Intrepid Potash Inc. reported first-quarter net income of $31.4 million ($2.31 per share) on sales of $104.4 million, up from last year’s net income of $2.5 million ($0.18 per share) on sales of $71.5 million. Intrepid said its first-quarter profitability was driven primarily by higher prices for potash and Trio®, which more than offset lower potash sales volumes during the quarter.
Adjusted EBITDA for the quarter was $50.2 million, up $37.3 million from last year’s first quarter and the best since the third quarter of 2012. Adjusted earnings per share were $2.41 for the quarter, which missed the average analyst estimate of $2.44. Net sales of $3.92 billion were up 71 percent year-over year, but missed the average analyst estimate of $4.08 billion. Bloomberg reported that Mosaic shares dropped 4.5 percent after the net sales miss.
“In the backdrop of close-to-record high potash prices, Intrepid delivered exceptional first-quarter results,” said Bob Jornayvaz, Intrepid’s Executive Chairman and CEO. “We believe the outlook for Intrepid for the remainder of 2022 and the next couple years is very positive as the supply-demand balance for potash should continue to support strong economics.”
Potash segment sales in the quarter increased 30 percent from last year, to $56.4 million, driven primarily by a 149 percent increase in its average net realized sales price, to $703/st. The segment’s higher revenue was achieved despite a 41 percent year-over-year drop in potash sales volumes, to 69,000/st for the quarter. Intrepid said it entered the year with fewer tons in inventory and less potash available in its ponds after a below average 2021 production season.
“On the supply side, the December 2021 sanctions on Belarus took effect in April and strong international pricing continues to absorb supply, which is helping create a U.S. market with minimal excess swing capacity in the near-term,” the company said.
Potash production in the first quarter totaled 103,000 st, down 9 percent from last year’s first quarter, while segment gross margin totaled $29.1 million, more than triple the $8.7 million generated in the first quarter of 2021.
Intrepid said potash pricing continues to be supported by tight supply and steady demand. The company announced a $50/st increase in April (GM April 1, p. 13), which it expects to realize on spot sales in the second quarter.
“Despite our reduced sales volumes as a result of few tons available and unfavorable weather in various parts of the U.S. in the first quarter, which delayed planting, higher commodity prices supported application rates in most of our markets and we are well positioned to meet our customers’ needs as the spring season progresses,” Jornayvaz said.
Potash segment byproduct sales in the quarter decreased by 17 percent from last year, to $4.8 million, due to lower water and magnesium sales, partially offset by higher salt sales. Intrepid said magnesium chlorides sales decreased from last year due to a mild winter, which limited purchases of deicing products in the first quarter. Salt sales were up from last year due to higher realized pricing and growth in the industrial and pool salt markets.
Trio segment sales were up 73 percent from last year, to $41.4 million, driven by a higher average net realized sales price of $469/st in the quarter. Trio sales volumes increased modestly to 71,000 st during the quarter. The Trio segment generated gross margin of $16.1 million and production volumes of 65,000 st during the quarter, 16 percent higher than last year’s first-quarter production volumes.
Oilfield Solutions sales totaled $7.0 million during the quarter, up $2.7 million from last year. Intrepid said the sales increase was driven primarily by higher fresh water sales, surface use agreement sales, brine water sales, and produced water royalties, offset by higher coasts of good sold due to increased contract labor and rental expenses for water recycling equipment. The company said it also incurred additional contract labor expenses and increased water transfer fees during the quarter.
Intrepid noted several improvement products underway at its potash facilities. These include a new injection pipeline at HB, another potash cavern in Moab, Utah, and upgraded wells at its Wendover, Utah, site, which the company expects will add production volume as early as spring 2023. The company said it is also running additional underground shifts at its East mine to increase Trio availability.
“While potash prices remain elevated, we believe crop prices should continue to drive steady demand in the U.S., and U.S. potash prices are still at a record differential to Brazil,” the company said. “Looking into the back half of the year, as our potash production returns to more normal levels after the below-average 2021 evaporation year, our cost-per-ton should also improve, supporting strong cash flow generation.”
The company said it has approximately $80 million in cash on hand and $74 million available under its revolving credit facility as of April 30, 2022, for total liquidity of approximately $154 million.
| Potash | 1Q-22 | Q-21 |
| Sales (000 st) | 56,442 | 43,578 |
| Gross Margin ($000) | 29,064 | 8,673 |
| Sales Volume (000 st) | 69 | 117 |
| Production Vol. (000 st) | 103 | 113 |
| Avg Realized Price ($/st) | 703 | 282 |
| Trio | 1Q-22 | Q-21 |
| Sales (000 st) | 41,052 | 23,694 |
| Gross Margin ($000) | 16,140 | (70) |
| Sales Volume (000 st) | 71 | 69 |
| Production Vol. (000 st) | 65 | 56 |
| Avg Realized Price ($/st) | 469 | 233 |
| Oilfield Solutions | 1Q-22 | Q-21 |
| Sales (000 st) | 7,000 | 4,253 |
| Gross Margin ($000) | 1,972 | 505 |