Intrepid Potash, Inc. Stock

Thank you for standing by. This is the conference moderator. Welcome to the Intrepid Potash Q3 2026 Earnings Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Ryan Schultz, Investor Relations Manager. Please go ahead.

Good morning, everyone, and thank you for joining us to discuss Intrepid's third quarter 2026 results. With me today are Kevin Crutchfield, our Chief Executive Officer; Zach Adams, our Vice President of Sales and Marketing; Rick Kim, our Vice President of Operations; and Jason Tremblay, our Chief Financial Officer.

Before I turn the call over to Kevin, I want to remind everyone that today's discussion contains forward-looking statements about future business and financial expectations. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for such forward-looking statements. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, this call will include the discussion of certain non-GAAP financial measures.

Reconciliation of these measures to the closest GAAP financial measure is included in our earnings press release and corresponding SEC filings, which are available at intrepidpotash.com. With that, I'll turn the call over to Kevin.

Thank you, Ryan, and good morning, everyone. On last quarter's call, I discussed the 3 pillars of our own value creation strategy: execution, opportunity, and capital discipline. We made good progress on all 3 of these fronts during the third quarter. With respect to our execution, we increased production in Trio during the third quarter. This operating performance supports a 10,000 ton increase in our full year 2026 Trio production guidance and positions us to target annual production of more than 300,000 tons, a goal we didn't expect to achieve until sometime in 2027.

We're acutely focused on the reliability and predictability of our operations, and we're pleased with the improving track record that we're establishing. Rick will discuss the operating drivers behind this progress shortly. With respect to opportunity as the only U.S.-based producer of muriate of potash and 1 of only 2 global producers of langbeinite, the mineral we market as Trio, we see significant potential to unlock value through organic growth investment.

In potash, our opportunity lies in our ability to increase production while moving down the cost curve through operational excellence. We expect to lower production costs, and combined with our transportation cost advantage in our core markets and the diversity of our offerings, we expect to drive profitable growth in our potash business. Trio's combination of low chloride potassium, magnesium, and sulfate gives us a differentiated platform for growth. We believe that potential growth in demand for sulfur nutrition could support this opportunity over time. Zach will discuss the market backdrop for the products in more detail shortly.

We believe consistent execution, rigorous cost controls, and strategic organic growth investments can unlock the earnings potential of our existing assets, driving profitability and improved free cash flow conversion. While cyclical, the domestic market for agricultural nutrient is large, and third-party industry forecasts generally anticipate growth over the coming years. Importantly, as we've seen in recent years, the fertilizer market is highly sensitive to global geopolitical disruptions and thus, a matter of national security. As such, Intrepid is a well-positioned domestic critical mineral producer with attractive production assets in close proximity to key U.S. growing regions.

Against this backdrop, as we announced on October 26, the USDA selected our proposed sulfate of potash, or SOP, project near Carlsbad, New Mexico, for approximately $139 million and proposed matching funding through its FIELDS program. Based on current project plans, the facility would have annual production capacity of approximately 220,000 tons. If constructed, it would introduce a new product to our portfolio, complementing Trio and potash and expanding our presence in specialty fertilizer markets. This could be a pivotal project for Intrepid, allowing us to turn American minerals into a fertilizer product American farmers need.

The project is in the advanced stages of planning and evaluation but remain subject to completion of the award process, fulfillment of all applicable grant conditions, and a final investment decision, which we're currently targeting for late 2027. As we continue our evaluation, we remain focused on disciplined capital deployment and generating attractive long-term returns on invested capital. We look forward to sharing additional details as the project advances. Our operational improvements and the constructive selling price environment contributed to the solid cash flow we generated through the first 9 months of this year. The cash flow, combined with the proceeds from the sale of our South Ranch asset in the second quarter, puts us in a financial position that gives us multiple pathways to shareholder value creation.

Jason will review our capital allocation framework in more detail shortly, but I want to outline our two-pronged returns-focused strategy for deploying capital. First, we've identified several attractive organic growth opportunities within our existing asset base. We're in the final stages of evaluating capital investments designed to increase production volumes and lower unit costs across both segments. Jason will discuss the 2 principal projects we plan to pursue in 2027. We believe these investments can generate attractive returns and support sustained growth over the next several years. Also on the organic growth front, our development partners continue to advance the Wendover Lithium project as they work to complete their definitive feasibility study. Discussions with potential off-takers are also in the advanced stages.

In addition to growth investments, we're returning capital to shareholders through share repurchases. During the quarter, we repurchased shares under our $50 million share repurchase authorization. We would plan to accelerate the utilization of this program depending on how far below intrinsic value we believe our shares are trading. While we purchased a limited number of shares in the third quarter, over the past 5 weeks, we've accelerated our repurchasing activity, bringing the total shares we bought since the end of June to approximately 88,000. Share repurchases are a core component of our returns-focused approach to capital allocation, not a residual use of cash. We'll continue to weigh every dollar of capital, whether directed to share repurchases, improvements to our existing operations, or potential new growth projects, against the returns it can generate for shareholders, with a clear priority on compounding per share value over time.

Before I turn it over to Zach, I'd like to extend a special thanks to all of our employees for the work they've led over the last couple of years. By working together, we've increased our production in both Trio and potash. We substantially reduced our cost in Trio and are working similarly on our potash cost structure. As a result of their good work, our assets are performing much better, more predictably and reliably as demonstrated by increasing levels of profitability over the last several quarters.

I'll close by noting the 3 pillars I outlined earlier, execution, opportunity, and capital discipline are converging into a cohesive value creation framework for Intrepid. We're making good progress formulating that framework, and we see an opportunity to generate significant returns on invested capital through organic growth investment, share repurchases, and operational execution. As that work matures, we look forward to sharing more detail with you over the coming quarters.

Now I'll turn the call over to Zach for a closer look at demand, pricing and the market outlook for potash and Trio.

Thank you, Kevin. I'll provide additional context on the market environment for potash and Trio and how we are thinking about demand heading into year-end and the spring application season. During the third quarter, pricing for both potash and Trio increased over the prior year period, reflecting the supportive market environment. As we move through the last quarter of 2026 potash pricing has remained stable, and our order books for both potash and Trio are well subscribed, giving us a high level of visibility heading into the end of the year. Global potash producer inventories remain balanced supported by strong demand across key markets, including Brazil, China, and Southeast Asia throughout 2026.

Looking ahead, we are monitoring factors that could tighten the supply/demand balance in early 2027. In particular, congestion at Baltic ports is currently constraining exports from Russia and Belarus. If these shipping constraints persist into next year, they could limit available supply and provide further support for the market. We are also monitoring reports that negotiations have started on the next annual potash contract in China, where another early settlement could support continued shipment activity and help keep global supply and demand balances tight. Global sulfur supply constraints are contributing to higher input costs for some sulfate of potash producers, putting pressure on operating rates and availability. A tighter market for low-chloride potassium fertilizers could support demand for Trio. With sulfur constraints extending beyond sulfate of potash to other sulfur-containing fertilizers, Trio's sulfate sulfur component provides an attractive value proposition for growers heading into spring.

Trio is a unique product that supplies 3 essential plant nutrients, low-chloride potassium, magnesium, and sulfate in a naturally occurring mineral. Current supply conditions could enhance the appeal of that combination. Importantly, the sulfur in Trio occurs naturally within the langbeinite mineral we mine and is immediately available to the plants in the sulfate form. We do not need to purchase sulfur feedstock to produce Trio, reducing our exposure to the feedstock constraints affecting some other fertilizer producers. We believe this positions Trio well to serve growers seeking low chloride potassium, magnesium, and sulfur nutrition.

Looking ahead to spring 2027, grower sentiment has improved although elevated input costs continue to encourage disciplined purchase decisions. Demand will be subject to regional and seasonal variation but we believe growers remain focused on maximizing yields and making effective nutrient investments. Against that backdrop, we expect continued healthy fertilizer demand through the first half of 2027. With that market context, I'll turn the call over to Rick to discuss our operating performance and the initiatives supporting our increased production outlook.

Thanks, Zach. I'll focus on the operating improvements behind our third quarter production gains and the work underway to improve reliability, efficiency, and unit costs across our operations. At our potash operations, we are focused on continuing to increase production while maintaining spending discipline. On a year-to-date basis, we have held total spending approximately flat while increasing output allowing us to spread fixed costs across more tons resulting in lower unit production costs.

In our HB Mine, improvements in pond management and mill recovery have contributed to increases in production volume. These changes are helping us recover additional product that otherwise would have been lost as waste. We deliberately delayed the start of the harvest season at Moab to allow additional evaporation in our ponds. After evaluating several operating scenarios, we determined that this timing would better support long-term production by adding more tons of inventory.

While this decision reduced third quarter production, we expect to recover those tons by year-end. We also expect the additional evaporation to support higher production at Moab in 2027 and a corresponding reduction in unit costs. Decisions like this reflect our focus on optimizing performance across our operations.

Turning to our Trio segment. Production increased 19% year-over-year during the third quarter, driven largely by continued improvements in operating performance at the East mine. Our team is increasing equipment availability, reducing downtime and improving productivity. Year-over-year, operating hours increased by 5%, while tons per operating hour increased by approximately 20%. We believe these improvements provide a sustainable foundation for further production growth. Higher production improved operating leverage and contributed to a 13% year-over-year reduction in cost of goods sold per ton. Together with higher realized selling prices, these improvements supported stronger segment gross margin.

As Kevin noted, we are increasing our full year 2026 Trio production guidance by 10,000 tons. Our focus is on sustaining these gains while continuing to improve reliability, productivity, and unit costs. With that, I'll turn the call over to Jason to review our third quarter financial results and outlook.

Thank you, Rick. Third quarter sales from continuing operations were roughly flat with the prior year quarter at $51 million. Gross margin from continuing operations was also in line with last year's third quarter at $10 million. Net income from continuing operations improved to $1.7 million or $0.13 per diluted share from $700,000 or $0.05 per diluted share last year.

Adjusted EBITDA from continuing operations increased to $11.7 million from $10.7 million last year. As a reminder, the third quarter is typically 1 of our seasonally weakest quarters, given that it follows the spring planting season and precedes the fall fertilizer application season. In the Trio segment, sales increased to $19.1 million from $18.1 million in the prior year quarter. Sales volumes were flat, while average net realized selling price increased 1.5%. Most notably, Trio gross margin increased 33% year-over-year, driven by the positive impact of a 13,000 ton increase in production volume, which improved absorption and reduced Trio's cost of goods sold per ton, as well as favorable product mix.

In Potash, segment sales were $31.3 million compared with $32.5 million in the prior year quarter. Sales volumes declined to 59,000 tons from 62,000 tons, while average net realized sales price increased 3.4% to $394 per ton. Production volume declined 17%. As Rick discussed earlier, we made a strategic decision to delay the start-up of our Moab facility following the summer evaporation process to support production levels and efficiency. Potash segment gross margin declined due to higher COGS per ton, reflecting a production mix weighted more heavily toward Intrepid's higher cost sites as compared to last year's third quarter.

Moving to cash flow and liquidity. Year-to-date cash flow from continuing operations was $50.5 million compared with $37.3 million in the prior year, with the increase partly attributable to improved operating performance. Capital spending remained disciplined with $11.3 million invested in the third quarter and $24.9 million year-to-date. We ended the third quarter with $152.3 million in cash and cash equivalents, $9.1 million in short-term investments and no debt. As part of our capital allocation framework, we invested $14.5 million in short and long-term investments during the third quarter to earn additional returns on cash we've set aside to support our long-term balance sheet strength.

Going forward, we'll continue to manage our liquidity carefully, balancing opportunities to earn returns on our cash with seasonal working capital needs investments in our growth projects and ongoing share repurchases. As Kevin mentioned, our balanced approach to capital allocation prioritizes a safe and reliable operations balance sheet flexibility and investments evaluated against the risk-adjusted return potential, execution readiness, and strategic fit.

Within this framework, we will also return capital to shareholders. As I discussed during last quarter's call, balance sheet preservation is the foundation of our capital allocation strategy. We plan to maintain approximately $50 million in liquidity to navigate cyclical downturns plus roughly $35 million for working capital needs and cash flow variability. Beyond these amounts, we will deploy capital through disciplined growth investments, particularly within our existing operating footprint and share repurchases. As Kevin indicated, we have increased our repurchase activity over the past several weeks. Since the Board approved the $50 million authorization in June, we repurchased 88,000 shares for a total of $3 million.

Turning to growth investments. Our planned spending in 2027 will focus on Trio production growth and potash mine development within our existing asset base. These investments are designed to increase production, extend the life of existing operations, and enhance the business' long-term earnings potential. The Trio and Potash investments I'll discuss are separate from the proposed SOP project, Kevin outlined. As we continue evaluating that opportunity ahead of a final investment decision, we remain committed to our broader capital allocation priorities and will assess the project within the same disciplined returns-focused framework.

For Trio, we plan to invest approximately $16 million in 2027 as part of a broader initiative to increase annual production by approximately 30,000 tons above the first half 2026 run rates. We expect this initiative to generate an internal rate of return of approximately 30%. We anticipate realizing some of the production benefits in late 2026 and expect full year 2027 Trio production in the range of 320,000 to 330,000 tons. We believe there is potential to increase annual Trio production by an additional 100,000 tons with modest incremental investment beyond 2027. For Potash, we plan to invest approximately $20 million in mine development in 2027 to sustain annual production at levels approximately 20,000 to 30,000 tons above prior years, with expected rates of return of approximately 30%.

To support these initiatives, we are increasing our full year 2026 capital expenditure guidance to approximately $45 million from approximately $40 million previously. In summary, we executed well during the third quarter, making meaningful progress toward our stated goals. We increased Trio production and significantly improved the segment's margins. Our strong balance sheet and disciplined capital allocation strategy position us to invest in organic growth while returning capital to shareholders through opportunistic share repurchases. Collectively, we expect these efforts to create long-term value for our shareholders. Operator, we are now ready to begin the Q&A.

[Operator Instructions] Your first question comes from the line of Lucas Beaumont with UBS.

Just wanted to start on Trio. So I mean, pricing is up 25% or so over the last 2 years, I mean, probably half of that sort of came before the sort of more recent disruptions to the sulfur markets. So I just kind of wanted to get your view on, I guess, how would you sort of frame that in terms of what do you see as sort of temporary pricing uplift there versus what's been more structurally driven by the supply/demand setup. So I guess as we sort of go forward and then see a normalization in those temporary factors, how much of that would you sort of expect to sort of roll off versus sort of being supported on an underlying basis?

Lucas, thank you for the question. In regards to Trio pricing and the changes we've seen over the last several years, we would assign that to a structural change. And yes, the global disruptions to sulfur are supporting that now, but on a broader level, there is just a greater awareness and recognition of magnesium and sulfur needs increasing over time in soil nutrient levels. And in combination with that as well is we're seeing a greater appreciation for the low-chloride content of Trio as well in specialty crop. So it's really all 3 components: the low-chloride potassium, the magnesium and the sulfur all having broader awareness and recognition that's helping to structurally change that price dynamic.

The other thing I'd add too, Lucas, is given the conflict in the Mid East, I mean that's obviously provided some underfooting for higher sulfur prices. And to the extent that, that gets resolved tomorrow, it's not going to come back quickly. We don't think just based on the level of infrastructure damage that's been done across the system.

So you can refer to it as temporary, if you want, but our view is that it's going to take a long time to get that anywhere back to normal.

Great. And then I guess just on the potash side, considering the markets that have been fairly balanced through the middle part of the year here, and you're kind of expecting pricing to sort of be flat to kind of slightly lower end of the fourth quarter sequentially. So I guess, how do you sort of see the set up there for market momentum for potash into the fall and then peak spring demand. I mean, you sort of see the market as tight enough that we should see pricing move higher into the spring? Or kind of what's your view currently?

Lucas, regarding the potash market, we see that as very constructive. To your point, it has been balanced throughout the year, but as we enter the fourth quarter here, there's several things going on globally. One is the reengagement of the Chinese on their next potash contract, which could drive kind of shipments to continue to be at very ratable heavy clip what we've done year-to-date.

And the other more, I'd say, thing we're watching even closer is the disruption to the ports in the Baltic. Estimates are that could impact up to 1.5 million tons here in fourth quarter of potash from Russia and Belarus that would not be able to be exported. And we kind of pair that with an improving grower sentiment and good demand on potash that we've seen this fall and we expect to continue into the spring season. There certainly is some factors that could lead to a tightening market as we get in the first quarter of next year.

And then I guess just on your production improvement initiatives there for next year, I mean, that's fairly substantial again as well. You're sort of pointing to another kind of 10% increase. So I was just wondering if you could give us a bit more detail there. I guess, on sort of what you're doing? And then what sort of a cash cost to production benefit should we, I guess, be thinking about with that kind of 10% uplift?

Yes, Lucas. Good question. So on Potash and Trio, I mean the investments are different, obviously, I think on Trio, rather than talking about anything specifically we're going to do -- we just want to talk about the Trio product as a system from the mine face continuous miner shuttle cars, belt, plant infrastructure, yields, et cetera. We just -- we think there are opportunities to improve operating run time, maintenance downtime, mill throughput, yields, et cetera. And that monies -- those monies will go into just generally, I would describe as system improvements to generate better volumes over time.

And it's not a sort of a onetime thing. We think that's a sustainable long-term run rate. And we think there's upside potential beyond that which is premature to get into today. So that's kind of how we think about Trio. I'm not going to talk much more about what 1 miner does or whatever. We're just going to talk about it as improvements to the system and continuing to debottleneck the system to generate better production over time. And then on the Potash side, it's an investment that is developmental in nature to replace tons as they fall off over the future, but it will stimulate production 20,000 to 30,000 tons. We'll start to realize that next year.

And look, I'd also point out, too, that some context here is important. When we -- when you look at the numbers we've provided in terms of next year's range of guidance. You're in the mid 600,000 ton range. And it's been, I don't know, a decade or so since the company has achieved anywhere near that. And so I think that's an important part of the story that's not getting captured appropriately. And those gains have largely come over the last 2.5 or 3 years. And I'd like to credit the team that we have in place and the good work that's being done at the site level to generating those positive outcomes. I'll refer to Jason for any sort of remarks around the cost piece.

Yes. So on the cost front. These are -- I would call them marginal tons, right? So I think what you get is much of your fixed cost isn't going to adjust. There's some amount of investment in fixed cost that come. Majority of this is marginal production with marginal costs being added. As a result, you see a pretty -- we're a high fixed cost business and you see that benefit come through. That answer is very specific to Trio and I'll get into the Potash side. But on the Trio side, you should see cost benefits just through absorption.

As we come to the Potash side, I think if you look at it on any individual mine, you're going to see cost benefits of these investments, right? So -- and largely, what this mine development does is provide higher grade to the facilities, which drives kind of more efficient production. Really, your costs aren't changing much. You're handling the same volume of raw materials to produce incremental volume. So you're getting better volume for largely similar cost structure at most of that -- at the sites.

The thing that gets hard is -- and Q3 is a good example of that, is depending which site we're producing tons at and where the relative cost positions are, you can get unusual movement in the consolidated result, right? And that's something we're going to expand on more as we move into the future and just help make sure that we help the investors and understand kind of the relative cost performance of site because I think that's a big driver that moves pieces around. But what we do know is each of our sites should see cost improvement as the mine development takes hold and the production improves.

Your next question comes from the line Vincent Andrews with Morgan Stanley.

This is Justin Pellegrino on for Vincent. My first question is about Trio production. And if you just annualize 2H '26 Trio production. It implies about 332,000 tons of production at today's rates which -- that's above the 2027 production guidance. So 2 questions there. Does the '27 production guidance includes some conservatism? Or do you guys expect current rates to kind of come down a little bit maybe? And then likewise, does the '27 production guidance include any additional tons from the $16 million that you plan to invest in '27?

Yes, there's a lot in that question. So out of the $16 million that we called out, we're going to spend -- start spending a little bit of that this year. That's why we raised our capital guide a little bit. You're right, the run rate of late has been really solid but it's dangerous to annualize a quarter. So what we're trying to do is build sustainable run rates that are reliable, predictable, and dependable just like I've been saying for the last few years.

So a piece of that is, is there upside in that? Absolutely, because the team there is -- they've become very dedicated to thinking about the Trio production system as just that a system and just debottlenecking kind of weak point by weak point by weak point. And every time you do that, you generate better volumes over time. So we still think there's tremendous upside potential left on the Trio side. And we'll continue to update it on a quarterly basis. Anything you'd add?

Yes. The only thing I'd add to that is just to your -- the first part of your answer when you were talking about -- it's dangerous to annualize a quarter. You have to keep in mind, right, there is scheduled downtime required for our assets for major maintenance. We have to take turnaround activities on specific assets and timing of those matter, right? And so in the second half here, we're lighter on the maintenance front and lighter in terms of major asset maintenance, which is why you're seeing a higher run rate, but it's also indicative of the fact that we can run at higher rates but that's why I think you're seeing kind of a change in guide.

Understood, and that's much appreciated. And then the next -- I know this is kind of trying to isolate 2027 and investments happen at different points throughout the year. But if we simply just add the $16 million of Trio and $20 million that you called out in Potash to the $45 million of guidance, you get to somewhere in the $80 million ballpark of CapEx 2027. So I was just hoping you could maybe help us figure out if that's in the right ballpark. I know you had mentioned previously some maybe larger sustaining CapEx items as well in '27. So just any kind of help us triangulate where 2027 CapEx could land?

Yes. I'll take the initial part of that, Jason, will probably have some color to add. But if you imputed that the way you just described, you'd be too high. So yes, we did this year from -- I mean, we started, I think, the year $45 million, we moved it down $40 million. We've moved it back up to $45 million because we wanted to get a head start on some of next year. So $5 million of that $36 million is happening this year. But the addition of those 2 numbers is not going to get you close to what we're talking about for sustaining. Next year, it will be south of that. But we're not prepared to give full year guidance just yet. We'll do that next quarter.

The only thing I'd add, Justin, to that, just context-wise, right, we do mine development activity every year, right? It's just given the magnitude of it that's falling next year, we wanted to provide some context to that and the return profile. And I would say the same thing on the Trio front. There's reliability type investments ongoing year-over-year. But again, we wanted to provide context because it will be a bit higher next year. So we just want to make sure people understand these are being done with a return focus, right? And -- but I agree wholeheartedly with Kevin's comment, which is why you just can't add the 2 numbers together.

Your next question comes from the line of Jason Ursaner with Bumbershoot Holdings.

Sorry, I was on mute. Just on the Trio on the additional tons for next year and then kind of this road map for maybe additional 100,000 tons with moderate investment from there. Has that changed at all the marketability between the granular standard and fine langbeinite? Like are you adding any way to get additional tons of one? Or is it just kind of across the board?

Jason, thanks for the question. This is Zach. As we think about the additional tons of Trio, we see that growth coming from a variety of areas. First is focus on specialty crops like we talked about earlier and also where we see crops and soil types that have a broader recognition of sulfur and magnesium needs. And then with that growth, we see that as a combination of both market expansion and share gains. And within that, that expansion, that's geographically as well as customer base and also crop based, and we're currently working through and putting together plans for what that will look like into next year and beyond.

And to the extent that the SOP project proceeds, that will be a source as well, as opposed to trying to find new markets in the U.S. or trying to grab market share or whatever. So that will be an outlet as well. To the extent the project proceeds.

So for the SOP project, is it -- would you be using some of the standard and fine langbeinite as a raw input and then you don't have to market kind of the less desirable lower margin langbeinite because you could use that to create SOP, you could sell the higher margin granular and then kind of -- you have sort of an exchange reaction instead of a Mannheim process so you could get SOP and then also have mag chloride?

Yes. No Mannheim process required here because we already have the sulfur on site. So the answer to your question is generally yes. That's how we're thinking about it, and that's how it work.

Okay. Does it kind of increase your desire or willingness to try to expand the Trio production and have more of the standard and fine product, if you have an outlet for it, I guess, is what I'm eventually trying to get to?

Jason yes, absolutely. Absolutely. SOP drives the ability for us to grow our Trio production significantly more than it is today with providing a nice premium outlet for those fines into an upgraded specialty fertilizer product.

Okay. And then, I guess, just a broader question for Kevin. You -- around $400 million market cap, $160 million of cash, you still have the $50 million eventually coming from Exxon. So it's around $190 million, $200 million of enterprise value just based on trailing numbers of EBITDA. I mean you're kind of trading 3.5x EBITDA or so. So the implication at least to me is either EBITDA is unsustainable, you're at some cyclical peak, you're structurally not converting EBITDA cash and none of those sound at all kind of what you're saying, which is pretty upbeat, optimistic and anything. So I guess from your perspective, what are -- I guess, what are people sort of missing here? And what is going to change that in people's mind eventually for this being not only a sustainable business, but kind of an improving 1 pretty significantly is what it sounds like.

Yes, that's an excellent question. I mean the way I think about it is start with the core assets. And we've been pounding the table for -- ever since I've been here about laser focus on core assets, getting them running better on an improved basis, more consistent, more reliable. And I think by any metric you look at over the last 2 to 4 years, that's a -- or a green check mark in that box.

And then over time, too, the other thing that's happened is as we've continued to survey the asset base, you've got some new eyes looking at things here and there. We're coming up with a lot of internal organic growth opportunities that we think are very investable that will have very nice returns on them. So I think you're right. I think maybe we're not telling the story, right? But this is a story of a very nice turnaround over a 2-, 3-year period with a lot of upside potential in the future. Now baseline with all that is we have to execute. We have to continue to do that quarter after quarter after quarter to regain sort of that credibility and that track record.

But we think that there's tremendous upside here. And I'm not going to speak to the share buying program exactly, but we upped our purchases when we saw weakness in the stock. And I think you could expect that to continue if you continue to see weakness in the stock because we think there's upside value here and it's a good value. So if a little frustration is coming through in my voice, should be, because I am a little bit but I also take the responsibility that we've got to tell the story better and make the value proposition more clear going forward because there's tremendous upside here.

Your next question comes from the line of Vitaly Kononov with Freedom Capital Markets.

So I'd like to maybe dissect on the cost divergence in the 2 segments. So we saw a year-over-year increase in Potash and year-over-year decrease in Trio. So maybe you can distinguish the factors that are driving the increase in Potash and explain some of the efficiency gains that helped to bring the cost of Trio down?

Yes. Look, on the Trio side, as I mentioned earlier, that's an underground mine. We have continuous miner sections operating underground. The continuous miner loads coal into a shuttle cars, shuttle cars takes it to the belt. The belt takes it outside. We process it through the plant, and generate a salable product. All of that is a system. And what we've been doing is, as I said earlier, debottlenecking that system. Part of the problem early on was we had some continuous mining units that were older and experiencing low reliability, low availability, et cetera.

So we replaced those, and that enhanced the system. But what it does is it points out, you've got a bottleneck somewhere else. So we're just moving constraint to constraint across the site, and what that's led to is more operating time, higher productivity, more bits on langbeinite time in the face. The mill is operating really well. Our yields are higher, we're staying in the ore zone better. So all that has contributed to better production and better fixed cost absorption over the last couple of years.

And I think the exciting thing about it is this is not the eighth inning of a ninth inning ball game, we're probably in the fourth inning here, on this thing. So I think it's got more runway, and we're excited to pursue it. We're being very thoughtful about it because markets are somewhat fixed in the U.S., and we've got to think about proper outlets, and not destroying economic value as it relates to the value of the product in the marketplace. But we expect us to be very thoughtful around that approach over the next 2, 3 years but we're super excited about what that potential runway looks like.

If I could add, Vitaly, just on your question on the Potash side. So -- the interesting part and the difference is, in Trio, we're ramping up one facility. So the cost performance is really visible based on kind of ramping that production and seeing the unit cost improvements for that facility. In Potash, right, we've got 3 facilities, and the production increases this year, the production improvement this year because we are improving production year-over-year in this year, but the improvements this year have largely been at 2 of our mines, HB and Wendover which are a higher cost facility than Moab, which is the third facility. And so our production growth is happening at the 2 higher cost facilities.

But at the same time, though, the cost per ton at those facilities is improving. And so the whole idea here for us is improved production at all of our facilities and drive better results. It doesn't show up in that consolidated cost per ton or COGS per ton measure because of that product mix. And that's what we've been trying to communicate. We are going to work and focus on better telling that story, moving into the future. But I think what we see is improved cost performance at all the sites as the production ramps up, it's just the mix is making it difficult to see it on a consolidated level.

On the Wendover Lithium project, do I sense a change of sentiment here that the project could be the time lines of installing could be delayed somewhat, or am I guessing wrong?

I mean relative to kind of where we started talking about this maybe a little bit, but they're still looking at definitive feasibility study by first quarter engineering continues, value-add engineering continues, FEL3 process is done, advanced discussions continue with offtake partners. That's actually going exceedingly well. So yes, but relative to maybe where we started a quarter or something, but it's not terrible, not to be unexpected in this space either.

All right. Got it. And the last question for me on the recent USDA announcements. I'm just curious what conditions are still remaining before the funding becomes binding? And how much customer offtake commitment would you require before approving construction?

So we're just in the early stages of finalizing that work with the USDA. I suspect that will take a good bit of time. And as it relates to what we'd want to have presold before we gave the green light. I think that's part and parcel to the final investment decision process, what the markets look like, where we can move the tons, as you know, a lot of this product is an import product, which we think we could displace but that would be part of the final investment decision, along with final CapEx, what's the cost structure look like et cetera, et cetera. So in the next -- over the course of the next 8 to 12 months, we have a lot of work to do, and we'll be able to update you in the coming quarters on how that work is shaping up.

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, operator. Once again, thanks to everybody for your interest for tuning in to today's call. If you have any questions in the future, please reach out. If you're shy, you can just hit the investor website at [email protected], and we'll certainly follow up with you. Thank you, and talk to you next quarter.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Thank you. Thank you for standing by. This is the conference moderator. Welcome to the Intrepid Potash, Inc. Second Quarter 2026 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to hand the conference over to [ Alex Gorel ], Director of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us to discuss Intrepid's second quarter of 2026 results. With me today are Kevin Crutchfield, our Chief Executive Officer; Zachry Adams, our Vice President of Sales and Marketing; Richard Kim, our Vice President of Operations; and Jason Tremblay, our Chief Financial Officer.

Please be advised that our remarks today include forward-looking statements as defined by U.S. securities laws. These statements are based on information currently available to us and are subject to risks and uncertainties described in our SEC filings, which could cause actual results to differ materially from those currently anticipated. We assume no obligation to update any forward-looking statements.

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 today's press release, and along with our SEC filings, are available at intrepidpotash.com. With that, I'll turn the call over to Kevin.

Thank you, [ Alex Gorel ], and good morning, everyone. I'd like to welcome Jason Tremblay to his first earnings call as Intrepid's Chief Financial Officer. Jason brings deep experience across mining, crop nutrition, capital markets, and corporate strategy, including many years of direct experience in potash. His financial discipline and industry perspective are well aligned with our priorities as we improve execution, sharpen capital allocation, and build greater investor understanding of Intrepid's long-term value creation opportunity.

Now, our message today is built around three themes: execution, opportunity, and capital discipline. I'll frame those themes at the company level. Then Zach will provide additional market context. Rick will discuss the operating improvements behind the improving performance and guidance increase. And Jason will cover the financial results, capital allocation framework, and our outlook.

First, execution improved. Better process control, improving reliability, and recovery performance helped deliver year-over-year earnings growth, stronger production results, better TRIO unit economics, and improved margin quality. Second, the opportunity set is becoming clearer. TRIO market dynamics, improved operating performance, and disciplined internal investments give us a path to improve the durability and long-term earnings power of the core fertilizer business. Third, capital discipline remains central to value creation. Our balance sheet gives us flexibility to fund ready opportunities, return a portion of excess capital to shareholders, and adjust the pace of returns as our investment priorities evolve and mature.

These themes are reflected in our decision to raise full-year production guidance for both potash and TRIO, supported by continued improvements in the core fertilizer business and a stronger foundation for the second half of 2026 and beyond. Pricing remained constructive across the business, particularly in TRIO, where current market conditions are increasing the value of sulfate exposure.

Zach will cover the market backdrop in more detail, but at a high level, TRIO's naturally occurring sulfate content continues to reinforce differentiated positioning. At the same time, we're staying disciplined in how we frame the near-term opportunities. The market backdrop is encouraging, but we'll continue to translate that opportunity into guidance in a measured way based on customer demand, production execution, and the timing of market development.

We also made important progress on portfolio and capital allocation priorities. We completed the South Ranch sale for $68.9 million net of customary transaction adjustments, including $62 million of cash proceeds in the second quarter, which further strengthened the balance sheet and sharpened our focus on the core fertilizer business. We maintained a very strong liquidity position with $185 million of cash on hand, no revolver borrowings, and $149.8 million of revolver availability at quarter end.

That balance sheet is not an end in itself. It's a tool to create value. Our strategy is to improve the reliability and long-term earnings power of the base business, capture value from TRIO market dynamics, and allocate capital when the timing, returns, and execution requirements are clear. We recognize investors want clarity on how we'll use our balance sheet. Jason will provide more detail on the capital allocation framework, including how we think about liquidity, ready investment opportunities, and capital returns to shareholders. At the highest level, our approach is to preserve flexibility, invest where returns and readiness are clear, and return capital where appropriate.

We're also evaluating value-creating opportunities that can improve the durability and long-term earnings power of the core business, including East Underground TRIO capacity, MOP production, enhancements to reliability, and byproduct utilization where the economics are compelling. We'll share more as expected returns, timing, resource requirements, and execution risks become sufficiently defined.

On lithium, our partners continue to advance engineering and permitting activities at Wendover. We view the project as part of a broader opportunity set, and we expect to provide additional detail as those efforts progress later this year. Our goal today is to be clear about what improved in the quarter, where we still have work to do, and how better execution, a cleaner portfolio, and balance sheet strength can drive long-term shareholder value creation. I'm really proud of the Intrepid team's performance, and I want to thank everyone for their dedicated work. With that, I'll now turn the call over to Zach for a closer look at the market backdrop for potash and TRIO and how those conditions inform our view of the second half.

Thank you, Kevin. I'll provide additional context for potash and TRIO, focusing on the demand, pricing, and sulfate-related dynamics that inform how we are thinking about the second half of the year. In potash, market conditions remain constructive. Global demand has been strong with record first-half shipments into key markets such as Brazil and China, while channel inventories remain broadly balanced. Current pricing remains healthy compared with longer-term historical levels, even as customer commitments remain disciplined.

On the supply side, recently announced production reductions in Belarus for maintenance are expected to keep supply and demand balances tight through the remainder of the year, and we do not see meaningful near-term incremental capacity coming online in time to materially impact supply for the fall or spring application seasons. Potash remains well positioned as an essential crop input, particularly with prices still relatively moderate compared to other nutrients as growers focus on optimizing yields.

In North America, the summer fill program announced in June saw a good customer response with pricing stable to ending spring values. While commitments remain disciplined and just-in-time, the fall application season remains an important demand window, and we expect growers will return for additional tons as the season begins. We believe our strategically located production points position us well to execute on those opportunities.

For TRIO, the market opportunity is increasingly tied to the value of sulfate nutrition, low-chloride positioning, and broader sulfur-related dynamics. Global sulfur supply disruptions tied to recent geopolitical developments have reinforced the value of TRIO's naturally occurring sulfate component. Disruptions are affecting not only phosphate production, but also other sulfur-based fertilizers such as ammonium sulfate and sulfate of potash. Sulfate of potash operating rates are also under pressure from feedstock concerns, increasing the opportunity for TRIO as both a source of sulfur and low-chloride potassium.

We will continue our focus on growing the overall TRIO market through balanced nutrition messaging, reliable and ratable North American-based supply, and disciplined market development as customers evaluate nutrient programs for the remainder of the year and into next spring. From a macro ag market standpoint, corn and soybean values have seen some recent appreciation tied to weather risk and geopolitical tensions, which can help support grower economics and reinforce the importance of maximizing yields.

At the same time, lower global phosphate application rates could pressure forward yields and further tighten end-use stock-to-use ratios over time. We recognize the challenges growers continue to face, and we expect they will remain careful in their input decisions. However, that approach also underscores the value of essential yield-supporting nutrients with clear agronomic benefits. With that market context, I'll turn the call over to Rick to discuss the operational improvements supporting the higher second-half guidance.

Thanks, Zach. I'll focus on the operational execution behind the second quarter improvement and the specific operating drivers that support the higher second-half production guidance. The Q2 improvement was broad-based. It reflected better operating discipline, stronger execution of maintenance plans, and improved throughput and continued focus on recoveries, reliability, and process control. Operating gains are visible across both our potash and TRIO operations.

As Kevin mentioned in his opening remarks, performance across all of Intrepid's operations continues to improve. We are focused on improving forecasting, planning, and execution of our operating plans, and our results show these efforts. Across the organization, we continue to improve what we refer to as execution muscle, which leads to consistency in delivering to our commitments in a more predictable, reliable, and repeatable way. Development of execution muscle is also creating opportunities to produce incremental tons, lower unit costs, and develop organic growth opportunities.

In potash, we saw meaningful progress across all three facilities. In HB, cross-functional teams implemented new mill operating procedures that improved recovery by 3% year-to-date, supporting first-half production of 72,000 tons and better-than-projected tons through the balance of 2026. With Moab, improved mill recovery supported higher first-half production, and better-than-expected early season evaporation has largely mitigated the impact of the late 2025 storms. Moab has also achieved a 2% year-over-year recovery improvement in the first half, equating to over 1,000 tons of additional production.

At Wendover, adjusting the production schedule, including idling in April and processing in May, allowed for additional evaporation and increased forecasted production for the remainder of 2026. These changes underpin the higher full-year production guidance and reinforce our confidence in the second-half operating plan.

In TRIO, our focus on reducing downtime and improving process control increased mine tons per operating hour by over 7%. Stronger ore grades supported higher production, while mill process changes improved both recovery and throughput. First-half recovery increased by 4 percentage points compared to 2025, adding over 5,000 tons of incremental production so far this year. Together, these improvements strengthen TRIO unit economics and have us on track to surpass last year's TRIO production by over 25,000 tons, as reflected in the increase to our full-year TRIO production guidance.

We also continue to manage our larger capital projects with discipline. At HB, our current production outlook gives us flexibility to defer near-term capital spending on the AMAX project without impacting expected production volumes as we continue to evaluate the cavern. At Wendover, we have reduced the expected cost of Primary Pond 8 by applying a revised construction process while still supporting long-term brine management needs of the operation.

We still have work to do, and disciplined execution remains a priority. The Q2 results show the business is moving in the right direction with site-level improvements, supporting better reliability, higher recoveries, improved production visibility, and stronger cost performance. Our focus now is to sustain those gains through the second half of the year. With that, I'll turn the call over to Jason.

Thanks, Rick. Before I review the financial results, I want to briefly share what excites me about joining the Intrepid team. It is clear to me that the company has a meaningful opportunity to capitalize on its current situation. What stands out is a business with strong market fundamentals, significant capital to allocate, clear growth opportunities, and a strong leadership team to drive improved execution while building long-term shareholder value. As CFO, my focus is to bring financial discipline, industry insight, and capital allocation rigor to the business, while clearly communicating Intrepid's investment thesis and progress.

Turning to financial performance, second quarter sales from continuing operations were roughly flat with the prior year quarter at $66.7 million. The more important takeaway is the improvement in margin quality. Gross margin increased by 35% to $16.6 million. Net income from continuing operations improved to $2.4 million, or $0.18 per diluted share, which includes a $5 million accrual related to anticipated water repayment and associated obligations in the Pecos water rights matter.

Adjusted EBITDA from continuing operations increased to $17.5 million from $13.8 million last year. The improvement was driven primarily by stronger material margins and better production performance, while cost discipline remains an important focus across the business. In TRIO, segment sales increased to $35.7 million from $33.2 million in the prior year quarter, with flat sales volumes and a 6% increase in average net realized selling price. Importantly, the segment delivered stronger margins and the lowest TRIO cost of goods sold per ton since the fourth quarter of 2019, reflecting the operational improvements Rick described. These improvements reinforce our decision to increase full-year TRIO production guidance to 295,000 to 305,000 tons.

In potash, segment sales were $30.6 million compared with $34 million in the prior year quarter. Sales volumes declined to 59,000 tons, while average net realized sales price increased 8% to $391 per ton. Segment gross margin was essentially flat year-over-year as higher prices and improved production performance were offset by lower sales volumes and higher average COGS per ton. Production increased by 8,000 tons from the prior year quarter to 52,000 tons, supporting our decision to increase full-year potash production guidance to 290,000 to 300,000 tons.

Moving to cash flow and liquidity, year-to-date cash flow from continuing operations was $55.3 million compared with $42.9 million in the prior year. Capital spending remained disciplined, with $8.5 million invested in the second quarter and $13.6 million year-to-date. Cash generation remains strong due to improved operating performance and disciplined capital deployment. During the quarter, we also received $62 million of cash proceeds from the South Ranch transaction, allowing us to further strengthen the balance sheet with $185 million of cash and cash equivalents and no revolver borrowings at quarter end.

Looking ahead and consistent with the project updates Rick described earlier, we are reducing full-year 2026 capital expenditure guidance to approximately $40 million, reflecting the updated timing and expected cost for AMAX and Primary Pond 8 at Wendover. As Kevin mentioned, we are approaching capital allocation with a balanced framework, focused on funding safe and reliable operations, preserving balance sheet flexibility, and evaluating investments against risk-adjusted return potential, execution readiness, and strategic fit. With discipline in place, we will also return excess capital to shareholders.

When we look at our cash balance, we think about it in practical buckets. First, we expect to hold approximately $50 million to maintain balance sheet strength and protect the company through trough conditions. Second, given the seasonality of the business, we expect to keep roughly $35 million available for working capital and cash flow variability. After those needs are met, the remaining cash can be allocated to high-return investments or returned to shareholders, depending on the relative opportunity and timing.

Consistent with that approach, in June, the Board expanded the share repurchase authorization to $50 million. We expect to begin repurchases in the third quarter while retaining flexibility to adjust the pace based on market conditions, liquidity needs, and the timing of investment opportunities. We will provide progress updates in future quarters.

Looking ahead to the third quarter, we expect potash sales volumes of 55,000 to 65,000 tons at an average net realized sales price of $380 to $390 per ton, reflecting late-season price increases, some refill pricing, and a second-half mix with a higher proportion of feed tons. For TRIO, we expect sales volumes of 30,000 to 40,000 tons and average net realized sales price of $400 to $410 per ton, reflecting our expectation that TRIO pricing will trend up as we fully realize the late spring season increase across all tons and continue to benefit from its low-chloride and sulfate fertilizer value.

To summarize, the quarter demonstrated meaningful improvement in profitability, a cleaner portfolio following the South Ranch sale, and a strong balance sheet. From here, our focus is to sustain operating gains, manage costs, and deploy capital with discipline. Operator, we are now ready to begin the Q&A.

[Operator Instructions] The first question comes from Vincent Andrews with Morgan Stanley.

Good morning, everybody. This is Justin Pellegrino on for Vincent, and congratulations on the results. You mentioned demand softening for potash in the second half of the quarter. I'm curious if you saw a similar function for TRIO, and if so, understanding 3Q is a smaller volume quarter, was that considered in the guidance for 3Q, and how much of an impact does it have?

Yes, Justin, thank you for the question. Related to that, we did see a little bit of softness as we moved in kind of late May, early June on the TRIO demand for second quarter. But really kind of speaking about third quarter guidance for TRIO, that's really a function just of the seasonality of the business. You know, that's in line with kind of what we did, you know, a year ago. With TRIO being primarily a spring-applied product, we typically see a dip in third quarter, and then we expect customers to come back to the table beginning in fourth quarter for positioning needs for next spring.

Understood, thank you. And then I guess more so across both potash and TRIO. We've seen a bit of an improvement in crop prices over the past couple of weeks. I'm just curious if that has helped, you know, stimulate some sort of demand and how farmers are reacting to recent prices.

Thank you. Yes, I think on the crop prices, we're watching those closely. You know, any uptick in crop values will certainly help the outlook for the fall application season. We're a few weeks away from the fall application season really beginning in earnest, and I think if crop prices stay, you know, stay, continue to appreciate, we'll see that come through with additional inquiries and opportunities for both potash and TRIO during the fall.

Great. Thank you for the time.

The next question comes from Lucas Beaumont with UBS.

So I guess just looking at potash, so you're pointing to sort of roughly flat pricing sequentially into the third quarter. We haven't seen any sort of seasonal decline at all this year really. So I guess how do you kind of see this setting up for 4Q and 1Q that demand picks up again?

Yes, Lucas, thanks for the question. Yes, we, as you noted, pricing, you know, into the summer fill for potash was flat to spring values. And we had that reflected in our guidance. You know, where that third quarter number lands will be a function of, you know, sales mix and, you know, the percent of ag versus industrial, and also just the mix of where those ag tons are going as far as the freight involved in those dynamics. But overall pricing outlook for potash remains very good and constructive through the remainder of the year, just based on a balanced global picture, and also, you know, recent news, particularly in Belarus, of a reduction in volume in second half.

Great, thanks. And then I guess just on the production sort of cost side in potash, you were able to hold cash COGS per ton there roughly flat, sort of year-on-year in the first half. I mean, you're sort of pointing to roughly flat production year-on-year in the second half. Should we, I guess, see that trajectory on the cost side continue? Just any other factors to think about there, and I guess, how do you sort of see your outlook from here and being able to take costs down at all going forward? Thanks.

Yes, Lucas, this is Rick. Thanks for the question. Yes, I mean, I think we see some opportunities to make some cost improvements throughout the balance of the year. I don't think they're going to be as major this year. We are continuing to focus on that and have some longer-term initiatives that we're working on to make some meaningful cost improvements in both potash and TRIO throughout the remainder of this year, but really into 2027.

If I can just add on to that response, Lucas, the other thing to keep in mind, right, is, you know, that Rick and team are really focused on kind of operational improvements, volume increases, right? And just like any other mining company, you know, we're highly levered to fixed costs. And so, you know, as those operational improvements come through, we will see kind of the cost benefits on a unit basis.

Great. And then I guess just is there anything this quarter that you can kind of update us on in terms of the potential lithium projects?

Online and you're delighted to see that. Thanks. Hey, Lucas, Kevin here. Thanks for the question. Now look, we don't have a whole lot to update on. They're progressing on the permitting front. They're progressing on the engineering, working towards a definitive feasibility study. I think it's going to be a pretty active fourth quarter, to be honest with you. So I think we'll have a good update on the next quarterly call, but things are progressing pretty much as planned on the lithium project.

And then I guess just on TRIO, I mean, you're also making you've been making, I guess, more progress there more recently sort of on the cost side as sort of production improves. I guess, where do you think you sort of are in terms of that sort of journey now and the ability to sort of further reduce sort of costs as we go forward from here?

Thanks. Yes, Lucas, good question. You know, we have made meaningful progress. A lot of that was due to the installation of the continuous miner earlier in the year and the benefits with that. We still see a lot of opportunity just outside of that machine and the rest of the process. So we have been working very diligently on increasing our tons per operating hour. We've seen meaningful progress in that. We still have opportunity to improve that. As the mine production increases, we're starting to see some bottlenecks in our mill. They're working to address those. So we still have some big opportunities out there to grow TRIO over the next couple of years, and we'll stay focused on achieving those.

Great, thanks very much.

The next question comes from Jason Ursaner with Bumbershoot Holdings.

Thanks. Congrats on the improved results, and I very much appreciate all the details included now in the prepared remarks around capital allocation plans and everything else. Just following up on Lucas's question there. I didn't quite hear some of it, but the increase in the full-year guidance for MOP potash production, you'd previously also given guidance for next year for fiscal '27 because of how the tons were sliding and kind of split between the two years. Is the increase in this year now pulling some of that back forward, or is this, you know, kind of truly found tons in somewhere?

No, Jason, that's a good question, and you're right. The answer is no, we're not pulling tons into this year. We've actually made meaningful and sustainable improvements in the way that we operate our mills, and this incremental tonnage is largely based on increased mill recoveries and throughput. So we've been mindful to make sure that we're not pulling tons in from next year. So no, this shouldn't have an adverse impact on 2027 production.

Okay, and then just on the operational improvement side for the potash piece, all else equal, if production were to be consistent year-over-year, I didn't hear if you said, is there, I guess what level of efficiency gains on COGS are we still expecting to see as you get, you know, the saturation levels, brine grades, water availability, kind of the full benefits of the CAPEX program from the last couple of years to flow through? Is there still benefits on COGS that you expect to see? And I know kind of previously have tried to quantify some of it is, how does some of that square with how you guys are looking at it now?

Yes. I mean, just kind of dovetailing on Jason's prior comment, yes, I mean, you know, our focus initially has been incremental production, right? Trying to make more tons without increasing our fixed cost and having the COGS improvement with those additional tons. You know, we're still continuing to progress on that. We still have work to do on that, but then also, you know, also working on the cost side of it. How can we get cost out of the process? You know, I think it's probably a little bit too early to give, you know, kind of longer-term guidance on where we think we may be able to get there. But I think we see opportunities for some meaningful improvements still yet to come.

Okay. And then just the capital allocation plans, I guess you sort of went through, Jason, you kind of went through the want to hold $50 million, another $35 million of working capital, obviously a bit overcapitalized right now. Kevin, you talked about feeling some of the pressure from shareholders on that in terms of doing something, but wanting to do it in the right way. Does that change the kind of the timing or intensity of some of the capital plans change based on the timing of the next guaranteed $50 million for Exxon or if the customers to go ahead with some of the production plans and hit targets on the next $100 million milestone payments? Is there a difference in kind of the timing and intensity of some of the capital plans at $185 million of cash versus $225 million or $300 million or something like that?

Let me take a shot at that, Jason, and then the other Jason can fill in with some details. It's a good question. We, as you pointed out, felt the pressure, felt the noise and feedback from the shareholders to start returning some capital. That's why we announced the $50 million program, which will kick off this quarter. What we felt like was appropriate was to get something started. Let's start buying in some shares. Let's continue to execute. As Rick mentioned in his opening remarks, we're building better execution muscle. Let us continue to execute. We're evaluating some internal projects, which we think we can share a little more in the next one or two quarters.

But then as the Exxon money, to the extent it rolls in, we don't have any idea when that'll happen. That could decidedly change how we think about capital allocation. So I think it's premature to commit to anything right now other than we're committed to getting this program started this quarter. Let's see how things go, and we'll adjust the plan accordingly based on how the environment is unfolding for us.

Okay, great. I really appreciate all the details and congrats on the quarter and great call. Thanks.

Thank you. This concludes the question and answer session. I would now like to turn the conference back over to Kevin Crutchfield for any closing remarks.

Thanks, operator, and really appreciate everyone joining the call today, and thank you also for your questions. I got to say we're really encouraged by the progress in the quarter and frankly the last few quarters and the momentum that we're building across the business. From our perspective, our priorities remain clear. Operate safely, sustain the production and cost improvements we're seeing, advance value-creating opportunities with discipline, and return capital where appropriate while maintaining financial flexibility. So again, I want to call a special call out to our teams out in the field that make all this possible. We want to thank them for their continued focus and execution, and also thank our investors for their continued interest and support. So, operator, you may now conclude our call. Thank you.

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

Thank you for standing by. This is the conference operator. Welcome to Intrepid Potash, Inc. First Quarter 2026 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Ryan Schultz, Interim Investor Relations Manager. Please go ahead.

Good morning, everyone. Thank you for joining us to discuss and review Intrepid's First Quarter 2026 results. With me today is Intrepid's CEO, Kevin Crutchfield; our Chief Accounting Officer, Cris Ingold; our VP of Sales and Marketing, Zachry Adams; and our VP of Operations, Rick Kim.

Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based upon information available to us today and are subject to risks and uncertainties that are described in the reports we file with the SEC and could cause our 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 today's press release and along with our SEC filings are available at intrepidpotash.com.

I'll now turn the call over to our CEO, Kevin Crutchfield.

Thank you, Ryan, and good morning, everyone. We appreciate your interest and attendance for today's earnings call. I'm pleased to report that 2026 is off to a strong start with solid first quarter results.

Our adjusted net income from continuing operations for the first quarter of $8.2 million and adjusted EBITDA of $19 million is a significant improvement from last year's first quarter adjusted net income of $3.9 million and adjusted EBITDA of $14.6 million. And we're looking forward to capitalizing on this momentum for the rest of the year. Our performance is a reflection of the hard work of all of our employees, and I'd like to thank our entire team for their commitment to safety and consistent execution across our core fertilizer business.

Our first quarter performance was driven by several factors. First, supportive pricing and resilient demand across our fertilizer products. In the first quarter, our average potash net realized sales price was $353 per ton, and our average Trio net realized sales price was $387 per ton. This represents a 13% increase year-over-year for potash, up from $312 a ton and a 12% increase for Trio, up from $345 per ton.

Second, sales volumes remained strong with our second highest quarterly sales total since idling the West mine in 2016. Combined potash and Trio sales volumes were 211,000 tons in the first quarter with potash sales volumes of 105,000 tons and Trio sales volumes of 106,000 tons. Finally, successful execution on key projects and operational efficiencies supported improved cost margins. Trio delivered its highest quarterly segment margin since 2022 and per ton cost improved 5% compared to the fourth quarter.

Before I pass the call to Zach, I want to highlight a few key developments and operational updates. On April 1, 2026, we sold the majority of the assets of the Intrepid South Ranch to HydroSource Logistics, LLC for total consideration of $70 million, which included the $8 million deposit we received in December 2025. We were able to transact on the ranch at a favorable valuation, unlocking decades worth of cash flows in a single transaction that will allow us to refocus our efforts exclusively on our fertilizer assets. The sale will also allow us to utilize a portion of our sizable deferred tax assets to offset the tax impact of the one-time gain.

On lithium, our partners continue to advance FEL-3 engineering and associated permitting. We remain confident in this project and look forward to sharing further details of the project economics as they develop. Overall, we're looking forward to a strong year. Continued steady support for our core business and solid cash position will allow us to capitalize on our unique position in the market and capture additional upside from opportunities like lithium, among others.

I'll now pass the call to Zach to provide some commentary on market. Go ahead, Zach.

Thanks, Kevin. Potash saw good subscription during the winter fill program with customers securing orders to meet most of their first quarter requirements. Following the closure of the order window, posted potash prices increased by $20 per ton, a change reflected in second quarter spot transactions. Trio demand remains resilient as customers value the individual components, particularly sulfate due to ongoing disruptions in raw sulfur supply from the Middle East, along with the low chloride potassium component.

Trio pricing was increased by $15 per ton in late March with this adjustment realized on spot second quarter sales. Globally, potash fundamentals have been supported by consistent production, broadly stable pricing and solid demand. Brazil and China imported potash at record levels in the first quarter, contributing to a balanced market and reinforcing a constructive outlook for the second half of the year.

Turning to agriculture markets. U.S. corn exports are on track to reach record levels for the '25-'26 marketing year. Commodity prices for corn, soybeans and cotton have strengthened in recent weeks, driven by weather concerns, supportive demand and geopolitical tensions affecting market stability. We do recognize the concerns regarding the financial health of growers within the U.S. market, particularly as affordability challenges have been intensified by volatility in input costs arising from the conflict in the Middle East. We anticipate growers will continue to make the input decisions carefully. Potash, whose prices have stayed comparatively stable relative to other nutrients remains a critical input as growers look to maximize yields.

I will now turn the call over to Rick Kim for an operations update.

Thanks, Zach. In our Trio segment, the commissioning of a new continuous miner has already increased our tons per operating hour and increased operational efficiency. Additional improvements in our mill have boosted recovery and increased operating hours per shift continues to drive higher production of both granular and premium products. We benefited from these improvements in the first quarter, and we expect to continue realizing further improvements through the rest of the year.

In our potash segment, we've seen promising returns this spring from the HB Mine with higher mill recoveries and improved pond deposition, extending our expected run time before our summer shutdown. Moab also continues to see improvements in overall plant efficiency, driving higher throughput and recovery. Early season evaporation looks promising, and we anticipate making up the tons lost due to last year's late season rain events.

At Wendover, we expect to commence construction on Primary Pond 8 this summer, which will expand our evaporative area, and we anticipate increased production in 2028 as a result. We also expect Primary Pond to start contributing more production this year. Overall, our focus on operational improvements and execution have resulted in higher production and reduced unit costs year-over-year in both potash and Trio.

I'll now turn the call over to Cris.

Thank you, Rick. To echo Kevin's remarks, Intrepid delivered a strong first quarter. Our continued focus on driving production to increase revenues and improved unit economics is visible in our first quarter results. Potash production was 104,000 tons in the first quarter compared to 93,000 tons in the first quarter of 2025. As Kevin and Rick mentioned, this production is due to operational improvements across our mines.

First quarter potash sales were $46.1 million, up $2.5 million from the prior quarter, driven primarily by higher realized pricing. Potash gross margin was $3.1 million versus $2.5 million last year as a result of higher realized pricing, partially offset by higher costs on a similar volume. We sold 105,000 tons at an average net realized sales price of $353 per ton compared to $312 per ton in the first quarter of 2025. Higher production from higher cost sites increased our average potash segment cost of goods sold to $334 per ton in the first quarter of 2026 compared to $313 per ton in the first quarter of 2025 and $332 per ton in the fourth quarter of 2025. For 2026, we expect our annual potash production to be at the upper end of our guidance of 270,000 to 285,000 tons given recent improvements at HB.

Turning to Trio. First quarter production was 69,000 tons, a 10% increase versus last year. This increase is largely attributed to the new continuous miner commissioned during the quarter and ongoing plant optimization projects. Sales were $52.5 million, up $2.7 million from the prior year, driven by a 12% increase in our average net realized sales price per ton. This offset a 4% decline in tons sold. Overall, Trio margin was $14.8 million for the quarter, up $4.4 million from last year. This was the highest quarterly segment margin since 2022 due to higher realized pricing and an improvement in COGS, offsetting the slight decline in sales volume. COGS per ton saw an improvement year-over-year and quarter-over-quarter with $229 per ton versus $235 per ton in Q1 last year and versus $242 per ton in the fourth quarter of 2025.

For 2026, Trio production, we are expecting to reach 285,000 to 300,000 tons with COGS of around $230 per ton. This is the expected result from our improvements with the new miner, increased recoveries and more operating hours per shift. In terms of second quarter guidance, we expect another solid quarter as spring application winds down and our potash facilities enter the summer evaporation season.

For potash, we expect our sales volumes to be between 50,000 to 60,000 tons at an average net realized sales price in the range of $380 to $390 per ton. In Trio, we expect our sales volumes to be between 70,000 to 80,000 tons at an average net realized sales price in the range of $390 to $400 per ton.

For our 2026 capital program, we expect to spend $40 million to $50 million, with most of our spend related to sustaining capital, specifically at our East Mine and for the beginning of a new Primary Pond at Wendover, which we expect will begin contributing to Wendover's production in 2028. We continue to consider investment opportunities that will upgrade our assets and optimize future production and efficiency. We are currently evaluating a number of additional high-return growth and productivity investment initiatives over the next 18 to 24 months.

In summary, 2026 is off to a strong start, and we're excited to see the results from the initiatives we put in place to meaningfully pay off in the form of increased production and improving costs.

Operator, we are now ready for the Q&A portion of our call.

[Operator Instructions] Your first question comes from the line of Lucas Beaumont from UBS.

I just wanted to start on kind of the sale of the South Ranch. I mean it sounded like you're sort of indicating that potentially you get the full $70 million in cash sort of net of the sort of DTA benefits. I guess, one, is that sort of correct? And then two, what are you kind of intending to do with the proceeds?

I'm sorry, Lucas, what was the last part of your question? What are we going to do with the cash?

Exactly. Yes, yes. So should we assume you're getting the full $70 million? And then what are your intentions in terms of deploying it? Are you going to sit on it to sort of put towards projects going forward? I mean do you see repurchases as attractive at the current level? Or sort of where would you like to use that?

Yes. Look, it's a good question. And let me just give you some context on how we're thinking about that right now. As I've mentioned a bunch of times before since I joined, this is a regular conversation amongst our Board, i.e., how to think about capital allocation. And frankly, it's becoming even more topical given the improved performance that we've seen over the last 18 months and the cash build that we're experiencing on the balance sheet at the moment.

So let me just kind of reiterate some priorities that I've discussed before, just so we're clear and you get a sense of how we think about this. As I laid out early in my tenure here, the first order of business was to reestablish an intense focus on the core assets. The goal was to make them more predictable, more reliable, more resilient. And I think we can all agree that we've seen improvements on that front, but we're not done there, and I'll address that momentarily.

From there, we wanted some time to look at our sustaining capital needs for the business over a reasonable period of time, say, 5 years or so. We're pretty much through that process now and believe long-term core operations should require something on the order of $35 million to $40 million a year of sustaining capital with an add-on every few years for larger sustaining items like making a new cavern or building a new pond like we're doing at Wendover right now.

So notably, I'll just give you a heads up that 2027 is expected to be one of those years, and we can talk about that a little later. And then next, and also importantly, we're really focused on across the company on ways we can increase volumes and reduce our cost. This effort is being ingrained into the culture of Intrepid as simply the way we need to think about our business. And to be frank, we don't see any silver bullets to increase production substantially in the short term, but we do see numerous opportunities to add incremental tons to the portfolio with attendant effects on costs and efficiencies. And I think a good example of that is what's happening at Carlsbad now. You can see that result improved over the past several quarters.

And then as I've also mentioned in the past, we wanted to review our portfolio to determine if there were assets that we held that might make sense in the hands of somebody else and the South Ranch fit that bill. Then as you saw, we monetized that asset and brought forward decades of cash flows and frankly, put that asset into a better set of hands than us given the dynamics of what's happening with water in the Permian Basin. So now that the assets -- core assets are performing better, and we've taken a look out into the future and assess our capital needs, we want to be thoughtful about maintaining an adequate amount of dry powder for organic projects or opportunities that exist across our portfolio and through continued performance to frankly earn the right to consider adjacency opportunities that might make strategic sense for the company.

And then last but not least, we want to retain adequate liquidity to buoy us through any rough times that might come our way. And for those of you that have been around this sector for a while, you'll know exactly what I'm talking about. I know, Lucas, that was a lot, I realized, but I thought it was important for you and others to hear how we think about capital allocation priorities. And suffice it to say, I think we've made great progress over the 1.5 years. And what I want to leave you with today is the following: a lot of requests that we return capital to shareholders. We hear you loud and clear. We always have. We simply had some work to do before this conversation could be had in earnest. And our Board is convening later this month to discuss a variety of matters. And what I'll leave you with is just know that this topic is chief among them.

So I'll just leave it at that for now, and hopefully, that gives you some nuggets at least on how we think about it and what might be on the near-term time frame.

Great. I mean that's very helpful. And then, I guess, just on the -- I'm trying to, kind of, talk to you about how the Trio market is going to kind of go as we look forward here. So I mean you're kind of pointing to like a $10 to $15 kind of sequential improvement in pricing into 2Q. I mean, sulfur markets have been impacted significantly globally from the Middle East disruption, and that's kind of raising production costs and raising the cost curve, I guess the synthetic production on that side. How do you kind of see that flowing into the Trio market and impacting pricing? Is there more of an impact to come as 2026 progresses? Or do you believe that's kind of incorporated in what you're sort of expecting for 2Q now?

Thanks, Lucas, for the question. So it's important to remember that customers typically lock in the majority of their spring requirements pretty early to start the year for Trio and potash. And so most of those commitments were made ahead of the Iran conflict beginning and certainly before the full extent of it was realized. So we expect to start seeing more and more of that realization and certainly as we kind of see those spot opportunities here in second quarter.

And for the balance of the year, we expect Trio to benefit from a constructive outlook amid a tightening global supply environment on sulfur, which should keep sulfate values firm, and you should see that kind of roll through our realized pricing as we kind of move through the rest of the year.

Great. And then just, Kevin, I mean, you kind of mentioned, I guess, the further efforts to kind of incrementally lift production progressively. So I guess switching over to potash, how do you kind of see the trajectory beyond this year to kind of push back above 300,000 tons over time?

You want to take that, Rick?

Yes, sure. Lucas, this is Rick. We see a number of different incremental opportunities at the core assets. As Kevin mentioned, kind of the past 12 to 18 months have really been focused in on operational improvements, identifying those and executing on them. So continue to see opportunities at HB. We're starting to realize those already, as I mentioned in the earlier comments.

And we're seeing similar opportunities around Wendover and Moab as well. The addition of the new Primary Pond at Wendover, it will start contributing in 2028. Primary Pond 7, which was commissioned a couple of years ago, we'll really start to see its full productive capacity coming online throughout this year and with the intent of getting that operation back up into the 75,000, 80,000 ton per year run rate that it's historically operated at.

Just one more little point, Lucas, in addition to what Rick said, as we've talked about before, we have the AMAX cavern. It still needs more work. We want to be very thoughtful about how we approach that. And to the extent that, that proves out, that would represent a meaningful upside opportunity for us. But we still have work to do there, and we'll keep you posted in the coming quarters on that project.

Great. And then I guess just on the lithium project, could you maybe just kind of share how you sort of see the time line on the milestones there as we sort of move through this year and beyond? And then I mean, investors are very keen to kind of get an understanding of like how you think the sort of unit cost economics are going to look there. I mean I think the sort of production target and the revenue side is sort of more well understood sort of depending on sort of what everyone does with market pricing. But to kind of really understand what it could mean to you guys in the medium term, we sort of need a better view on the cost side. So I don't know if there's anything you can kind of share there now or I guess, when you sort of think you'll be able to have a better view of that as we sort of work through the process there?

Yes. Good question. And look, I don't want to front-run our partners. The key milestone that's coming early this summer will be FEL-3. And that's when you have a pretty high degree of precision around your engineering, the build, the cost of the build and where your operating costs are going to come out. We have a sense of what those are, but it'd be way premature for me to start talking about that.

But look, given the concentrations that we have of the lithium ion relative to a lot of these other brine projects, we've kind of got a head start really when it comes down to it. So we feel good about the initial volumes coming out of the project in a couple of years, 5,000 tons LCE and continue to work very closely with our partners on assisting them from the footprint of their operations, assisting with permitting, getting through the regulatory hurdles, et cetera, all of which is actually going pretty well. So I think the big milestone, again, is FEL-3. And once that's done, that's when we'll be prepared to talk to the market about more precision around timing, cost to build and cash operating and full operating costs. So hopefully, that's incrementally helpful, Lucas.

That's great. And then maybe just one on sort of the cost side. So I just wanted to sort of understand how you're seeing sort of any cost pressures flowing through the business from the, I guess, the inflationary environment that we're in right now. Just is that sort of impacting either potash or Trio? And I guess, how would you sort of see that evolving as the year progresses? And then just lastly, is there any -- I mean, I think there's a small residual of the -- there's some small residual impacts left, I guess, even after the South Ranch sales. So I just kind of wanted to understand, are there any kind of stranded costs associated with that or just anything we should think about there going forward as well?

Maybe hitting the last part of your question first, to the extent I understood it properly. We had an Oilfield Services segment when we had South Ranch. We'll still have some oilfield services activity, but that will get subsumed into the other segment and we'll discontinue the Oilfield Services segment. And in terms of kind of cleanup post deal, I'm looking at Cris to see if I want to get this right. But I think it's pretty clean and you're not going to see any sort of tail effects permeating through the P&L of the balance sheet after the sale was concluded. Did I do okay there, Cris?

You did. Very minimal costs left behind that will be absorbed into the other parts of the business there.

And then I'll take a shot at the sort of the cost question Lucas, I mean, yes, I mean, we're seeing it kind of all over the place. It's not like radical or anything, but fuel clearly is the biggest nemesis and it's highly volatile. It's bouncing all over the place. We have some natural gas exposure over time. That's actually behaving pretty well kind of given the natural gas deck. Winter always portends for a potential spike. But beyond that, we're not seeing anything that I would characterize as material unless Rick has information to the contrary.

No, I agree with Kevin. I think one of the things that's probably important to call out is while we do see the fluctuations in fuel, if you look at the nature of our mining processes, we're probably not as impacted or exposed to those fuel fluctuations as surface -- traditional surface and underground miners. Our solution mining process does insulate us a bit from that.

Your next question comes from the line of Vincent Andrews from Morgan Stanley.

Thank you for all the color and that wide slew of questions there. We really appreciate it. I just wanted to -- this is Justin Pellegrino on for Vincent. I just wanted to double-click on some of those. First being well understood on the capital allocation priorities. In the meantime, should we expect that the cash kind of generate some interest income on your P&L?

Yes. Yes, it will. Those cash balances are placed in very safe federal-type securities. So yes, you will see some interest income start to leak through the P&L as we move ahead. We've built up a pretty hefty balance. I know we reported as of the end of the first quarter. But clearly, the incremental $62 million for the Ranch transaction came in after the end of the quarter, and we've built some additional cash, too. So I think current cash balance stands on the order of $170 million or so. So definitely, you'll start to see some interest flow through.

Okay. And then one more on COGS for the rest of the year. Can you just kind of give us some cadence for COGS per ton in potash throughout the balance of the year? I know the press release kind of mentioned some higher cost mix in production towards higher cost sites. So can you just kind of give us some cadence for the balance of the year?

Yes. So Justin, typically, our COGS will fluctuate throughout the year, especially at our solar sites, largely due to the production volumes. So we're actually finishing up our harvest season here within the next few weeks, and each of the sites will go into their summer shutdown. So that does have an impact on the COGS that we will report for the next 2 quarters or we anticipate to see that. But once we get later in the year, I mean, we do expect to see some of those operational efficiencies that we've talked about starting to realize in both production and costs. So I think especially into the latter half of the year, we'll start to see those materialize.

Your next question comes from the line of Jason Ursaner from Bumbershoot Holdings.

Congrats on the quarter and the sale of Oilfield. I think I've asked you about capital allocation pretty much every quarter since you joined, Kevin. I appreciate the answers to Lucas. I'm not going to hammer too much on it. But just the last questioner, you said that the cash balance as of the end of April is around $170 million.

Yes, plus or minus. Correct.

Any -- I guess what was the -- any rationale why we didn't include it in the press release for this quarter to kind of let algorithms and whatever pick up on that, just given we've included it pretty much every quarter, kind of that month-end cash balance the last year or 2?

Yes. Look, that's a fair question. I mean, obviously, the press release pertains to the first quarter and the deal on the Ranch didn't close until the day after the first quarter. So technically, we took the view that we're going to just discuss everything inside the first quarter. Perhaps it would have made sense to address cash on hand and liquidity more pointedly actually in the press release, but we weren't trying to hide from it. It was just focused on the quarter.

Okay. And just any update on kind of the XTO Exxon permitting process, any update on where the BLM stands with that?

I'm sorry. We actually don't have any like information that's useful. We see kind of what's going on in that part of the world where we operate. It's super busy, lots of activity, but we don't have any insights as to Exxon's near-term plans. I mean we continue to be bullish on their Big Eddy development process, and it's going to come. We just don't know exactly when.

[Operator Instructions] At this time, there are no further questions. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks.

I'd like to give one final thank you today before we conclude to our team here in Denver, our teams in Utah and New Mexico for their hard work and dedication over the last quarter and, frankly, the last couple of years. And also to those of you who attended the call today, thank you for patching in, and we look forward to keeping you posted in the future. Thank you. Everybody, have a great day.

This concludes today's conference call. Thank you for participating, and have a pleasant day. You may now disconnect your lines.

Thank you for standing by. This is the conference operator. Welcome to the Intrepid Potash, Inc. Fourth Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] 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's fourth quarter 2025 results. With me today is Intrepid's CEO, Kevin Crutchfield; and CFO, Matt Preston. During the Q&A session, our VP of Sales and Marketing, Zachary Adams; and VP of Operations, Rick Kim will also be available. Please be advised that comments we will make today include forward-looking statements as defined by U.S. securities laws. These are based upon information available to us today and are subject to risks and uncertainties, which are described in the reports we have filed with the SEC.

These could cause our 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 on intrepidpotash.com. I'll now turn the call over to our CEO, Kevin Crutchfield.

Thanks, Evan, and good morning, everyone. We appreciate your interest and attendance for today's earnings call. Intrepid again delivered strong results in the fourth quarter with adjusted net income and adjusted EBITDA of $6.5 million and $18.1 million, respectively, both of which were significant improvements compared to last year. For 2025 as a whole, our adjusted EBITDA of $63 million is one of the best prints since 2016 and represents an almost 80% improvement compared to 2024.

We're very proud of these results, which we also accomplished with best-in-class safety performance with just 1 recordable incident in 2025 across over 1.1 million hours worked. I'd like to thank and congratulate our site leaders and all of our team members for their hard work and dedication and want to encourage them to continue to stay focused and continue to deliver good results in 2026. Our solid 2025 performance was driven by several factors. First, steady demand for our core fertilizer products drove strong sales volumes. In 2025, our combined potash and Trio sales volumes of just over 590,000 tons was 20% higher compared to 2024 with 303,000 tons of Trio sales being a company record.

Second, we again delivered solid unit economics from higher overall production with our 2025 potash COGS per ton improving by approximately 5% versus last year and our Trio COGS per ton improving by over 10%.

And thirdly, we benefited from increasing pricing. This was most pronounced in Trio, where fourth quarter average realized price of $379 per ton was 20% higher than the first quarter of 2025. The solid sales volumes and pricing have continued into 2026 ahead of the spring application season and agricultural markets have also shown signs of optimism. For corn, year-to-date domestic exports are up almost 50% versus last year. And for soybeans, recent trade deals have improved the outlook with futures for both crops up by about 15% since the August lows.

Moreover, the $12 billion in government bridge payments to farmers are expected in the coming weeks, which should help further support solid fertilizer demand this spring. For the broader potash market, global supply and demand remains mostly balanced, where demand in key international markets has been resilient. In 2025, global potash shipments were estimated at roughly 75 million tons and 2026 is expected to see additional growth of about 1.5 million tons.

Moreover, by the end of the decade, third parties are forecasting global potash demand to be about 6 million tons higher than it was in 2025, which should help absorb additional supply coming from some of the larger-scale potash projects like Jansen. Before passing the call to Matt, I'll end my remarks with a couple of key project and operational updates. In potash, we've deferred a decision on our AMAX cavern into at least 2027 as we continue to evaluate the project.

Since we've never mined this cavern, which still requires additional investment, we want to be very sure we completely understand the mineralogy and the geology and feel it's most prudent to continue to demonstrate strong capital discipline until this evaluation is complete. In addition, we feel confident we can sustain our HB production over the next several years even without AMAX.

For Trio, our operational performance continues to be very strong, and we recently placed another new continuous miner into service, which should further improve our mining rates and continue our trend of year-over-year production increases. For 2026, we expect our Trio production to be in the range of 285,000 to 300,000 tons, which represents a year-over-year increase of about 7% at the midpoint. This will help offset what should be flat to slightly down potash production in '26, which is primarily due to the below average evaporation at HB over the summer.

Moving on to our lithium project in Wendover. We've published quite a bit of detail in recent press releases, but I'll provide a quick summary. For those new to the story, one of our key byproducts after producing potash at Wendover is magnesium chloride brine. This brine also contains lithium but requires a highly technical direct lithium extraction process. We've looked at various DLE options over the past several years and just recently, new technologies have made significant strides, which should now make the project viable at scale.

As for project updates, in January, we announced that we have a joint development agreement in place with Aquatech and Adionics, whereby our partners have already produced a sample of battery-grade lithium carbonate from our brine. As we noted in yesterday's press release, we'll be providing an updated technical report summary for Wendover along with our 2025 10-K, which will include maiden resource estimates for lithium and will show a measured and indicated resource of approximately 119,000 tons of lithium carbonate equivalent.

At the current estimated production capacity of 5,000 tons per year, this would support a project life of roughly 25 years. There's still plenty of work to be done, but we have high confidence in our partners, and we're optimistic we can move quickly with a goal for a definitive feasibility study later this year. Lastly, we're now under exclusivity with a potential buyer for the South Ranch. Negotiations are ongoing and subject to confidentiality provisions, but we're holding an $8 million deposit from the potential buyer, which demonstrates their very serious intent. Although we're still negotiating definitive agreements, we believe the potential deal will likely close sometime in the first half of 2026, and we'll update the market as appropriate.

Overall, it's an exciting time for Intrepid. We're delivering strong results and remain constructive on the outlook. With very strong support for critical minerals in the United States, there's probably been no better time to be a domestic producer of potash and Trio, while lithium provides significant potential upside. In addition, we want to highlight that our core products have long-term staying power, which is further enhanced by our multi-decade reserve lives, and we look forward to capitalizing on our unique positioning in 2026 and beyond. So with that, I'll now turn the call over to Matt. Please go ahead.

Thank you, Kevin. To echo Kevin's remarks, 2025 was a great year for Intrepid, where our total fertilizer sales volumes of 592,000 tons were almost 100,000 tons higher than 2024 and reached a level not seen since 2018. Our #1 focus is driving higher production, increase our revenues and improve our unit economics, and it's very encouraging to see our hard work pay off with strong results. For segment highlights, in potash, our fourth quarter gross margin of $4.6 million was in line with the prior year as a higher average net realized sales price of $387 per ton was offset by a slight decrease in sales volumes due to a compressed fall application season and limited engagement on spring potash needs in the latter part of the quarter.

Full year 2025 segment gross margin of $18.2 million was modestly higher compared to last year as the higher production that started in 2024 allowed us to sell 289,000 tons, a 20% increase from 2024, which offset a pricing decline of about $25 per ton. As we noted on our third quarter earnings call, our fourth quarter potash production was impacted by a delayed start-up at HB, which resulted in our full year 2025 production coming in at 280,000 tons. For 2026, we expect our annual potash production to be in the range of 270,000 to 285,000 tons. So we do expect a slight degradation in our unit economics this year.

That said, looking beyond 2026, we expect a recovery in our HB production and more tons out of our Wendover facility and project that our 2027 potash production will be in the range of 300,000 to 310,000 tons, which puts us back on track for our key potash production goal.

Moving on to Trio. The very strong performance continued as our fourth quarter and 2025 production, sales volumes and pricing were all higher compared to the respective prior year periods due to strong operational execution, modest market share gains and supportive sulfate values. This led to a $10.5 million in gross margin in the fourth quarter and $33.4 million in gross margin for 2025.

Outside of the significantly elevated pricing in 2022, this is the best Trio performance in our history. For 2026, as Kevin mentioned, we expect to produce 285,000 to 300,000 tons of Trio and anticipate our cost of goods sold per ton to show modest improvements from 2025 as consistent production increases continue to improve our overall unit economics. Our forecasted Trio production, coupled with continued strong pricing due to both the expected solid nutrient demand for spring application and supportive Trio component valuations should continue to result in strong Trio segment performance in 2026.

Turning to first quarter guidance. In potash, we expect our sales volumes to be between 95,000 to 105,000 tons at an average net realized sales price in the range of $345 to $355 per ton. For Trio, we expect our sales volumes to be between 105,000 to 115,000 tons at an average net realized sales price in the range of $380 to $390 per ton. For our 2026 capital program, we expect our capital investment will be in the range of $40 million to $50 million, with most of our spend related to sustaining capital, specifically at our East mine and for the beginning of a new primary pond at Wendover, which we expect will begin contributing to Wendover's production in 2028.

In summary, 2025 was a great year for Intrepid, and we look forward to carrying this momentum into 2026. Overall, fertilizer production and sales volumes look to be on par or slightly ahead of 2025 and pricing continues to be supportive. Production improvements in our Trio segment going from 216,000 tons in 2023 to nearly 300,000 tons in 2026 are sustainable and we see further upside as we continue to focus on improved mining and recovery rates. We will work through the recent weather and evaporation setbacks in potash during the 2026 spring season and remain confident in eclipsing 300,000 tons of potash production in upcoming production years. Operator, we're now ready for the Q&A portion of our call.

[Operator Instructions] The first question comes from Lucas Beaumont with UBS Investment Bank.

This is Nicole Grueneberg on for Lucas. Firstly, I was just wondering if you can walk us through current potash demand dynamics and how your order book is looking for 1Q? Have you seen any evidence of demand disruption due to affordability issues?

Yes. Thank you for the question. This is Zachary. We're almost fully committed for first quarter right now on potash, and we have not seen really any significant demand disruption at this time. Potash remains a very good value from the grower at the current price point, and we expect stable demand for the spring season amid strong acres of corn expected to be planted.

Great. And then just on the lithium project, can you walk through the unit economics there? What cash cost of production would you expect on a per ton basis?

We're not prepared to address that at this stage. We'll continue to provide updates to the marketplace. And as the engineering work progresses, we'll start laying those metrics out in the future.

Got it. And then last one for me. So oilfield sales are pretty -- were down pretty meaningfully in 2025. What's your outlook there going forward compared to this year? Are you expecting growth or further declines from here?

Well, I mean, given the nature of the asset and lots of inbounds and interest in oilfield services business that we felt like testing the market for valuation of our asset was appropriate under the circumstances, which we did, which is why we entered a letter of intent with the prospective buyer. So I think any comment that I would have beyond that would be speculation and almost irrelevant given that it's our intent to transact on this asset.

Your next question comes from Vincent Andrews with Morgan Stanley.

This is Justin Pellegrino on for Vincent. Congratulations on the results. My first question is kind of around sulfur prices. Given the conflict in the Middle East, we've seen a pretty significant increase in sulfur prices there. So -- and I know it's fairly recent, but could you just discuss any sort of increased interest you've had in Trio over the last few days? And any type of real-time update that you've seen there would be very helpful. And then likewise, could you just discuss expectations for prices relative to the potash products, how that will trend throughout the year?

Yes. First, Justin, on the sulfur component and kind of what that's kind of led to on Trio interest. I mean we're right in the heat of our kind of main Trio application season. So we're seeing really good response, I would say, just from a demand perspective for the rest of first quarter out into the second quarter at this point. I haven't seen those prices I'd say, roll through on sulfate values just yet. But I think to your point, that's something we're watching closely there as we move into the spring. And then just as far as potash pricing throughout the rest of the year here, not prepared to kind of project what second half looks like. But I think globally, we're in a very balanced potash market. And particularly here in the U.S., the U.S. potash prices are trading at a discount to almost all global benchmarks. So we think that supports stable pricing here in the U.S. and certainly some room for upside to get in line with where other global markets are currently trading at.

Great. And then just one more for me. If the South Ranch deal does go through, can you just kind of give us an update on any capital allocation priorities? Do you have any idea what you would do with the proceeds? Any thoughts there would be helpful.

Yes, sure. Thank you. Yes, assuming the sale goes through, I mean, I think my answer would be the same whether the sale goes through or not that I've referenced on pretty much every call since I took the mantle of the CEO here 15 months ago. Our first priority is an intense focus on our core operations, sort of restoring those back to predictable, resilient state, making sure that they're generating consistent free cash flow and that we can appropriately capitalize them to continue that predictability and reliability into the future and perhaps even grow production volumes modestly over the coming years.

And then from there, we obviously need to maintain sufficient liquidity to allocate capital internally to our operations. and address any sort of sustaining and growth capital requirements internally, but also to withstand any sort of body blow or shock that we take to the system on the pricing front. And then once we've satisfied those criteria, I think it's a very appropriate discussion for the Board to begin to think about capital allocations beyond that, that just entailed the internal needs. So to the extent that, that sale does go through, you can rest assured that, that discussion is top of mind and top of the agenda with the Board. So with that, I don't want to front run our Board any further than those comments, but that's our point of view on that.

This concludes the question-and-answer session. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks.

Thanks to everybody again for attending today's call. And I would like to again thank all of our employees across all of our sites for a really great year and especially thank them for just an outstanding safety performance. And we look forward to continuing to keep you updated in the coming quarters. Thanks for attending today.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Thank you for standing by. This is your conference operator. Welcome to the Intrepid Potash, Inc. Third Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] 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's third quarter 2025 results. With me today is Intrepid's CEO, Kevin Crutchfield; and CFO, Matt Preston. During the Q&A session, our VP of Sales and Marketing, Zachry Adams will also be available. Please be advised that comments we'll make today include forward-looking statements as defined by U.S. securities laws. These are based upon 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'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 are available at intrepidpotash.com. I'll now turn the call over to our CEO, Kevin Crutchfield.

Thank you, Evan, and good morning, everyone. We appreciate your interest and attendance for today's earnings call. I'm pleased to report that Intrepid sustained its strong financial performance in the third quarter. This was highlighted by a net income of $3.7 million and adjusted EBITDA of $12 million, which compares to a net loss of $1.8 million and adjusted EBITDA of $10 million last year. Outside of the record pricing we saw in 2022, our year-to-date adjusted EBITDA of $45 million represents our best start since 2015. I'd like to take the time on our call to specifically recognize all of our employees and congratulate them on this excellent set of results, both for this quarter and year-to-date.

Our strong results were primarily driven by 2 key factors: first, higher pricing in Potash and Trio as we realize the entirety of the first half increases in both segments in quarter 3. And second, our higher production over the past year has led to better unit economics. Both Potash and Trio improved our cost of goods sold per ton by low-single-digit percentages during the quarter and year-to-date our Potash cost of goods sold improved by 9% to $327 per ton, while in Trio, the same figure improved by 15% to $238 per ton. For Trio, specifically, our production has been consistently exceeding our expectations quarter after quarter, and we're confident we can continue to sustain these higher run rates, which should further improve our unit economics in 2026.

Turning to market commentary. While sentiment in U.S. agriculture had softened over the past few months, there are some green shoots emerging. This was, of course, highlighted by last week's trade deal with China, which included soybean purchase commitments and yesterday's follow-through where they also confirmed they would remove retaliatory tariffs on certain U.S. farm goods including soybeans. While China soybean purchase commitments essentially put our exports back to historical levels, when those are combined with much higher recent domestic soybean crush, the total domestic soybean use has the potential to again reach recent historical highs. This, in turn, could also provide some relief for corn if we get lower planted acres next spring although corn exports have remained very strong regardless.

In summary, the U.S. agriculture landscape is certainly looking better, which is also evidenced by corn and soybean futures, both now being up by 15% since August lows. For the broader Potash market, global supply and demand remains relatively balanced where demand in key international markets has been resilient throughout the year. Given the lack of significant additional potash supply until mid-2027, we think the market will continue to see pricing support for the foreseeable future. Furthermore, potash is currently trading at similar levels to where it was this time in 2023, offering good relative value compared to other fertilizers.

Putting this together, we remain constructive on our sales volumes and pricing as we wrap up the year, and we'll continue to prioritize selling into our highest netback markets. Before passing the call on to Matt, I'll end my remarks with a couple of operational highlights. In potash, we're still working on the permitting and evaluation process for the AMAX Cavern at our HB facility and hope to have our permitting efforts wrapped up in the first quarter of 2026, which is consistent with the time line we outlined in the last earnings call.

In Trio, as I alluded to earlier, our financial and operating performance continues to exceed expectations. This has largely been driven by the 2 new continuous miners we placed into service in the second half of '23 as well as the restart of our fine langbeinite recovery circuit. In addition, in January 2026, we expect to take delivery of another continuous miner, which will further improve our mining rates and continue our trend of year-over-year production increases. Accordingly, we now forecast our quarterly Trio production will be in the range of 70,000 to 75,000 tons for 2026, and our team is continuing to challenge itself to find even more tons through improved mining efficiencies and increased mill recoveries. Higher production should drive another year of record Trio sales volumes for Intrepid. And given that Trio pricing is close to parity with potash, this will also help to offset the modestly lower 2026 potash production guidance we gave on the last earnings call.

Overall, Intrepid continues to deliver solid financial results and the recent improvements in U.S. ag markets is certainly a positive development. Looking ahead, we'll remain focused on strong operational execution, improving our margins and free cash flow through the cycle. As the only domestic producer of potash, we'll prioritize our investments into our core business to fully capitalize on our multi-decade reserve lives. So with that, I'll now turn the call over to Matt. So please go ahead.

Thank you, Kevin. Starting with our Potash segment. We delivered another quarter of solid results, primarily underpinned by improved pricing and higher sales volumes. Our Q3 average net realized sales price for potash totaled $381 per ton as we fully capture the approximately $60 per ton increase for sales into agriculture markets compared to the first quarter. Compared to the prior year, our higher sales volumes of 62,000 tons in the third quarter were driven by the increase in production over the past 12 months. As we noted on last quarter's call, during the third quarter, we did delay our production at HB with the goal of maximizing late season evaporation, which was the reason for our third quarter potash production decreasing to 41,000 tons. Despite the reduced production, we're still experiencing solid year in economics in potash particularly when you consider the other revenue streams of salt, magnesium chloride and brine that enhance our cash flows.

In terms of segment gross margin, our Q3 figure of $6.3 million was approximately $2.2 million higher than last year. And year-to-date, our segment gross margin totaled $13.6 million, which compares to $13 million in the same prior year period. Due to the above average rain at HB in the summer of 2025, we expect our annual potash production next year to be in the range of 270,000 to 280,000 tons. Moving on to Trio. In the third quarter, we sold 36,000 tons at an average net realized sales price of $402 per ton. The strong pricing was driven by the continuation of supportive potash values and improved realization of low chloride pricing premiums in key markets and also reflects realization of first half price increases which totaled approximately $60 per ton since the start of the year.

As for the lower Q3 Trio sales volumes, that was driven by 2 factors. First, our Trio demand was heavily weighted to the first half of 2025 and where we sold a record 181,000 tons and second, normal seasonality as customers focus exclusively on third quarter application needs. Last week, we announced the Trio fill program, where we reduced our reference pricing by $35 per ton for orders placed through the end of October, with pricing after the order period back up $25 to match levels seen during the spring season. We saw a very good subscription from our customers in the fill and expect to end the year with good sales momentum.

Our East mine production rates and mill recoveries continue to exceed expectations in the quarter with Trio production of 70,000 tons, again driving solid unit economics. Trio's COGS per ton totaled $257 in Q3, which compares to $272 per ton last year and $235 per ton in the second quarter of 2025, with the sequential increase in Q3 attributable to a higher mix of premium Trio sales, which have a higher carrying cost relative to our other products. Overall, a combination of operational efficiencies, improving unit economics and higher pricing have driven a significant improvement in our Trio results. Our Q3 gross margin of $4.4 million was approximately $4 million higher than last year. And through the first 3 quarters, our gross margin totaled approximately $23 million, which compares to $1.6 million in the same prior year period.

This is truly a step change in operating performance that we expect to not only maintain but continue to improve upon in 2026. For next year, we expect our Trio production to be in the range of 285,000 to 295,000 tons, which we expect will also drive a 5% to 7% improvement in our per unit costs and deliver another year of very solid margins.

In Oilfield Solutions, lower water sales and oilfield activity reduced our gross margin in the quarter with water significantly lower, mostly due to last year's Q3 having the largest frac job in company history. Despite the dip in Q3, our year-to-date revenues and profitability on the South Ranch have mostly been consistent with recent historical performance. While not included in our segment results, I want to highlight another strategic sale of land on our South Ranch in the third quarter, where we sold approximately 95 fee acres for a gain of $2.2 million.

These sales, while infrequent, highlight the strategic value of our ranch in New Mexico, and we will continue to pursue options to monetize our land position in the Delaware Basin. As for fourth quarter sales and pricing guidance, in Potash, we expect our sales volumes to be between 50,000 to 60,000 tons at an average net realized sales price in the range of $385 to $395 per ton. Compared to last year's fourth quarter, our Q4 volume should be roughly in line with pricing up approximately $45 per ton as our geographic advantage, diverse sales mix and limited sales into the corn belt are expected to insulate us from a potential slower start to the fall season. For Trio, we expect our fourth quarter sales volumes to be between 80,000 to 90,000 tons at an average net realized sales price in the range of $372 to $382 per ton.

Compared to last year's fourth quarter, our Trio volumes are expected to be almost 60% higher after the very good subscription to the fill program with pricing up roughly $45 per ton, and we expect this sales momentum will again carry into the spring season. For our 2025 capital program, we expect our spend will be in the range of $30 million to $34 million. Our 2025 spend includes approximately $5 million related to the HB AMAX Cavern with the balance directed to other sustaining projects across our Potash and Trio operations. Overall, we're pleased with our year-to-date results and encouraged by the outlook. While we've had some pricing tailwinds this year in both Potash and Trio, much of the success has also been driven by the operational improvements we put into place, particularly at our East mine.

Moreover, our debt-free balance sheet and cash position of roughly $74 million continues to put Intrepid in a position of strength and we're looking forward to a very strong finish to the year. Operator, we're now ready for the Q&A portion of the call.

[Operator Instructions] The first question comes from Vincent Andrews with Morgan Stanley.

This is Justin Pellegrino on for Vincent. I just wanted to touch on the AMAX Cavern and the permits. Can you give us an idea of what the CapEx would be associated with the injection well in the pipeline should those permits be obtained? And then within the overall capital allocation priorities for next year, I imagine this is impacting your decisions and how you're planning on going forward. But can you just give us an idea of where that falls within the potential for returning any other excess cash back to shareholders or any other projects that you might be taking on?

Yes. Thanks for the question, Justin. As we continue to evaluate the HB AMAX Cavern, if you recall, that capital will be spread out over a couple of years. Certainly disappointed that the cavern didn't have brine when we got the injection well or the extraction well, excuse me, drilled in the summer of '25. But as we evaluate it, I mean, the capital spend, it will really just kind of like I said, I mean, be over a couple of years. And kind of how that plays out is something we'll have a little more color on here as we get to the first part of the year. I mean, Kevin, I'll let you touch on the capital.

Yes. Yes, Justin. Thanks for your question on capital returns. I mean, I think the answer is consistent with the past. What we're really aimed at doing is continuing to reinvest in these core assets like we talked about before, to establish a position of resiliency, consistency, predictability, et cetera. So you've got repeatable results year-over-year-over-year. I think once we get to that point and are generating predictable steady free cash flows and cash flows, then that's when we can enter a period of what does a capital return policy begin to look like. And as we've said before, it's something that the Board registers very clearly and squarely with them, and it's something we talk about routinely. So I hate to give you the same answer, but it is the same answer. And we're kind of on the path as we begin to examine that going forward.

Your next question comes from the line of Lucas Beaumont with UBS.

So farmer economics has sort of been pressured in the U.S. There have been concerns around demand destruction kind of across some of the nutrients. So I just wanted get your view on sort of how your order book is looking for both Potash and Trio and if you're seeing any indications of that at all? Or it seems like a nonissue in terms of cost cutting from the growers so far?

Lucas, this is Zachry. I appreciate the question. I think first on Trio, as Matt noted in his remarks, we saw a really good response to the fill program we released last week there. So order book looks really strong on that front, and we're really fully committed for fourth quarter at this point there. And then on the potash side, a similar story. Order book looks good. We're almost fully committed here for the fourth quarter versus our guidance values. And -- and the 1 thing I'll highlight is just the diversity of our potash mix between our feed sales, industrial and the geographies that we focus on. So that insulates us a bit if there is a slower start, as Matt said, to demand for fall in the Corn Belt, for example, and we feel good about where we're sitting today.

Great. And I guess just as a follow-up then on the new well at AMAX. So I guess, could you maybe just give us a bit more detail around I guess, what the pathway forward would be. So if you get kind of -- if you get the permit in the first quarter, like when would you kind of look to sort of execute on that? And then what would sort of be the next steps if that's either successful or sort of not successful to then continue kind of moving the project forward?

Yes. I look to provide a little more color, Lucas. I mean depending on the permitting, we did the extraction well. It's about $5 million we spent on that. There's certainly a little more work to completely put that in service with pipeline. It'll only depend on timing of permitting and when we want to put the injection well in and what that time looks like to get that cavern full. When it comes to an injection well, it's about $5 million to $6 million for the well, a few million dollars for injection pipeline. But as far as exact timing of when that will spend and when that final completion capital around the extraction well will happen, that's something that I just will have more color on here as we get a little more clarity on permitting into the first part of 2026.

Great. And then just, I guess, while the potash volumes are kind of going to be impacted and be a bit lower heading into '26 in the near term, when should we sort of start to see the negative kind of cost absorption there flowing through? I don't know if you can kind of give us a view on sort of what portion of your cost base there in potash, you sort of view as fixed versus durable maybe to kind of help with that as well.

Yes. I mean given the slightly lower production guide here in '26, we'll start to see, all else equal, some higher cost per ton here in the first quarter as we start to start harvesting the tons that were laid down in our ponds in the summer of '25. I think it's probably 5% to 7% increase for the full year cost per ton for potash compared to '25, which we're pleased is kind of offset by that improvement in our Trio segment.

All right. And then I guess just in Trio, I mean you mentioned at the start that the pricing there has continued to be very attractive and they're sort of trading kind of in line with potash at the moment. How do you kind of see that dynamic that are playing out as we sort of move through 2026?

Yes. Lucas, I think we continue to see strength on Trio, and it's really due to the components of that product. Obviously, kind of year-to-date, we've seen strength across the potassium markets. And not just on the potash side as well on the SOP side, too, where we're seeing a greater realization of that low chloride K value in the Trio. And then kind of pivoting over to the sulfate component of Trio, we did see a bit of a seasonal adjustment in the summer as expected. But just looking at sulfur values overall, they're starting to trend back up here in the fall, and we think that provides support going into Trio into 2026 as well.

Great. And then just lastly on Oilfield Services, I mean, it's sort of in a tough water sales environment there that you called out with the low activity levels in the quarter. So how is kind of -- is the fourth quarter kind of tracking the same? And I guess, how should we kind of think about the outlook there for that business into '26, both on the sale side and I mean like you saw, you saw a fair bit of margin pressure there in the quarter as well, which I'm assuming the bulk of that is probably tied to the sales decline. But I mean, if there's anything else there to maybe roll out for us to kind of just help frame how we should think about the potential earnings if we're sort of running at a lower sort of sales level kind of going into next year?

Yes. I mean Q3 was certainly quite a bit lower, particularly when we compare it against last year's record frac. I mean, we're very exposed to kind of the drilling activity that's on our feed land there, and it's really kind of feast or famine with some of those bigger drilling jobs. As we look into Q4, we certainly expect it to be down a bit compared to what we saw in the first half of the year, where we were pretty consistent margins around $1.3 million and $1.6 million. So some improvement over Q3, but we see still a slower water environment here in the fourth quarter and likely into the first part of '26.

Your final question comes from the line of Jason Ursaner with Bumbershoot Holdings.

Just for Kevin, it's been, I guess, nearly a role since your were -- nearly a year since you were announced in the CEO role. But I think you've been pretty clear on the priority in terms of consistency of earnings, sustainability. Just looking at the results, it does feel like a lot of that work to get back to structural profitability, at least the heavy lifting is kind of either done or kind of on the path. So I guess, in your mind, what else sort of -- what are the big steps that you're looking for to kind of get you there?

Well, I mean, the focus has been intense just around the core assets. And look, I'll tell you that while we're posting more consistent, more reliable results, we're still not pleased with where we are. We think there's more work to be done, and we're going to continue that work because what we'd like to do is continue to take costs out of the system move ourselves down the cost curve. Some of that comes from the removal of cost that you can avoid because some of that comes through tweaking the volumes. And I'd like to just specifically recognize the Trio team for the work that they're doing at our East mine, have been dramatic improvements there over the last year. And I think they'll continue to outperform going into next year.

We've still got some work to do on the potash side. We had the AMAX disappointment and then the weather at the end of the year that kind of threw a little bit of a ranch into early part of next year, but we'd like to get that back on track and kind of get back over that magic 300,000 ton mark and even a little higher. So while we're pleased with what has been done, there still is more work to do to achieve that resilient, predictable, as you just said, structural reliability.

So that continues to be job one. And once we feel reasonably satisfied that we've accomplished that, then we can start to think about where we go from here. So bottom line is pleased with progress to date, but we still have more work to do and look forward to reporting out on those results in the coming quarters.

And in terms of the capital allocation stuff, I mean, is it waiting to see it? Or is it kind of a linear thing where, I guess, or is it -- at what point you kind of feel like it's in the works sort of, I guess, is where I'm trying to go, is it just obviously sitting with a pretty big percentage of your market cap in cash. So the commentary on waiting for capital returns, just sort of how does that go together?

Yes, the nature of this business and a lot of businesses, you can make a capital investment and see the result in a week. Here, it can take a year or 2 before that stuff starts to play out, just given the long-dated nature of largely the evaporation seasons and our -- the impact that weather can have on us. But I would say that a lot of that's in flight. We still have more work to do, specifically around Carlsbad and Wendover and frankly, Moab as well, making sure that those assets are performing at what we believe to be sort of their entitled level of performance. So we've sort of done a couple of years of catch-up capital. I think next year will be another one of those years. And you'll start to see the benefits of those manifest themselves late next year and moving into 2027, I think.

This concludes the question-and-answer session. I would like to turn the conference back over to Kevin Crutchfield for any closing remarks.

Again, I'd like to take just another moment to thank our team for their hard work and dedication this year and posting solid results year-to-date and look forward to continuing to work with them in the coming quarters. And thank you all for attending today's call, and we look forward to keeping you posted in the coming quarters. Everybody, have a good day. Thank you. .

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.