Q3 2023 Intrepid Potash Inc Earnings Call
Speaker 1: Thank you for standing by. This is the Conference of RATER. Welcome to the Intrepid Potash Incorporated Third Quarter 2023 Results Conference School. As a reminder, all participants are in listen only mode and the conference is being recorded.
Thank you for standing by this is the conference operator, welcome to the Intrepid potash incorporated third quarter 2023 results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.
Speaker 1: After the presentation, there will be the opportunity to ask questions. To join the question to you, you may press start then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing start and zero. I would now like to turn the conference over to Evan Mates in the relations. Please go ahead.
After the presentation there'll be the opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, one off rates up by pressing star zero.
I would now like to turn the conference over to Evan Knight's Investor Relations. Please go ahead.
Speaker 2: Thank you, Emily. Good morning, everyone. Thanks for joining us to discuss an interview in TREF. It's 3rd quarter, 2023 results.
Thank you Emily and good morning.
Everyone. Thanks for joining us to discuss and review Intrepid third quarter 2023 results.
Speaker 2: With me today is in FREP, it's co-founder, executive chairman and CEO , Bob Drenovis, and CFO Matt Press.
With me today is intrepid <unk> co founder executive Chairman and CEO, Bob <unk> and CFO, Matt Preston.
Speaker 2: Also available to answer questions during the Q&A session as our VP of Sales and Marketing, Zach Riettams, and our VP of Operations, John Galassini.
Also available to answer questions. During the Q&A session is our VP of sales and marketing Zachary Adams and our VP of operations John Gaussian here.
Speaker 2: Please be advised to our remarks today, including answers to your questions, include for-looking statements as defined by US securities law.
Please be advised that our remarks today, including answers to your questions include forward looking statements as defined by U S Securities laws.
Speaker 2: These four-looking statements are subject to risk and uncertainties that could have caused actual results being truly different from those really anticipated. And they're based on information available to us today and we assume no obligation to update them.
These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated and are based upon information available to us today, and we assume no obligation to update them.
Speaker 2: These risks and uncertainties are described in our periodic reports, followed by the SEC, which are incorporated here by rep.
These risks and uncertainties are described in our periodic reports filed with the SEC, which are incorporated herein by reference.
Speaker 2: During today's call, we were put a certain non- GAAP financial and operational met.
During today's call, we refer to certain non-GAAP financial and operational measures.
Speaker 2: Reconciliation to the mostly directly comparable GAAP measures are included in the yesterday's press.
Reconciliations to the mostly directly comparable GAAP measures are included in yesterday's press release.
Speaker 2: Our SSE filings and press releases are available on our website in trebuchaddpottish.com.
<unk> SEC filings and press releases are available on our website at Intrepid potash Dot com.
Speaker 3: on that in the calls above. Thank you, Evan. Good morning, everyone. We appreciate your interest in intrevit, and your attendance for our third quarter, 2023 earnings call.
I'll now turn the call to Bob.
Evan Good morning, everyone. We appreciate your interest in Intrepid and your attendance for our third quarter 2023 earnings call.
Speaker 3: Intrepid's third quarter was highlighted by strong sales with our volumes remaining well ahead of last year's pay.
<unk> third quarter was highlighted by strong sales with our volumes remaining well ahead of last year's pace.
Speaker 3: For Potash and Trio, our respective volumes to the third quarter represent approximately 95 and 90% of the total we sold in 2022.
For potash and trio, our respective volume through the third quarter represent approximately 95% to 90% of the total we sold in 2022.
Speaker 3: A couple of reasons for the higher sales include, first, farmers in the United States are finding good value in POT-AISH, where US demand is projected to increase by about 10 to 15% year over year. And second, the premium feed market remains very important for intrepid, with this market comprising just over 30% of our POT-A salesmex in the third quarter.
A couple of reasons for the higher sales include first farmers in the United States are finding good value in potash, where U S demand is projected to increase by about 10% to 15% year over year in.
And second the premium feed market remains very important for intrepid with this market comprising just over 30% of our potash sales mix in the third quarter.
Speaker 3: but also providing the added benefit of increased net.
While also providing the <unk>.
Added benefit of increased net backs looks.
Speaker 3: Looking ahead, we expect continued solid demand in the fourth corner, as Harvest for Corn and Soybeans is tracking ahead of the five-year average, which helps provide an open window for the fall application.
Looking ahead, we expect continued solid demand in the fourth quarter as harvest corn and soybeans is tracking ahead of the five year average.
Which helps provide an open window for the fall application season.
Speaker 3: While our volume subsigned a nice rebrand from 2022, owing to the impacts from last year's failed extraction well, we've had fewer tons available to sell in 2023 versus what our markets could support. In correcting our potash production trend has been the key strategic priority for intrep-
While our volumes have seen a nice rebound from 2022, owing to the impacts from last year's sales extraction, well, we've had fewer tons available to sell in 2023 versus what our markets could support and correcting our potash production trend has been the key strategic priority.
Intrepid.
Speaker 3: Our capital program has been directly focused on revitalizing our products assets and owing to our strong project execution. We feel very confident that we are well on the way to increasing our production to the high end of our historical range.
Our capital program has been directly focused on revitalizing our potash assets and owing to our strong project execution, we feel very confident that we're well on our way to increasing our production to the high end of our historical range.
Speaker 3: Before diving into project details, I wanted to provide some commentary on the outlook for the agricultural markets and products.
Before diving into project details I wanted to provide some commentary on the outlook for the agricultural markets can potash.
Speaker 3: Starting with the agricultural markets, as we've been highlighting for several orders, US farmers are most...
Starting with the agricultural markets as we've been highlighting for several quarters.
U S farmers are mostly in good shape.
Speaker 3: They're projected to generate solid profits for the third consecutive year, have healthy balance sheets, farmland values are close to record highs, and futures for soybeans and corn remain supportive.
They are projected to generate solid profits for the third consecutive year have healthy balance sheets farmland values are close to record highs and futures for soybeans and corn remains supportive.
Speaker 3: In addition, key international commodities like palm oil, sugar, cocoa, and coffee are all still trading at levels that are either higher than historic averages for pushing for record highs.
In addition, key international commodities like Palm oil sugar cocoa and coffee are all still trading at levels that are either higher than historic averages for pushing for record highs.
Speaker 3: For Padaj, current pricing, which is still being impacted by more supply from continued imports of Russian tons into the United States, has led to much better
For potash current pricing, which is still being impacted by more supply from continued imports of Russian tons into the United States.
Has led to much better value performers.
Speaker 3: This has served as a key catalyst for stronger demand with this trend expected to continue for the rest of 2023 and into 2024.
This has served as a key catalyst for stronger demand with this trend expected to continue for the rest of 2023 and into 2024 on.
Speaker 3: On the supply side for potash, global markets still face the possibility of constraints or disruptions, and third party forecasts show that about 40% of the world's potash exports will come from regions with heightened geopolitical risk.
On the supply side for potash global markets still face the possibility of constraints or disruptions and third party forecasts show that about 40% of the world's potash exports will come from regions with heightened geopolitical risks.
Speaker 3: Until these risks are resolved, we think we should see a higher floor for pricing in the near to medium term, or at least until some of the more significant supply additions come online.
These risks are resolved, we think we should see a higher floor for pricing in the near to medium term or at least until some of them.
Were significant supply additions come online.
Speaker 3: Given the constructive outlook, it's paramount that in trepid we turn our annual potash production back to the high end of our historical race.
Given the constructive outlook is paramount.
Intrepid return our annual potash production back to the high end of our historical range as I mentioned.
Speaker 3: As I mentioned earlier in my remarks, I'm very pleased to share that our recent project execution makes us quite confident that we're well on our way to meeting our production goal.
<unk> earlier in my remarks, I am very pleased to share that our recent project execution makes us quite confident that we're well on our way to meeting our production goals.
Speaker 3: We do want to remind folks that our production cycle for potash takes time.
We do want to remind folks that our production cycle for potash takes time.
From the stages.
Speaker 3: from brine injection to eventual harvest, typically being an 18 to 24-month process.
From Brian injection to eventual harvest typically being an 18 to 24 month process.
Speaker 3: However, the impact from the projects we've undertaken has reduced this timeframe to 9 to 12 months at HB and 12 to 15 months at our MOA facility for the long foreseeable future.
However, the impact from the projects we have undertaken has reduced this timeframe to nine to 12 months at HB and 12 to 15 months at our Moab facility for the long foreseeable future.
Speaker 3: Moreover, since most of the growth projects were started well over a year ago, with several already having been commissioned, we will start to see more significant incremental production benefits beginning in the second half of 2024.
Moreover, since most of the growth projects were started well over a year ago with several already having been commission, we will start to see more significant incremental production benefits beginning in the second half of 2024.
Speaker 3: I now want to quickly touch on some of the key concepts and drivers of our pottage production, which will hopefully add some clarity to the technical aspects of our business.
And now let's quickly touch on some of the key concepts and drivers of our potash production, which will hopefully add some clarity to the technical aspects of our business.
Speaker 3: After that, I'll then go over our project highlights and implications for our production.
After that I will then go over our project highlights and implications for our production.
Speaker 3: Throughout the year, we've stressed the importance of two key goals, maximizing our brine availability and maximizing our underground.
Throughout the year, we've stressed the importance of two key goals maximizing our Bryan availability and maximizing our underground residents time.
Speaker 3: Maximizing brine availability essentially means we need to inject as much brine as possible into our caverns at HP.
Maximizing Brian availability essentially means we need to inject as much Brian as possible into our caverns at HP.
Speaker 3: At Moab, we need consistent injection and good brine circulation in the caverns, as well as access to new ore and reserves over time. These reserves have multi-decade lives with significantly higher resource potential, and our drilling projects at Moab are designed to accelerate the process of tapping new ore to increase our brine availability, residence time, which results in higher brine growth.
At Moab, we need consistent injection and good Brian circulation and the caverns as well as access to new ore and reserves over time. These.
These reserves have multi decade lives with significantly higher resource potential and our drilling projects at Moab are designed to accelerate the process tapping new or to increase our Brian availability residents time, which results in higher Brian Greg.
Speaker 3: For Wendover, we need to ensure that we have as much brine as possible to transport through our canal.
For wind over we need to ensure that we have as much Brian as possible to transport through our canal system, which totals approximately 120 miles in length with the Brian then being stored and upgraded and our large scale surface bonds, which have total evaporative surface area of approximately 11000 acres.
Speaker 3: which totals approximately 120 miles in length, with the brine then being stored and upgraded in our large-scale surface ponds, which have total evaporative surface area of approximately 11,000 acres. In terms of macro... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
In terms of maximizing residence time.
Speaker 3: This implies letting the brine we inject stay in contact with ore for long enough time to enhance potassium chloride concentration of that brine so that that will eventually extract.
This implies letting the Brian we inject stay in contact with lower for long enough time to enhance the potassium chloride concentration of that Brian.
That will eventually extract.
Speaker 3: By achieving both goals of maximizing brine availability and residence time, the resulting effect is having more volume of higher-grade brine to extract, which drives increased production and more tons to sell and improves our unit economics.
By achieving both goals of maximizing Brian availability and residence time, the resulting effect is having more volume of higher grade, Brian to extract which drives increased production and more tons to sell and improve our unit economics.
Moving onto project highlights.
Speaker 3: At HB, limited brine availability has been a key driver of the lower production in 2023. This is first and foremost being addressed by the new injection pipeline project, HB1.
At HB limited, Brian availability has been a key driver driver of the lower production in 2023.
This is first and foremost being addressed by the new injection pipeline project HB one.
Speaker 3: With this phase, the installation of the pipeline was commissioned roughly six months ago and is operating solid.
With this phase the installation of the pipeline was commenced commissioned roughly six months ago and is operating solidly.
Speaker 3: When phase 2 of the pipeline is complete, which we expect to occur in the spring of 2024, our injection rates and residence times should be the highest.
When phase two of the pipeline is complete which we expect to occur in the spring 2024, our injection rates and residence times should be the highest in company history.
Speaker 3: However, in the near term, we have two other projects at HPE that will serve as a bridge to increased potash production, which are also designed to have long-term operations.
However in the near term we have two other projects at HB that will serve as a bridge to increased potash production, which are also designed to have long term operationalize. One was recently commissioned in October.
Speaker 3: One was recently commissioned in October , where we were already extracting a very high gray brine into our pond. With the second project, expect to be commissioned in the first half of next year.
Where we were already extracting a very high grade brine into our pump with the second project expect be commissioned in the first half of next year.
Speaker 3: The first project was press released last week, the eddy shaft brine extraction.
The first project was press released last week, the <unk> shaft brine extraction project.
Speaker 3: This project targets 270 million gallons of high-grade brine in the Eddy Cavern and we expect all of this brine to be pumped into our ponds ahead of the 2024 summer evaporation.
This project targets 270 million gallons of high grade brine and the Eddie Cavern and we expect all of this Brian to be pumped into our Pons ahead of the 2020 for summer evaporation season.
Speaker 3: As for production impacts, we estimate this brine source corresponds to incrementally 85,000 to 100,000 tons of potash product tons, which will be evident in our production figures starting in the second half of 2024 and continuing into 2025.
As for production impacts we estimate this Brian source corresponds to incrementally 85 to 100000 tonnes of potash product tons, which will be evident in our production figures starting in the second half of 2024 and continuing into 2025.
The second project is the replacement extraction, while IP 30, <unk>, which targets an additional high grade, Brian pool, and the Eddie cavern that the shaft.
Access with this Brian Poole estimated contain approximately 333 million gallons of Brian Once we finished extracting the 80 shaft, Brian the larger pool will serve as the next Brian source for HP.
Speaker 3: For one final comment on HB, while these two Eddie Cavern projects will contribute to higher product production in 24 and 25, they serve another key purpose.
But one final comment on HB, while these two Eddie Catherine projects will contribute to higher potash production in 2425, they serve another key purpose.
By extracting the already enrich Brian pools in the near and medium term, we're able to keep injecting Brian throughout the entire HB cavern system, including Hedi cavern, and let that mine, Brian build and develop into other sources of high grade Brian pools. This is crucial for driving sustained higher production over.
The longer term.
As we look to 2025 and beyond.
Speaker 3: Moving on to our most consistent potash asset, Moab, which has seen an average annual production of approximately 105 to 110,000 tons for the past 10 years.
Moving onto our most consistent potash asset mobile App, which has seen an average annual production of approximately 105 to 110000 tonnes for the past 10 years.
Speaker 3: Over the course of 2023, we've had three key projects at Moab, all of which were commissioned over the summer.
Over the course of 2023, we've had three key projects at Moab, all of which were commissioned over the summer.
Speaker 3: They provided modest contributions to our 2023 production.
They provided modest contributions to our 2023 production.
Speaker 3: and more substantial impacts are expected in 2024. The primary project to highlight is 1245, or Cavern 4 project, which created brand new ore for us to target through at least the next decade.
And more substantial impacts are expected in 2024.
The primary project to highlight as well 45, or <unk>, four project, which created brand new or for us to target through at least the next decade.
Speaker 3: Cavern 4 will supplement our brine injection into caverns 1, 2, and 3 in potash bed 9, as well as the old mine workings in potash bed 5.
<unk> four will supplement our Brian injection into caverns, one two and three and potash that nine as well as the old mine workings and potash bad five.
Speaker 3: Given the consistency of production at Moab, in completely new ore in Cavern 4, we expect our Moab production to remain pretty consistent with historic levels with room for us.
Given the consistency of production at Moab and completely new ore and carrying forward, we expect our moab production to remain pretty consistent with historic levels with room for upside.
Speaker 3: Lastly, at Wendover, which is our smallest pottage operation, our production in recent years has been negatively impacted by multiple weather events, with those being compounded by a lack of brine storage.
Lastly, at Wendover, which is our smallest potash operation our production in recent years has been negatively impacted by multiple weather events with us being compounded by a lack of Brian storage to mitigate this we recently commenced the construction of a new primary path. The new primary PON will help increase the amount of Brian we can see.
Speaker 3: To mitigate this, we recently commenced the construction of a new primary pond. The new primary pond will help increase the amount of brine we can store and evaporate, which is key to improving our production.
Store and evaporate, which is key to improving our production. This project is on track to be commissioned in the summer of 2024, we expect to start seeing positive impacts beginning in early 2025.
Speaker 3: This project is on track to be commissioned in the summer of 2024. We expect to start seeing positive impacts beginning in early 2025.
Speaker 3: Overall, we're confident that we're well on our way to returning our annual potash production back to the high end of our historical range, and we look forward to updating the market as we continue to make progress on our potash projects in the coming quarters. I'll now turn the call over to Matt. Please go.
Overall, we're confident that we're well on our way to returning our annual potash production back to the high end of our historical range and we look forward to updating the market as we continue to make progress on our potash projects in the coming quarters.
I'll now turn the call over to Matt. Please go ahead.
Thanks, Bob.
Speaker 4: In the third quarter, we generated adjusted EBITDA of $2.2 million and adjusted net loss of $6.8 million.
In the third quarter, we generated adjusted EBITDA of $2 $2 million and adjusted net loss of $6 8 million weighing on this quarter's results was again lower pricing in Q3, our net realized sales price for potash and trio averaged $433 per ton and $298 per ton respectively with both.
Speaker 4: Weighing on this quarter's results was again lower pricing. In Q3, our net realized sales price for Potash and Trio averaged $433 per ton and $298 per ton, respectively, with both figures down roughly 40% compared to Q3 of 2020.
Figures down roughly 40% compared to Q3 of 2022.
Speaker 4: As Bob noted, while our sales volumes have remained quite strong this year, lower fertilizer pricing, as well as elevated carrying costs, are proving to be headwinds for our margins in the near term. That said, pricing for potash and trio has seen modest increases since our last earnings call and improving our unit economics by means of higher production remains the number 1 priority for Intrepid.
As Bob noted, while our sales volumes have remained quite strong this year lower fertilizer pricing as well as elevated carrying costs are proving to be headwinds for our margins in the near term.
That said pricing for potash and trio has seen modest increases since our last earnings call and improving our unit economics by means of higher production remains the number one priority for intrepid.
Speaker 4: To highlight what higher production can mean for our unit economics, we estimate that returning our annual potash production to approximately 350,000 tons will improve our cost per ton by 20 to 30 percent.
To highlight what higher production can mean for our unit economics, we estimate that returning our annual potash production to approximately 350000 tonnes will improve our cost per ton by 20% to 30%.
Speaker 4: Moving on to segment highlights, in potash, our Q3 and first nine-month sales volumes totaled 46 and 213,000 tons respectively.
Moving onto segment highlights and potash are Q3, and first nine months sales volumes totaled 46, and 213000 tons respectively.
Speaker 4: With the third quarter volume being flat compared to last year, while the first nine months volumes represent an increase of just under 25% versus the prior year period.
With the third quarter volume being flat compared to last year, while the first nine months volumes represent an increase of just under 25% versus the prior year period.
Speaker 4: We've seen strong demand from agricultural customers throughout the year, and we've also been selling more tons into feed markets to ensure we take advantage of premium pricing when possible.
<unk> seen strong demand from agricultural customers throughout the year and we've also been selling more tons into feed markets to ensure we take advantage of premium pricing when possible.
Speaker 4: Our third quarter potash production totaled 43,000 tons, and we now expect our 2023 calendar year production to come in about 10% lower than our previous guidance of 260,000.
Third quarter potash production totaled 43000 tonnes and we now expect our 2023 calendar year production to come in about 10% lower than our previous guidance of 260000 tons.
Speaker 4: As for the fourth quarter potash outlook, we expect our sales volumes to be in the range of 40,000 to 50,000 tons at an average net realized sales price in the range of $410 to $420 per ton.
As for the fourth quarter potash outlook, we expect our sales volumes to be in the range of 40% to 50000 tons at an average net realized sales price in the range of $4 10 to $420 per ton.
Speaker 4: This implies second half volumes at roughly the midpoint of the guidance we gave a few months back, with pricing likely coming in slightly higher than we previously expected.
This implies second half volumes at roughly the midpoint of the guidance. We gave a few months back with pricing likely coming in slightly higher than we previously expected.
Speaker 4: In TRIO, our Q3 and first nine month sales volumes totaled 52 and 179,000 tons respectively, which compares to 39 and 169,000 tons in the same prior year period.
In trio, our Q3 and first nine months sales volumes totaled 52, and 179000 tons, respectively, which compares to 39 and 169000 tonnes in the same prior year periods.
Speaker 4: In the third quarter, we produced 52,000 tons flat compared to the prior year, but we did experience unplanned downtime during underground mining. And at the.
In the third quarter, we produced 52000 tons flat compared to the prior year, but we did experienced unplanned downtime during underground mining and at the mill, while we achieved higher efficiencies from the new continuous miners the downtime in Q3 offset these gains.
Speaker 4: while we achieved higher efficiencies from the new continuous miners, the down timing Q3 offset.
Speaker 4: As for the fourth quarter trio outlook, we expect our sales volumes to begin the range of 35 to 40,000 tons at an average net realized sales price in the range of $290 to $300.
As for the fourth quarter trio outlook, we expect our sales volumes to be in the range of 35 to 40000 tonnes at an average net realized sales price in the range of $2 90 to $300 per ton. This implies second half volumes at the upper end of our previous guidance with pricing right in line.
Speaker 4: This implies second half volumes at the upper end of our previous gains with pricing right in line.
Speaker 4: In oilfield solutions, the primary driver of the lower revenue in Q3 was fewer sales of third-party water, which also resulted in lower costs of goods sold. Partially offsetting the lower water sales was higher surface use agreement revenue, with the net effect being a modest increase in our quarterly gross margin.
In oilfield solutions the primary driver of the lower revenue in Q3 was fewer sales of third party water, which also resulted in lower cost of goods sold.
Partially offsetting the lower water sales was higher surface use agreement revenue with the net effect and a modest increase in our quarterly gross margin figure.
Speaker 4: Lastly, on capital allocation, our priorities remain the same. Investing to return our potash production to historical highs while maintaining our strong balance sheet and the putter.
Lastly on capital allocation, our priorities remain the same investing to return our potash production to historical highs, while maintaining our strong balance sheet and liquidity position.
Speaker 4: At the end of October , our liquidity totaled $153 million, and while that will decrease as trailing earnings compressed compared to 2022, we remain focused on effectively managing our working capital as we continue to execute on key projects ahead of what we expect will be a strong spring fertilizer season. Operator, we're now ready for the Q&A.
At the end of October our liquidity totaled 100, $153 million and while that and while that will decrease as trailing earnings compressed compared to 2022, we remain focused on effectively managing our working capital as we continue to execute on key projects ahead of what we expect will be a strong spring fertilizer season.
Operator, we're now ready for the Q&A portion of the call.
Speaker 1: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star and then two. We will pause for a moment, of course, is joined the key.
Thank you.
We'll now begin the question session joined the question you May Press Star then one on your telephone keypad.
Okay and acknowledge in your question you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press star and then K.
Of course, the amendment of cordless joined the queue.
Speaker 1: Our first question comes from the line of Joshua Spector with EDS. Joshua please go ahead your line is open.
Our first question comes from the line of Joshua Spector with UBS. Joshua. Please go ahead. Your line is open.
Speaker 5: Hi, good morning everyone. It's Christopher Perala on for Josh. With all the projects that you're doing. I know the longer term goal is to get back up to the historic higher the historical range.
Hi, Good morning, everyone, It's Christopher Perrella on for Josh.
With all of the projects that you're doing I know the longer term goal is to get back up to the historic high end of the historical range.
Speaker 5: What are the neuroterm impacts on 2024 production? What's your outlook for next year in terms of volumes you'll be able to produce?
What are the near term impacts on 2024 production. What's your outlook for next year in terms of volumes, you'll be able to produce.
Matt do you want to take that.
Speaker 4: Sure, thanks for the question, Christopher. We're continuing to pull that high grade, Eddie Schaff bride into our ponds right now. And we just started kind of the 23, 24 harvest season.
Sure. Thanks for the question Christopher.
Continuing to you'll pull that high grade Eddie shaft, Brian into our Pons right now and so we just started to kind of the 'twenty three 'twenty four harvest season.
Speaker 4: Quick summary, Christopher, we're not ready to give guidance on 24 calendar year production just yet, but we certainly think we'll see a nice bump year over year as we continue to see the effects of this high grade brine get the effects of the Moab projects we completed in the summer of 2023 and start to see that in the back half of 2024. So
Quick summary, Christopher we're not ready to give guidance on 'twenty four calendar year production, just yet, but we certainly think we will see a nice bump year over year as we continue to see the effects of this high grade Brian get the the effects of the Moab projects. We completed in the summer of 2023 and start to see that in the back half of 2024, so given the various.
Speaker 4: You know, given the variability and weather and evaporation, not ready to put a number out there yet, but we certainly think we'll take a big step towards that 350,000 tons as we move forward into the next evaporator.
<unk> and whether an evaporation not ready to put a number out there yet, but we certainly think we'll take a big step towards that 350000 tonnes as we move forward into the next evaporation season.
Speaker 5: you know as a as a follow up as I think about Eddie and you've sized it is 85 to 100 kt of potash product or incremental product potash tons you know it is about half of that hit in 2024 and
As a follow up as I think about <unk> and you've sized it is 85 to 100 kt of potash products or incremental product potash tons.
About half of that hit in 2024 and <unk>.
Speaker 5: Where did costs go from here given the higher production rates, or the potential higher production rates next?
We're to Costco.
From here.
Given the higher production rates or the potential higher production rates next year.
Speaker 4: Yeah, so as far as half of it hitting in 2024, we'll put this 85 to 110,000 tons of of pod ash into our ponds for the
Yes, so as far as half of it hitting in 2024, and we will we will put this 85 to 110000 tonnes of potash into our ponds for the.
Speaker 4: you know, the 24 evaporation season, you know, we'll start harvesting in the fall of 24 there, which we expect will be a much higher feed grade into our mill. You know, that bride will be mixed with Brian from the other portions of our, or our, excuse me, our HP pot ash mine and caverns. And you also will see just a general increase to go every month as we, we,
The 24 evaporation season will start harvesting in the fall of 'twenty four there, which we expect will be a much higher feed grade into our mill that.
Brian will be mixed with Brian from the other portions of already of our excuse me, our HB potash mining caverns.
So we'll see just a general increase every month as we.
Speaker 4: Millie higher grade feedstock into our HB mill and so
Milly higher grade.
Feedstock into our HB mill and so.
Speaker 4: The timing of which ponds we're in at certain times is variable and can't say what exact grade will be in the fall of 24, but we'll see that benefit all the way throughout the 24 and 25 heart.
The timing of which ponds were in at certain times.
Variable and can't say, what exact grade will be in the fall of 'twenty, four but what kind of see that benefit all the way throughout the 24 and 'twenty five harvest season.
Speaker 5: All right, and then one quick follow up on Trio, you had higher costs than the third quarter from the unplanned downtime. You know, how much were they and do they all reverse out in the fourth quarter here?
Alright, and then one quick follow up on trio.
Higher costs in the third quarter from the unplanned downtime.
How much were they and do they all reverse out in the fourth quarter here.
Speaker 4: Yeah, from a cost for tons standpoint in
Yes from a cost per tonne standpoint in.
Speaker 4: In the third quarter, I think we're right about $340 per time. We think we'll see some marginal improvement into the fourth quarter anywhere, maybe in the 5% range. We have a pretty big inventory of trio, and so kind of that weighted average cost does take some time to turn over in our cogs. So you won't see that impact immediately in Q4, but we think we'll see some incremental improvement in the fourth quarter compared to the third quarter.
<unk>.
In the third quarter I think we're right about $340 per ton. We certainly think we will see some marginal improvement into the fourth quarter.
Where maybe in the 5% range.
We said, we have a pretty big inventory of trio and so kind of that weighted average cost does take it takes some time to turnover in our Cogs. So you won't see that impact immediately in Q4, but we think we'll see some incremental improvement in the fourth quarter compared to the third quarter.
Alright. Thank you very much appreciate the time.
Speaker 1: Our next question comes from Joel Jackson with BMO capital markets. Joel, please go ahead, your line is open.
Our next question comes from Joel Jackson with BMO Capital markets. Please go ahead. Your line is open.
Hi, good morning.
Speaker 6: A few questions for me, I'll do one at a time. I've noticed like in the last years
A few questions from me I will be one time.
I noticed like in Alaska.
Here's like trio.
Speaker 6: The HBO's price as a percentage of kind of podcast prices have kind of gone together. It seems like the trio value relative to the podcast has been quite stable, relatively wise, you know, for years when maybe it's been more volatile. Can you explain, you know, the value of trio and podcast have really traded together. They're careful the last few years, maybe different than prior cycles. Does that make sense?
<unk> price as a percentage of kind of potash prices have kind of gone together it seems like with trio value relative potash has been quite stable relatively wise for years. When maybe it's been more volatile can you explain the value of trio and potash are really trade together and care for the last few years, maybe different than prior <unk>.
Echols that makes any sense.
Speaker 7: Zach, you want to take a stab at that first? Yeah, thanks for the question, Joel. I think part of that could be related to our trio of sales today and certainly over the last year have been a higher percentage for our domestic market.
Zack <unk>.
Next step at that first yeah. Thanks for the question Jill I think part of that could be related to our trio sales today and certainly over the last year have been a higher percentage for domestic markets and those typically carry a higher price point in international sales that could be related to what youre seeing there as far as.
Speaker 7: And those typically carry a higher price point in international sales, but that could be related to what you're seeing there as far as attracting closer to potash. With all of our potash sales being domestic more.
Is it tracking closer to potash with all of our potash sales being domestic markets as well.
Speaker 6: Okay, thank you for that. Now, if you can get a big chunk, see you have a goal to get to 350 of pot ourselves, with all the operational expansion you're doing improvements. If you get a big chunk of the way towards 350, what can we do for cost? Like you say you can get 20% to 30% cost improvement, you need to get half the distance of the goal line in 24 or what should we think about?
Okay. Thank you for that if you can get a big chunk.
The goal to get to $2 50, a potash sales with Alba.
Operational expansions youre doing improvements.
If you get a big chunk of the way towards 350, what what can we do for cost like you. So you can get 20, 30% cost improvement do you think you can get half the distance to the goal line in 'twenty four or what should we think about it.
Speaker 7: Yeah, yeah, it's like a schedule. It's certainly hard to say what we've seen some really good results from the Moab project so far And the brine grade were pulling out in Darpons obviously the the eddy shaft has been very strong so far We have no expectations of that decreasing here as we continue to pump out of that
Yeah, it's like a schedule, it's certainly hard to say what we've seen some really good results from the Moab projects so far.
And the Brian grade were pointed out into our ponds, obviously, the Eddie shaft has been very strong. So far we have no expectations of that decreasing here as we continue to pump out of that.
Speaker 4: and then start pumping out of the IP 30B, the replacement extraction well towards the spring and early summer. You know, that being said, I think, you know, kind of just take it to the midpoint. If we can get kind of halfway there, we'll get half of those cost benefits in the 2425 season and then kind of that full 20 to 30% and we're back towards the 350,000 sun range.
And then start pumping out of the IP 30 be the replacement extraction well towards the spring and early summer.
That being said I think kind.
Kind of just take it to the midpoint and if we can get kind of halfway there we'll get half of those cost benefits in the 'twenty four 'twenty five season, and then kind of that full 20% to 30% when we're back towards the 350000 ton range.
Speaker 6: I mean, you've seen a lot of your peers, your products groups appear.
Okay, and then I mean, you've seen a lot of your peers your potash which appears.
Speaker 6: of last week to earning season really boost up now, expectations for 24 pot-ass demand, three, four, five million tons. A lot of questions about who's gonna supply the extra three, four, five million tons globally, and people different steps around what Belarus and Russia can do, and what can't be kept as can do with some of the logistics and just strengths. You're obviously a smaller player in the market, and see the lost strength in North America, New Jersey, list prices. How do you see the market right now in pot-ass?
Over the last week during earnings season really.
Boost up now expectations for 'twenty for potash demand 345 million tons.
A lot of questions about who is going to supply the extra $3 5 million tonnes globally.
People different assumptions around what Belarus, and Russia can do and what <unk> can do with some of the logistics constraints, you're obviously in a smaller player in the market, but you know.
It seems that a lot of strength in North America nutrients list prices, how do you see the market right now in potash.
Speaker 6: Anything you open question and how are you seeing more exports?
Anything you open question and how are you seeing more exports come on the river from from the FSU or are you seeing anything in the last couple of months, making more excited about the outlook for next year and maybe talk about demand supply anything you want within a very broad question.
Speaker 6: I'm on the river from the FSU. Are you seeing anything? We'll have a couple of months making more excited about the outlook for next year. And you'll be talking about demands, supply, anything you want within a very broad course.
Speaker 3: Jill, thanks for the question. I think the previous earnings calls you've heard the same story. We expect a pretty robust demand, especially at these values. We continue to see.
Joel Thanks for the question.
I think.
The previous earnings calls you've heard the same story.
<unk> are pretty robust demand, especially at these values.
We continue to see.
Speaker 3: Fertilizer imports out of Russia in all fertilizer products, which is somewhat surprising, given the magnitude of the imports. We're staying from Russia, but they're there.
Fertilizer imports out of out of Russia, and all fertilizer products, which is somewhat surprising given the magnitude of the imports where sand from Russia, but they are there.
Speaker 3: We agree with the demand figures that you threw out. We anticipate robust demand. And that's why we are so laser focused on getting our production back to the high end of our historical ranges.
We agree with the the demand figures that you threw out we anticipate robust demand and.
And Thats why we are so laser focused on getting our production back to the high end of our historical ranges.
Speaker 3: Zach, I don't know if you want to add any color, but we did see a robust 2024.
Zack I don't know if you want to add any color, but we did see a robust 2024.
Speaker 7: Yeah, I would just echo that Bob, you know, I'll find, you know, fall application has been good across the geographies that we participate in that end.
Yes, I would just echo that Bob.
All lines fall application has been good across the geographies that we participate in that in and our expectation is that we'll see that continue into the spring and then obviously the crop commodity prices they incentivize growers to maximize yields.
Speaker 7: And our expectation is, and we'll see that continue into the spring. And obviously the crop commodity prices, they incentivize growers to maximize yields. And not only those, Joel, a lot of our markets.
Not only those Joel.
Lot of our markets.
Speaker 7: We provide new trends to foraging grass markets and cattle processing is at historical highs as well. And we see really good demand on the pasture and hay ground across those markets.
We provide nutrients to origin grass markets in kernel pricing is at historical highs as well and so we see really good demand on the passenger and highground across those markets as this ranchers lift to kind of reinvest in their brands and their acres there as well.
Speaker 7: As ranchers, what the kind of reinvest in their grass and their acres there.
Speaker 6: Okay, that you be. Is that answered? Very broad question. Yeah.
Okay finally that movies.
Okay broad question Yeah.
Speaker 8: Yeah, did I know Bob, you've talked about, I kind of went forums with print media or on these conference calls about being surprised, I don't want to put words in about Russian imports in the interest rates, so yes.
Yes did I know I know, Bob you talked about kind of what form delivered print media or on these conference calls about.
He can surprise I don't want put words in your mouth, but Russian imports.
<unk>.
And so states so yes.
Speaker 8: I guess one more question for me on oil field solutions. What kind of expectations directly should we expect in 24 from that business? A little higher or a lot higher? We can give us some to put some take to expect in 24 from that business.
I guess one more question for me on oilfield solutions.
What kind of expectations Directionally like should we expect in 'twenty four from that business at a little higher a lot higher if you can give us some of the puts and takes to expect in 'twenty and the business.
Speaker 3: You know, all of most of that business, I would say the large majority of that business is centered into Mexico.
All most of that business I would say the large majority of that business is centered in new Mexico.
Speaker 3: So the fundamentals of servicing the oil and gas industry are very strong, but we continue to navigate the regulatory.
So the fundamentals of servicing the oil and gas industry are very strong, but we continue to navigate the regulatory environment. So for example, our sand mine project, we're still waiting on one more permit that we should have had months ago.
Speaker 3: So for example, our Sandman project, we're still waiting on one more permit that we should have had months ago. So we continue to navigate the... The...
So we continue to navigate the hum.
Yeah.
Continuing complexity of the new Mexico regulatory bar.
Speaker 3: So it's really hard to give really solid guidance.
So.
It's really hard to give really solid guidance based on the number of projects that we have teed up and ready to go on that we just continue to weight on on permitting.
Speaker 3: based on the number of projects that we have teed up and ready to go, and that we just continue to wait on permitting. So it's hard to give specific guidance when we can.
So it's hard to give specific guidance when we can't get.
Speaker 3: specific answers as to when certain permits will come out of regular
Specific answers as to when certain permits will come out of regulatory agencies. So I hate to I hate to make excuses, but thats the reality of life in southeast New Mexico right now.
Speaker 3: So I hate to make excuses, but that's the reality of life in Southeast Jamaica.
So if you were like someone like me asked the model. Your company would you then assume kind of a similar like base case.
Speaker 8: So if you were like someone like me asked the Mallier company, would you then assume kind of a similar like base case, bouncing all the risks, kind of.
Balancing all the risks kind of a similar.
Speaker 8: profitability or similar business size and 24 versus 23.
Profitability, our similar business size and 24 versus 23.
Yes.
Speaker 4: Yeah, I mean, I think that's a good place to start, Joel. We certainly have some opportunities there from the SAM project Bob mentioned. You'll continue to look to increase the high margin sales we have around our fresh water and 10 pound brine that we've had great success selling and kind of growing that business over the last couple.
Yes, I mean, I think that's a good place to start Joel we certainly have some opportunities there from the sand project Bob mentioned.
We're continuing to look to increase the high margin sales, we have around our freshwater and 10 pound brine that we've had great success, selling and kind of growing that business over the last couple of years. So I think it's a good place to start is pretty consistent you do see and we've talked about this on past calls some quarter to quarter variability, particularly in our South ranch, where we saw.
Speaker 4: So, I think it's a good place to start is pretty consistent. You do see, and we've talked about this on past calls, some quarter to quarter of variabilities, particularly in our South Ranch, where we sell one or two large fracks a year. And so that variability in timing of sales can cause some of the quarterly fluctuations, but from a calendar year perspective, it's a good place to start is being consistent with prior year, as activity continues to be strong down there.
One or two large fracs, a year and so that variability and timing of sales can can cause some of the quarterly fluctuations, but from a calendar year perspective, it's a good place to start is being consistent with prior year.
Activity continues to be strong down there.
Thank you very much.
Thanks, Sean.
Speaker 1: As a final reminder, if you would like to ask a question today, you may do so now by pressing star and then one on your telephanky pad.
As a final reminder, if you'd like to ask a question today you may do so now by pressing star and then one on your telephone keypad.
Speaker 1: We have a follow-up question from Joshi Respecto with EBS. Please go ahead.
We have a follow up question from Joshua Spector with UBS. Please go ahead.
Yes.
Speaker 5: Hi, yes, I just a quick one with all the moving parts here in the fourth quarter. Is there incremental EBITDA that you're expecting to generate in 4Q here?
Hi, Yes, just a quick one with all the moving parts here in the fourth quarter is there incremental EBITDA that you are expecting to generate in <unk> here.
Speaker 4: I mean, Christopher, do you mind maybe rephrasing? Now we say incremental to what?
Christopher do you mind, maybe rephrasing that we say incremental to what.
Speaker 5: I'm sorry, yeah. So sequentially, I mean with better pricing here and volumes looking a little bit better and maybe cost coming down a little bit. I mean, what's a reasonable range for Ebeda for the fourth quarter?
I'm, sorry, yes, so sequentially I mean with with better pricing here and volumes looking a little bit better than maybe cost coming down a little bit I mean, what's the what's a reasonable range for us.
EBITDA for the fourth quarter.
Xtra.
Yes.
Speaker 4: Not going to give guys as far as quarterly EBITDA, but you're certainly Q3 historically is a low point. Sales pick up from just the volume standpoint in the fourth quarter. We had some LCM. We took in the third quarter, roughly $3.4 million. And we expected increased kind of quarter to quarter, but not going to provide a number there.
Not going to give guidance as far as quarterly EBITDA certainly Q3, historically is a low point sales pick up from just a volume standpoint in the fourth quarter. We had some some LCM we took in the third quarter roughly $3 $4 million in that.
We expected increase kind of quarter to quarter, but not going to provide a number there.
Speaker 5: All right, okay, nope, that's fair. I was just looking for any other one-time items that maybe, you know, as I think about modeling the things, modeling profitability sequentially, you know, you would call out or should be aware of.
Alright.
Okay. That's fair I was just looking for any other onetime items that may be.
As I think about modeling this thing.
Modeling profitability sequentially.
<unk>.
You would call out or should be aware of.
Speaker 4: No, I certainly know one-time items that we expect right now, and I just kind of reiterate, you know, certainly sales. We expect to pick up here in Q4 a little bit, given kind of the rough guidance on pricing and volumes, hopefully that kind of can help get you there.
No I would say certainly no one time items, we expect right now and I was just kind of reiterate certainly sales we expect to pick up here in Q4, a little bit.
Given kind of the rough guidance on pricing and volume so for that kind of can help help get you there.
No I appreciate that thank you very much.
Speaker 1: Disconcrete the question and answer session. I would like to hand the conference back over to Bob Dronavis for closing remarks.
This concludes the question and answer session I would like to turn the conference back over to Bob <unk> for closing remarks.
Speaker 3: I want to thank everyone in your interest in entrapment and appreciate your interest. And thank you and have a great day.
I want to thank everyone and your interest in Intrepid.
And I appreciate your interest and thank you and have a great day.
Speaker 1: Thank you everyone for joining us today. This concludes our call. And you may now disconnect your line.
Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.