Intrepid Potash(IPI) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The unaudited financial statements present the company's financial position, results of operations, and cash flows for the periods ended June 30, 2025 Condensed Consolidated Balance Sheets Total assets grew to $607.2 million, driven by a significant increase in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (In thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $211,632 | $183,763 | | Cash and cash equivalents | $85,049 | $41,309 | | Inventory, net | $100,196 | $112,968 | | Total Assets | $607,160 | $594,520 | | Total Current Liabilities | $40,083 | $38,003 | | Total Liabilities | $123,323 | $120,128 | | Total Stockholders' Equity | $483,837 | $474,392 | Condensed Consolidated Statements of Operations The company returned to profitability with a net income of $7.9 million, driven by a 20% increase in sales Condensed Consolidated Statements of Operations Highlights (In thousands, except per share amounts) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Sales | $169,232 | $141,342 | | Gross Margin | $28,889 | $14,058 | | Operating Income (Loss) | $8,292 | $(5,934) | | Net Income (Loss) | $7,869 | $(3,963) | | Diluted EPS | $0.60 | $(0.31) | Condensed Consolidated Statements of Cash Flows Net cash from operations was $50.9 million, and lower capital expenditures led to a decrease in cash used for investing Cash Flow Summary (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $50,860 | $69,278 | | Net cash used in investing activities | $(5,798) | $(16,407) | | Net cash used in financing activities | $(1,318) | $(5,275) | | Net Change in Cash | $43,744 | $47,596 | Notes to Condensed Consolidated Financial Statements The notes detail business segments, revenue sources, and significant legal contingencies including lawsuits and environmental liabilities - The company operates in three segments: potash, Trio®, and oilfield solutions, producing potassium, magnesium, sulfur, salt, and water products[16][18] - A class action lawsuit was filed alleging failure to properly compensate employees for donning and doffing personal protective equipment, with alleged damages exceeding $5.0 million[70] - Following a final court decision invalidating certain water rights, the company must repay for water sold under previous authorizations, though the form and amount are uncertain[71][72][73] - In May 2025, the company reported an unpermitted brine discharge and has recorded an estimated liability of $2.2 million for potential penalties and $0.1 million for remediation[74] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes financial results, highlighting a return to profitability driven by strong Trio® performance and higher potash volumes Significant Business Trends and Activities Key trends include lower potash prices offset by higher volumes, strong Trio® pricing, and declining water sales - Potash average net realized sales price per ton decreased in Q2 and H1 2025 compared to 2024, but sales volumes increased significantly due to improved production and strong demand[103] - Trio® average net realized sales price per ton and sales volumes both increased in Q2 and H1 2025 compared to 2024, driven by rising potash and sulfate prices and strong demand[107] - Water sales declined sharply in 2025 as the oil and gas market trends towards using more recycled water[107] - Above-average rainfall and lack of anticipated brine are expected to reduce 2026 production from the HB facility by a combined total of approximately 45,000 tons[109][110] Consolidated Results The company's net income reached $7.9 million, reversing a prior-year loss, driven by a 20% sales increase and doubled gross margin Consolidated Results Summary (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Sales | $169,232 | $141,342 | | Gross Margin | $28,889 | $14,058 | | Net Income (Loss) | $7,869 | $(3,963) | Average Net Realized Sales Price Per Ton | Product | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Potash | $332 | $399 | | Trio® | $352 | $306 | Segment Results The Trio® segment's gross margin surged to $18.5 million, offsetting declines in the Potash and Oilfield Solutions segments Potash Segment Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Sales (in thousands) | $77,571 | $67,610 | | Gross Margin (in thousands) | $7,361 | $8,886 | | Sales Volumes (in k tons) | 172 | 129 | | Avg. Net Realized Price/ton | $332 | $399 | Trio® Segment Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Sales (in thousands) | $83,054 | $63,010 | | Gross Margin (in thousands) | $18,520 | $1,043 | | Sales Volumes (in k tons) | 181 | 154 | | Avg. Net Realized Price/ton | $352 | $306 | Oilfield Solutions Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Sales | $8,724 | $10,862 | | Gross Margin | $3,008 | $4,129 | Liquidity and Capital Resources The company maintains a strong liquidity position with $85.0 million in cash and no outstanding debt on its credit facility - Cash and cash equivalents increased to $85.0 million as of June 30, 2025, from $41.3 million at December 31, 2024[177] - The company has a $150 million revolving credit facility with no borrowings outstanding as of June 30, 2025[181][183] - Expected capital investments for 2025 are between $32 million and $37 million, primarily for sustaining capital[176] - No shares were repurchased in the first six months of 2025 under the share repurchase program, which has approximately $13 million remaining[185] Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risk exposure since year-end 2024 - There have been no material changes to the company's market risk exposure since December 31, 2024[191] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[192] - No changes occurred in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[193] PART II - OTHER INFORMATION Legal Proceedings This section refers to Note 14 for details on legal matters, including lawsuits and contingent liabilities - For details on legal proceedings, the report directs readers to Note 14 in Part I, Item 1[196] Risk Factors The company highlights expanded risks related to U.S. tariffs and their potential impact on costs and customer demand - The company highlights the risk from changes in laws, particularly the uncertainty surrounding U.S. tariffs announced in April 2025 and potential retaliatory tariffs[199][200] - Tariffs could affect raw material costs and availability, influence customer purchasing decisions, and increase overall operating costs[200] Unregistered Sales of Equity Securities and Use of Proceeds The company withheld shares to cover employee taxes on vested stock but made no repurchases under its formal program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Purchased as Part of Program | Remaining Program Value | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 3,791 | $29.63 | — | $12,987,86 | | May 2025 | 1,881 | $32.57 | — | $12,987,86 | | June 2025 | — | $— | — | $12,987,86 | | Total | 5,672 | $30.61 | — | $12,987,86 | - The shares purchased were withheld to cover employee taxes on vested restricted stock and were not part of the formal share repurchase program[203] Mine Safety Disclosures The company provides required mine safety disclosures for its MSHA-regulated facilities in Exhibit 95.1 - The company's New Mexico facilities are regulated by MSHA, and required mine safety violation information is provided in Exhibit 95.1[206]