Q2 2024 Intrepid Potash Inc Earnings Call
Operator: Thank you for standing by. This is the conference operator, and welcome to the Intrepid Potash Inc. second quarter 2024 results conference call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star and then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Evan Mapes, Investor Relations. Please go ahead.
Thank you for standing by this is the conference operator, and welcome to the Intrepid Potash, Inc. Second quarter 'twenty 'twenty four results conference call. As a reminder, all participants are in a listen only mode and the conference is being recorded after the presentation there will be an opera.
Uniti to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.
Yvonne mate: I'd now like to turn the conference over to Yvonne mate Investor Relations Pease go ahead.
Evan Mapes: Thank you, Rochelle. Good morning, everyone.
Yvonne mate: Thank you Michele good morning, everyone. Thanks for joining us to discuss second quarter 2020 for adults.
Evan Mapes: Thanks for joining us to discuss and review Intrepid's second quarter 2024 results. With me today is Intrepid CFO and Acting Principal Executive Officer Matt Preston, and available during the Q&A session is our VP of Sales and Marketing, Zachry Adams, and our VP of Operations, John Galassini. Please be advised that our remarks today include forward-looking statements as defined by U.S. Securities Law. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to be entirely different from those currently anticipated, are based upon information available to us today, and we assume no obligation to update them.
Yvonne mate: With me today as interim CFO and accurate principal Executive officer, Matt Preston and available during the Q&A session is our VP of sales and marketing exactly Adams and our VP of operations John <unk>.
Evan Mapes: These risks and uncertainties are described in periodic reports filed with the SEC, which are incorporated herein. During today's call, we were referring to certain non-GAAP financial and operational Reconciliation is the most directly comparable gap measure that was included in yesterday's press release. The SEC filings are available on our website at IntrepidPotash.com. I'm now going to turn the call over to Matt. Please go ahead.
Yvonne mate: Please be advised that our remarks today include forward looking statements as defined by securities laws.
Speaker Change: Forward looking statements are subject to risks and uncertainties that could cause our actual results to materially differ from those kind of anticipated are based upon information available to us today and assume no obligation to update them.
Speaker Change: These risks and uncertainties are described inkjet at reports from the SEC, which are perfect here by reference.
Speaker Change: Today's call will refer to certain non-GAAP financial and operational measures.
Speaker Change: You conciliation so much directly comparable GAAP measures are included in yesterday's press release SEC filings our website at Intrepid potash Dot com.
Speaker Change: Let's turn the call over to Matt. Please go ahead.
Matt Preston: Good morning, everyone. We appreciate your interest in Intrepid and attendance at our second quarter earnings call. As we announced in July, our CEO, Bob Dronovos, remains on a medical leave of absence, and our board has initiated a search process to identify his successor. While we understand your interest, we don't have any additional information to share on today's call. We will continue to issue updates on Bob's status as it relates to Intrepid and the CEO search as we have them.
Evan: Thank you Evan.
Matt: Good morning, everyone. We appreciate your interest in Intrepid and attendance for our second quarter earnings call.
Speaker Change: As we announced in July our CEO, Bob her novice remains on a medical leave of absence and our board has initiated a search process to identify his successor, while we understand your interests. We don't have any additional information to share on today's call.
Speaker Change: We will continue to issue updates on Bob status as it relates to intrepid and the CEO search as we have them.
Matt Preston: For our second quarter results, our adjusted EBITDA totaled $9.2 million, a $1.5 million increase sequentially, but down from $15.8 million in the prior year period, as lower price levels and reduced potash sales weighed on our overall results. Our TRIO segment results continue to be a bright spot as increased mining rates and lower overall production costs led to material improvements in our unit economics compared to the prior year. Moving to the macro outlook in our agricultural markets, although key U.S. crop futures have softened throughout the year, growers are expected to continue their approach of maximizing crop yields, with potash helping that story. U.S. farmers remain in a solid financial position, which we believe will support steady potash demand in the second half of this year.
Speaker Change: For our second quarter results, our adjusted EBITDA totaled $9 $2 million or $1 $5 million increase sequentially, but down from $15 $8 million in the prior year period, as lower price levels and reduced potash sales weighed on our overall results.
Speaker Change: Our trio segment results continued to be a bright spot as increased mining rates and lower overall production costs led to a material improvements in our unit economics compared to the prior year.
Speaker Change: Moving to the macro outlook in our agricultural markets, Although key U S crop futures have softened throughout the year growers are expected to continue their approach of maximizing crop yields with potash, helping that story U.
Speaker Change: U S farmers remain in a solid financial position, which we believe will support steady potash demand in the second half of this year.
Matt Preston: As for the potash market specifically, global demand has been solid throughout 2024, and we expect relatively stable potash prices during the fall season after a good response to the summer fill program. Additionally, settlement of key potash contracts in China and India should help spur further demand in the back half of the year as pricing is right in line with current values in Brazil and U.S. barge markets. Moving on, to our second quarter segment results.
Speaker Change: As for the potash market, specifically global demand has been solid throughout 2024, and we expect relatively stable potash pricing during the fall season. After a good response to the summer fill program. Additionally.
Speaker Change: Additionally settlement, a key potash contracts in China, and India should help further help spur further demand in the back half of the year as pricing is right in line with current values in Brazil, and U S barge markets.
Matt Preston: In potash, our gross margin totaled $3.3 million, which compares to $12.9 million in the prior year period and $5.6 million in the first quarter. Key drivers of declining year-over-year financial performance were a combination of lower pricing and sales volumes as we work to reverse our trend of declining potash production over the past few years. That said, our second quarter potash production of 40,000 tons, which is up from 12,000 tons in the prior year period, provides the first indication that our production rates are moving higher, as improved brine grades at HB led to an extended sprig season compared to the prior year.
Speaker Change: Moving onto our second quarter segment results in potash, our gross margin totaled $3 3 million, which compares to $12 $9 million in the prior year period, and $5 $6 million in the first quarter.
Speaker Change: The key drivers of the declining year over year financial performance were a combination of lower pricing and sales volumes as we work to reverse our trend of declining potash production over the past few years.
Speaker Change: That said, our second quarter potash production of 40000 tonnes, which is up from 12000 tons in the prior year period provides the first indication that our production rates are moving higher as improved Brian grades at HB led to an extended spring season compared to prior year.
Matt Preston: For our full year 2024 outlook, we still expect our potash production to be approximately 15% higher than last year. In TRIO, our focus on cost improvement and operational efficiencies is materializing in our results, and we generated a gross margin of $2.2 million in the second quarter, a $3.3 million improvement sequentially and a $1 million improvement from the prior year period, despite a lower realized price per ton compared to last year. Improved production and supportive sulfate pricing resulted in 63,000 tons sold in the second quarter, bringing our first half sales volumes to 154,000 tons, a company record.
Speaker Change: For our full year 2024 outlook, we still expect our potash production to be approximately 15% higher than last year.
Speaker Change: In <unk>, our focus on cost improvement and operational efficiencies are materializing in our results and we generated gross margin of $2 $2 million in the second quarter of $3 $3 million improvement sequentially and a $1 million improvement from the prior year period, Despite a lower realized price per ton compared to last year.
Speaker Change: Improved production and supportive sulfate pricing resulted in 63000 tons sold in the second quarter, bringing our first half sales volumes to 154000 tonnes a company record.
Matt Preston: On the cost front, when compared to the prior year, our first half cost of goods sold per ton decreased by 11% to approximately $284 per ton. And for the second quarter, this figure was even better at approximately $261 per ton, or 18% lower than the second quarter of 2023. Oilfield Solutions continues to be a steady performer with a second quarter gross margin of $2.1 million and an approximately $800,000 increase from the prior year and flat sequentially.
Speaker Change: On the cost front when compared to the prior year, our first half cost of goods sold per ton have decreased by 11% to approximately $284 per ton and for the second quarter. This figure was even better at approximately $261 per ton or 18% lower than the second quarter of 2023.
Speaker Change: Oilfield solutions continues to be a steady performer with second quarter gross margin of $2 $1 billion and approximately $800000 increase from the prior year and flat sequentially.
Matt Preston: Brine sales and oilfield product and services revenues continue to trend higher compared to the prior year as we've been successfully increasing our price per barrel and improving our product availability while also reducing contract labor expense. For third quarter guidance, we expect our potash sales volumes to be in the range of 45,000 to 55,000 tons at an average net realized sales price between $340 and $350 per ton, with volumes varying based on the timing of fall application and truck mark.
Speaker Change: Brian sales in oilfield products and services revenues continue to trend up compared to the prior year as we've been successful increasing our price per barrel and improving our product availability, while also reducing contract labor expense.
Speaker Change: For third quarter guidance, we expect our potash sales volumes to be in the range of 45 to 55000 tonnes at an average net realized sales price between 340 and $350 per ton with volumes vary based on the timing of fall application and truck markets for trio, we expect our sales volumes to be in the range of 40 to 45.
Matt Preston: For TRIO, we expect our sales volumes to be in the range of 40 to 45,000 tons at an average net realized sales price of $300 to $310 per ton. Before opening up for Q&A, I will end my remarks with comments on Intrepid's current positioning and outlook. Starting with our current positioning, Intrepid has no long-term debt, balance sheet cash of $51 million, and no outstanding borrowings on our $150 million revolver that matures in August 2027.
<unk> thousand tonnes at an average net realized sales price of 300 to $310 per ton.
Speaker Change: Before opening up for Q&A I will end my remarks with comments on <unk> current positioning and outlook.
Speaker Change: Starting with our current positioning Intrepid has no long term debt balance sheet cash of $51 million and no outstanding borrowings on our $150 million revolver that matures in August 2027.
Matt Preston: With potash prices finding their mid-cycle floor, backed by a balanced global market, the key near-term priority continues to be improving our potash production and ensuring the company has enough cash to weather unforeseen down cycles. As our potash production trends higher, but more importantly, as our confidence in our two to five year production outlook improves because we've met our injection rate and brine availability goals across our solar production profile, we can take a less cautious approach.
Speaker Change: With potash prices finding their mid cycle floor backed by a balanced global market. The key near term priority continues to be improving our potash production and ensuring the company has enough cash to weather unforeseen down cycles.
Speaker Change: As our potash production trends higher but more importantly is our confidence in our two to five year production outlook improves because we've met our injection rate and Brian availability goals across our solar production profile. We can take a less cautious approach until then we feel its prudent for intrepid to remain guarded with the backdrop of declining trailing earnings and to not lose.
Matt Preston: Until then, we feel it's prudent for Intrepid to remain guarded against the backdrop of declining trailing earnings and not lose sight of the fact that our potash costs per ton need to improve. That said, as production rates improve and we get back to 300,000 tons of annual production over the next couple of years, we believe we will see a 20 to 30 percent improvement in our potash cost per ton compared to 2023, which will help improve our margins and cash flow, even if potash pricing stays relatively range-bound in the near term.
Speaker Change: Sight of the fact that our potash cost per ton need to improve that.
Speaker Change: That said as production rates improve and we get back to 300000 tons of annual production over the next couple of years. We believe we will see a 20% to 30% improvement in our potash cost per ton compared to 2023, which will help improve our margins and cash flow, even if potash pricing stays relatively range bound in the near term.
Matt Preston: We will also focus on improving the smaller but meaningful portions of our business, such as brine sales, look for opportunities to reduce our SG&A expense, and continue to make steady progress on the longer-term upside projects like lithium without taking resources away from our core business. Finally, we will redirect efforts when projects aren't trending in a favorable direction, which we've done with our sand project. While this project is uniquely positioned as the only permitted sand operation in Southeast New Mexico, with softening market conditions across all oil field services in the Permian, we are pausing our development of this project and focusing our internal resources elsewhere.
Speaker Change: We will also focus on improving the smaller but meaningful portions of our business such as Brian sales look for opportunities to reduce our SG&A expense and continue to make steady progress on the longer term upside projects like lithium without taking resources away from our core business.
Speaker Change: Finally, we will redirect efforts when projects are trending in a favorable direction, which we've done with our sand project. While this project is uniquely positioned as the only permitted sand operation in southeast New Mexico with softening market conditions across all oilfield services in the Permian, We are pausing our development of this project and focusing our internal resources elsewhere.
Matt Preston: We still have the necessary permits in place for both construction and operation if market conditions improve. To conclude, we remain optimistic about the long-term outlook for fertilizer and agricultural markets, and we are encouraged by the progress seen in our Q2 results. A constructive market and clean balance sheet will allow us to focus on what we can control, which is improving operating efficiencies, controlling costs, and continuing to make the right investments at the right time to ensure the long-term success of our operations and drive value for our shareholders. Operator, we're now ready for the Q&A portion of our call. Thank you. We will now begin.
Speaker Change: We still have the necessary permits in place for both construction and operation if market conditions improve.
Speaker Change: To conclude we remain optimistic on the long term outlook for fertilizer and agriculture markets and we are encouraged by the progress seen in our Q2 results.
Speaker Change: Constructive market and clean balance sheet will allow us to focus on what we can control, which is improving operating efficiencies controlling costs and continuing to make the right investments at the right time to ensure the long term success of our operations and drive value to our shareholders.
Speaker Change: <unk>, we're now ready for the Q&A portion of our call.
Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any To answer your question, please press star then 1. We will pause for a moment as callers join the queue. The first question comes from Josh Spector of UBS. Your line is open.
Speaker Change: Thank you.
Speaker Change: We'll now begin the question and answer session.
Speaker Change: Brian The question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing anarchy.
Speaker Change: <unk>. Your question. Please press Star then one we will pause for a moment as callers join the queue.
Speaker Change: Yeah.
Speaker Change: The first question comes from Josh Spector of UBS. Your line is open.
Lucas Beaumont: Hi, this is Lucas Beaumont for Josh. Just sort of start on the potash volumes. So you guys had a really good production performance here in the first half, which was sort of up strongly. You've kind of kept your target for the growth for the year at sort of 15%, which sort of implies that the back half is going to grow sort of about 5% a year, which is still higher, which is great, but less than sort of what you're seeing in the first half. So I just wanted to talk us through kind of the moving parts there and how you're thinking about that flowing through and then your setup looking into 2025. Thanks.
Speaker Change: Hi, This is Lucas Feldman on for Josh.
Just wanted to start on the potash volumes.
Speaker Change: You've got you guys had a really good production performance during the first half which will save up strongly.
Captured targets have been great for the year at 15%.
Speaker Change: Which sort of implies at the back half is going to grow sort of at that 5% a year, which is still high which is great.
Speaker Change: Less than kind of what youre seeing in the first half. So I'm just wondering if you could talk us through kind of the moving parts, there and how youre thinking about that.
Speaker Change: Flowing through and then you're set up.
Speaker Change: Looking into 2020 cod.
Speaker Change: Thanks.
Matt Preston: Yeah, thanks for the question, Lucas. You know, as we kind of said on a couple calls prior, you know, we had a goal of 10 to 15% increase in our potash production for the calendar year 24. And we're happy to be kind of on the high side of that guidance right now. You know, as we as we move towards 25, we initially indicated kind of another 15 to 20% increase in volumes, you always always have to kind of see where evaporation ends up for not just kind of this back half of the fall and what that means for the spring season, but certainly encourage where we are today, you know, glad to be at the higher end of the 24 guidance and seeing those improved brine grades at HB and seeing the benefits of some of our Moab projects.
Speaker Change: Yes. Thanks for the question Lucas you know as we kind of said on a couple of calls prior we had a goal of 10% to 15% increase in our potash production for the calendar year 'twenty four and we're happy to be kind of on the high side of that guidance right now as.
Speaker Change: As we move towards 25, we initially indicated kind of another 15% to 20% increase in volumes, you're always always have to kind of see where evaporation ends up for not just kind of this back half of the fall and what that means for the spring season, but certainly encouraged where we are today you know glad to be at the higher end of the 24 guidance and you'll see those improve Brian grades at HB and seeing the benefits of some of our Moab <unk>.
Matt Preston: And so while we aren't going to give some updated guidance for the 25 calendar year, just given kind of the movement between evaporation seasons and how long that spring season lasts, you know, we're certainly encouraged by the progress so far.
Speaker Change: Jackson, so while we aren't going to give some updated guidance on 'twenty five calendar year, just given kind of the movement between evaporation seasons, and how long that spring season last we're certainly encouraged by the progress so far.
Matt Preston: Right, and then just on the trio side. I mean, you were previously sort of expecting volumes there to sort of be flattish, sort of year on year, but you've had a really strong first half, particularly on the sales side. I mean, it looks like some of that probably pulled out of inventory with production being a bit higher, but not quite as strong as the strong sales growth that you had. So just wondering if you could kind of help us frame how you're thinking about the full year there now and sort of your production plan.
Speaker Change: Alright, and then just on the.
Speaker Change: Sure Yes.
Speaker Change: I mean, you were previously you sort of expecting.
Speaker Change: Volumes.
Speaker Change: Bold flattish at a year on year, but you've had a really strong SaaS tops, particularly on the sales side I mean, it looks like some of that probably pull data inventory with production being a bit higher but not quite as strong as the strong sales growth that you had.
Speaker Change: So I was wondering if you can kind of help us frame, how youre thinking about the full year guide now.
Speaker Change: And so your production plan to keep adding.
Speaker Change: A strong demand.
Matt Preston: So if you keep adding similarly strong demand, it looks like things might be up a bit year on year. But just, I guess, how are you thinking about your ability to lift production to kind of meet that demand going forward as well?
Speaker Change: It looks like things might be up a bit year on year, but just.
Speaker Change: I guess, how are you thinking about your ability to lift production to kind of meet that.
Speaker Change: And going forward as well thanks.
Matt Preston: Yeah, I mean, I'll touch a little bit on the production side, maybe pass over to Zach as far as what we're seeing in the sales market, you know, certainly getting those new miners underground and restarting our fine Langdonite recovery. We've had great results at East in the first half of the year, you know, lower overall costs, less contract labor, and producing more tons than we did last year. So the production side has been a great success story for us at our East mine this year, which has given us some more product available to sell. I mean, Zach can touch on the great spring season we had and kind of the outlook for the back half of the year. Yeah, I think about the first half of the year.
Speaker Change: Yes, I mean, I'll touch a little bit on the production side, maybe pass over to Zack as far as what we're seeing in the sales market certainly the getting those new miners underground and restarting our fine langbeinite recovery, we've had great results at east in the first half of the year lower overall costs less contract labor and producing more tons than we did last year. So the production side.
Zack: It's been a great success story for us at our East mine this year, which has given us some more product available to sell it means that can touch on the great spring season, we had in kind of the outlook towards the back half of the year.
Zachry Adams: Yeah, I think in the first half of the year, we had a really good year there, really good engagement across all of our regions historically, getting back to what I would say kind of more normal volumes from what we saw several years ago. And so what we continue to see there is an increase in the value of the sulfur and the magnesium part of TRIO in addition to the potassium. And as we kind of look at the second half, you know, obviously, we expect our volume in the second half to be less than it was in the first half, but that's just more of a nature that TRIO is more of a spring applied product versus a fall applied product.
Speaker Change: Yes, I think on the first half of the year, we had a really good really good year, there really good engagement across all of our regions historically getting backed out what I would say kind of more normal volumes from what we saw several years ago.
Speaker Change: And so what we continue to see there is an engagement on the value of the sulfur in the magnesium part of trio in addition to the potassium.
Speaker Change: As we kind of look at second half, but obviously, we expect our volume in the second half to be less than they burn first half, but thats just more of a nature that trio is more of.
Speaker Change: Our spring applied product versus a fall applied product, but we still think we will see good engagement here in second half and we just completed a fill program, Ontario here in the last few days and saw a good response to that for for near term fall dates from our customers.
Zachry Adams: But we still think we'll see good engagement here in the second half, and we just completed a field program on TRIO here in the last few days and saw a good response to that for near-term fall needs from our customers.
Speaker Change: Great. Thank you.
Operator: The next question comes from the line of Jason Ursaner with Bumbershoot Holdings. Your line is open.
Jason <unk>: The next question comes from the line of Jason <unk> with Bumbershoot Holdings. Your line is open.
Jason Ursaner: Hi, thanks for taking my questions. I just wanted to say, you know, this quarter, it feels a little bit like a story of two halves. You're kind of looking backwards versus forwards optically, obviously a tough quarter from a gap perspective in terms of the comparison year-to-year and getting through this low production period, you know, I guess continuing maybe for another quarter or two with the summer fill. But looking forward, it sounds like everything's kind of coming together.
Jason <unk>: Hi, Thanks for taking my questions.
Speaker Change: Just wanted to ask this quarter it feels a little bit like a story of two halves youre kind of looking backwards or forwards optically, obviously, a tough quarter from a GAAP perspective in terms of the comparison year to year and getting through this low production period.
I guess, continuing maybe for another quarter or two with the summer fill but looking forward. It sounds like everything is kind of coming together.
Jason Ursaner: You know, production sounds like it's really on the upswing, and you're sort of stabilizing at mid-cycle pricing while CapEx is coming down. You kind of mentioned the cash on the balance sheet. So I guess just, you know, do I sort of have that commentary right from you at the end there? And I mean, it just sounds a little bit like a tough balancing act right now, because you're kind of head down in the short term, kind of getting through this period versus more head up, looking ahead to where things might be headed, you know, over the next year or so. But we're kind of not there yet. Is that kind of a commentary?
Speaker Change: Production sounds like it's really.
This upswing and Youre sort of stabilizing at the mid cycle pricing, while Capex is coming down and you kind of mentioned the cash on the balance sheet.
Speaker Change: So I guess, just do I sort of have that commentary right from you at the end there.
Speaker Change: It sounds a little bit like a tough balancing act right now because you kind of head down in the short term kind of getting through this period versus more head up looking ahead to where things might be headed over the next year or so.
Speaker Change: We're kind of not there yet is.
Speaker Change: Does that kind of the commentary.
Matt Preston: Yeah, I think that's fair, Jason, as I said in the prepared remarks and we talked a little bit about on our last call, you know, and unfortunately, it takes time with solar evaporation and the brine residence time and availability. We really want to get a lot of confidence in that underground storage at HB or kind of how our primary ponds and what our brine storage is at Wendover, for example, and really have that Like I said, early indications from 2024 calendar year production are great at the higher end of our guidance.
Speaker Change: Yes, I think that's fair, Jason as I said in the prepared remarks, and we talked a little bit about in our last call.
Speaker Change: Unfortunately, it takes time with solar evaporation in the Brian resin assignment availability and we really want to get a lot of confidence in that underground storage at HB or kind of how are our primary ponds and what our brine storage is at Wendover for example, and really have that increased confidence on the two to five year production outlook.
Speaker Change: To kind of a less cautious approach.
As said.
Matt Preston: And so we're seeing the benefits of those projects, but, you know, we still have to hit those injection rate goals. And our phase 2 of our injection project should be complete here, probably the end of August or early September, and we'll hope to be up to, you know, really improve brine injection rates on a gallons per minute rate, possibly hitting 2000 GPM. And so once we hit those and get that brine availability and residence time underground, we can be more confident in that outlook going forward. So, yeah, I mean, I think your take on the kind of our approach is spot on. Okay.
Speaker Change: Early indications from 2024 calendar year production are great at the higher end of our guidance and so we're seeing the benefits of those projects, but we still have to hit those injection rate goals and our.
Speaker Change: Our phase two of our injection projects should be complete here probably end of August early September and we hope to be up to.
Speaker Change: Really improved Brian injection rates on gallons per minute rate, possibly hitting 2000, GPM and so once we hit those and get that Brian availability and residents time underground we can be more confident kind of in that outlook going forward. So yes, I mean, I think your take on the on kind of our approach is spot on.
Matt Preston: Okay, and just on the full year production outlook, can you maybe, it's kind of a follow up on Lucas's question, but just to clarify a little, because I guess as I understand it, the production season doesn't really span a calendar year in terms of, I guess, when you then harvest the production and then that's the selling cycle for the next year for those tons produced. So maybe just, you know, kind of in context to the brine in the ponds now with the eddy shaft as kind of the stop gap for this year to give you the added brine availability for the evaporation currently and then moving into next year on the, you know, kind of what you had given is the 15 to 20% on top of this year is what it sounds like, just maybe like trying to map from a timing perspective, the production increases, for a season versus the calendar year and then eventually moving into 2026 and beyond where we are relative to some of the nameplate capacity.
Speaker Change: Okay, and just on the full year production outlook could you maybe it's kind of a follow up on Lucas's question, but just to clarify a little because I guess as I understand it with production season doesn't really span a calendar year in terms of I guess when you then harvest the production and then that's the selling cycle for the next year for those tons produced.
Speaker Change: But maybe just kind of in context to the the brine in the pond now with Yeti shaft.
Speaker Change: Kind of a stop gap for this year to give you the added Brian availability.
Speaker Change: For the evaporation currently and then moving into next year.
Kind of what you had given us the 15% to 20% on top of this year is what it sounds like.
Speaker Change: Just maybe.
Trying to map from a timing perspective, the production increases.
Speaker Change: For a season versus the calendar year, and then eventually moving into 2026 and beyond where we are relative to some of the nameplate capacity.
Matt Preston: Yeah, no, and that's a fair comment as far as the harvest year, which spans from kind of right about now through the spring versus calendar year production. You know, we stuck with that calendar year just because it's what we end up reporting in our annual report, going from 226,000 tons in 2023, you're up that 10 to 15% in 2024. You know, when it comes to harvest year production, you know, we're not going to, there's so much that kind of varies a little bit with evaporation, we're not going to kind of give those that guidance right now. But as I said to Lucas earlier, you know, still on track to kind of hit those targets and encouraged by our progress so far.
Speaker Change: Yes, no that's a fair comment as far as kind of a harvest year, which spans from kind of right about now through the spring versus a calendar year production, we stuck with that calendar year, just because it's what we end up reporting to her in our annual report going from 226000 tons and 23, you upped at 10% to 15% in 'twenty.
Speaker Change: For you when it comes to harvest year production you know, we're not going to there is so much they've kind of varies a little bit with evaporation, we're not going to kind of give those that guidance right now, but it was I said to Lucas earlier still on track to kind of hit those targets and encouraged by our progress so far.
Matt Preston: And the encouragement, though, is the brine that's in the pond in terms of the availability, the grade of the brine, or that you've actually just had pretty good weather so far.
And the encouragement that was the Brian that's in the bonds in terms of the availability the grade, but Brian or that you've actually had pretty good weather so far.
Matt Preston: Yeah, I mean, those are certainly the benefits we've seen so far, going back to the Eddie Schaaf project to kind of get that initial high-grade brine at HB, which we did in the fall of last year, then transitioning to IP30B here this spring, where we can continue to put that high-grade brine in the ponds. It's really a, it's a brine grade story at HB, which is really promising.
Speaker Change: Yes, I mean, thats certainly been the benefits we've seen so far going back to the Eddie shaft project to kind of get that initial high grade Brian at HB, which we did in the fall of last year, and then transitioning to IP <unk> here. This spring, where we can continue to put that high grade brine in the ponds, it's really a it's a Brian great story at HB, which is really promising.
Speaker Change: It is stuff that we've been able to accomplish with our Brian availability not just the benefit of weather.
Matt Preston: So this is stuff that we've been able to accomplish with our brine availability, not just the benefit of weather. And then at Moab, getting the new cavern in, you know, hopefully seeing some higher brine grades as that cavern continues to mature. So it becomes a brine grade story for both HB and Moab. And then at Wendover, getting the new primary pond in, and filling that with brine today. That's really a brine availability story, just making sure we have the right brine availability in our primary ponds to be able to maximize evaporation during the summer and move that brine at the appropriate times. So we're certainly seeing the benefits from our projects from a brine grade standpoint and not just benefiting from what's been, I'd say, a pretty average, maybe slightly above average evaporation year so far here in 2024.
Speaker Change: And then at Moab getting the new cavern in hopefully seeing some higher Brian Grazer that Catherine continues to mature so it becomes a Brian great story for both HP and Moab and Wendover getting the new primary pond in filling that with Brian today relates really O'brien availability story, just making sure we have the right Brian availability in our primary ponds to be able to.
Maximize evaporation during the summer and move that Brian at the appropriate times. So we're certainly seeing the benefits from our projects from a Brian grade standpoint, and not just benefiting from what's been I'd say, a pretty average so maybe slightly above average evaporation year. So far here in 2024.
Matt Preston: Okay, and then just last one on the cost side, because I know people tend to be more focused on the price of potash, but for me, at least the story of the last year is more on your own costs as you're starting to see some of these encouraging early signs, you know, are you I guess maybe remind what we talked about on the cost side, very sort of trending in the right direction on the cost reduction efforts were in terms of maybe this year, next year are kind of long.
Speaker Change: Okay, and then just last one on the cost side I know people tend to be more focused on the price of potash, but for me at least the story of the last year is more on your own cost as you're starting to see some of these encouraging early signs.
Speaker Change: I guess, maybe remind what we talked about on the cost side, we're already sort of trending in the right direction on the cost reduction.
Speaker Change: Our efforts were in terms of maybe this year next year or on a long term.
Matt Preston: Yeah, and so I think it's a good time to highlight just sort of where the progress has been. I think I said in our first quarter call that we can certainly see some quarter to quarter variability just depending on where we're selling our product. So roughly $349 per ton was our Q1 potash cost of goods sold, and it was increasing in Q2 to $386. That's really just a function of sort of where we were selling product at higher costs out of HB and Wendover compared to Moab.
Speaker Change: Yeah, and so it's a good time to highlight just sort of where the progress has been I think I said in our first quarter call. We can certainly see some quarter to quarter variability just depending on where we are selling our product directly $349 per ton was our Q1 potash cost of goods sold it was increased in Q2 to $3 86, that's really just a function of sort of where we.
Speaker Change: We're selling product from higher cost out of HP in wendover compared to Moab really bring folks focused kind of looking at second half of 'twenty three versus first half of 'twenty for going from a $411 per ton down to $3 65. So we've really seen that cost improvement of our potash and kind of over the the evaporation season and continue to expect that to trend.
Matt Preston: Really bring, you know, folks focus kind of looking at the second half of 23 versus the first half of 24, going from $411 per ton down to 365. So, you know, we've really seen that cost improvement in our potash and kind of during the evaporation season and continue to expect that to trend in a favorable direction here, as we continue to improve our brine grades and brine availability across our solar production profile.
Jason Ursaner: Okay, awesome. I'll jump back into the queue. Thanks a lot.
Speaker Change: In a favorable direction here as we continue to improve our Brian grades and Brian availability across our our solar production profile.
Speaker Change: Okay, I'll jump back into queue. Thanks, a lot.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Matt Preston for any closing remarks.
Matt Preston: This concludes the question and answer session. I would like to turn the conference back over to Matt Preston for any closing remarks.
Operator: Thanks, everyone, for joining the call and showing interest in Intrepid, and I hope you have a great day.
Matt Preston: Thanks, everyone for joining the call and interest in Intrepid and hope you have a great day.
Operator: This concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Speaker Change: This concludes today's conference call you May now disconnect. Your lines. Thank you for participating and have a pleasant day.
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