Intrepid Potash Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 11:59
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933, as amended. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this Quarterly Report other than statements of historical fact are forward-looking statements. Forward-looking statements include statements about, among other things, our future results of operations and financial position, our business strategy and plans, our expected capital investments and our objectives for future operations. In some cases, you can identify these statements by forward-looking words, such as "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," and "continue." Forward-looking statements are only predictions based on our current knowledge, expectations, and projections about future events.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including the following:
•changes in the price, demand, or supply of our products and services;
•challenges and legal proceedings related to our water rights;
•our ability to successfully identify and implement any opportunities to grow our business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;
•the costs of, and our ability to successfully execute, any strategic projects;
•declines or changes in agricultural production or fertilizer application rates;
•declines in the use of potassium-related products or water by oil and gas companies in their drilling operations;
•our ability to prevail in outstanding legal proceedings against us;
•our ability to comply with the terms of our revolving credit facility, including any underlying covenants;
•write-downs of the carrying value of assets;
•circumstances that disrupt or limit production, including operational difficulties or variances, geological or geotechnical variances, equipment failures, environmental hazards, and other unexpected events or problems;
•changes in reserve estimates;
•currency fluctuations;
•adverse changes in economic conditions or credit markets;
•the impact of governmental regulations, including environmental and mining regulations, the enforcement of those regulations, and governmental policy changes;
•the impact of trade tariffs and any potential changes to them we are unable to mitigate;
•weather events, including events affecting precipitation and evaporation rates at our solar solution mines;
•increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise;
•changes in management and the board of directors, and our reliance on key personnel, including our ability to identify, recruit, and retain key personnel;
•changes in the prices of raw materials, including chemicals, natural gas, and power;
•our ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations;
•interruptions in rail or truck transportation services, or fluctuations in the costs of these services;
•our inability to fund necessary capital investments;
•global inflationary pressures and supply chain challenges;
•the impact of global health issues, and other global disruptions on our business, operations, liquidity, financial condition and results of operations; and
•the other risks, uncertainties, and assumptions described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024, this Quarterly Report and in other reports we file with the SEC.
In addition, new risks emerge from time to time. It is not possible for our management to predict all risks that may cause actual results to differ materially from those contained in any forward-looking statements we may make.
In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in these forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements to conform those statements to actual results or to reflect new information or future events.
Throughout this Quarterly Report, we refer to average net realized sales price per ton, which is a non-GAAP financial measure. More information about this measure, including a reconciliation of this measure to the most directly comparable GAAP financial measure, is below under the heading "Non-GAAP Financial Measure."
Company Overview
We are a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed and the oil and gas industry. We are the only U.S. producer of muriate of potash (sometimes referred to as potassium chloride, KCl or potash), which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, we produce a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. We also provide water, magnesium chloride, brine, and various oilfield products and services.
Our extraction and production operations are conducted entirely in the continental U.S. We produce potash from three solution mining facilities: our HB solution mine in Carlsbad, New Mexico, our solution mine in Moab, Utah, and our brine recovery mine in Wendover, Utah. We also operate our North compaction facility in Carlsbad, New Mexico, which compacts and granulates product from the HB mine. We produce Trio®from our conventional underground East mine in Carlsbad, New Mexico.
We also have certain land, water rights, federal grazing leases, and other related assets in southeast New Mexico. We refer to these assets and operations as "Intrepid South." Our Intrepid South property generates revenue from sales of various oilfield related products and services, including but not limited to, water, brine, surface use and right-of-way agreements, a produced water royalty agreement, and caliche.
We have three segments: potash, Trio®, and oilfield solutions. We account for the sale of byproducts as revenue in the potash or Trio®segment based on which segment generated the byproduct. Intersegment sales prices are market based and are eliminated.
Significant Business Trends and Activities
Our financial results have been, or are expected to be, impacted by several significant trends and activities, which are described below. We expect that the trends described below may continue to impact our results of operations, cash flows, and financial position.
• Tariffs and retaliatory tariffs.Since February 2025, the U.S. government has announced, implemented, modified, paused, and/or terminated various tariff measures, including "reciprocal" tariffs on imports from most countries, the so-called "trafficking" tariffs on imports from Canada, Mexico and China, and a number of new or modified tariffs on imports of specific classes of products (including, but not limited to, steel, aluminum, and copper) under Section 232 of the Trade Expansion Act of 1962.
Imports from Canada and Mexico that meet the origin rules of the United States-Mexico-Canada Agreement (USMCA), are presently exempt from the "reciprocal" and "trafficking" tariffs, but not the Section 232 tariffs. However the status of this exemption is uncertain, and the USMCA itself may be subject to renegotiation. Other countries and customs unions, including the United Kingdom, European Union, and Japan, have negotiated separate trade agreements with the U.S. resulting in lower tariffs that would have otherwise applied. However, these agreements are also subject to further negotiation.
The U.S. also continues to negotiate with additional trade partners on potential agreements, the outcome of which remains uncertain. These tariffs and other announcements has led, and may continue to lead, to retaliatory tariffs by other countries. This activity is creating uncertainty regarding the extent and impact of tariffs on our business and the economy in general. Tariffs, or the potential for tariffs, may affect the costs and availability of raw materials, affect our customers' purchasing decisions, contribute to increases in operating costs through increases in product and equipment costs, wages, and energy, or have other related impacts on our business and the markets in which we operate.
• Potash pricing and demand.Our potash average net realized sales price per ton(1)increased to $381 for the three months ended September 30, 2025, compared to $356 for the same period in 2024, as we realized the entirety of the first half potash price increases, and we sold a greater percentage of our product into feed markets due to normal seasonality in agricultural markets. Our average net realized sales price per ton for the nine months ended September 30, 2025, decreased to $345 compared to $387 for the same period in 2024, as pricing to begin the year was $70 per ton lower than in 2024, and we sold a smaller percentage of our product into feed markets due to higher overall sales volumes. Sales volume increased 15% and 28% in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024, as improved production volumes during 2024 led to more tons available for sale in the first nine months of 2025.
Potash prices were stable through the third quarter of 2025 as summer-fill pricing announced in June 2025 largely filled the third quarter order book. We realized higher prices ($410 per ton Midwest warehouse reference price) on certain spot shipments in the third quarter, although that price level remains largely untested as distributors secured the majority of their third quarter needs during the fill period. Looking ahead, pricing continues to be supported by a balanced global outlook for potash and contract settlements with China and India that are supportive of U.S price levels despite decreases in farmer profitability.
As a small producer, domestic pricing of our potash is influenced principally by the price established by our competitors. The interaction of global potash supply and demand, ocean, land, and barge freight rates, currency fluctuations, and crop commodity values and outlook, also influence pricing. Our price expectations could be affected by, among other things, weather, planting decisions, rail car availability, commodity price decreases and the price and availability of other potassium products.
Various factors affect potash sales and shipments, which increases the volatility of sales volumes from quarter to quarter and season to season. We experience seasonality in potash demand, with more purchases historically occurring in February through May and September through November when purchasers are looking to have product on hand for the spring and fall application seasons in the U.S. The specific timing of when farmers apply potash remains highly weather dependent and varies across the numerous growing regions within the U.S. The timing of potash sales is also significantly influenced by the marketing programs of potash producers, as well as storage volumes closer to the farm gate.
• Trio®pricing and demand. Our Trio®average net realized sales price per ton(1)increased to $402 and $362 for the three and nine months ended September 30, 2025, respectively, compared to $312 and $305, respectively for the same periods in 2024, as rising potash prices and higher sulfate price levels led to increased Trio®prices. Sales volumes in the three months ended September 30, 2025, decreased 20% compared to the same period in 2024, as buyers deferred purchases to stock Trio® inventories for the upcoming spring 2026 application season. Sales volumes for the nine months ended September 30, 2025, increased 8%, compared to the same period in 2024, due to an increase in production rates and an acreage shift to corn in traditional Trio®markets which led to strong demand throughout the first nine months of 2025.
Trio®pricing increased $10 per ton to $415 per ton in June 2025, after completion of an order window for a summer fill program, and we maintained those prices through the third quarter. In late October we announced a fall fill program for Trio®reducing prices by $35 per ton to $380 per ton for orders received during a one-week window with shipments of those orders by the end of the year. We saw good subscription to the fall fill program with customers committing to historical volumes. After the one-week order window for the fall fill program was closed, Trio®pricing increased $25 per ton to $405 per ton. Moving forward, we expect Trio®pricing to be supported by a balanced global potash outlook and constructive sulfate values. Our ability to realize these prices may be affected by, among other things, weather, planting decisions, rail car availability, commodity price decreases, and the price and availability of other potassium products.
We also experience seasonality in domestic Trio®demand, with more purchases coming in the first and second quarters in advance of the spring application season in the U.S. In turn, we generally have increased inventory levels in the third and fourth quarters in anticipation of expected demand for the following year.
• Water sales. In the three and nine months ended September 30, 2025, total water sales were $0.6 million and $2.6 million, respectively, compared to $7.9 million and $12.7 million, respectively, during the same periods of 2024. Sales decreased in the three and nine months ended September 30, 2025, compared to the prior year as we sold less water from our Caprock water rights and at Intrepid South as the market continues to trend towards more use of recycled water in oil and gas operations. Water sales in the third quarter of 2024 included a five million barrel frac at Intrepid South and we have not seen similar activity on Intrepid South in 2025. We continue to pursue opportunities to supply or source water for additional fracs on or near Intrepid South, although the timing of those opportunities, if any, is uncertain.
See Note 14 of our unaudited Condensed Consolidated Financial Statements included in "Item 1. Condensed Consolidated Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q regarding legal proceedings related to our water rights.
• Byproduct sales. We sell byproducts that are derived from our potash and Trio®operations. Byproduct sales were $6.3 million and $18.9 million during the three and nine months ended September 30, 2025, respectively, compared to $6.7 million and $18.1 million, respectively, for the same periods of 2024. Byproduct sales in the third quarter were similar to the prior year as we have seen a return to more normal demand for our magnesium chloride in Wendover and consistent salt sales from our potash operations. Byproduct sales for the nine months ended September 30, 2025, increased primarily due to increased sales of magnesium chloride in early 2025 as our customer was able to destock inventory that impacted 2024 sales volumes and return to more normal seasonal volumes.
• HB AMAX Cavern. In July, we successfully drilled a sample well into one of the lowest sections of the AMAX mine; unfortunately, the brine pool that we anticipated encountering based on our imaging was not present. Given this outcome, we are continuing our evaluation of options to pursue an injection well and pipeline that would connect the AMAX mine to our HB injection system. Timing of construction will depend on further technical review and quantifying permitting requirements. We expect to have the necessary permits complete in the first quarter of 2026.
• Other oilfield products and services.Our revenue from brine and other oilfield products and services, excluding water, recorded in our oilfield solutions segment were $2.2 million and $8.8 million in the three and nine months ended September 30, 2025, respectively, compared to $2.4 million and $8.5 million, respectively, in the same periods of 2024, due primarily to the timing of recognizing surface use and easement revenues on Intrepid South.
(1)Average net realized sales price per ton is a non-GAAP financial measure. More information about this non-GAAP financial measure is below under the heading "Non-GAAP Financial Measure."
Consolidated Results
| (in thousands, except per ton amounts) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
|
Sales1
|
$ | 53,219 | $ | 57,549 | $ | 222,451 | $ | 198,891 | ||||||||||||||||||
| Cost of goods sold | $ | 33,051 | $ | 38,266 | $ | 136,534 | $ | 135,767 | ||||||||||||||||||
| Gross Margin | $ | 10,574 | $ | 7,732 | $ | 39,463 | $ | 21,790 | ||||||||||||||||||
| Selling and administrative | $ | 9,000 | $ | 9,154 | $ | 27,128 | $ | 25,448 | ||||||||||||||||||
| Net Income (Loss) | $ | 3,745 | $ | (1,833) | $ | 11,614 | $ | (5,796) | ||||||||||||||||||
|
Average net realized sales price per ton2
|
||||||||||||||||||||||||||
| Potash | $ | 381 | $ | 356 | $ | 345 | $ | 387 | ||||||||||||||||||
|
Trio®
|
$ | 402 | $ | 312 | $ | 362 | $ | 305 | ||||||||||||||||||
1Sales include sales of byproducts which were $6.3 million and $6.7 million for the three months ended September 30, 2025, and 2024, respectively, and $18.9 million and $18.1 million for the nine months ended September 30, 2025, and 2024, respectively.
2Average net realized sales price per ton is a non-GAAP financial measure. More information about this non-GAAP financial measure is below under the heading "Non-GAAP Financial Measure."
Consolidated Results for the Three Months Ended September 30, 2025, and 2024
Sales
Our total sales for the three months ended September 30, 2025, decreased $4.3 million, or 8%, compared to the same period in 2024, as oilfield solutions segment sales decreased $7.6 million, and Trio®segment sales decreased $0.8 million, partially offset by an increase of $4.1 million in potash segment sales.
Our total potash segment sales increased $4.1 million during the three months ended September 30, 2025, compared to the same period in 2024, as potash sales increased $4.7 million, partially offset by a $0.5 million decrease in potash segment byproduct sales. During the three months ended September 30, 2025, we sold 15% more tons of potash, compared to the same period in 2024, as we began the third quarter with more tons to sell due to strong potash production in the first and second quarters of 2025, combined with a 7% increase in our average net realized sales price per ton as we realized the various potash price increases announced since the 2025 winter fill program was launched at the beginning of January 2025.
Our Trio® segment sales decreased $0.8 million, or 4%, in the three months ended September 30, 2025, compared to the same period in 2024, as we sold 20% fewer tons of Trio®as customers deferred purchasing Trio®to build inventory for the upcoming Spring 2026 application season. Our Trio® average net realized sales price per ton increased 29% for the three months ended September 30, 2025, due to continued strong prices of the individual nutrient components of Trio®, particularly sulfate and potassium.
Our oilfield solutions segment sales, which include sales of water, brine water, surface use, and easements, decreased $7.6 million, or 74%, in the three months ended September 30, 2025, compared to the same period in 2024, driven by a $7.4 million decrease in water sales and a $0.3 million decrease in surface use and easement revenues. Our oilfield solutions segment water revenues decreased during the three months ended September 30, 2025, compared to the same period in 2024, due to the completion of a large frac on Intrepid South in the third quarter of 2024 combined with decreased sales from our Caprock wells. Our surface use and easement revenues fluctuate based on the timing of recognizing revenue from the various performance obligations contained in the underlying agreements.
Our total byproduct sales, which are recorded in either our potash segment or Trio®segment, decreased $0.4 million in the three months ended September 30, 2025, compared to the same period in 2024, due to slight decreases in brine, salt, and magnesium chloride sales.
Cost of Goods Sold
Our total cost of goods sold decreased $5.2 million during the three months ended September 30, 2025, compared to the same period in 2024, as oilfield solutions segment cost of goods sold decreased $4.5 million, and Trio®segment cost of goods sold decreased $3.0 million, partially offset by a $2.3 million increase in potash segment cost of goods sold.
Our oilfield solutions cost of goods sold decreased $4.5 million, or 62%, during the three months ended September 30, 2025, compared to the same period in 2024, as total oilfield solution segment sales decreased 74%. As mentioned above, a large frac was completed on Intrepid South in the third quarter of 2024 and associated with that frac, we purchased $3.6 million of third-party water.
Our Trio®segment cost of goods sold decreased 24% during the three months ended September 30, 2025, compared to the same period in 2024, as we sold 20% fewer tons. In addition, our weighted average carrying cost per Trio® ton decreased during the three months ended September 30, 2025, compared to the same period in 2024, due to improved Trio®production during the first nine months of 2025. A significant portion of our Trio® production costs are fixed and an increase in the number of tons produced decreases our per ton production costs.
Our potash segment cost of goods sold increased $2.3 million, or 12%, during the three months ended September 30, 2025, compared to the same period in 2024, as we sold 15% more tons of potash in the three months ended September 30, 2025, compared to the same period in 2024.
Lower of Cost or Net Realizable Value Inventory Adjustments
In the three months ended September 30, 2025, we incurred $0.4 million of lower of cost or net realizable value inventory adjustments in our potash segment, as our weighted average carrying costs for certain potash products exceeded our expected average net realized sales price for those products. We incurred $0.5 million in lower of cost or net realizable value inventory adjustments in our potash segment in the three months ended September 30, 2024.
Gross Margin
During the three months ended September 30, 2025, we generated gross margin of $10.6 million compared to gross margin of $7.7 million during the same period in 2024. As discussed above, our gross margin increased during the three months ended September 30, 2025, due to increased average net realized sales price per ton for both potash and Trio®.
Selling and Administrative Expenses
During the three months ended September 30, 2025, selling and administrative expenses decreased $0.2 million compared to the same period in 2024, driven by a $2.2 million decrease in labor and benefits expense and a $0.3 million decrease in legal expenses, partially offset by a $1.2 million increase in stock compensation expense and a $1.1 million increase in other professional services expenses. In April 2024, our former Chief Executive Officer ("CEO") was injured in a non-work related accident. Effective September 30, 2024, we entered into an agreement with our former CEO where we agreed to pay the former CEO $2.0 million in cash for compensation owed to him for services rendered prior to the accident and all of his unvested equity awards were cancelled. The cash payment was recorded in labor and benefits and we reversed approximately $1.1 million in equity compensation expense previously recognized on the former CEO's unvested equity awards that were cancelled. Finally, other professional services expense increased $1.1 million because we used more outside consultants during the three months ended September 30, 2025, compared to the same period in 2024.
Impairment Expense
During the year ended December 31, 2023, we recorded an impairment related to our Trio® segment assets because the net book value exceeded the estimated fair value of the assets. The fair value of the Trio® segment assets was primarily determined using the expected proceeds received in an orderly sale of the individual assets. For any Trio® segment capital spending during the three months ended September 30, 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets and recorded an impairment of $0.9 million in the three months ended September 30, 2024. For the three months ended September 30, 2025, we recorded no impairment expense.
Other Operating Expense
Other operating expense increased $0.4 million during the three months ended September 30, 2025, compared to the same period in 2024. In early 2020, we applied for and received a $10.0 million Payroll Protection Program ("PPP") loan from the U.S. Small Business Administration ("SBA"). In November 2020, the SBA notified us that our $10.0 million PPP loan was forgiven. In August 2025, SBA notified us that due to a clerical error in our PPP loan application we were only eligible for a $9.6 million PPP loan and we are required to repay $0.4 million of the PPP loan. We recorded the $0.4 million repayment in other operating expense during the three months ended September 30, 2025.
Income Tax Expense
During the three months ended September 30, 2025, we incurred $0.3 million in income tax expense compared to an immaterial income tax benefit during the same period in 2024. Since December 31, 2024, we have had a full valuation allowance recorded against our deferred tax assets.
Net Income
We generated net income of $3.7 million during the three months ended September 30, 2025, compared to a net loss of $1.8 million in the same period in 2024, due to the factors discussed above.
Consolidated Results for the Nine Months Ended September 30, 2025, and 2024
Sales
Our total sales for the nine months ended September 30, 2025, increased $23.6 million, or 12%, compared to the same period in 2024, as Trio®segment sales increased $19.2 million and potash segment sales increased $14.1 million, partially offset by a decrease of $9.8 million in oilfield solutions segment sales.
Our Trio® segment sales increased $19.2 million, or 23%, in the nine months ended September 30, 2025, compared to the same period in 2024, as we sold 8% more tons of Trio®because we had more inventory to sell due to increased production during the first nine months of 2025, and our Trio® average net realized sales price per ton increased 19% in the nine months ended September 30, 2025, compared to the same period in 2024, as we realized the benefits of several price increases announced during the first half of 2025. Continued strong prices of the individual nutrient components of Trio®, particularly sulfate and potassium along with strong demand drove the price increases.
Our total potash segment sales increased $14.1 million for the nine months ended September 30, 2025, compared to the same period in 2024, as potash sales increased $13.2 million and potash segment byproduct sales increased $0.9 million. During the nine months ended September 30, 2025, we sold 28% more tons of potash, compared to the same period in 2024, as we had more tons to sell due to increased production in the first nine months of 2025. During the nine months ended September 30, 2025, our average net realized sales price per ton decreased 11% as potash list prices at the beginning of 2025 were approximately $70 per ton lower than at the beginning of 2024. List potash prices increased throughout the first half of 2025 due to strong global demand and U.S. farmers planting more corn acreage in 2025, compared to 2024.
Potash segment byproduct sales increased, compared to the same period in 2024, due to increased magnesium chloride sales. Our magnesium chloride sales during the nine months ended September 30, 2024, were negatively impacted as our customer entered 2024 with excess inventory. Our customer sold its excess magnesium chloride inventory during 2024, and returned to normal historical volumes during the nine months ended September 30, 2025.
Our oilfield solutions segment sales, which include sales of fresh water, brine water, surface use, and easements, decreased $9.8 million, or 46%, in the nine months ended September 30, 2025, compared to the same period in 2024, driven by a $10.0 million decrease in water sales and a $0.5 million decrease in produced water royalties, partially offset by a $0.6 million increase in surface use and easement revenues. Our oilfield solutions segment water revenues decreased during the nine months ended September 30, 2025, compared to the same period in 2024, because during 2024, we supplied water to a large frac that was completed at Intrepid South, while we have not supplied any water to large frac projects in 2025. In addition, we sold less water from our Caprock wells during the nine months ended September 30, 2025, compared to the same period in 2024. Our surface use and easement revenues fluctuate based on the timing of recognizing revenue from the various performance obligations contained in the underlying agreements.
Cost of Goods Sold
Our total cost of goods sold increased $0.8 million during the nine months ended September 30, 2025, compared to the same period in 2024, as potash segment cost of goods sold increased $10.7 million, partially offset by decreases in oilfield solutions segment and Trio® segment cost of goods of $4.4 million, and $5.5 million, respectively.
Our potash segment cost of goods sold increased $10.7 million, or 16%, during the nine months ended September 30, 2025, compared to the same period in 2024, as we sold 28% more tons of potash in the nine months ended September 30, 2025, compared to the same period in 2024. Our potash cost of goods sold during the nine months ended September 30, 2025, was favorably impacted by lower of cost or net realizable value inventory adjustments recorded during the second half of 2024 and the first half of 2025.
Our Trio®segment cost of goods sold decreased $4.4 million, or 8%, during the nine months ended September 30, 2025, compared to the same period in 2024, even though we sold 8% more tons during the 2025 period compared to the 2024 period. Our Trio®segment cost of goods sold was positively impacted by improved production rates throughout 2024, which led to a lower carrying cost per ton for our finished goods inventory to begin 2025. In addition, production labor costs decreased in the nine months ended September 30, 2025, compared to the same period in 2024, as we stopped operating an additional underground shift in March 2024 at our East facility. Finally, increased Trio®tons produced during the nine months
ended September 30, 2025, compared to the same period in 2024, lowered our per ton production costs. A significant portion of our production costs is fixed and an increase in the number of tons produced decreases our per ton production costs.
Our oilfield solutions cost of goods sold decreased $5.5 million, or 40%, during the nine months ended September 30, 2025, compared to the same period in 2024, as third party water purchases decreased $3.6 million and we incurred less expenses as total oilfield solutions segment sales decreased $10.0 million.
Lower of Cost or Net Realizable Value Inventory Adjustments
In the nine months ended September 30, 2025, we incurred $2.2 million of lower of cost or net realizable value inventory adjustments in our potash segment, as our weighted average carrying costs for certain potash products exceeded our expected average net realized sales price for those products. We incurred $2.3 million in lower of cost or net realizable value inventory adjustments in our potash segment in the nine months ended September 30, 2024.
Gross Margin
During the nine months ended September 30, 2025, we generated gross margin of $39.5 million compared to gross margin of $21.8 million during the same period in 2024, due to the factors discussed above.
Selling and Administrative Expenses
During the nine months ended September 30, 2025, selling and administrative expenses increased $1.7 million, or 7%, compared to the same period in 2024, as other professional services expenses increased $1.7 million and stock compensation expense increased $1.0 million, partially offset by a $0.9 million decrease in labor and benefits. Our professional service expenses increased because we used more outside consultants in 2025, compared to 2024. As discussed above, stock compensation decreased during the nine months ended September 30, 2025, compared to the same period in 2024, due to the reversal of approximately $1.1 million in previously recognized stock compensation expense for the cancellation of unvested equity awards to our former CEO in September 2024. Likewise, labor and benefits expense decreased because we recorded $2.0 million in labor and benefits for the cash compensation owed to our former CEO in September 2024.
Impairment Expense
During the year ended December 31, 2023, we recorded an impairment related to our Trio® segment assets because the net book value exceeded the estimated fair value of the assets. The fair value of the Trio® segment assets was primarily determined using the expected proceeds received in an orderly sale of the individual assets. For any Trio® segment capital spending during the nine months ended September 30, 2025, and 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets and recorded an impairment of $1.9 million and $3.1 million in the nine months ended September 30, 2025, and 2024, respectively.
Other Operating Expense
Other operating expense increased $1.3 million during the nine months ended September 30, 2025, compared to the same period in 2024, mainly due to a $2.2 million contingent liability recorded during the nine months ended September 30, 2025, for potential fines related to an unpermitted discharge at our HB facility. See further discussion related to the unpermitted discharge in Note 14-Commitments and Contingencies to the Condensed Consolidated Financial Statements. During the nine months ended September 30, 2024, we incurred $0.9 million for royalties assessed by the State of New Mexico on certain water sales made during 2019 to 2022.
Income Tax Expense
During the nine months ended September 30, 2025, we incurred income tax expense of $0.5 million compared to income tax benefit of $1.1 million during the same period in 2024. Since December 31, 2024, we have had a full valuation allowance against our deferred tax assets.
Net Income
We generated net income of $11.6 million during the nine months ended September 30, 2025, compared to a net loss of $5.8 million in the same period in 2024, due to the factors discussed above.
Potash Segment
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (in thousands, except per ton amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
|
Sales1
|
$ | 32,479 | $ | 28,356 | $ | 110,050 | $ | 95,966 | ||||||||||||||||||
| Less: Freight costs | 3,146 | 3,217 | 12,592 | 9,976 | ||||||||||||||||||||||
|
Warehousing and handling costs |
1,613 | 1,819 | 5,142 | 4,889 | ||||||||||||||||||||||
| Cost of goods sold | 21,050 | 18,783 | 76,531 | 65,823 | ||||||||||||||||||||||
|
Lower of cost or net realizable value inventory adjustments |
406 | 471 | 2,160 | 2,326 | ||||||||||||||||||||||
| Gross Margin | $ | 6,264 | $ | 4,066 | $ | 13,625 | $ | 12,952 | ||||||||||||||||||
|
Depreciation, depletion, and amortization incurred2
|
$ | 7,275 | $ | 6,670 | $ | 22,828 | $ | 19,819 | ||||||||||||||||||
| Potash sales volumes (in tons) | 62 | 54 | 234 | 183 | ||||||||||||||||||||||
| Potash production volumes (in tons) | 41 | 51 | 178 | 178 | ||||||||||||||||||||||
|
Average potash net realized sales price per ton3
|
$ | 381 | $ | 356 | $ | 345 | $ | 387 | ||||||||||||||||||
1 Sales include sales of byproducts which were $6.2 million and $6.7 million for the three months ended September 30, 2025, and 2024, respectively, and $18.6 million and $17.7 million for the nine months ended September 30, 2025, and 2024, respectively.
2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.
3Average net realized sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."
Three Months Ended September 30, 2025, and 2024
Our total sales in the potash segment increased $4.1 million in the three months ended September 30, 2025, compared to the same period in 2024, as potash sales recorded in the potash segment increased $4.7 million and potash segment byproduct sales decreased $0.5 million.
Our potash sales increased in the three months ended September 30, 2025, compared to the same period in 2024, as we sold 15% more tons of potash combined with an increase of 7% in our average net realized sales price per ton. We sold more tons of potash in the three months ended September 30, 2025, compared to the same period in 2024, as we had more potash to sell due to increased production during the first half of 2025. Our average net realized sales price per ton increased compared to the prior year as we realized the various potash price increases announced since the 2025 winter fill program was announced to begin January 2025.
Our potash segment byproduct sales decreased $0.5 million during the three months ended September 30, 2025, compared to the same period in 2024, as we saw minor sales declines in salt, magnesium chloride and brine water sales.
Potash segment freight expense decreased 2% in the three months ended September 30, 2025, compared to the same period in 2024, even though we sold 15% more tons of potash. Our potash freight expense is impacted by the geographic distribution of our potash and byproduct sales, by the proportion of customers arranging for and paying their own freight costs and the mix of sales shipped via rail and truck.
Our potash segment cost of goods sold increased $2.3 million, or 12%, during the three months ended September 30, 2025, compared to the same period in 2024, as we sold 15% more tons of potash. Our weighted average carrying cost per potash ton to begin the third quarter of 2025, was less than our weighted average carrying cost per potash ton to begin the third quarter of 2024, due to increased potash production during the first six months of 2025. A significant portion of our production costs are fixed and an increase in tons produced lowers our per ton production costs. In addition, lower of cost or net realizable value potash inventory adjustments recorded in previous quarters at our Wendover, Utah ("Wendover") facility lowered our weighted average carrying cost per potash ton to begin the third quarter of 2025.
During the three months ended September 30, 2025, we recorded lower of cost or net realizable value inventory adjustments of $0.4 million as our weighted average carrying cost per ton for inventoried potash products at our Wendover and HB facilities was higher than our forecasted average net realizable sales price per ton for those products. During the three months ended September 30, 2025, compared to the same period in 2024, we produced fewer tons of potash because we had fewer production days at our HB facility because of a later start-up after the 2025 evaporation season. Potash production at our
Wendover facility during the three months ended September 30, 2024, remained below historical production levels. Our work-in-process inventory at our Wendover facility is higher at September 30, 2025, compared to September 30, 2024, because of the new primary pond placed in service at the end of the second quarter of 2024. We recorded $0.5 million in lower of cost or net realized value inventory adjustments in the potash segment in the second quarter of 2024.
Our potash segment gross margin increased $2.2 million in the three months ended September 30, 2025, compared to the same period in 2024, mainly due to an increase in our potash average net realized sales price per ton.
Nine Months Ended September 30, 2025, and 2024
Our total sales in the potash segment increased $14.1 million in the nine months ended September 30, 2025, compared to the same period in 2024, as potash sales recorded in the potash segment increased $13.2 million and potash segment byproduct sales increased $0.9 million.
Our potash sales increased in the nine months ended September 30, 2025, compared to the same period in 2024, as we sold 28% more tons of potash, partially offset by an 11% decrease in our average net realized sales price per ton. Our average net realized sales price per ton during the nine months ended September 30, 2025, compared to the same period in 2024, decreased as potash list prices at the beginning of 2025 were approximately $70 per ton lower than at the beginning of 2024. We sold more tons of potash in the nine months ended September 30, 2025, compared to the same period in 2024, as we had more potash to sell due to increased production during the second half of 2024 and the first half of 2025.
Our potash segment byproduct sales during the nine months ended September 30, 2025, compared to the same period in 2024, increased $0.9 million due to an increase in magnesium chloride sales. Our magnesium chloride sales during the nine months ended September 30, 2024, were negatively impacted as our customer entered 2024 with excess inventory. Our customer sold its excess magnesium chloride inventory during 2024, and returned to more normal seasonal purchase volumes during the nine months ended September 30, 2025.
Potash segment freight expense increased 26% in the nine months ended September 30, 2025, compared to the same period in 2024, as we sold 28% more tons of potash. Our potash freight expense is impacted by the geographic distribution of our potash and byproduct sales and by the proportion of customers arranging for and paying their own freight costs.
Our potash segment cost of goods sold increased $10.7 million, or 16%, during the nine months ended September 30, 2025, compared to the same period in 2024, as we sold 28% more tons of potash in the nine months ended September 30, 2025, compared to the same period in 2024. Our potash production cost per ton decreased in 2024, due to strong production at all of our facilities during 2024, which lowered our carrying cost per ton for our finished goods inventory at the beginning of 2025, compared to the beginning of 2024, improving our per ton cost of goods sold in the nine months ended September 30, 2025. A significant portion of our production costs are fixed and an increase in the number of potash tons produced decreases our per ton production costs. In addition, lower of cost or net realizable value potash inventory adjustments recorded in 2024 also lowered our weighted average carrying cost per potash ton to begin 2025.
During the nine months ended September 30, 2025, we recorded total lower of cost or net realizable value inventory adjustments of $2.2 million, with $1.9 million of that total related to our Wendover facility. Our weighted average carrying cost per ton for inventoried potash products at our Wendover facility was higher than our expected average net realizable sales price per ton for those products. Potash production at our Wendover facility remained below historical production levels, which increased our weighted average carrying costs. Work-in-process inventory at our Wendover facility is higher at September 30, 2025, compared to September 30, 2024, because of the new primary pond placed in service at the end of the second quarter of 2024, and we expect improved production at our Wendover facility going forward. We recorded $2.3 million in lower of cost or net realized value inventory adjustments in the potash segment during the nine months ended September 30, 2024.
Our potash segment gross margin increased $0.7 million in the nine months ended September 30, 2025, compared to the same period in 2024, due to the factors discussed above.
Additional Information Relating to Potash
The table below shows our potash sales mix for the three and nine months ended September 30, 2025, and 2024:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Agricultural | 72% | 72% | 78% | 75% | ||||||||||||||||||||||
| Industrial | 7% | 4% | 4% | 3% | ||||||||||||||||||||||
| Feed | 21% | 24% | 18% | 22% | ||||||||||||||||||||||
Trio® Segment
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (in thousands, except per ton amounts) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
|
Sales1
|
$ | 18,094 | $ | 18,928 | $ | 101,148 | $ | 81,938 | ||||||||||||||||||
| Less: Freight costs | 3,473 | 4,864 | 22,646 | 20,498 | ||||||||||||||||||||||
|
Warehousing and handling costs |
996 | 1,239 | 4,071 | 3,844 | ||||||||||||||||||||||
| Cost of goods sold | 9,255 | 12,221 | 51,541 | 55,949 | ||||||||||||||||||||||
| Gross Margin | $ | 4,370 | $ | 604 | $ | 22,890 | $ | 1,647 | ||||||||||||||||||
|
Depreciation, depletion, and amortization incurred2
|
$ | 824 | $ | 864 | $ | 2,538 | $ | 2,599 | ||||||||||||||||||
| Sales volumes (in tons) | 36 | 45 | 216 | 200 | ||||||||||||||||||||||
| Production volumes (in tons) | 70 | 62 | 202 | 184 | ||||||||||||||||||||||
|
Average Trio® net realized sales price per ton3
|
$ | 402 | $ | 312 | $ | 362 | $ | 305 | ||||||||||||||||||
1 Sales include sales of byproducts which were $0.2 million and $0.0 million for the three months ended September 30, 2025, and 2024, respectively, and $0.3 million and $0.4 million for the nine months ended September 30, 2025, and 2024, respectively.
2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.
3Average net realized sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."
Three Months Ended September 30, 2025, and 2024
Trio®segment sales decreased 4% during the three months ended September 30, 2025, compared to the same period in 2024. Trio®sales decreased $1.0 million, partially offset by an increase of $0.1 million in Trio®segment byproduct sales. Trio®sales decreased primarily due to a 20% decrease in tons sold, partially offset by 29% increase in our average net realized sales price per ton. Our average net realized sales price per ton increased during the three months ended September 30, 2025, compared to the same period in 2024, as we realized the multiple Trio®price increases announced during the first half of 2025. Trio® prices rose due to strong prices of the individual nutrient components of Trio®, particularly sulfate and potassium. We sold fewer tons during the three months ended September 30, 2025, compared to the same period in 2024, as buyers deferred Trio® purchases to stock inventory for the upcoming Spring 2026 application season until later in 2025.
Trio® freight costs decreased 29% during the three months ended September 30, 2025, compared to the same period in 2024, as we sold 20% fewer tons. Our Trio® freight expense is also impacted by the geographic distribution of our Trio®sales and by the proportion of customers arranging for and paying their own freight costs.
Our Trio® cost of goods sold decreased 24% during the three months ended September 30, 2025, compared to the same period in 2024, mainly due to selling 20% fewer tons. In addition, increased Trio® tons produced over the past twelve months lowered our per ton production costs which lowered our Trio® weighted average carrying cost per ton. A significant portion of our production costs is fixed and an increase in tons produced lowers our per ton production costs.
Our Trio® segment generated gross margin of $4.4 million in the three months ended September 30, 2025, compared to gross margin of $0.6 million in the same period in 2024, mainly due to the increase in our Trio®average net realized sales price per ton and continued improvement in our Trio®cost of goods sold per ton.
Impairment Expense
During the year ended December 31, 2023, we recorded an impairment related to our Trio® segment assets because the net book value exceeded the estimated fair value of the assets. The fair value of the Trio® segment assets was primarily determined using the expected proceeds received in an orderly sale of the individual assets. For any new Trio® segment capital spending during the three months ended September 30, 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets, and we recorded an additional impairment of $0.9 million. For the three months ended September 30, 2025, we recorded no impairment expense.
Nine Months Ended September 30, 2025, and 2024
Trio®segment sales increased 23% during the nine months ended September 30, 2025, compared to the same period in 2024. Trio®sales increased $19.2 million as we sold 8% more tons, combined with a 19% increase in our average net realized sales price per ton. We sold more tons as we had more product to sell due to increased production over the past twelve months. Our average net realized sales price per ton increased during the nine months ended September 30, 2025, compared to the same period in 2024, as we realized the multiple Trio®price increases announced during the first half of 2025. Strong prices of the individual nutrient components of Trio®, particularly sulfate and potassium, led to Trio®price increases.
Trio® freight costs increased 10% during the nine months ended September 30, 2025, compared to the same period in 2024, as we sold 8% more tons. Our Trio® freight expense is impacted by the geographic distribution of our Trio®sales and by the proportion of customers arranging for and paying their own freight costs.
Our Trio® cost of goods sold decreased 8% in the nine months ended September 30, 2025, compared to the same period in 2024, even though we sold 8% more tons. Our cost of goods sold was positively impacted by improved production rates throughout 2024, which led to a lower carrying cost per ton for our finished goods inventory to begin 2025, and decreases in production labor costs, as we stopped operating an additional underground shift in March 2024 at our East facility. Increased Trio® tons produced during the first nine months of 2025, when compared to the prior year, have also lowered our per ton production costs which lowered our Trio® weighted average carrying cost per ton. A significant portion of our production costs is fixed and an increase in the number of tons produced decreases our per ton production costs.
Our Trio® segment generated gross margin of $22.9 million in the nine months ended September 30, 2025, compared to gross margin of $1.6 million in the same period in 2024, mainly due to an increase in our Trio®average net realized sales price per ton combined with an improvement in our Trio®cost of goods sold per ton.
Impairment Expense
During the year ended December 31, 2023, we recorded an impairment related to our Trio® segment assets because the net book value exceeded the estimated fair value of the assets. The fair value of the Trio® segment assets was primarily determined using the expected proceeds received in an orderly sale of the individual assets. For any new Trio® segment capital spending during the nine months ended September 30, 2025, and 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets, and we recorded an additional impairment of $1.9 million and $3.1 million, respectively.
Additional Information Relating to Trio®
The table below shows the percentage of Trio®tons sold into the domestic and export markets during the three and nine months ended September 30, 2025, and 2024.
| United States | Export | |||||||||||||
| For the Three Months Ended September 30, 2025 | 89% | 11% | ||||||||||||
| For the Nine Months Ended September 30, 2025 | 90% | 10% | ||||||||||||
| For the Three Months Ended September 30, 2024 | 84% | 16% | ||||||||||||
| For the Nine Months Ended September 30, 2024 | 88% | 12% | ||||||||||||
Oilfield Solutions Segment
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Sales | $ | 2,686 | $ | 10,324 | $ | 11,410 | $ | 21,186 | ||||||||||||||||||
| Less: Cost of goods sold | 2,746 | 7,262 | 8,462 | 13,995 | ||||||||||||||||||||||
| Gross (Deficit) Margin | $ | (60) | $ | 3,062 | $ | 2,948 | $ | 7,191 | ||||||||||||||||||
| Depreciation, depletion, and amortization incurred | $ | 945 | $ | 1,134 | $ | 2,907 | $ | 3,400 | ||||||||||||||||||
Three Months Ended September 30, 2025, and 2024
Our oilfield solutions segment sales decreased $7.6 million in the three months ended September 30, 2025, compared to the same period in 2024, due to a $7.4 million decrease in water sales, combined with a $0.3 million decrease in surface use and easement sales. Our water sales decreased during the three months ended September 30, 2025, compared to the same period in 2024, due to the completion of a large frac on Intrepid South during the third quarter of 2024, and decreased sales from our Caprock wells. Surface use and easement revenues fluctuate based on the timing of recognizing revenue from the various performance obligations contained in the underlying agreements.
Our cost of goods sold decreased $4.5 million, or 62%, in the three months ended September 30, 2025, compared to the same period in 2024. During the three months ended September 30, 2024, we purchased $3.6 million of third-party water to service the large frac that was completed on Intrepid South. We did not purchase any third-party water during the three months ended September 30, 2025.
Gross margin for the three months ended September 30, 2025, decreased $3.1 million compared to the same period in 2024, mainly due to the decrease in water sales.
Nine Months Ended September 30, 2025, and 2024
Our oilfield solutions segment sales decreased $9.8 million in the nine months ended September 30, 2025, compared to the same period in 2024, due to a $10.0 million decrease in water sales, and a $0.5 million decrease in produced water royalties, partially offset by a $0.6 million increase in surface use and easement sales. Our water sales decreased during the nine months ended September 30, 2025, compared to the same period in 2024, due to the completion of a large frac on Intrepid South during the third quarter of 2024, and decreased sales from our Caprock wells. Surface use and easement revenues fluctuate based on the timing of recognizing revenue from the various performance obligations contained in the underlying agreements.
Our cost of goods sold decreased $5.5 million, or 40%, in the nine months ended September 30, 2025, compared to the same period in 2024, mainly due to reduced water sales. During the nine months ended September 30, 2024, we purchased $3.6 million of third-party water to service the large frac completed on Intrepid South. We did not purchase any third-party water during the nine months ended 2025.
Gross margin for the nine months ended September 30, 2025, decreased $4.2 million compared to the same period in 2024, mainly due to the decrease in water sales.
Specific Factors Affecting Our Results
Sales
Our gross sales are derived from the sales of potash, Trio®, water, salt, magnesium chloride, brine water, and various other products and services offered to oil and gas producers. Total sales are determined by the quantities of products we sell and the sales prices we realize. For potash, Trio®, and salt, we quote prices to customers both on a delivered basis and on the basis of pick-up at our plants and warehouses. We incur freight costs on most of our potash, Trio® and salt sales, but some customers arrange and pay for their own freight directly. When we arrange and pay for freight, our quotes and billings are based on expected freight costs to the points of delivery. When we calculate our potash and Trio® average net realized sales price per ton, we deduct any freight costs included in sales before dividing by the number of tons sold. We believe the deduction of freight costs provides a more representative measure of our performance in the market due to variations caused by ongoing changes in the proportion of customers paying for their own freight, the geographic distribution of our products, and freight rates. Freight rates have been increasing, and if we are unable to pass the increased freight costs on to the customer, our average net realized sales price per ton is negatively affected. We manage our sales and marketing operations centrally and we work to achieve the
highest average net realized sales price per ton we can by evaluating the product needs of our customers and associated logistics and then determining which of our production facilities can best satisfy these needs.
The volume of products we sell is determined by demand for our products and by our production capabilities. We operate our potash and Trio®facilities at production levels that approximate expected demand and consider current inventory levels and expect to continue to do so for the foreseeable future.
Our water sales and other products and services offered through our oilfield solutions segment are driven by demand from oil and gas exploration companies drilling in the Permian Basin. As such, demand for our water is generally stronger during a cyclical expansion of oil and gas drilling. Likewise, a cyclical contraction of oil and gas drilling may decrease demand for our water and the other products and services offered through our oilfield solutions segment.
Cost of Goods Sold
Our cost of goods sold reflects the costs to produce our products. Many of our production costs are largely fixed and, consequently, our cost of sales per ton on a facility-by-facility basis tends to move inversely with the number of tons we produce, within the context of normal production levels. Our principal production costs include labor and employee benefits, maintenance materials, contract labor, and materials for operating or maintenance projects, natural gas, electricity, operating supplies, chemicals, depreciation and depletion, royalties, and leasing costs. Certain elements of our cost structure associated with contract labor, consumable operating supplies, reagents, and royalties are variable, but these variable elements make up a smaller component of our total cost structure. Our costs often vary from period to period based on the fluctuation of inventory, sales, and production levels at our facilities.
Our production costs per ton are also impacted when our production levels change, due to factors such as changes in the grade of ore delivered to the plant, levels of mine development, plant operating performance, and downtime. Because all of our potash is produced from solution mining, weather has a significant impact on our potash production. We expect that our labor and contract labor costs in Carlsbad, New Mexico, will continue to be influenced most directly by the demand for labor in the local region where we compete for labor with another fertilizer company, companies in the oil and gas industry, and a nuclear waste processing and storage facility.
We pay royalties to federal, state, and private lessors under our mineral leases. These payments typically equal a percentage of sales (less freight) of minerals extracted and sold under the applicable lease. In some cases, federal royalties for potash are paid on a sliding scale that varies with the grade of ore extracted. For the three months ended September 30, 2025, our average royalty rate for potash and Trio®combined sales (less combined freight expenses) was 4.9%. For the nine months ended September 30, 2025, our average royalty rate for potash and Trio®combined sales (less combined freight expenses) was 5.0%. For the three and nine months ended September 30, 2024, our average royalty rate for potash and Trio®sales combined (less combined freight expenses) was 5.2% and 4.9%, respectively.
Income Taxes
We are subject to federal and state income taxes on our taxable income. Our effective tax rate for the nine months ended September 30, 2025, was 4.0%. Our effective tax rate differed from the statutory rate during this period due to the valuation allowance established to offset our deferred tax assets. Our effective tax rate for the nine months ended September 30, 2024, was 15.8% which differed from the statutory rate during this period primarily from the permanent difference between book and tax income for the percentage depletion deduction and the officers' compensation deduction.
Our federal and state income tax returns are subject to examination by federal and state tax authorities.
For the nine months ended September 30, 2025, we incurred $0.5 million of income tax expense. For the nine months ended September 30, 2024, we realized income tax benefit of $1.1 million.
We evaluate our deferred tax assets and liabilities each reporting period using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the states in which we conduct business. Changing business conditions for normal business transactions and operations, as well as changes to state tax rates and apportionment laws, potentially alter our apportionment of income among the states for income tax purposes. These changes in apportionment laws result in changes in the calculation of our current and deferred income taxes, including the valuation of our deferred tax assets and liabilities. The effects of any such changes are recorded in the period of the adjustment. These adjustments can increase or decrease the net deferred tax asset on our Condensed Consolidated Balance Sheets and thus increase or decrease the deferred tax benefit or deferred income tax expense on the income statement.
Capital Investments
During the three and nine months ended September 30, 2025, cash paid for property, plant, equipment, mineral properties, intangible and other assets was $7.7 million and $20.2 million, respectively.
We expect to make capital investments in 2025 of $30 million to $34 million, with the majority of this being sustaining capital. We may adjust our investment plans as our expectations for 2025 change. We anticipate our 2025 operating plans and capital programs will be funded out of operating cash flows and existing cash. We may also use our revolving credit facility, to the extent available, to fund capital investments.
Liquidity and Capital Resources
As of September 30, 2025, we had cash and cash equivalents of $77.2 million, compared to $41.3 million at December 31, 2024. The increase in our cash balance during the first nine months of 2025 was due primarily to increased potash and Trio® segment sales.
Our operations have primarily been funded from cash on hand, cash generated by operations, borrowings under our revolving credit facility, and proceeds from debt and equity offerings. We continue to monitor our future sources and uses of cash and anticipate that we may adjust our capital allocation strategies when, and as determined by our Board. We may attempt to raise capital and improve our liquidity position in the future through the issuance of additional equity or debt securities, subject to prevailing market conditions and in accordance with our existing debt agreements. However, there is no assurance that we will be able to successfully raise additional capital on acceptable terms or at all. With our current cash on hand, the remaining availability under our revolving credit facility, and the expected cash generated from operations, we believe we have sufficient liquidity to meet our obligations for the next twelve months.
The following summarizes our cash flow activity for the nine months ended September 30, 2025, and 2024 (in thousands):
| Nine Months Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Cash flows provided by operating activities | $ | 46,873 | $ | 64,936 | ||||||||||
| Cash flows used in investing activities | $ | (11,185) | $ | (25,511) | ||||||||||
| Cash flows provided by (used in) financing activities | $ | 217 | $ | (5,455) | ||||||||||
Operating Activities
Net cash provided by operating activities through September 30, 2025, was $46.9 million, a decrease of $18.1 million compared with the first nine months of 2024, mainly due to a $45 million cash payment received in January 2024 under the cooperative development agreement and Amendment with XTO, partially offset by the increase in sales during the first nine months of 2025, compared to the first nine months of 2024.
Investing Activities
Net cash used in investing activities decreased by $14.3 million in the first nine months of 2025, compared with the same period in 2024, due to a decrease in capital spending and the cash proceeds received for the sale of NESR common shares in May 2025.
Financing Activities
Revolving Credit Facility-We maintain a $150 million revolving credit facility with a syndicate of lenders with Bank of Montreal as administrative agent. The revolving credit facility has a maturity date of August 4, 2027. As of September 30, 2025, borrowings under the credit facility bear interest at the SOFR plus an applicable margin of 1.50% to 2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. Borrowings under the revolving credit facility are secured by substantially all of our current and non-current assets, and the obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.
We occasionally borrow and repay amounts under the revolving credit facility for near-term working capital needs or other purposes and may do so in the future. During the three and nine months ended September 30, 2025, we made no borrowings and made no repayments under the revolving credit facility. During the three months ended September 30, 2024, we made no borrowings and made no repayments under the revolving credit facility. During the nine months ended
September 30, 2024, we made no borrowings and made $4.0 million in repayments under the revolving credit facility. As of September 30, 2025, and December 31, 2024, we had no borrowings outstanding and no outstanding letters of credit under this facility.
As of September 30, 2025, we were in compliance with all applicable covenants under the revolving credit facility.
As of October 31, 2025, we had approximately $74.0 million in cash and cash equivalents and no borrowings under the revolving credit facility. We have $150.0 million of remaining availability under the revolving credit facility as of October 31, 2025.
Share Repurchase Program-In February 2022, our Board approved a $35 million share repurchase program. Under the share repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of share repurchases, if any, will be at our sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. We may suspend or discontinue the share repurchase program at any time. For the three and nine months ended September 30, 2025, we did not repurchase any shares under the share repurchase program. We repurchased 608,657 shares totaling $22.0 million from August 2022 through December 2022, with approximately $13 million remaining available under the repurchase program authorization.
Critical Accounting Policies and Estimates
Our Annual Report on Form 10-K for the year ended December 31, 2024, describes the critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. We have not made any significant changes to our critical accounting policies since December 31, 2024.
Non-GAAP Financial Measure
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, from time to time we use "average net realized sales price per ton," which is a non-GAAP financial measure. This non-GAAP financial measure should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, because the presentation of this non-GAAP financial measure varies among companies, our presentation of this non-GAAP financial measure may not be comparable to similarly titled measures used by other companies.
We believe average net realized sales price per ton, when used in conjunction with GAAP financial measures, provides useful information to investors for analysis of our business and operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to the key metric we use in our financial and operational decision making. We use this non-GAAP financial measure as one of our tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. We believe this non-GAAP financial measure is used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.
Average Net Realized Sales Price per Ton
We calculate average net realized sales price per ton for each of potash and Trio®. Average net realized sales price per ton for potash is calculated as potash segment sales less potash segment byproduct sales and potash freight costs and then dividing that difference by the number of tons of potash sold in the period. Likewise, average net realized sales price per ton for Trio®is calculated as Trio®segment sales less Trio®segment byproduct sales and Trio®freight costs and then dividing that difference by Trio®tons sold. We consider average net realized sales price per ton to be useful, and believe it to be useful for investors, because it shows our potash and Trio®average per-ton pricing without the effect of certain transportation and delivery costs. When we arrange transportation and delivery for a customer, we include in revenue and in freight costs the costs associated with transportation and delivery. However, some of our customers arrange for and pay their own transportation and delivery costs, in which case these costs are not included in our revenue and freight costs. We use average net realized sales price per ton as a key performance indicator to analyze potash and Trio®sales and price trends.
Below is a reconciliation of average net realized sales price per ton to segment sales, the most directly comparable GAAP financial measure for the three and nine months ended September 30, 2025, and 2024:
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| (in thousands, except per ton amounts) | Potash |
Trio®
|
Potash |
Trio®
|
||||||||||||||||||||||
| Total Segment Sales | $ | 32,479 | $ | 18,094 | $ | 28,356 | $ | 18,928 | ||||||||||||||||||
| Less: Segment byproduct sales | 6,155 | 161 | 6,664 | 41 | ||||||||||||||||||||||
| Freight costs | 2,673 | 3,473 | 2,488 | 4,864 | ||||||||||||||||||||||
| Subtotal | $ | 23,651 | $ | 14,460 | $ | 19,204 | $ | 14,023 | ||||||||||||||||||
| Divided by: | ||||||||||||||||||||||||||
| Tons sold | 62 | 36 | 54 | 45 | ||||||||||||||||||||||
| Average net realized sales price per ton | $ | 381 | $ | 402 | $ | 356 | $ | 312 | ||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| (in thousands, except per ton amounts) | Potash |
Trio®
|
Potash |
Trio®
|
||||||||||||||||||||||
| Total Segment Sales | $ | 110,050 | $ | 101,148 | $ | 95,966 | $ | 81,938 | ||||||||||||||||||
| Less: Segment byproduct sales | 18,604 | 345 | 17,724 | 354 | ||||||||||||||||||||||
| Freight costs | 10,669 | 22,646 | 7,505 | 20,498 | ||||||||||||||||||||||
| Subtotal | $ | 80,777 | $ | 78,157 | $ | 70,737 | $ | 61,086 | ||||||||||||||||||
| Divided by: | ||||||||||||||||||||||||||
| Tons sold | 234 | 216 | 183 | 200 | ||||||||||||||||||||||
| Average net realized sales price per ton | $ | 345 | $ | 362 | $ | 387 | $ | 305 | ||||||||||||||||||
Intrepid Potash Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 17:59 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]