,584
Lower of cost or net realizable value inventory adjustments	503		—

Gross Margin	$	5,574	$	14,428
Depreciation, depletion, and amortization incurred2	$	6,971	$	7,051

Potash sales volumes (in tons)	74		89
Potash production volumes (in tons)	87		90

Average potash net realized sales price per ton3	$	395	$	485

1 Sales include sales of byproducts which were $5.2 million and $5.3 million for the three months ended March 31, 2024, and 2023, respectively.

2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.

3Average net realized sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."

Three Months Ended March 31, 2024, and 2023

Our total sales in the potash segment decreased $14.9 million in the first quarter of 2024, compared to the first quarter of 2023, as potash sales recorded in the potash segment decreased $14.7 million, or 31%, and potash segment byproduct sales decreased $0.2 million. Our potash sales decreased in the first quarter of 2024, compared to the first quarter of 2023, as our average net realized sales price per ton decreased 19%, and we sold 17% fewer tons. We sold fewer tons of potash in the first quarter of 2024, compared to the first quarter of 2023, as we had fewer tons of potash to sell due to lower potash production from our HB and Wendover facilities. Byproduct sales were similar to the prior year period as a $0.7 million decrease in magnesium chloride sales was mostly offset by a $0.5 million increase in brine sales. Magnesium chloride sales declined due to mild winter weather which decreased demand for our de-icing product. Brine sales increased as we sold more barrels at a higher average price compared to the prior year due to continued oilfield activity near our mines.

Potash segment freight expense decreased 21% in the first quarter of 2024, compared to the first quarter of 2023, as we sold 17% fewer tons of potash. Our potash freight expense is further impacted by the geographic distribution of our potash and byproduct sales and by the proportion of customers arranging for and paying their own freight costs.

Our potash segment cost of goods sold decreased 18% in the first quarter of 2024, compared to the first quarter of 2023, as we sold 17% fewer tons of potash. In addition, our beginning 2024 weighted average carrying cost per ton was reduced by the lower of cost or net realizable value inventory adjustment that was recorded during the fourth quarter of 2023.

During the first quarter of 2024, we recorded lower of cost or net realizable value inventory adjustments of $0.5 million as our weighted average carrying cost per ton for certain inventoried potash products was higher than our expected selling price per ton for those products. We did not record any lower of cost or net realized value inventory adjustments in the first quarter of 2023.

Our potash segment gross margin decreased $8.9 million in the first quarter of 2024, compared to the first quarter of 2023, due to the factors discussed above.

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Additional Information Relating to Potash

The table below shows our potash sales mix for the three months ended March 31, 2024, and 2023:


	Three Months Ended March 31,
	2024	2023
Agricultural	79%	82%
Industrial	3%	2%
Feed	18%	16%

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Trio® Segment


	Three Months Ended March 31,
(in thousands, except per ton amounts)	2024		2023
Sales1	$	36,487	$	30,274
Less: Freight costs	8,974		6,686
Warehousing and handling costs	1,362		1,253
Cost of goods sold	27,291		20,883


Gross (Deficit) Margin	$	(1,140)	$	1,452
Depreciation, depletion, and amortization incurred2	$	884	$	1,206

Sales volumes (in tons)	91		65
Production volumes (in tons)	54		49

Average Trio® net realized sales price per ton3	$	300	$	344

1 Sales include sales of byproducts which were $0.2 million and $1.2 million for the three months ended March 31, 2024, and 2023, respectively.

2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.

3Average net realized sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."

Three Months Ended March 31, 2024, and 2023

Trio® segment sales increased 21% during the first quarter of 2024, compared to the first quarter of 2023. Trio® sales increased $7.2 million, partially offset by a decrease of $1.0 million in our Trio® segment byproduct sales. Trio® sales increased primarily due to a 40% increase in Trio® tons sold, partially offset by a 13% decrease in our average net realized sales price per ton. Sales volumes increased during the first quarter of 2024, compared to the first quarter of 2023 as customers saw good value for Trio® relative to current crop prices. Similar to potash prices discussed above, our Trio® average net realized sales price per ton has decreased since the peak prices realized during the second quarter of 2022, as potassium fertilizer supplies improved.

Our Trio® segment byproduct sales decreased $1.0 million in the first quarter of 2024, compared to the first quarter of 2023, due to a decrease in Trio® segment byproduct water sales. We sold less byproduct water as we increased the volume of water used for injection at our HB plant and had fewer overall sales of water from our Caprock water rights. Generally, we source our water sales closer to the location where the customer needs the water to minimize water transfer costs.

Trio® freight costs increased 34%, as we sold 40% more Trio® tons in the first quarter of 2024, compared to the first quarter of 2023. Our Trio® freight expense is impacted by the geographic distribution of our Trio® sales and by the proportion of customers arranging for and paying their own freight costs.

Our Trio® cost of goods sold increased 31% in the first quarter of 2024, compared to the first quarter of 2023, mainly due to selling 40% more tons of Trio®. Our cost of goods sold was positively impacted by decreases in certain production costs, such as production labor and benefits expense, as we moved to a reduced operating schedule at our East facility and restarted our fine langbeinite recovery process in March 2024. In addition, the beginning 2024 weighted average carrying cost per ton of our finished goods was reduced by the lower of cost or net realizable value inventory adjustment recorded in the fourth quarter of 2023. Finally, we produced more tons of Trio® in the first quarter of 2024, compared to the first quarter of 2023, which lowered our per ton production costs. A significant portion of our production costs is fixed and an increase in tons produced decreases our per ton production costs.

Our Trio® segment experienced a gross deficit of $1.1 million in the first quarter of 2024, compared to gross margin of $1.5 million in the first quarter of 2023, mainly due to the decrease in average net realized sales price per Trio® ton.

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During the year ended December 31, 2023, we recorded an impairment related to our Trio® segment assets because the estimated fair value of the assets exceeded the net book value of the assets. The fair value of the Trio® segment assets was primarily determined using the expected proceeds received in an orderly sale of the individual assets. For any new Trio® segment capital spending during the first quarter, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets and we recorded an additional impairment of $1.4 million in the first quarter of 2024. Although we have reduced capital spending at our East facility compared to prior years, we expect to incur additional capital expenditures in the future periods for our Trio® segment assets that we will likely have to impair.

Additional Information Relating to Trio®

The table below shows the percentage of Trio® tons sold into the domestic and export markets during the three months ended March 31, 2024, and 2023.


	United States	Export
For the Three Months Ended March 31, 2024	89%	11%


For the Three Months Ended March 31, 2023	90%	10%

Oilfield Solutions Segment


	Three Months Ended March 31,
(in thousands)	2024		2023
Sales	$	5,324	$	4,250


Cost of goods sold	3,324		3,778


Gross Margin	$	2,000	$	472
Depreciation, depletion, and amortization incurred	$	1,071	$	907

Three Months Ended March 31, 2024, and 2023

Our oilfield solutions segment sales increased $1.1 million in the first quarter of 2024, compared to the first quarter of 2023, due to a $0.6 million increase in water sales, a $0.3 million increase in brine water sales, and a $0.2 million increase in other oilfield solution products and services. Our water sales increased compared to the prior year period due to increased sales of water on our South ranch. Our brine water sales and sales of other oilfield solutions segments products and services increased due to continued strong demand from oil and gas operators in the Permian Basin near Intrepid South.

Our cost of goods sold decreased $0.5 million, or 12%, in the first quarter of 2024, compared to the first quarter of 2023, due to using less contract labor. In the first quarter of 2023, we used contract labor to complete various projects at Intrepid South.

Gross margin for the first quarter of 2024 increased $1.5 million compared to the first quarter of 2023, due to the factors discussed above.

Specific Factors Affecting Our Results

Sales

Our gross sales are derived from the sales of potash, Trio®, water, salt, magnesium chloride, brine water, and various other products and services offered to oil and gas producers. Total sales are determined by the quantities of products we sell and the sales prices we realize. For potash, Trio®, and salt, we quote prices to customers both on a delivered basis and on the basis of pick-up at our plants and warehouses. We incur freight costs on most of our potash, Trio® and salt sales, but some customers arrange and pay for their own freight directly. When we arrange and pay for freight, our quotes and billings are based on expected freight costs to the points of delivery. When we calculate our potash and Trio® average net realized sales price per ton, we deduct any freight costs included in sales before dividing by the number of tons sold. We believe the deduction of freight costs provides a more representative measure of our performance in the market due to variations caused by ongoing changes in the proportion of customers paying for their own freight, the geographic distribution of our products, and freight rates. Freight rates have been increasing, and if we are unable to pass the increased freight costs on to the customer, our average net realized sales price per ton is negatively affected. We manage our sales and marketing operations centrally and we work to achieve the

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highest average net realized sales price per ton we can by evaluating the product needs of our customers and associated logistics and then determining which of our production facilities can best satisfy these needs.

The volume of products we sell is determined by demand for our products and by our production capabilities. We operate our potash and Trio® facilities at production levels that approximate expected demand and take into account current inventory levels and expect to continue to do so for the foreseeable future.

Our water sales and other products and services offered through our oilfield solutions segment are driven by demand from oil and gas exploration companies drilling in the Permian Basin. As such, demand for our water is generally stronger during a cyclical expansion of oil and gas drilling. Likewise, a cyclical contraction of oil and gas drilling may decrease demand for our water and the other products and services offered through our oilfield solutions segment.

Cost of Goods Sold

Our cost of goods sold reflects the costs to produce our products. Many of our production costs are largely fixed and, consequently, our cost of sales per ton on a facility-by-facility basis tends to move inversely with the number of tons we produce, within the context of normal production levels. Our principal production costs include labor and employee benefits, maintenance materials, contract labor, and materials for operating or maintenance projects, natural gas, electricity, operating supplies, chemicals, depreciation and depletion, royalties, and leasing costs. Certain elements of our cost structure associated with contract labor, consumable operating supplies, reagents, and royalties are variable, but these variable elements make up a smaller component of our total cost structure. Our costs often vary from period to period based on the fluctuation of inventory, sales, and production levels at our facilities.

Our production costs per ton are also impacted when our production levels change, due to factors such as changes in the grade of ore delivered to the plant, levels of mine development, plant operating performance, and downtime. Because all of our potash is produced from solution mining, weather has a significant impact on our potash production. We expect that our labor and contract labor costs in Carlsbad, New Mexico, will continue to be influenced most directly by the demand for labor in the local region where we compete for labor with another fertilizer company, companies in the oil and gas industry, and a nuclear waste processing and storage facility.

We pay royalties to federal, state, and private lessors under our mineral leases. These payments typically equal a percentage of sales (less freight) of minerals extracted and sold under the applicable lease. In some cases, federal royalties for potash are paid on a sliding scale that varies with the grade of ore extracted. Our average royalty rate was 4.9% for the three months ended March 31, 2024, and 2023.

Income Taxes

We are subject to federal and state income taxes on our taxable income. Our effective tax rate for the three months ended March 31, 2024 was 19.8%. Our effective tax rate differed from the statutory rate during this period primarily from the permanent difference between book and tax income for stock compensation. Our effective tax rate for the three months ended March 31, 2023 was 28.4% which differed from the statutory rate primarily from the estimated permanent difference between book and tax income for the officers' compensation deduction.

Our federal and state income tax returns are subject to examination by federal and state tax authorities.

For the three months ended March 31, 2024, we incurred approximately $0.8 million of deferred income tax benefit and a minimal amount of current income tax expense. Our current income tax expense is less than the total tax benefit due to the utilization of net operating losses. For the three months ended March 31, 2023, we incurred income tax expense of $1.8 million.

We evaluate our deferred tax assets and liabilities each reporting period using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the states in which we conduct business. Changing business conditions for normal business transactions and operations, as well as changes to state tax rates and apportionment laws, potentially alter our apportionment of income among the states for income tax purposes. These changes in apportionment laws result in changes in the calculation of our current and deferred income taxes, including the valuation of our deferred tax assets and liabilities. The effects of any such changes are recorded in the period of the adjustment. These adjustments can increase or decrease the net deferred tax asset on our condensed consolidated balance sheet, and thus increase or decrease the deferred tax benefit or deferred income tax expense on the income statement.

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Capital Investments

During the first quarter of 2024, cash paid for property, plant, equipment, mineral properties, intangible and other assets was $11.7 million.

We expect to make capital investments in 2024 of $40 million to $50 million. We anticipate spending approximately $20 million to $25 million on sustaining capital in 2024 with the remainder of our estimated spending on opportunity projects, which include the completion of phase two of our new HB injection pipeline project, a new extraction well at our HB mine, and a new primary pond at our Wendover facility. We may adjust our investment plans as our expectations for 2024 change. We anticipate our 2024 operating plans and capital programs will be funded out of operating cash flows and existing cash. We may also use our revolving credit facility, to the extent available, to fund capital investments.

Liquidity and Capital Resources

As of March 31, 2024, we had cash and cash equivalents of $34.1 million, compared to $4.1 million at December 31, 2023. The increase in our cash balance during the first three months of 2024 was driven mainly by a $45 million cash payment received under the cooperative development agreement with XTO, partially offset by $11.7 million in capital expenditures and a $4.0 million repayment of borrowings under our revolving credit facility.

Our operations have primarily been funded from cash on hand, cash generated by operations, borrowings under our revolving credit facility, and proceeds from debt and equity offerings. We continue to monitor our future sources and uses of cash and anticipate that we may adjust our capital allocation strategies when, and as determined by our Board of Directors. We may, at any time we deem conditions favorable, attempt to improve our liquidity position by accessing debt or equity markets in accordance with our existing debt agreements. We also may attempt to raise capital in the future through the issuance of additional equity or debt securities, subject to prevailing market conditions. However, there is no assurance that we will be able to successfully raise additional capital on acceptable terms or at all. With our current cash on hand, the remaining availability under our credit facility, and the expected cash generated from operations, we believe we have sufficient liquidity to meet our obligations for the next twelve months.

The following summarizes our cash flow activity for the three months ended March 31, 2024, and 2023 (in thousands):


	Three Months Ended March 31,
	2024		2023
Cash flows provided by operating activities	$	41,532	$	8,449
Cash flows used in investing activities	$	(6,577)	$	(20,430)
Cash flows (used in) provided by financing activities	$	(4,957)	$	3,920

Operating Activities

Net cash provided by operating activities through March 31, 2024, was $41.5 million, an increase of $33.1 million compared with the first three months of 2023, mainly due to a $45 million cash payment received under the cooperative development agreement with XTO, partially offset by the decrease in sales during the first quarter of 2024, compared to the first quarter of 2023.

Investing Activities

Net cash used in investing activities decreased by $13.9 million in the first three months of 2024, compared with the same period in 2023 due to a decrease in capital spending and proceeds received for the sale of water recycling equipment.

Financing Activities

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Revolving Credit Facility—We maintain a $150 million revolving credit facility with a syndicate of lenders with Bank of Montreal as administrative agent. The revolving credit facility has a maturity date to August 4, 2027. As of March 31, 2024, borrowings under the credit facility bear interest at the SOFR plus an applicable margin of 1.50% to 2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. Borrowings under the revolving credit facility are secured by substantially all of our current and non-current assets, and the obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.

As of March 31, 2024, we were in compliance with all applicable covenants under the revolving credit facility.

As of April 30, 2024, we had approximately $48.8 million in cash and cash equivalents and no borrowings under the revolving credit facility. We have $150.0 million of remaining availability under the revolving credit facility as of April 30, 2024.

Share Repurchase Program—In February 2022, our Board of Directors approved a $35 million share repurchase program. Under the share repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of share repurchases, if any, will be at our sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. We may suspend or discontinue the share repurchase program at any time. We repurchased 608,657 shares totaling $22.0 million from August 2022 through December 2022, with approximately $13 million remaining available under the repurchase program authorization. For the three months ended March 31, 2024, we did not repurchase any shares under the share repurchase program.

Critical Accounting Policies and Estimates

Our Annual Report on Form 10-K for the year ended December 31, 2023, describes the critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. We have not made any significant changes to our critical accounting policies since December 31, 2023.

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Non-GAAP Financial Measure

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, from time to time we use "average net realized sales price per ton," which is a non-GAAP financial measure. This non-GAAP financial measure should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, because the presentation of this non-GAAP financial measure varies among companies, our presentation of this non-GAAP financial measure may not be comparable to similarly titled measures used by other companies.

We believe average net realized sales price per ton, when used in conjunction with GAAP financial measures, provides useful information to investors for analysis of our business and operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to the key metric we use in our financial and operational decision making. We use this non-GAAP financial measure as one of our tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. We believe this non-GAAP financial measure is used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.

Average Net Realized Sales Price per Ton

We calculate average net realized sales price per ton for each of potash and Trio®. Average net realized sales price per ton for potash is calculated as potash segment sales less potash segment byproduct sales and potash freight costs and then dividing that difference by the number of tons of potash sold in the period. Likewise, average net realized sales price per ton for Trio® is calculated as Trio® segment sales less Trio® segment byproduct sales and Trio® freight costs and then dividing that difference by Trio® tons sold. We consider average net realized sales price per ton to be useful, and believe it to be useful for investors, because it shows our potash and Trio® average per-ton pricing without the effect of certain transportation and delivery costs. When we arrange transportation and delivery for a customer, we include in revenue and in freight costs the costs associated with transportation and delivery. However, some of our customers arrange for and pay their own transportation and delivery costs, in which case these costs are not included in our revenue and freight costs. We use average net realized sales price per ton as a key performance indicator to analyze potash and Trio® sales and price trends.

Below is a reconciliation of average net realized sales price per ton to segment sales, the most directly comparable GAAP financial measure for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
	2024				2023
(in thousands, except per ton amounts)	Potash		Trio®		Potash		Trio®
Total Segment Sales	$	37,576	$	36,487	$	52,497	$	30,274
Less: Segment byproduct sales	5,164		203		5,342		1,221
Freight costs	3,146		8,974		3,992		6,685
Subtotal	$	29,266	$	27,310	$	43,163	$	22,368

Divided by:
Tons sold	74		91		89		65
Average net realized sales price per ton	$	395	$	300	$	485	$	344

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Part II, Item 7A., "Quantitative and Qualitative Disclosure About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2023, describes our exposure to market risk. There have been no significant changes to our market risk exposure since December 31, 2023.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures are also designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of management, including our principal financial officer and acting principal executive officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2024. Based on this evaluation, our principal financial officer and acting principal executive officer have concluded that our disclosure controls and procedures were effective as of March 31, 2024, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal financial officer and acting principal executive officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Intrepid have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

For information regarding litigation, other disputes and regulatory proceedings see Part I - Item1. Financial Statements, Note 15 - Commitments and Contingencies.

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ITEM 1A.RISK FACTORS

Our future performance is subject to a variety of risks and uncertainties that could materially and adversely affect our business, financial condition, results of operations, and the trading price of our common stock. These risks and uncertainties are described in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023. Except as set forth below, there have been no material changes to these risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2023.

We rely on our management personnel (including our directors) for the development and execution of our business strategy, and the loss of one or more members of our management team could harm our business.

Our management personnel have significant relevant industry and company-specific experience. Our senior management team has developed and implemented first-of-their-kind processes and other innovative ideas that are important to our business. Our success depends, in part, upon the performance and continued services of our senior leadership team, including our directors. We do not currently maintain "key person" life insurance on any of our management personnel.

On April 16, 2024, our Board granted Robert P. Jornayvaz III, our Executive Chairman of the Board and Chief Executive Officer, a temporary medical leave of absence, effective immediately, as he recovers from an accident. In connection with Mr. Jornayvaz’s medical leave, the Board temporarily delegated all responsibilities of the Chairman of the Board to Barth Whitham, Lead Director. In addition, the Board appointed Matthew D. Preston, the Company’s Chief Financial Officer, as acting principal executive officer of the Company. The Board also appointed Hugh E. Harvey, our co-founder with Mr. Jornayvaz, to serve as a Class III director on the Board.

Disruption to our organization as a result of leadership changes could have a material adverse effect on our business, financial condition and results of operations. If our leadership team fails to perform effectively or if we fail to attract or retain key executives, senior management or other key employees, our business, financial condition or results of operations could be harmed. The loss or inability to retain these individuals could disrupt our operations, and we may be unable to achieve our business strategies and grow effectively. To execute our business plans and strategies, we must also continue to attract and retain highly qualified personnel and we may incur significant costs, including stock-based compensation expense, to do so.

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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Issuer Purchases of Equity Securities
Period	(a) Total Number of Shares Purchased1	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs2
January 1, 2023 through January 31, 2024	—	—		—	$	12,987,860
February 1, 2024 through February 29, 2024	—	—		—	12,987,860
March 1, 2024 through March 31, 2024	31,843	$	19.89	—	12,987,860
Total	31,843	$	19.89	—	$	12,987,860

1 Represents shares of common stock we withheld as a payment of withholding taxes due upon vesting of restricted stock held by our employees.

2 Represents the remaining dollar amount available to repurchase shares of common stock under the $35 million share repurchase program approved by the Board of Directors in February 2022. Under the share repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of share repurchases, if any, will be at our sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. We did not repurchase any shares during the first quarter of 2024, and we may suspend or discontinue the share repurchase program at any time.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

We are committed to providing a safe and healthy work environment. The objectives of our safety programs are to eliminate workplace accidents and incidents, preserve employee health, and comply with all safety- and health-based regulations. We seek to achieve these objectives by training employees in safe work practices; establishing, following, and improving safety standards; involving employees in safety processes; openly communicating with employees about safety matters; and recording, reporting, and investigating accidents, incidents, and losses to avoid recurrence. As part of our ongoing safety programs, we collaborate with the Mine Safety and Health Administration (“MSHA”) and the New Mexico Bureau of Mine Safety to identify and implement accident prevention techniques and practices.

Our East, West, and North facilities in New Mexico are subject to regulation under the Federal Mine Safety and Health Act of 1977 and the New Mexico Bureau of Mine Safety. MSHA inspects these facilities on a regular basis and issues various citations and orders when it believes a violation has occurred under federal law. Exhibit 95.1 to this Quarterly Report on Form 10-Q provides the information concerning mine safety violations and other regulatory matters required by SEC rules. Our Utah and HB facilities are subject to regulation by the Occupational Health and Safety Administration and, therefore, are not required to be included in the information provided in Exhibit 95.1.

ITEM 5.OTHER INFORMATION

On March 25, 2024, Robert P. Jornayvaz III, our Chief Executive Officer and Chairman of the Board, entered into a pre-arranged stock trading plan (the "Jornayvaz 10b5-1 Trading Agreement"). The Jornayvaz 10b5-1 Trading Agreement provides for the sale of up to 315,000 shares of the Company's common stock between June 24, 2024 to June 24, 2025. Further, the Jornayvaz 10b5-1 Trading Agreement was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act.

Other than the above, during the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6.EXHIBITS


Exhibit No.						Description


31.1						Certification of Principal Financial Officer and Acting Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*



32.1						Certification of Principal Financial Officer and Acting Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**



95.1						Mine Safety Disclosure Exhibit.*

101.INS						Inline XBRL Instance Document (Note that the instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document).*

101.SCH						Inline XBRL Taxonomy Extension Schema Document.*

101.CAL						Inline XBRL Extension Calculation Linkbase Document.*

101.LAB						Inline XBRL Extension Label Linkbase Document.*

101.PRE						Inline XBRL Extension Presentation Linkbase Document.*

101.DEF						Inline XBRL Extension Definition Linkbase Document.*

104						Cover page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101)

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						INTREPID POTASH, INC. (Registrant)

Dated: May 9, 2024						/s/ Matthew D. Preston
						Matthew D. Preston - Chief Financial Officer and Acting Principal Executive Officer (Principal Executive Officer and Principal Financial Officer)




Dated: May 9, 2024						/s/ Cris Ingold
						Cris Ingold - Chief Accounting Officer (Principal Accounting Officer)

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