Intrepid Potash, Inc. — Call Transcript 2025

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash Inc. Second Quarter 2025 Results Conference Call. As a reminder, all participants are in 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, 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. Good morning, everyone. Thank you for joining us to discuss and review Intrepid Potash's second quarter 2025 results. With me today is Intrepid Potash's CEO, Kevin Crutchfield, and CFO, Matt Preston. Our VP of Sales and Marketing, Zachary Adams, will also be available during the Q&A session. Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based on information available to us today and are subject to risks and uncertainties that are more fully described in the reports we file with the SEC. These risks and uncertainties could cause Intrepid Potash's actual results to be different from those currently anticipated, and we assume no obligation to update them. During today's call, we will also refer to certain non-GAAP financial and operational measures. Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release, and along with our SEC filings, are available at intrepidpotash.com. I will now turn the call over to our CEO, Kevin Crutchfield. Thanks, Evan, and good morning, everyone. We really appreciate your interest in attendance for today's earnings call. Intrepid has been off to a great start to the year, and our second quarter results again exceeded our expectations. While we've experienced tailwinds from the broader potash market, the focus on executing our key initiatives throughout the business is paying off, and I'd like to congratulate the team on achieving strong performance across the board. In the second quarter, our results were highlighted by generating adjusted EBITDA of $16.4 million and adjusted net income of $6 million, which compares to our prior year adjusted EBITDA of $9.2 million and adjusted net loss of about $40,000. At a high level, our strong second quarter performance was driven by a combination of strong sales volumes for potash and Trio, improving pricing, and solid unit economics resulting from higher production. Through the second quarter in potash, our year-to-date production of 137,000 tons was 8% higher than the same period in 2023, and our cost of goods sold per ton improved by 12% to $323 per ton. In Trio, our year-to-date production of 132,000 tons was 8% higher than the same period last year, and our cost of goods sold per ton improved by 18% to $234 per ton. Before getting into the market outlook, I want to first provide an update on our AMAX cavern sample well project. We successfully drilled the well in July, but unfortunately, we did not find the brine pool that our imaging had showed us as being present. Given this outcome, we're continuing our evaluation of options to pursue an injection well and pipeline that will connect the AMAX mine to our HB injection system. Timing of construction will depend on further technical review and quantifying permitting requirements, but we'll keep the market informed as we progress our efforts on this front. As for the implications, without the AMAX brine pool available for our 2026 evaporative season, we now expect a slightly overall brine grade into our HB ponds in 2026, as well as lower near-term potash production. While this wasn't our anticipated outcome, given the complexity of drilling these wells, we're pleased to have successfully drilled into our intended target area and to have also have a well for future brine extraction at AMAX. In addition, potash fundamentals remain strong, and improving pricing from the start of the year will help offset some of the impacts related to our modestly lower production forecast, which Matt will detail later in the call. Turning to market commentary, I want to highlight four key points as it relates to potash. First, tight global supply and strong demand has outpaced supply additions so far in 2025. Second, key international contracts were settled at supportive levels that should help provide a pricing floor through year-end. Third, there was a successful summer field program where posted prices increased by $20 per ton following the conclusion of the order period. Lastly, the Jansen project that was set to come online late next year has been delayed six months to mid-2027 for first production, with the expectation of a multi-year ramp to full capacity. Project delays such as this one will help contribute to the continuation of a more balanced market over the next several years. As per agriculture markets, we've seen some weakness in corn and soybean futures over the summer, but there are positives that could help shift this narrative. A weak U.S. dollar has so far supported strong corn and soybean exports, which remain well ahead of last year's volumes. Moreover, recent trade deals with major partners have featured U.S. agriculture, which we expect will continue to provide support for exports. Looking at international markets, key crops like palm oil, cocoa, and coffee continue to trade at elevated levels, as we always want to make sure that we mention that non-corn and soybean crops comprise about 70% of global potash consumption. Relative agricultural weakness in the U.S. doesn't necessarily have significant implications for our potash prices. Overall, we've had a great start to the year and remain constructive on the outlook. As I've emphasized on previous calls, we remain focused on making our core operations more durable and more consistent, and we'll prioritize investments that support higher production and lower costs over the long term so that we can fully capitalize on our multi-decade reserve base. With that, I'll now turn the call over to Matt. Please go ahead, Matt. Thank you. Thank you, Kevin. Starting with our Potash segment, our second quarter results wrapped up a great first half of the year. Strong pricing, with multiple moves higher after the January fill program, led to a net relay sales price of $361 per ton in the second quarter, which was up about $50 per ton compared to the first quarter. Second quarter sales volumes of 69,000 tons were 25% higher than last year, and our segment gross margin of $4.9 million was the best quarterly figure in over a year. Second quarter Potash production of 44,000 tons was 4,000 tons higher than the same prior year period, while our Potash segment cost of goods sold of $337 per ton was a 13% improvement compared to $386 per ton in the second quarter of last year. Looking ahead, and as we covered in yesterday's press release, poor weather at our HB facility and the lack of brine in AMAX has reduced our near-term Potash production forecast. First on the weather, we've had above-average rainfall at our HB mine over the past few months, about 50% higher than average, resulting in below-average evaporation and reduced Potash inventory in our ponds compared to last year. Assuming we have average evaporation for the remainder of the summer, our production outlook for the upcoming harvest year has decreased by approximately 20,000 tons. Given fewer tons in our ponds, we'll see this impact in the first half of 2026 due to reduced runtime and an earlier shutdown. In response to our lower pond inventory, we plan to shut down our HB mill for a few weeks in September so that we can maximize as much late-season evaporation as possible. This will shift 15,000 tons of calendar year 2025 production into the spring of 2026. We have sufficient inventory at our HB facility to meet expected demand for the second half of 2025 and do not expect any significant impacts to our forecasted sales volumes for the remainder of the year. Turning to AMAX, the lack of brine in this cavern will reduce our overall brine grades into our HB pond system in 2026, which we expect will decrease our production by an additional 25,000 tons compared to previous estimates. Putting this together, we now expect our Potash production will be between 270,000 and 280,000 tons for both the 2025 and 2026 calendar years. Moving on to Trio, which remains a clear standout for Intrepid. In the second quarter, we sold 70,000 tons at an average net relay sales price of $368 per ton. Trio's pricing continued to be supported by a tight domestic sulfate market and firm potash values, while an increase in corn acres supported an uptick in nutrient demand. Our mine production rates and mill recoveries continued to exceed our expectations, with our Trio production totaling 70,000 tons in the second quarter. Trio's cost of goods sold per ton totaled $235 in Q2, which was flat sequentially and a 10% improvement from $261 per ton in the second quarter of 2024. Overall, our segment gross margin totaled $8.1 million, and we remain encouraged on the outlook for Trio. Finally, our Oilfield Solutions segment was again a steady contributor in the second quarter, with revenue of $4.3 million and gross margin of $1.3 million, or 30% of revenue, which is in line with our historical average. As for third quarter sales and pricing guidance, in potash, we continue to see a stable market for the second half of the year, as evidenced by no change to pricing for the summer fill program in June, which was followed by a $20 per ton increase after the order period. For Q3, we expect our potash sales volumes to be between 55,000-65,000 tons at an average net relay sales price in the range of $375-$385 per ton. For Trio, we expect our sales volumes to be between 27,000 to 37,000 tons at an average net relay sales price in the range of $383-$393 per ton. The third quarter is historically the slowest period for Trio sales, and we expect second half volumes will be in line with historical averages of the last several years. For our 2025 capital program, given the result of our AMAX well, we've reduced our CapEx guidance to $32-$37 million, as we have deferred the remaining spends on the extraction well and pipeline while we evaluate our options at HB. Overall, it's been a strong year for Intrepid on several fronts. I want to emphasize that our top priorities are setting the company up for long-term success and creating sustained value for our shareholders, which starts with increasing our production to improve our unit economics. We've been quite successful since we began these efforts a few years ago, so while we hit a near-term speed bump with the AMAX news, as well as the poor weather in Carlsbad this summer, I want to end my remarks by helping frame the context. First, we've largely seen the increased production we anticipated when we began refocusing on our core assets a couple of years ago. Our strong project execution helped our 2024 production come in about 15% above our initial expectations, which gives us confidence in our ability to execute on projects and get back to growing our production. Second, our performance so far this year has been strong, which shouldn't be overlooked, particularly at our East mine, where Trio production, costs, and margins have improved significantly since the first quarter of 2024. Third, we continue to see improving potash market fundamentals and better-than-expected pricing, which helps offset some of the impacts of lower near-term production. Finally, we remain in a strong financial position to navigate these near-term headwinds on production and execute on the projects necessary to position Intrepid for future sustained success. Operator, we're now ready for the Q&A portion of the call. We will now begin the question and answer session. To join the question queue, you may press star, then the number one 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 keys. To withdraw your question, please press star, then one. We will pause for a moment as callers join the queue. The first question comes from Lucas Beaumont with UBS. Please go ahead. Good afternoon. I just wanted to start on the changes to the production timing. I think it's clear that the temporary piece is linked to rainfall in the short term. You've pushed 15,000 tons of production into 2026, but you've also reduced 2026 by 40,000 tons overall, which was the 25,000 on the AMAX cavern sample well project plus another portion. I was just confused about, out of the 15,000 that shifted into next year, is that netting off against the change from this year, or is there a larger gap there given the timing shift as well? Maybe if you could just walk me through the different parts there and how to think about that, that'd be great. Yeah, happy to do that, Lucas. No, you're right. The total impact is the 45,000 tons of 2026, but we are netting that against kind of the shift of 15,000 tons from 2025 into the 2026 calendar year. Compared to previous forecasts, we're down 30,000 tons for the calendar year 2026. Right. What I was trying to think about then was what does that kind of mean on a multi-year kind of view going forward? The production weather-related factors are temporary, and you would assume in a normal year that you'd get something normal there. That should reverse into the following year. I would assume that would be a tailwind into 2027 of 15,000 tons. Is that right? Then it'll just be the 25,000 from the lack of the well being successful. That will be the medium-term challenge, I guess, until you're able to kind of work on another strategy there. Is that right? Yeah, no, I think you're looking at it the right way. I mean, it's pretty recent news for us on AMAX. We got to actively evaluate the options to get brine into that AMAX mine longer term and get the residents time underground. As we look forward into late 2026 and 2027, we do have our Wendover production, which will continue to increase with primary pond seven starting to ramp up here in the back half of 2025 into 2026. As we evaluate options and understand HB a little bit better, we'll certainly keep the market updated. How fast we can get into that AMAX mine and get brine under there will start to dictate the longer-term forecasts. Yeah, Lucas, it's just, despite the fact that there wasn't any brine in AMAX, which was a little bit of a surprise to us based on all the recon that we've done, that is still a very critical component of the long-term plan for Carlsbad. It's just a function of finding the brine and the new injection well so we can start filling up that cavity, and you'll see it show up in the future forecasts. I guess maybe just another way to help frame that for people then. I mean, you've obviously gone through the project here where you thought there was the brine, you've drilled the well, and unfortunately, it was unsuccessful in this case. I guess how long was that sort of lead time of the period to kind of execute on that to help give us a feel for what it would take to have another go effectively? Yeah, and if I'm understanding your question exactly, that's what we're evaluating right now. We have to look at the permit requirements to do an injection well and pipeline. We had hoped there was a brine that had been under there for a while, and we'd have an extraction well and an extraction pipeline we could tie into our AMAX system in the near term. Without that today, we have to just go through the necessary steps to look at injection, much like we have for all the other mines at HB, whether it's North, South, or Eddy Mine. I think it's important to remember that these were empty when we started our HB project, and all these started with us injecting brine and having residence time. In many ways, AMAX will just be like what we've done before for HB. We hoped to get a bit of a head start there, but unfortunately, that wasn't the case. Great. Lastly, you guys have made solid progress on your lower production cost per ton the last couple of years now. With the lower production outlook, I assume that's going to sort of be negative for cost absorption going forward. If you could kind of just help frame that up for us for the second half and then into 2026, that'd be great. Yeah, I don't see a huge impact to the second half. Obviously, it's kind of that cost of inventory starts to creep up with lower production. It's a bit progressive as you go forward. For 2026, it's kind of as simple as the 40,000 tons is about 12-13% of our overall Potash production. Given our larger fixed cost load, we need to look at ways to get our costs down in light of this news. At face value, you could expect an 8-10% increase in our cost per ton unless we can find ways to cut back, which we're actively looking at. Mitigate it to some extent, or at least a large extent, sort of the price deck and price ideas that we're seeing out there in the marketplace. Net net, hopefully, the result that we generate is neutral, even despite the downgrade in production guidance. All right, thanks very much. Your next question comes from Jason Ursaner with Bumbershoot Holdings. Hey, just maybe following up a little bit on the production. I guess, can you try to frame, you know, all the CapEx that you did? A lot of that started with injection with the residence time underground. You know, this balance between 2025 and 2026 calendar year, how does that kind of look versus maybe more of a longer-term view of where your injection rates are overall into the system with some of that brine kind of getting saturated over time, maybe over a slightly longer time frame? Yeah, I'll do my best to answer that, Jason. I mean, you're right. We've really focused on investing back in our core assets for HB. Our main focus has been keeping injection rates above our extraction rates to keep our caverns full, make sure that we're touching all that potash underground all the time, and really maximizing the production out of each of our different caverns at HB. I mean, going forward, it's largely the same. We just want to make sure that we're keeping our caverns as full as possible. Certainly, as we look to 2026, one of the impacts now is we'll have to just pull on those existing caverns a little bit harder than we otherwise would have liked. Hoping we'd had one more kind of straw down there at the AMAX cavern sample well project for the 2026 production. We're encouraged by the trend. Obviously, the success we've had when we've refocused on our core assets and getting that brine underground, we've seen the results. Like we said on the call, it's a bit of a speed bump for us for sure, but confident in our ability to execute at HB over the long term. Is the brine grade mostly the Eddy Shaft kind of top depth tailing off? What would cause the brine grade to decline a bit? hoped the AMAX cavern sample well project, if there was brine under there, would have had significant residence time. It would have been a pretty strong brine grade, much like we saw out of the Eddy Mine when we got back in there, both from the Eddy Shaft as well as the new extraction well we completed a while back. Just given that we have one less cavern to pull out of, we'll pull a little bit harder, which just decreases residence time overall. We'll just see a lower brine grade, given a general reduced residence time in our existing caverns in 2026. Okay. Great quarter in terms of cash flow. I think you gave the number as of August, you're with $87 million in cash. The outlook on pricing sounds, you know, relatively constructive. In terms of future going forward, it should be okay. At some point, you know, hopefully get some of the money from Exxon, maybe even the next round of money from Exxon. I think the last couple of calls have talked about Oilfield Solutions kind of non-core. I guess at what point, you know, cash is accumulating pretty quickly on the balance. Even if you look out a year or two, you know, if things go right, there could be a pretty significant amount of capital relative to your market cap. I know I've asked about it a number of times, but I guess at what point does the capital allocation question sort of become, you know, a pretty clear focus, just given that you're going to have a significant portion of your market cap in cash? Good question. Good points. We did, we are accumulating some cash. You asked the question of what point does the capital allocation discussion become relevant. Look, it's always relevant. The board talks about it all the time. Historically, what I've said is we need to continue to focus on the core operations, sort of a restoration plan, getting those things back to what I would refer to as an entitled level of performance, where we're predictable, reliable, we're durable over the long term, and having adequate cash on the balance sheet to see you through sort of volatile market periods. With that as a backdrop, to the extent that something happened with Exxon, again, we have no idea around that. They have no obligation to share with us their long-term plans, but that is hanging out there. We've spoken to the South Ranch in the past. That would bring the capital allocation discussion to the fore with the board. I don't want to speculate on that, but things are stacking up in favor of a very robust discussion on that front. What we've got to do is just continue to execute so that that discussion remains relevant at all times. Hopefully that's responsive to your inquiry. No, I appreciate that. I think there's limits to what you can say, but it is becoming apparent. The company is a significant cash generator, and I don't know, it's a positive problem to have, I guess, at some point. I appreciate it, and thanks for answering the question. Yeah, thank you. This concludes the question and answer session. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks. Thank you again for attending today. I'd like to give one final thank you again to our team for their hard work and their dedication over the course of the last couple of quarters in putting together solid levels of performance. We'll keep you posted in the coming quarters. Thank you again for attending today. Have a good one. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Speaker 6: Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash Inc. Second Quarter 2025 Results Conference Call. As a reminder, all participants are in 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, 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. thank you for standing by This is the conference operator. this is the conference operator Welcome to the Intrepid Potash Inc. Second Quarter 2025 Results Conference Call. welcome to the intrepid potash inc second quarter 2025 results conference call As a reminder, all participants are in listen-only mode, and the conference is being recorded. as a reminder all participants are in listen-only mode and the conference is being recorded After the presentation, there will be an opportunity to ask questions. after the presentation there will be an opportunity to ask questions To join the question queue, you may press star, then one on your telephone keypad. 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. 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. i would now like to turn the conference over to evan mapes investor relations Please go ahead. please go ahead

Speaker 5: Good morning, everyone. Thank you for joining us to discuss and review Intrepid Potash's second quarter 2025 results. With me today is Intrepid Potash's CEO, Kevin Crutchfield, and CFO, Matt Preston. Our VP of Sales and Marketing, Zachary Adams, will also be available during the Q&A session. Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based on information available to us today and are subject to risks and uncertainties that are more fully described in the reports we file with the SEC. These risks and uncertainties could cause Intrepid Potash's actual results to be different from those currently anticipated, and we assume no obligation to update them. During today's call, we will also refer to certain non-GAAP financial and operational measures. Good morning, everyone. good morning everyone Thank you for joining us to discuss and review Intrepid Potash's second quarter 2025 results. thank you for joining us to discuss and review intrepid potash's second quarter 2025 results With me today is Intrepid Potash's CEO, Kevin Crutchfield, and CFO, Matt Preston. with me today is intrepid potash's ceo kevin crutchfield and cfo matt preston Our VP of Sales and Marketing, Zachary Adams, will also be available during the Q&A session. our vp of sales and marketing zachary adams will also be available during the q&a session Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. please be advised that comments we will make today include forward-looking statements as defined by u.s securities laws These are based on information available to us today and are subject to risks and uncertainties that are more fully described in the reports we file with the SEC. these are based on information available to us today and are subject to risks and uncertainties that are more fully described in the reports we file with the sec These risks and uncertainties could cause Intrepid Potash's actual results to be different from those currently anticipated, and we assume no obligation to update them. these risks and uncertainties could cause intrepid potash's actual results to be different from those currently anticipated and we assume no obligation to update them During today's call, we will also refer to certain non-GAAP financial and operational measures. during today's call we will also refer to certain non-gaap financial and operational measures Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release, and along with our SEC filings, are available at intrepidpotash.com. I will now turn the call over to our CEO, Kevin Crutchfield. Reconciliations to the most directly comparable GAAP measures are included in yesterday's press release, and along with our SEC filings, are available at intrepidpotash.com. reconciliations to the most directly comparable gaap measures are included in yesterday's press release and along with our sec filings are available at intrepidpotash.com I will now turn the call over to our CEO, Kevin Crutchfield. i will now turn the call over to our ceo kevin crutchfield

Speaker 2: Thanks, Evan, and good morning, everyone. We really appreciate your interest in attendance for today's earnings call. Intrepid has been off to a great start to the year, and our second quarter results again exceeded our expectations. While we've experienced tailwinds from the broader potash market, the focus on executing our key initiatives throughout the business is paying off, and I'd like to congratulate the team on achieving strong performance across the board. In the second quarter, our results were highlighted by generating adjusted EBITDA of $16.4 million and adjusted net income of $6 million, which compares to our prior year adjusted EBITDA of $9.2 million and adjusted net loss of about $40,000. At a high level, our strong second quarter performance was driven by a combination of strong sales volumes for potash and Trio, improving pricing, and solid unit economics resulting from higher production. Thanks, Evan, and good morning, everyone. thanks evan and good morning everyone We really appreciate your interest in attendance for today's earnings call. we really appreciate your interest in attendance for today's earnings call Intrepid has been off to a great start to the year, and our second quarter results again exceeded our expectations. intrepid has been off to a great start to the year and our second quarter results again exceeded our expectations While we've experienced tailwinds from the broader potash market, the focus on executing our key initiatives throughout the business is paying off, and I'd like to congratulate the team on achieving strong performance across the board. while we've experienced tailwinds from the broader potash market the focus on executing our key initiatives throughout the business is paying off and i'd like to congratulate the team on achieving strong performance across the board In the second quarter, our results were highlighted by generating adjusted EBITDA of $16.4 million and adjusted net income of $6 million, which compares to our prior year adjusted EBITDA of $9.2 million and adjusted net loss of about $40,000. in the second quarter our results were highlighted by generating adjusted ebitda of $16.4 million and adjusted net income of $6 million which compares to our prior year adjusted ebitda of $9.2 million and adjusted net loss of about $40,000 At a high level, our strong second quarter performance was driven by a combination of strong sales volumes for potash and Trio, improving pricing, and solid unit economics resulting from higher production. at a high level our strong second quarter performance was driven by a combination of strong sales volumes for potash and trio improving pricing and solid unit economics resulting from higher production Through the second quarter in potash, our year-to-date production of 137,000 tons was 8% higher than the same period in 2023, and our cost of goods sold per ton improved by 12% to $323 per ton. In Trio, our year-to-date production of 132,000 tons was 8% higher than the same period last year, and our cost of goods sold per ton improved by 18% to $234 per ton. Before getting into the market outlook, I want to first provide an update on our AMAX cavern sample well project. We successfully drilled the well in July, but unfortunately, we did not find the brine pool that our imaging had showed us as being present. Given this outcome, we're continuing our evaluation of options to pursue an injection well and pipeline that will connect the AMAX mine to our HB injection system. Through the second quarter in potash, our year-to-date production of 137,000 tons was 8% higher than the same period in 2023, and our cost of goods sold per ton improved by 12% to $323 per ton. through the second quarter in potash our year-to-date production of 137,000 tons was 8% higher than the same period in 2023 and our cost of goods sold per ton improved by 12% to $323 per ton In Trio , our year-to-date production of 132,000 tons was 8% higher than the same period last year, and our cost of goods sold per ton improved by 18% to $234 per ton. in trio our year-to-date production of 132,000 tons was 8% higher than the same period last year and our cost of goods sold per ton improved by 18% to $234 per ton Before getting into the market outlook, I want to first provide an update on our AMAX cavern sample well project. before getting into the market outlook i want to first provide an update on our amax cavern sample well project We successfully drilled the well in July, but unfortunately, we did not find the brine pool that our imaging had showed us as being present. we successfully drilled the well in july but unfortunately we did not find the brine pool that our imaging had showed us as being present Given this outcome, we're continuing our evaluation of options to pursue an injection well and pipeline that will connect the AMAX mine to our HB injection system. given this outcome we're continuing our evaluation of options to pursue an injection well and pipeline that will connect the amax mine to our hb injection system Timing of construction will depend on further technical review and quantifying permitting requirements, but we'll keep the market informed as we progress our efforts on this front. As for the implications, without the AMAX brine pool available for our 2026 evaporative season, we now expect a slightly overall brine grade into our HB ponds in 2026, as well as lower near-term potash production. While this wasn't our anticipated outcome, given the complexity of drilling these wells, we're pleased to have successfully drilled into our intended target area and to have also have a well for future brine extraction at AMAX. In addition, potash fundamentals remain strong, and improving pricing from the start of the year will help offset some of the impacts related to our modestly lower production forecast, which Matt will detail later in the call. Timing of construction will depend on further technical review and quantifying permitting requirements, but we'll keep the market informed as we progress our efforts on this front. timing of construction will depend on further technical review and quantifying permitting requirements but we'll keep the market informed as we progress our efforts on this front As for the implications, without the AMAX brine pool available for our 2026 evaporative season, we now expect a slightly overall brine grade into our HB ponds in 2026, as well as lower near-term potash production. as for the implications without the amax brine pool available for our 2026 evaporative season we now expect a slightly overall brine grade into our hb ponds in 2026 as well as lower near-term potash production While this wasn't our anticipated outcome, given the complexity of drilling these wells, we're pleased to have successfully drilled into our intended target area and to have also have a well for future brine extraction at AMAX. while this wasn't our anticipated outcome given the complexity of drilling these wells we're pleased to have successfully drilled into our intended target area and to have also have a well for future brine extraction at amax In addition, potash fundamentals remain strong, and improving pricing from the start of the year will help offset some of the impacts related to our modestly lower production forecast, which Matt will detail later in the call. in addition potash fundamentals remain strong and improving pricing from the start of the year will help offset some of the impacts related to our modestly lower production forecast which matt will detail later in the call Turning to market commentary, I want to highlight four key points as it relates to potash. First, tight global supply and strong demand has outpaced supply additions so far in 2025. Second, key international contracts were settled at supportive levels that should help provide a pricing floor through year-end. Third, there was a successful summer field program where posted prices increased by $20 per ton following the conclusion of the order period. Lastly, the Jansen project that was set to come online late next year has been delayed six months to mid-2027 for first production, with the expectation of a multi-year ramp to full capacity. Project delays such as this one will help contribute to the continuation of a more balanced market over the next several years. Turning to market commentary, I want to highlight four key points as it relates to potash. turning to market commentary i want to highlight four key points as it relates to potash First, tight global supply and strong demand has outpaced supply additions so far in 2025. first tight global supply and strong demand has outpaced supply additions so far in 2025 Second, key international contracts were settled at supportive levels that should help provide a pricing floor through year-end. second key international contracts were settled at supportive levels that should help provide a pricing floor through year-end Third, there was a successful summer field program where posted prices increased by $20 per ton following the conclusion of the order period. third there was a successful summer field program where posted prices increased by $20 per ton following the conclusion of the order period Lastly, the Jansen project that was set to come online late next year has been delayed six months to mid-2027 for first production, with the expectation of a multi-year ramp to full capacity. lastly the jansen project that was set to come online late next year has been delayed six months to mid-2027 for first production with the expectation of a multi-year ramp to full capacity Project delays such as this one will help contribute to the continuation of a more balanced market over the next several years. project delays such as this one will help contribute to the continuation of a more balanced market over the next several years As per agriculture markets, we've seen some weakness in corn and soybean futures over the summer, but there are positives that could help shift this narrative. A weak U.S. dollar has so far supported strong corn and soybean exports, which remain well ahead of last year's volumes. Moreover, recent trade deals with major partners have featured U.S. agriculture, which we expect will continue to provide support for exports. Looking at international markets, key crops like palm oil, cocoa, and coffee continue to trade at elevated levels, as we always want to make sure that we mention that non-corn and soybean crops comprise about 70% of global potash consumption. Relative agricultural weakness in the U.S. doesn't necessarily have significant implications for our potash prices. Overall, we've had a great start to the year and remain constructive on the outlook. As per agriculture markets, we've seen some weakness in corn and soybean futures over the summer, but there are positives that could help shift this narrative. as per agriculture markets we've seen some weakness in corn and soybean futures over the summer but there are positives that could help shift this narrative A weak U.S. dollar has so far supported strong corn and soybean exports, which remain well ahead of last year's volumes. a weak u.s dollar has so far supported strong corn and soybean exports which remain well ahead of last year's volumes Moreover, recent trade deals with major partners have featured U.S. agriculture, which we expect will continue to provide support for exports. moreover recent trade deals with major partners have featured u.s agriculture which we expect will continue to provide support for exports Looking at international markets, key crops like palm oil, cocoa, and coffee continue to trade at elevated levels, as we always want to make sure that we mention that non-corn and soybean crops comprise about 70% of global potash consumption. looking at international markets key crops like palm oil cocoa and coffee continue to trade at elevated levels as we always want to make sure that we mention that non-corn and soybean crops comprise about 70% of global potash consumption Relative agricultural weakness in the U.S. doesn't necessarily have significant implications for our potash prices. relative agricultural weakness in the u.s doesn't necessarily have significant implications for our potash prices Overall, we've had a great start to the year and remain constructive on the outlook. overall we've had a great start to the year and remain constructive on the outlook As I've emphasized on previous calls, we remain focused on making our core operations more durable and more consistent, and we'll prioritize investments that support higher production and lower costs over the long term so that we can fully capitalize on our multi-decade reserve base. With that, I'll now turn the call over to Matt. Please go ahead, Matt. Thank you. As I've emphasized on previous calls, we remain focused on making our core operations more durable and more consistent, and we'll prioritize investments that support higher production and lower costs over the long term so that we can fully capitalize on our multi-decade reserve base. as i've emphasized on previous calls we remain focused on making our core operations more durable and more consistent and we'll prioritize investments that support higher production and lower costs over the long term so that we can fully capitalize on our multi-decade reserve base With that, I'll now turn the call over to Matt. with that i'll now turn the call over to matt Please go ahead, Matt. please go ahead matt Thank you. thank you

Speaker 3: Thank you, Kevin. Starting with our Potash segment, our second quarter results wrapped up a great first half of the year. Strong pricing, with multiple moves higher after the January fill program, led to a net relay sales price of $361 per ton in the second quarter, which was up about $50 per ton compared to the first quarter. Second quarter sales volumes of 69,000 tons were 25% higher than last year, and our segment gross margin of $4.9 million was the best quarterly figure in over a year. Second quarter Potash production of 44,000 tons was 4,000 tons higher than the same prior year period, while our Potash segment cost of goods sold of $337 per ton was a 13% improvement compared to $386 per ton in the second quarter of last year. Thank you, Kevin. thank you kevin Starting with our Potash segment, our second quarter results wrapped up a great first half of the year. starting with our potash segment our second quarter results wrapped up a great first half of the year Strong pricing, with multiple moves higher after the January fill program, led to a net relay sales price of $361 per ton in the second quarter, which was up about $50 per ton compared to the first quarter. strong pricing with multiple moves higher after the january fill program led to a net relay sales price of $361 per ton in the second quarter which was up about $50 per ton compared to the first quarter Second quarter sales volumes of 69,000 tons were 25% higher than last year, and our segment gross margin of $4.9 million was the best quarterly figure in over a year. second quarter sales volumes of 69,000 tons were 25% higher than last year and our segment gross margin of $4.9 million was the best quarterly figure in over a year Second quarter Potash production of 44,000 tons was 4,000 tons higher than the same prior year period, while our Potash segment cost of goods sold of $337 per ton was a 13% improvement compared to $386 per ton in the second quarter of last year. second quarter potash production of 44,000 tons was 4,000 tons higher than the same prior year period while our potash segment cost of goods sold of $337 per ton was a 13% improvement compared to $386 per ton in the second quarter of last year Looking ahead, and as we covered in yesterday's press release, poor weather at our HB facility and the lack of brine in AMAX has reduced our near-term Potash production forecast. First on the weather, we've had above-average rainfall at our HB mine over the past few months, about 50% higher than average, resulting in below-average evaporation and reduced Potash inventory in our ponds compared to last year. Assuming we have average evaporation for the remainder of the summer, our production outlook for the upcoming harvest year has decreased by approximately 20,000 tons. Given fewer tons in our ponds, we'll see this impact in the first half of 2026 due to reduced runtime and an earlier shutdown. In response to our lower pond inventory, we plan to shut down our HB mill for a few weeks in September so that we can maximize as much late-season evaporation as possible. Looking ahead, and as we covered in yesterday's press release, poor weather at our HB facility and the lack of brine in AMAX has reduced our near-term Potash production forecast. looking ahead and as we covered in yesterday's press release poor weather at our hb facility and the lack of brine in amax has reduced our near-term potash production forecast First on the weather, we've had above-average rainfall at our HB mine over the past few months, about 50% higher than average, resulting in below-average evaporation and reduced Potash inventory in our ponds compared to last year. first on the weather we've had above-average rainfall at our hb mine over the past few months about 50% higher than average resulting in below-average evaporation and reduced potash inventory in our ponds compared to last year Assuming we have average evaporation for the remainder of the summer, our production outlook for the upcoming harvest year has decreased by approximately 20,000 tons. assuming we have average evaporation for the remainder of the summer our production outlook for the upcoming harvest year has decreased by approximately 20,000 tons Given fewer tons in our ponds, we'll see this impact in the first half of 2026 due to reduced runtime and an earlier shutdown. given fewer tons in our ponds we'll see this impact in the first half of 2026 due to reduced runtime and an earlier shutdown In response to our lower pond inventory, we plan to shut down our HB mill for a few weeks in September so that we can maximize as much late-season evaporation as possible. in response to our lower pond inventory we plan to shut down our hb mill for a few weeks in september so that we can maximize as much late-season evaporation as possible This will shift 15,000 tons of calendar year 2025 production into the spring of 2026. We have sufficient inventory at our HB facility to meet expected demand for the second half of 2025 and do not expect any significant impacts to our forecasted sales volumes for the remainder of the year. Turning to AMAX, the lack of brine in this cavern will reduce our overall brine grades into our HB pond system in 2026, which we expect will decrease our production by an additional 25,000 tons compared to previous estimates. Putting this together, we now expect our Potash production will be between 270,000 and 280,000 tons for both the 2025 and 2026 calendar years. Moving on to Trio, which remains a clear standout for Intrepid. In the second quarter, we sold 70,000 tons at an average net relay sales price of $368 per ton. This will shift 15,000 tons of calendar year 2025 production into the spring of 2026. this will shift 15,000 tons of calendar year 2025 production into the spring of 2026 We have sufficient inventory at our HB facility to meet expected demand for the second half of 2025 and do not expect any significant impacts to our forecasted sales volumes for the remainder of the year. we have sufficient inventory at our hb facility to meet expected demand for the second half of 2025 and do not expect any significant impacts to our forecasted sales volumes for the remainder of the year Turning to AMAX, the lack of brine in this cavern will reduce our overall brine grades into our HB pond system in 2026, which we expect will decrease our production by an additional 25,000 tons compared to previous estimates. turning to amax the lack of brine in this cavern will reduce our overall brine grades into our hb pond system in 2026 which we expect will decrease our production by an additional 25,000 tons compared to previous estimates Putting this together, we now expect our Potash production will be between 270,000 and 280,000 tons for both the 2025 and 2026 calendar years. putting this together we now expect our potash production will be between 270,000 and 280,000 tons for both the 2025 and 2026 calendar years Moving on to Trio , which remains a clear standout for Intrepid. moving on to trio which remains a clear standout for intrepid In the second quarter, we sold 70,000 tons at an average net relay sales price of $368 per ton. in the second quarter we sold 70,000 tons at an average net relay sales price of $368 per ton Trio's pricing continued to be supported by a tight domestic sulfate market and firm potash values, while an increase in corn acres supported an uptick in nutrient demand. Our mine production rates and mill recoveries continued to exceed our expectations, with our Trio production totaling 70,000 tons in the second quarter. Trio's cost of goods sold per ton totaled $235 in Q2, which was flat sequentially and a 10% improvement from $261 per ton in the second quarter of 2024. Overall, our segment gross margin totaled $8.1 million, and we remain encouraged on the outlook for Trio. Finally, our Oilfield Solutions segment was again a steady contributor in the second quarter, with revenue of $4.3 million and gross margin of $1.3 million, or 30% of revenue, which is in line with our historical average. Trio 's pricing continued to be supported by a tight domestic sulfate market and firm potash values, while an increase in corn acres supported an uptick in nutrient demand. trio 's pricing continued to be supported by a tight domestic sulfate market and firm potash values while an increase in corn acres supported an uptick in nutrient demand Our mine production rates and mill recoveries continued to exceed our expectations, with our Trio production totaling 70,000 tons in the second quarter. Trio 's cost of goods sold per ton totaled $235 in Q2, which was flat sequentially and a 10% improvement from $261 per ton in the second quarter of 2024. our mine production rates and mill recoveries continued to exceed our expectations with our trio production totaling 70,000 tons in the second quarter trio 's cost of goods sold per ton totaled $235 in q2 which was flat sequentially and a 10% improvement from $261 per ton in the second quarter of 2024 Overall, our segment gross margin totaled $8.1 million, and we remain encouraged on the outlook for Trio . overall our segment gross margin totaled $8.1 million and we remain encouraged on the outlook for trio Finally, our Oilfield Solutions segment was again a steady contributor in the second quarter, with revenue of $4.3 million and gross margin of $1.3 million, or 30% of revenue, which is in line with our historical average. finally our oilfield solutions segment was again a steady contributor in the second quarter with revenue of $4.3 million and gross margin of $1.3 million or 30% of revenue which is in line with our historical average As for third quarter sales and pricing guidance, in potash, we continue to see a stable market for the second half of the year, as evidenced by no change to pricing for the summer fill program in June, which was followed by a $20 per ton increase after the order period. For Q3, we expect our potash sales volumes to be between 55,000-65,000 tons at an average net relay sales price in the range of $375-$385 per ton. For Trio, we expect our sales volumes to be between 27,000 to 37,000 tons at an average net relay sales price in the range of $383-$393 per ton. The third quarter is historically the slowest period for Trio sales, and we expect second half volumes will be in line with historical averages of the last several years. As for third quarter sales and pricing guidance, in potash, we continue to see a stable market for the second half of the year, as evidenced by no change to pricing for the summer fill program in June, which was followed by a $20 per ton increase after the order period. as for third quarter sales and pricing guidance in potash we continue to see a stable market for the second half of the year as evidenced by no change to pricing for the summer fill program in june which was followed by a $20 per ton increase after the order period For Q3, we expect our potash sales volumes to be between 55,000- 65,000 tons at an average net relay sales price in the range of $375- $385 per ton. for q3 we expect our potash sales volumes to be between 55,000- 65,000 tons at an average net relay sales price in the range of $375- $385 per ton For Trio , we expect our sales volumes to be between 27,000 to 37,000 tons at an average net relay sales price in the range of $383- $393 per ton. for trio we expect our sales volumes to be between 27,000 to 37,000 tons at an average net relay sales price in the range of $383- $393 per ton The third quarter is historically the slowest period for Trio sales, and we expect second half volumes will be in line with historical averages of the last several years. the third quarter is historically the slowest period for trio sales and we expect second half volumes will be in line with historical averages of the last several years For our 2025 capital program, given the result of our AMAX well, we've reduced our CapEx guidance to $32-$37 million, as we have deferred the remaining spends on the extraction well and pipeline while we evaluate our options at HB. Overall, it's been a strong year for Intrepid on several fronts. I want to emphasize that our top priorities are setting the company up for long-term success and creating sustained value for our shareholders, which starts with increasing our production to improve our unit economics. We've been quite successful since we began these efforts a few years ago, so while we hit a near-term speed bump with the AMAX news, as well as the poor weather in Carlsbad this summer, I want to end my remarks by helping frame the context. For our 2025 capital program, given the result of our AMAX well, we've reduced our CapEx guidance to $32- $37 million, as we have deferred the remaining spends on the extraction well and pipeline while we evaluate our options at HB. for our 2025 capital program given the result of our amax well we've reduced our capex guidance to $32- $37 million as we have deferred the remaining spends on the extraction well and pipeline while we evaluate our options at hb Overall, it's been a strong year for Intrepid on several fronts. overall it's been a strong year for intrepid on several fronts I want to emphasize that our top priorities are setting the company up for long-term success and creating sustained value for our shareholders, which starts with increasing our production to improve our unit economics. i want to emphasize that our top priorities are setting the company up for long-term success and creating sustained value for our shareholders which starts with increasing our production to improve our unit economics We've been quite successful since we began these efforts a few years ago, so while we hit a near-term speed bump with the AMAX news, as well as the poor weather in Carlsbad this summer, I want to end my remarks by helping frame the context. we've been quite successful since we began these efforts a few years ago so while we hit a near-term speed bump with the amax news as well as the poor weather in carlsbad this summer i want to end my remarks by helping frame the context First, we've largely seen the increased production we anticipated when we began refocusing on our core assets a couple of years ago. Our strong project execution helped our 2024 production come in about 15% above our initial expectations, which gives us confidence in our ability to execute on projects and get back to growing our production. Second, our performance so far this year has been strong, which shouldn't be overlooked, particularly at our East mine, where Trio production, costs, and margins have improved significantly since the first quarter of 2024. Third, we continue to see improving potash market fundamentals and better-than-expected pricing, which helps offset some of the impacts of lower near-term production. Finally, we remain in a strong financial position to navigate these near-term headwinds on production and execute on the projects necessary to position Intrepid for future sustained success. First, we've largely seen the increased production we anticipated when we began refocusing on our core assets a couple of years ago. first we've largely seen the increased production we anticipated when we began refocusing on our core assets a couple of years ago Our strong project execution helped our 2024 production come in about 15% above our initial expectations, which gives us confidence in our ability to execute on projects and get back to growing our production. our strong project execution helped our 2024 production come in about 15% above our initial expectations which gives us confidence in our ability to execute on projects and get back to growing our production Second, our performance so far this year has been strong, which shouldn't be overlooked, particularly at our East mine, where Trio production, costs, and margins have improved significantly since the first quarter of 2024. second our performance so far this year has been strong which shouldn't be overlooked particularly at our east mine where trio production costs and margins have improved significantly since the first quarter of 2024 Third, we continue to see improving potash market fundamentals and better-than-expected pricing, which helps offset some of the impacts of lower near-term production. third we continue to see improving potash market fundamentals and better-than-expected pricing which helps offset some of the impacts of lower near-term production Finally, we remain in a strong financial position to navigate these near-term headwinds on production and execute on the projects necessary to position Intrepid for future sustained success. finally we remain in a strong financial position to navigate these near-term headwinds on production and execute on the projects necessary to position intrepid for future sustained success Operator, we're now ready for the Q&A portion of the call. Operator, we're now ready for the Q&A portion of the call. operator we're now ready for the q&a portion of the call

Speaker 6: We will now begin the question and answer session. To join the question queue, you may press star, then the number one 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 keys. To withdraw your question, please press star, then one. We will pause for a moment as callers join the queue. The first question comes from Lucas Beaumont with UBS. Please go ahead. We will now begin the question and answer session. we will now begin the question and answer session To join the question queue, you may press star, then the number one on your telephone keypad. to join the question queue you may press star then the number one on your telephone keypad You will hear a tone acknowledging your request. you will hear a tone acknowledging your request If you are using a speakerphone, please pick up your handset before pressing any keys. if you are using a speakerphone please pick up your handset before pressing any keys To withdraw your question, please press star, then one. to withdraw your question please press star then one We will pause for a moment as callers join the queue. we will pause for a moment as callers join the queue The first question comes from Lucas Beaumont with UBS. the first question comes from lucas beaumont with ubs Please go ahead. please go ahead

Speaker 4: Good afternoon. I just wanted to start on the changes to the production timing. I think it's clear that the temporary piece is linked to rainfall in the short term. You've pushed 15,000 tons of production into 2026, but you've also reduced 2026 by 40,000 tons overall, which was the 25,000 on the AMAX cavern sample well project plus another portion. I was just confused about, out of the 15,000 that shifted into next year, is that netting off against the change from this year, or is there a larger gap there given the timing shift as well? Maybe if you could just walk me through the different parts there and how to think about that, that'd be great. Good afternoon. good afternoon I just wanted to start on the changes to the production timing. i just wanted to start on the changes to the production timing I think it's clear that the temporary piece is linked to rainfall in the short term. i think it's clear that the temporary piece is linked to rainfall in the short term You've pushed 15,000 tons of production into 2026, but you've also reduced 2026 by 40,000 tons overall, which was the 25,000 on the AMAX cavern sample well project plus another portion. you've pushed 15,000 tons of production into 2026 but you've also reduced 2026 by 40,000 tons overall, which was the 25,000 on the amax cavern sample well project plus another portion I was just confused about, out of the 15,000 that shifted into next year, is that netting off against the change from this year, or is there a larger gap there given the timing shift as well? i was just confused about out of the 15,000 that shifted into next year is that netting off against the change from this year or is there a larger gap there given the timing shift as well Maybe if you could just walk me through the different parts there and how to think about that, that'd be great. maybe if you could just walk me through the different parts there and how to think about that that'd be great

Speaker 2: Yeah, happy to do that, Lucas. No, you're right. The total impact is the 45,000 tons of 2026, but we are netting that against kind of the shift of 15,000 tons from 2025 into the 2026 calendar year. Compared to previous forecasts, we're down 30,000 tons for the calendar year 2026. Yeah, happy to do that, Lucas. yeah happy to do that lucas No, you're right. no you're right The total impact is the 45,000 tons of 2026, but we are netting that against kind of the shift of 15,000 tons from 2025 into the 2026 calendar year. the total impact is the 45,000 tons of 2026 but we are netting that against kind of the shift of 15,000 tons from 2025 into the 2026 calendar year Compared to previous forecasts, we're down 30,000 tons for the calendar year 2026. compared to previous forecasts we're down 30,000 tons for the calendar year 2026

Speaker 4: Right. What I was trying to think about then was what does that kind of mean on a multi-year kind of view going forward? The production weather-related factors are temporary, and you would assume in a normal year that you'd get something normal there. That should reverse into the following year. I would assume that would be a tailwind into 2027 of 15,000 tons. Is that right? Then it'll just be the 25,000 from the lack of the well being successful. That will be the medium-term challenge, I guess, until you're able to kind of work on another strategy there. Is that right? Right. right What I was trying to think about then was what does that kind of mean on a multi-year kind of view going forward? what i was trying to think about then was what does that kind of mean on a multi-year kind of view going forward The production weather-related factors are temporary, and you would assume in a normal year that you'd get something normal there. the production weather-related factors are temporary and you would assume in a normal year that you'd get something normal there That should reverse into the following year. that should reverse into the following year I would assume that would be a tailwind into 2027 of 15,000 tons. i would assume that would be a tailwind into 2027 of 15,000 tons Is that right? is that right Then it'll just be the 25,000 from the lack of the well being successful. then it'll just be the 25,000 from the lack of the well being successful That will be the medium-term challenge, I guess, until you're able to kind of work on another strategy there. that will be the medium-term challenge i guess until you're able to kind of work on another strategy there Is that right? is that right

Speaker 2: Yeah, no, I think you're looking at it the right way. I mean, it's pretty recent news for us on AMAX. We got to actively evaluate the options to get brine into that AMAX mine longer term and get the residents time underground. As we look forward into late 2026 and 2027, we do have our Wendover production, which will continue to increase with primary pond seven starting to ramp up here in the back half of 2025 into 2026. As we evaluate options and understand HB a little bit better, we'll certainly keep the market updated. How fast we can get into that AMAX mine and get brine under there will start to dictate the longer-term forecasts. Yeah, no, I think you're looking at it the right way. yeah no i think you're looking at it the right way I mean, it's pretty recent news for us on AMAX. i mean it's pretty recent news for us on amax We got to actively evaluate the options to get brine into that AMAX mine longer term and get the residents time underground. we got to actively evaluate the options to get brine into that amax mine longer term and get the residents time underground As we look forward into late 2026 and 2027, we do have our Wendover production, which will continue to increase with primary pond seven starting to ramp up here in the back half of 2025 into 2026. as we look forward into late 2026 and 2027 we do have our wendover production which will continue to increase with primary pond seven starting to ramp up here in the back half of 2025 into 2026 As we evaluate options and understand HB a little bit better, we'll certainly keep the market updated. as we evaluate options and understand hb a little bit better we'll certainly keep the market updated How fast we can get into that AMAX mine and get brine under there will start to dictate the longer-term forecasts. how fast we can get into that amax mine and get brine under there will start to dictate the longer-term forecasts

Speaker 4: Yeah, Lucas, it's just, despite the fact that there wasn't any brine in AMAX, which was a little bit of a surprise to us based on all the recon that we've done, that is still a very critical component of the long-term plan for Carlsbad. It's just a function of finding the brine and the new injection well so we can start filling up that cavity, and you'll see it show up in the future forecasts. I guess maybe just another way to help frame that for people then. I mean, you've obviously gone through the project here where you thought there was the brine, you've drilled the well, and unfortunately, it was unsuccessful in this case. Yeah, Lucas, it's just, despite the fact that there wasn't any brine in AMAX, which was a little bit of a surprise to us based on all the recon that we've done, that is still a very critical component of the long-term plan for Carlsbad. yeah lucas it's just despite the fact that there wasn't any brine in amax which was a little bit of a surprise to us based on all the recon that we've done that is still a very critical component of the long-term plan for carlsbad It's just a function of finding the brine and the new injection well so we can start filling up that cavity, and you'll see it show up in the future forecasts. it's just a function of finding the brine and the new injection well so we can start filling up that cavity and you'll see it show up in the future forecasts I guess maybe just another way to help frame that for people then. i guess maybe just another way to help frame that for people then I mean, you've obviously gone through the project here where you thought there was the brine, you've drilled the well, and unfortunately, it was unsuccessful in this case. i mean you've obviously gone through the project here where you thought there was the brine you've drilled the well and unfortunately it was unsuccessful in this case I guess how long was that sort of lead time of the period to kind of execute on that to help give us a feel for what it would take to have another go effectively? I guess how long was that sort of lead time of the period to kind of execute on that to help give us a feel for what it would take to have another go effectively? i guess how long was that sort of lead time of the period to kind of execute on that to help give us a feel for what it would take to have another go effectively

Speaker 2: Yeah, and if I'm understanding your question exactly, that's what we're evaluating right now. We have to look at the permit requirements to do an injection well and pipeline. We had hoped there was a brine that had been under there for a while, and we'd have an extraction well and an extraction pipeline we could tie into our AMAX system in the near term. Without that today, we have to just go through the necessary steps to look at injection, much like we have for all the other mines at HB, whether it's North, South, or Eddy Mine. I think it's important to remember that these were empty when we started our HB project, and all these started with us injecting brine and having residence time. In many ways, AMAX will just be like what we've done before for HB. Yeah, and if I'm understanding your question exactly, that's what we're evaluating right now. yeah and if i'm understanding your question exactly that's what we're evaluating right now We have to look at the permit requirements to do an injection well and pipeline. we have to look at the permit requirements to do an injection well and pipeline We had hoped there was a brine that had been under there for a while, and we'd have an extraction well and an extraction pipeline we could tie into our AMAX system in the near term. we had hoped there was a brine that had been under there for a while and we'd have an extraction well and an extraction pipeline we could tie into our amax system in the near term Without that today, we have to just go through the necessary steps to look at injection, much like we have for all the other mines at HB, whether it's North, South, or Eddy Mine. without that today we have to just go through the necessary steps to look at injection much like we have for all the other mines at hb whether it's north south or eddy mine I think it's important to remember that these were empty when we started our HB project, and all these started with us injecting brine and having residence time. i think it's important to remember that these were empty when we started our hb project and all these started with us injecting brine and having residence time In many ways, AMAX will just be like what we've done before for HB. in many ways amax will just be like what we've done before for hb We hoped to get a bit of a head start there, but unfortunately, that wasn't the case. We hoped to get a bit of a head start there, but unfortunately, that wasn't the case. we hoped to get a bit of a head start there but unfortunately that wasn't the case

Speaker 4: Great. Lastly, you guys have made solid progress on your lower production cost per ton the last couple of years now. With the lower production outlook, I assume that's going to sort of be negative for cost absorption going forward. If you could kind of just help frame that up for us for the second half and then into 2026, that'd be great. Great. great Lastly, you guys have made solid progress on your lower production cost per ton the last couple of years now. lastly you guys have made solid progress on your lower production cost per ton the last couple of years now With the lower production outlook, I assume that's going to sort of be negative for cost absorption going forward. with the lower production outlook i assume that's going to sort of be negative for cost absorption going forward If you could kind of just help frame that up for us for the second half and then into 2026, that'd be great. if you could kind of just help frame that up for us for the second half and then into 2026 that'd be great

Speaker 2: Yeah, I don't see a huge impact to the second half. Obviously, it's kind of that cost of inventory starts to creep up with lower production. It's a bit progressive as you go forward. For 2026, it's kind of as simple as the 40,000 tons is about 12-13% of our overall Potash production. Given our larger fixed cost load, we need to look at ways to get our costs down in light of this news. At face value, you could expect an 8-10% increase in our cost per ton unless we can find ways to cut back, which we're actively looking at. Yeah, I don't see a huge impact to the second half. yeah i don't see a huge impact to the second half Obviously, it's kind of that cost of inventory starts to creep up with lower production. obviously it's kind of that cost of inventory starts to creep up with lower production It's a bit progressive as you go forward. it's a bit progressive as you go forward For 2026, it's kind of as simple as the 40,000 tons is about 12- 13% of our overall Potash production. for 2026 it's kind of as simple as the 40,000 tons is about 12- 13% of our overall potash production Given our larger fixed cost load, we need to look at ways to get our costs down in light of this news. given our larger fixed cost load we need to look at ways to get our costs down in light of this news At face value, you could expect an 8-1 0% increase in our cost per ton unless we can find ways to cut back, which we're actively looking at. at face value you could expect an 8-1 0% increase in our cost per ton unless we can find ways to cut back which we're actively looking at Mitigate it to some extent, or at least a large extent, sort of the price deck and price ideas that we're seeing out there in the marketplace. Net net, hopefully, the result that we generate is neutral, even despite the downgrade in production guidance. Mitigate it to some extent, or at least a large extent, sort of the price deck and price ideas that we're seeing out there in the marketplace. mitigate it to some extent or at least a large extent sort of the price deck and price ideas that we're seeing out there in the marketplace Net net, hopefully, the result that we generate is neutral, even despite the downgrade in production guidance. net net hopefully the result that we generate is neutral even despite the downgrade in production guidance

Speaker 4: All right, thanks very much. All right, thanks very much. all right thanks very much

Speaker 6: Your next question comes from Jason Ursaner with Bumbershoot Holdings. Your next question comes from Jason Ursaner with Bumbershoot Holdings. your next question comes from jason ursaner with bumbershoot holdings

Speaker 1: Hey, just maybe following up a little bit on the production. I guess, can you try to frame, you know, all the CapEx that you did? A lot of that started with injection with the residence time underground. You know, this balance between 2025 and 2026 calendar year, how does that kind of look versus maybe more of a longer-term view of where your injection rates are overall into the system with some of that brine kind of getting saturated over time, maybe over a slightly longer time frame? Hey, just maybe following up a little bit on the production. hey just maybe following up a little bit on the production I guess, can you try to frame, you know, all the CapEx that you did? i guess can you try to frame you know all the capex that you did A lot of that started with injection with the residence time underground. a lot of that started with injection with the residence time underground You know, this balance between 2025 and 2026 calendar year, how does that kind of look versus maybe more of a longer-term view of where your injection rates are overall into the system with some of that brine kind of getting saturated over time, maybe over a slightly longer time frame? you know this balance between 2025 and 2026 calendar year how does that kind of look versus maybe more of a longer-term view of where your injection rates are overall into the system with some of that brine kind of getting saturated over time maybe over a slightly longer time frame

Speaker 2: Yeah, I'll do my best to answer that, Jason. I mean, you're right. We've really focused on investing back in our core assets for HB. Our main focus has been keeping injection rates above our extraction rates to keep our caverns full, make sure that we're touching all that potash underground all the time, and really maximizing the production out of each of our different caverns at HB. I mean, going forward, it's largely the same. We just want to make sure that we're keeping our caverns as full as possible. Certainly, as we look to 2026, one of the impacts now is we'll have to just pull on those existing caverns a little bit harder than we otherwise would have liked. Hoping we'd had one more kind of straw down there at the AMAX cavern sample well project for the 2026 production. We're encouraged by the trend. Yeah, I'll do my best to answer that, Jason. yeah i'll do my best to answer that jason I mean, you're right. i mean you're right We've really focused on investing back in our core assets for HB. we've really focused on investing back in our core assets for hb Our main focus has been keeping injection rates above our extraction rates to keep our caverns full, make sure that we're touching all that potash underground all the time, and really maximizing the production out of each of our different caverns at HB. our main focus has been keeping injection rates above our extraction rates to keep our caverns full make sure that we're touching all that potash underground all the time and really maximizing the production out of each of our different caverns at hb I mean, going forward, it's largely the same. i mean going forward it's largely the same We just want to make sure that we're keeping our caverns as full as possible. we just want to make sure that we're keeping our caverns as full as possible Certainly, as we look to 2026, one of the impacts now is we'll have to just pull on those existing caverns a little bit harder than we otherwise would have liked. certainly as we look to 2026 one of the impacts now is we'll have to just pull on those existing caverns a little bit harder than we otherwise would have liked Hoping we'd had one more kind of straw down there at the AMAX cavern sample well project for the 2026 production. hoping we'd had one more kind of straw down there at the amax cavern sample well project for the 2026 production We're encouraged by the trend. we're encouraged by the trend Obviously, the success we've had when we've refocused on our core assets and getting that brine underground, we've seen the results. Like we said on the call, it's a bit of a speed bump for us for sure, but confident in our ability to execute at HB over the long term. Obviously, the success we've had when we've refocused on our core assets and getting that brine underground, we've seen the results. obviously the success we've had when we've refocused on our core assets and getting that brine underground we've seen the results Like we said on the call, it's a bit of a speed bump for us for sure, but confident in our ability to execute at HB over the long term. like we said on the call it's a bit of a speed bump for us for sure but confident in our ability to execute at hb over the long term

Speaker 1: Is the brine grade mostly the Eddy Shaft kind of top depth tailing off? What would cause the brine grade to decline a bit? Is the brine grade mostly the Eddy Shaft kind of top depth tailing off? is the brine grade mostly the eddy shaft kind of top depth tailing off What would cause the brine grade to decline a bit? what would cause the brine grade to decline a bit

Speaker 2: hoped the AMAX cavern sample well project, if there was brine under there, would have had significant residence time. It would have been a pretty strong brine grade, much like we saw out of the Eddy Mine when we got back in there, both from the Eddy Shaft as well as the new extraction well we completed a while back. Just given that we have one less cavern to pull out of, we'll pull a little bit harder, which just decreases residence time overall. We'll just see a lower brine grade, given a general reduced residence time in our existing caverns in 2026. hoped the AMAX cavern sample well project, if there was brine under there, would have had significant residence time. hoped the amax cavern sample well project if there was brine under there would have had significant residence time It would have been a pretty strong brine grade, much like we saw out of the Eddy Mine when we got back in there, both from the Eddy Shaft as well as the new extraction well we completed a while back. it would have been a pretty strong brine grade much like we saw out of the eddy mine when we got back in there both from the eddy shaft as well as the new extraction well we completed a while back Just given that we have one less cavern to pull out of, we'll pull a little bit harder, which just decreases residence time overall. just given that we have one less cavern to pull out of we'll pull a little bit harder which just decreases residence time overall We'll just see a lower brine grade, given a general reduced residence time in our existing caverns in 2026. we'll just see a lower brine grade given a general reduced residence time in our existing caverns in 2026

Speaker 1: Okay. Great quarter in terms of cash flow. I think you gave the number as of August, you're with $87 million in cash. The outlook on pricing sounds, you know, relatively constructive. In terms of future going forward, it should be okay. At some point, you know, hopefully get some of the money from Exxon, maybe even the next round of money from Exxon. I think the last couple of calls have talked about Oilfield Solutions kind of non-core. I guess at what point, you know, cash is accumulating pretty quickly on the balance. Even if you look out a year or two, you know, if things go right, there could be a pretty significant amount of capital relative to your market cap. Okay. okay Great quarter in terms of cash flow. great quarter in terms of cash flow I think you gave the number as of August, you're with $87 million in cash. i think you gave the number as of august you're with $87 million in cash The outlook on pricing sounds, you know, relatively constructive. the outlook on pricing sounds you know relatively constructive In terms of future going forward, it should be okay. in terms of future going forward it should be okay At some point, you know, hopefully get some of the money from Exxon, maybe even the next round of money from Exxon. at some point you know hopefully get some of the money from exxon maybe even the next round of money from exxon I think the last couple of calls have talked about Oilfield Solutions kind of non-core. i think the last couple of calls have talked about oilfield solutions kind of non-core I guess at what point, you know, cash is accumulating pretty quickly on the balance. i guess at what point you know cash is accumulating pretty quickly on the balance Even if you look out a year or two, you know, if things go right, there could be a pretty significant amount of capital relative to your market cap. even if you look out a year or two you know if things go right there could be a pretty significant amount of capital relative to your market cap I know I've asked about it a number of times, but I guess at what point does the capital allocation question sort of become, you know, a pretty clear focus, just given that you're going to have a significant portion of your market cap in cash? I know I've asked about it a number of times, but I guess at what point does the capital allocation question sort of become, you know, a pretty clear focus, just given that you're going to have a significant portion of your market cap in cash? i know i've asked about it a number of times but i guess at what point does the capital allocation question sort of become you know a pretty clear focus just given that you're going to have a significant portion of your market cap in cash

Speaker 2: Good question. Good points. We did, we are accumulating some cash. You asked the question of what point does the capital allocation discussion become relevant. Look, it's always relevant. The board talks about it all the time. Historically, what I've said is we need to continue to focus on the core operations, sort of a restoration plan, getting those things back to what I would refer to as an entitled level of performance, where we're predictable, reliable, we're durable over the long term, and having adequate cash on the balance sheet to see you through sort of volatile market periods. With that as a backdrop, to the extent that something happened with Exxon, again, we have no idea around that. They have no obligation to share with us their long-term plans, but that is hanging out there. We've spoken to the South Ranch in the past. Good question. good question Good points. good points We did, we are accumulating some cash. we did we are accumulating some cash You asked the question of what point does the capital allocation discussion become relevant. you asked the question of what point does the capital allocation discussion become relevant Look, it's always relevant. look it's always relevant The board talks about it all the time. the board talks about it all the time Historically, what I've said is we need to continue to focus on the core operations, sort of a restoration plan, getting those things back to what I would refer to as an entitled level of performance, where we're predictable, reliable, we're durable over the long term, and having adequate cash on the balance sheet to see you through sort of volatile market periods. historically what i've said is we need to continue to focus on the core operations sort of a restoration plan getting those things back to what i would refer to as an entitled level of performance where we're predictable reliable we're durable over the long term and having adequate cash on the balance sheet to see you through sort of volatile market periods With that as a backdrop, to the extent that something happened with Exxon, again, we have no idea around that. with that as a backdrop to the extent that something happened with exxon again we have no idea around that They have no obligation to share with us their long-term plans, but that is hanging out there. they have no obligation to share with us their long-term plans but that is hanging out there We've spoken to the South Ranch in the past. we've spoken to the south ranch in the past That would bring the capital allocation discussion to the fore with the board. I don't want to speculate on that, but things are stacking up in favor of a very robust discussion on that front. What we've got to do is just continue to execute so that that discussion remains relevant at all times. Hopefully that's responsive to your inquiry. That would bring the capital allocation discussion to the fore with the board. that would bring the capital allocation discussion to the fore with the board I don't want to speculate on that, but things are stacking up in favor of a very robust discussion on that front. i don't want to speculate on that but things are stacking up in favor of a very robust discussion on that front What we've got to do is just continue to execute so that that discussion remains relevant at all times. what we've got to do is just continue to execute so that that discussion remains relevant at all times Hopefully that's responsive to your inquiry. hopefully that's responsive to your inquiry

Speaker 1: No, I appreciate that. I think there's limits to what you can say, but it is becoming apparent. The company is a significant cash generator, and I don't know, it's a positive problem to have, I guess, at some point. I appreciate it, and thanks for answering the question. No, I appreciate that. no i appreciate that I think there's limits to what you can say, but it is becoming apparent. i think there's limits to what you can say but it is becoming apparent The company is a significant cash generator, and I don't know, it's a positive problem to have, I guess, at some point. the company is a significant cash generator and i don't know it's a positive problem to have i guess at some point I appreciate it, and thanks for answering the question. i appreciate it and thanks for answering the question

Speaker 2: Yeah, thank you. Yeah, thank you. yeah thank you

Speaker 6: This concludes the question and answer session. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks. This concludes the question and answer session. this concludes the question and answer session I would like to turn the conference back over to Kevin Crutchfield for any closing remarks. i would like to turn the conference back over to kevin crutchfield for any closing remarks

Speaker 2: Thank you again for attending today. I'd like to give one final thank you again to our team for their hard work and their dedication over the course of the last couple of quarters in putting together solid levels of performance. We'll keep you posted in the coming quarters. Thank you again for attending today. Have a good one. Thank you again for attending today. thank you again for attending today I'd like to give one final thank you again to our team for their hard work and their dedication over the course of the last couple of quarters in putting together solid levels of performance. i'd like to give one final thank you again to our team for their hard work and their dedication over the course of the last couple of quarters in putting together solid levels of performance We'll keep you posted in the coming quarters. we'll keep you posted in the coming quarters Thank you again for attending today. thank you again for attending today Have a good one. have a good one

Speaker 6: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day. This concludes today's conference call. this concludes today's conference call You may disconnect your lines. you may disconnect your lines Thank you for participating and have a pleasant day. thank you for participating and have a pleasant day