Intrepid Potash Inc., Denver, reported second-quarter net income of $19.5 million ($1.46 per diluted share) on sales of $67.9 million, up from the year-ago loss of $8.9 million ($0.68 per share) and $46.5 million, respectively. Gross margin was $14.2 million, up from the year-ago negative $599,000. Adjusted EBITDA was $16.9 million up from $555,000.
“Second-quarter and first-half results continued to benefit from strong commodity prices and rising potash and Trio® pricing and demand, leading to significant improvements in net income, gross margin, and EBITDA compared to the prior year,” said Bob Jornayvaz, Intrepid Executive Chairman and CEO. “Since announcing another potash and Trio® price increase in June, the fertilizer market continued to move up with buyers eager to secure supply in a limited market.
“We began our HB production season this week and expect to start our Utah solar solution mining facilities in early September. We are well positioned to supply our customers when the fall season begins and have already received strong buyer interest in new orders for fourth quarter delivery. We have been thoughtful in waiting to accept orders as the market remains tight,” he continued.
“We announced a $20 increase to potash prices in May and booked historic volumes for the third-quarter delivery as distributors restocked warehouses after a busy spring,” Matthew Preston, Vice President of Finance told analysts. “Since the May announcement, potash pricing has moved up considerably in the barge and inland warehouse markets as buyers compete over limited supply for third-quarter delivery. We expect the third-quarter average net realized sales price will be between $355-$365/st, with additional upside into fourth-quarter 2021.”
He added that first-half Trio sales volumes exceeded the prior year by 5,000 st as strong customer relationships and robust demand led to record domestic deliveries, which more than offset reduced international volumes. He noted that the company increased Trio pricing $20/st in May and $35/st in June. The company expects a third-quarter Trio net realized price of $310-$325/st.
Zachry Adams, Vice President, Sales and Marketing, told analysts that most buyers in the Midwest have tons in place or on order for what they are going to need to get started this fall. “So we don’t see a lot of liquidity at those levels today.
“We certainly have transacted on some spot tons from our demand side to that point,” he said. “Looking ahead to Q4, we’ve not booked any tons for Q4 yet on the potash side. We’re going to hold off from booking tons there and the market remains tight. And we feel comfortable with what we have for Q3, and we’ll address Q4 later.”
Asked about demand destruction, Adams said that the company is not seeing a downtick in demand from growers.
“I think when you look at farmer economics, they’re doing extremely well right now globally,” added Jornayvaz. “’We tend to look at all commodities that use significant amounts of potash and we’re seeing strength across the board….So, given the strength across the entire spectrum, we believe that we’re finally at what is reasonable market pricing. I think we look at farmers’ economics, we’ve got plenty of room and we should not see any demand destruction at these levels.”
Addressing the Oilfield Solutions segment, Jornayvaz said oilfield activity continues to improve in the Delaware Basin as growth in rig counts and frac crews led to increased produced water royalty and surface use agreement revenue in the second quarter.
“We opportunistically scheduled our water on our South Ranch in the second quarter in anticipation of higher margin jobs, which have materialized, in the second half of the year, Jornayvaz added. “We expect steady growth in our Oilfield Solutions segment over the next six months and into 2022.”
The company said that in May it sold 326 acres of land in Texas for $6.0 million and recognized a gain on the sale of the land of $2.8 million. The company purchased this land in May 2019 for the development of a produced water disposal facility and had permitted two disposal wells on the property.
In June 2021, Intrepid received notice that the Small Business Administration had remitted funds to its bank to fully repay the company’s Paycheck Protection Program (PPP) loan and accrued interest. The company recognized a gain of $10.1 million related to the forgiveness of the PPP loan and the associated accrued interest on the loan.
Six-month net income was $21.9 million ($1.65 per share) on sales of $139.4 million, up from the year-ago loss of $16.3 million ($1.25 per share) and $110.4 million, respectively. Gross margin was $23.3 million, up from $5 million. Adjusted EBITDA was $29.7 million, up from $9.4 million.
| Potash | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Sales (000 st) | 37,693 | 24,526 | 81,270 | 58,317 |
| Gross Margin ($000) | 10,131 | 2,015 | 18,803 | 6,349 |
| Sales Volume (000 st) | 92 | 74 | 208 | 173 |
| Production Volume (000 st) | 51 | 4 | 164 | 140 |
| Avg Realized Price ($/st) | 319 | 256 | 300 | 256 |
| Trio | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Sales (000 st) | 26,924 | 19,251 | 50,619 | 41,832 |
| Gross Margin ($000) | 3,162 | (3,225) | 3,093 | (6,780) |
| Sales Volume (000 st) | 75 | 64 | 145 | 140 |
| Production Volume (000 st) | 63 | 50 | 119 | 100 |
| Avg Realized Price ($/st) | 271 | 208 | 251 | 200 |
| Oilfield Solutions | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Sales (000 st) | 3,331 | 2,747 | 7,584 | 10,488 |
| Gross Margin ($000) | 906 | 611 | 1,411 | 5,455 |