EX-99.1 2 ex991q42021.htm EX-99.1 Document

intrepidcorplogocolora09.jpg

Intrepid Reports Fourth Quarter and Full Year 2021 Results


DENVER, CO --(GlobeNewswire - March 7, 2022) -- Intrepid Potash, Inc. (NYSE:IPI) ("Intrepid", the "Company", "we", "us", "our") today reports its financial results for the fourth quarter and full year of 2021.

Key Fourth Quarter and Full Year 2021 Takeaways
•Net income of $223.9 million and $249.8 million in the fourth quarter and full year 2021, respectively, which includes the release of $215.9 million of valuation allowance for deferred tax assets
•Adjusted net income(1) of $8.0 million and $21.8 million in the fourth quarter and full year 2021, respectively. Recorded $7.0 million of tax expense in the fourth quarter and full-year 2021 as a result of the release of the valuation allowance against the deferred tax assets
•Adjusted EBITDA(1) of $24.8 million for the fourth quarter, bringing full year adjusted EBITDA to $67.6 million
•Cash flow from operations of $19.6 million in the fourth quarter, increasing full year cash from operations to $79.1 million
•Cash on hand of approximately $60 million as of March 7, 2022
•Excited to announced a joint feasibility study alongside the New Mexico Water Consortium and the New Mexico Environment Department to evaluate the potential of using treated produced water from oil and gas operations as injectate for our HB solar solution mine
•Board of Directors approved a $35 million share repurchase program


Management Comment
"The fourth quarter was highlighted by solid cash flow and a significant increase in EBITDA compared to the prior period led by the strong commodity environment and rising fertilizer prices," said Bob Jornayvaz, Intrepid's Executive Chairman and CEO. "Pricing and demand strength have continued into the first quarter of 2022 and we expect another quarter of increasing realized prices. The fertilizer and agriculture market outlook remains very strong and we are poised to drive significant increases in bottom line-results in 2022."

Jornayvaz continued, "Oilfield activity remains strong in the Delaware Basin with water volumes and other oilfield services revenue increasing, although segment results have lagged due to increased water purchases and lease, contract labor, and rental expenses. We continue to see good demand for water across our South ranch and expect to benefit from activity closer to our infrastructure during 2022. We are also excited to announce a joint feasibility study alongside the New Mexico Water Consortium and the New Mexico Environment Department to evaluate the potential of using treated produced water from oil and gas operations as injectate for our HB
1

mine. Recycling and treatment technology have improved considerably over the last few years and the potential to convert a waste stream into a sustainable source for producing potash is a unique opportunity for the basin and we look forward to the pilot project beginning as early as the third quarter of this year."

Share Repurchase Program
In February 2022, our Board of Directors approved a $35 million share repurchase program. We intend to remain focused on continued growth across our business segments and anticipate good cash flow generation in the coming quarters.
“The share repurchase program reflects our confidence in both our underlying business and our long-term potential," said Bob Jornayvaz. "Our strategy hasn't changed. We view this simply as another tool available to us to opportunistically return value to shareholders.”

Under the share repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of share repurchases, if any, will be at the Company’s sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. The share repurchase program may be suspended or discontinued at any time.

HB Green Disposal Pilot Project

Intrepid is excited to announce a joint feasibility study with the New Mexico Produced Water Consortium, as technical consultant for the New Mexico Environment Department, to evaluate the opportunity to beneficially re-use produced water from oil and gas production in New Mexico’s Northern Delaware Basin as injectate for Intrepid’s HB solar solution mine.

The pilot project is meant to prove the concept that treatment of produced water can meet the constituent levels necessary to comply with the standards and requirements for injection into Intrepid’s HB Solar Solution Mine. Intrepid is uniquely able to provide this service at its HB Solar Solution Mine which currently utilizes naturally occurring salt brine and groundwater as permitted injectates.

The New Mexico Produced Water Consortium has already approved Intrepid’s submitted pilot proposal pursuant to and in compliance with the New Mexico Environment Department’s 2022 requirements for pilot testing. This high priority green pilot project is already preliminarily scheduled to begin testing as early as the third quarter of 2022. Intrepid is excited to cooperate with our public and private stakeholders in advancing the proposed environmentally friendly re-use of produced water. This project, if successful, will aid in conserving existing groundwater sources in addition to advancing and promoting Intrepid’s Environment, Social, and Governance (ESG) goals and values as well as the stated mission of the New Mexico Produced Water Consortium.

Consolidated Results
We recorded net income of $223.9 million, or $16.66 per diluted share in the fourth quarter of 2021, contributing to full year 2021 net income of $249.8 million, or $18.66 per diluted share. Net income for both periods benefited from the $215.9 million release of the valuation allowance for our deferred tax assets. We released the valuation allowance because our long-term
2

projections of future taxable income indicates that most of our deferred tax assets will be realized in the future. As a result of the valuation allowance release, we recorded a tax benefit of $208.9 million in the fourth quarter and full year 2021. We recorded adjusted net income of $8.0 million, or $0.60 per diluted share in the fourth quarter of 2021, contributing to full year 2021 adjusted net income of $21.8 million, or $1.63 per diluted share(1). Since we no longer have a valuation allowance offsetting most our deferred tax assets, we utilized some of our deferred tax assets and recorded tax expense of $7.0 million, or $0.52 per diluted share, in both the fourth quarter and full year 2021.

Consolidated gross margin of $21.8 million and $55.8 million in the fourth quarter and full year 2021, respectively, was an increase compared to the same year-ago periods due primarily to increased net realized sales price per ton for our potash and Trio® products.

The Carlsbad, New Mexico area where our HB solar solution mining facility is located, received significant rainfall, well above the historical rainfall average during the summer of 2021. Additionally, humidity was higher than normal and temperatures were cooler than average during this period which reduced our pond production and our ability to extract brine. Due to the wet, humid weather and cooler temperatures, we had fewer harvestable tons of potash from our HB solution ponds. Accordingly, we recorded abnormal production costs of $2.4 million and $6.0 million in the fourth quarter and full year of 2021, respectively, and we may incur additional abnormal production costs in future periods. We did not incur any abnormal production costs in 2020.


Segment Highlights
Potash
Three Months Ended December 31,Year Ended December 31,
2021202020212020
(in thousands, except per ton data)
Sales$38,807 $27,556 $151,751 $108,060 
Gross margin$12,516 $3,847 $35,845 $11,551 
Potash production volume (in tons)86 106 287 308 
Potash sales volume (in tons)61 78 331 317 
Average potash net realized sales price per ton(1)
$504 $248 $353 $250 

Sales increased $11.2 million in the fourth quarter of 2021 driven by higher pricing, partially offset by reduced sales volumes. Sales volumes decreased due to reduced production from our mines and as we were selective in our sales in anticipation of a good spring season. Full year potash sales increased $43.7 million in the full year of 2021 due to improved net realized sales price per ton and higher byproduct sales. Byproduct sales improved in both periods due to increased magnesium chloride and water sales. Fourth quarter and full year average net realized sales price per ton increased as strong commodity pricing and tight-near-term inventory levels led to multiple price increases during 2021.
3


We recorded abnormal production costs of $2.4 million and $6.0 million in the fourth quarter and full year 2021, respectively, due to significant wet weather and reduced evaporation at our HB mine in the summer of 2021 which led to lower average ore grade and reduced product available to harvest.

Gross margin increased $8.7 million and $24.3 million in the fourth quarter and full year of 2021, respectively, compared to the same periods in 2020. Increases in both periods were primarily driven by higher average net realized sales prices for potash sales and increased byproducts sales.

Fourth quarter 2021 production decreased compared to the prior year as below average evaporation at our HB solar solution facility led to lower ore grades, reducing our daily production rates. Full year 2021 production decreased 7% compared to 2020 due to wet weather and reduced evaporation rates at our HB solar solution facility and significant wet weather at our Wendover facility in the summer of 2020 which resulted in fewer tons available to harvest in the spring of 2021.

Trio®
Three Months Ended December 31,Year Ended December 31,
2021202020212020
(in thousands, except per ton data)
Sales$24,612 $15,565 $96,058 $70,287 
Gross margin (deficit)$7,913 $(375)$16,442 $(8,505)
Trio® production volume (in tons)
53 58 228 213 
Trio® sales volume (in tons)
48 50 239 230 
Average Trio® net realized sales price per ton(1)
$388 $188 $295 $195 

Sales increased $9.0 million and $25.8 million in the fourth quarter and full year 2021, respectively, compared to the prior year periods as price increases announced throughout 2021 drove significantly higher net realized sales price per ton. Full year sales volume increased 4% compared to the prior year as we continued to sell more tons into the domestic market and remained very selective on export sales, which also improved our net realized sales prices.

Gross margin increased $8.3 million and $24.9 million in the fourth quarter and full year 2021, respectively, compared to the prior year, as higher net realized pricing per ton drove bottom line improvements. We recorded a lower of cost or net realized value inventory adjustment of $2.9 million for the full year 2020. We did not record any lower of cost or net realized value inventory adjustments in 2021.
Production volumes increased 7% for the full year of 2021 as we began operating increased shifts in the second half of 2021 in anticipation of robust domestic demand in early 2022.

4

Oilfield Solutions
Three Months Ended December 31,Year Ended December 31,
2021202020212020
(in thousands)
Sales$8,479 $5,390 $22,770 $18,929 
Gross margin$1,420 $2,342 $3,477 $7,484 

Sales increased $3.1 million and $3.8 million for the fourth quarter and full year of 2021, respectively, when compared to the same periods in 2020, as improvements in oilfield activity drove increased water, brine and other oilfield services sales.

Full-year cost of goods sold increased $7.8 million in 2021, compared to 2020, primarily due to water purchases, but also due to increased depreciation, rental, lease, and contract labor expense. Fourth quarter and full year 2021 gross margin decreased compared to 2020 as increased water sales were offset by higher costs, specifically the purchase of third party water to supplement the high-volume fracs on our South ranch.

Liquidity
Cash provided by operations was $19.6 million during the fourth quarter of 2021 and cash used for investing activities was $8.4 million during the fourth quarter of 2021. As of December 31, 2021, Intrepid had $36.5 million in cash and cash equivalents and $74.0 million available to borrow under its credit facility. Cash balance as of March 7 was approximately $60 million.

Notes
1 Adjusted net income, average net realized sales price per ton and adjusted EBITDA are non-GAAP financial measures. See the non-GAAP reconciliations set forth later in this press release for additional information.

Unless expressly stated otherwise or the context otherwise requires, references to tons in this press release refer to short tons. One short ton equals 2,000 pounds. One metric tonne, which many international competitors use, equals 1,000 kilograms or 2,204.62 pounds.

Conference Call Information
Intrepid will host a conference call on Tuesday, March 8, 2022 at 12:00 p.m. Eastern time (10:00 a.m. Mountain time) to discuss the results. A Q&A session will immediately follow the discussion of the results for the period. The call will also be streamed on the Intrepid website, intrepidpotash.com.

Live event participation details
Domestic dial-in number: 800-319-4610
International dial-in number: +1-631-891-4304

Replay information available until April 10, 2022
Conference ID #: 8527
Replay dial-in (Toll Free US & Canada): 800-319-6413
Replay dial-in (International): +1-631-883-6842
5


About Intrepid

Intrepid is a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed, and the oil and gas industry. Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, Intrepid produces a specialty fertilizer, Trio®, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also provides water, magnesium chloride, brine, and various oilfield products and services.

Intrepid serves diverse customers in markets where a logistical advantage exists and is a leader in the use of solar evaporation for potash production, resulting in lower cost and more environmentally friendly production. Intrepid's mineral production comes from three solar solution potash facilities and one conventional underground Trio® mine.

Intrepid routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investor Relations tab. Investors and other interested parties are encouraged to enroll at intrepidpotash.com, to receive automatic email alerts for new postings.


Forward-looking Statements

This document contains forward-looking statements - that is, statements about future, not past, events. The forward-looking statements in this document relate to, among other things, statements about Intrepid's future financial performance and cash flows, water sales, production costs, and its market outlook. These statements are based on assumptions that Intrepid believes are reasonable. Forward-looking statements by their nature address matters that are uncertain. The particular uncertainties that could cause Intrepid's actual results to be materially different from its forward-looking statements include the following:

•changes in the price, demand, or supply of Intrepid's products and services;
•challenges and legal proceedings related to Intrepid's water rights;
•Intrepid's ability to successfully identify and implement any opportunities to grow its business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;
•the costs of, and Intrepid's ability to successfully execute, any strategic projects;
•declines or changes in agricultural production or fertilizer application rates;
•declines in the use of potassium-related products or water by oil and gas companies in their drilling operations;
•Intrepid's ability to prevail in outstanding legal proceedings against it;
•Intrepid's ability to comply with the terms of its revolving credit facility, including the underlying covenants, to avoid a default under the agreement;
•further write-downs of the carrying value of assets, including inventories;
•circumstances that disrupt or limit production, including operational difficulties or variances, geological or geotechnical variances, equipment failures, environmental hazards, and other unexpected events or problems;
•changes in reserve estimates;
6

•currency fluctuations;
•adverse changes in economic conditions or credit markets;
•the impact of governmental regulations, including environmental and mining regulations, the enforcement of those regulations, and governmental policy changes;
•adverse weather events, including events affecting precipitation and evaporation rates at Intrepid's solar solution mines;
•increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise;
•changes in the prices of raw materials, including chemicals, natural gas, and power;
•Intrepid's ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations;
•interruptions in rail or truck transportation services, or fluctuations in the costs of these services;
•Intrepid's inability to fund necessary capital investments;
•the impact of the COVID-19 pandemic on Intrepid's business, operations, liquidity, financial condition, and results of operations; and
•the other risks, uncertainties, and assumptions described in Intrepid's periodic filings with the Securities and Exchange Commission, including in "Risk Factors" in Intrepid's Annual Report on Form 10-K for the year ended December 31, 2020, as updated by subsequent Quarterly Reports on Form 10-Q.

In addition, new risks emerge from time to time. It is not possible for Intrepid to predict all risks that may cause actual results to differ materially from those contained in any forward-looking statements Intrepid may make.

All information in this document speaks as of the date of this release. New information or events after that date may cause our forward-looking statements in this document to change. We undertake no duty to update or revise publicly any forward-looking statements to conform the statements to actual results or to reflect new information or future events.

Contact:
Matt Preston, Chief Financial Officer    
Phone: 303-996-3048
Email: matt.preston@intrepidpotash.com

7


INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands, except share and per share amounts)

Three Months Ended December 31,Year Ended December 31,
2021202020212020
Sales$71,828 $48,442 $270,332 $196,954 
Less:
Freight costs7,786 8,736 37,892 37,135 
Warehousing and handling costs2,208 2,149 9,282 9,431 
Cost of goods sold37,606 31,743 161,421 135,843 
Lower of cost or net realizable value inventory adjustments— — — 4,015 
Costs associated with abnormal production2,379 — 5,973 — 
Gross Margin21,849 5,814 55,764 10,530 
Selling and administrative5,705 5,454 23,998 25,476 
Accretion of asset retirement obligation535 435 1,858 1,738 
Litigation settlement— — — 10,075 
Loss (gain) on sale of assets18 191 (2,542)(4,250)
Other operating expense564 241 178 735 
Operating Income (Loss) 15,027 (507)32,272 (23,244)
Other Income (Expense)
Interest expense, net(42)(412)(1,468)(4,289)
Other income6 255 48 384 
Gain on extinguishment of debt— — 10,113 — 
Income (Loss) Before Income Taxes14,991 (664)40,965 (27,149)
Income Tax Benefit (Expense)208,869 (47)208,869 (5)
Net Income (Loss)$223,860 $(711)$249,834 $(27,154)
Weighted Average Shares Outstanding:
Basic13,129,081 13,030,185 13,098,871 12,993,225 
Diluted13,440,708 13,030,185 13,391,362 12,993,225 
Income (Loss) Per Share:
Basic$17.05 $(0.05)$19.07 $(2.09)
Diluted$16.66 $(0.05)$18.66 $(2.09)


8


INTREPID POTASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
AS OF DECEMBER 31, 2021 AND 2020
(In thousands, except share and per share amounts)

December 31,
20212020
ASSETS
Cash and cash equivalents$36,452 $19,515 
Accounts receivable:
Trade, net35,409 22,516 
Other receivables, net989 1,856 
Inventory, net78,856 88,673 
Other current assets5,144 3,228 
Total current assets156,850 135,788 
Property, plant, equipment, and mineral properties, net341,117 355,497 
Water rights19,184 19,184 
Long-term parts inventory, net29,251 28,900 
Other assets, net11,418 10,819 
Non-current deferred tax asset, net209,075 — 
Total Assets$766,895 $550,188 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$9,068 $7,278 
Income taxes payable41 — 
Accrued liabilities22,938 12,701 
Accrued employee compensation and benefits6,805 4,422 
Other current liabilities34,571 32,816 
Current portion of long-term debt— 10,000 
Total current liabilities73,423 67,217 
Advances on credit facility— 29,817 
Long-term debt, net— 14,926 
Asset retirement obligation27,024 23,872 
Operating lease liabilities1,879 2,136 
Other non-current liabilities1,166 961 
Total Liabilities103,492 138,929 
Commitments and Contingencies
Common stock, $0.001 par value; 40,000,000 shares authorized:
and 13,149,315 and 13,049,820 shares outstanding
at December 31, 2021, and 2020, respectively13 13 
Additional paid-in capital659,147 656,837 
Retained earnings (Accumulated deficit)4,243 (245,591)
Total Stockholders' Equity663,403 411,259 
Total Liabilities and Stockholders' Equity$766,895 $550,188 


9


INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands)
Three Months Ended December 31,Year Ended December 31,
2021202020212020
Cash Flows from Operating Activities:
Net income (loss) $223,861 $(711)$249,834 $(27,154)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization9,126 9,411 35,635 35,788 
Amortization of intangible assets81 81 322 322 
Accretion of asset retirement obligation535 435 1,858 1,738 
Amortization of deferred financing costs60 68 314 425 
Stock-based compensation723 840 3,012 3,821 
Reserve for obsolescence2,108 — 2,108 492 
Allowance for doubtful accounts— (200)— 75 
Loss (Gain) on disposal of assets18 191 (2,542)(4,250)
Gain on extinguishment of debt— — (10,113)— 
Lower of cost or net realizable value inventory adjustments— — — 4,015 
Other— — — (116)
Changes in operating assets and liabilities:
Trade accounts receivable, net(2,679)955 (12,615)1,158 
Other receivables, net2,461 719 589 (609)
Inventory, net(4,320)(3,391)7,358 (291)
Other current assets(826)2,618 (1,974)2,305 
Deferred tax assets(209,075)— (209,075)— 
Accounts payable, accrued liabilities, and accrued employee
     compensation and benefits		(1,798)(1,740)13,456 2,331 
Income tax payable2 — 42 (50)
Operating lease liabilities(892)(539)(2,508)(2,234)
Other liabilities259 3,921 3,366 13,379 
Net cash provided by operating activities19,644 12,658 79,067 31,145 
Cash Flows from Investing Activities:
Additions to property, plant, equipment, mineral properties and other assets(7,352)(2,356)(19,789)(16,443)
Proceeds from sale of property, plant, equipment, and mineral properties— — 6,042 4,786 
Long-term investment(1,076)— (1,076)(3,500)
Net cash used in investing activities(8,428)(2,356)(14,823)(15,157)
Cash Flows from Financing Activities:
Payments of financing lease— (74)(1,258)(74)
Repayment of long-term debt— — (15,000)(35,000)
Debt prepayment costs— — (505)(1,869)
Proceeds from loan under CARES Act— — — 10,000 
Proceeds from borrowings on credit facility— — — 10,000 
Repayments of borrowings on credit facility— — (29,817)— 
Capitalized debt costs— — — (36)
Employee tax withholding paid for restricted shares upon vesting(409)(76)(791)(172)
Proceeds from exercise of stock options8 108 89 108 
Net cash used in financing activities(401)(42)(47,282)(17,043)
Net Change in Cash, Cash Equivalents, and Restricted Cash10,815 10,260 16,962 (1,055)
Cash, Cash Equivalents, and Restricted Cash, beginning of period26,331 9,924 20,184 21,239 
Cash, Cash Equivalents, and Restricted Cash, end of period$37,146 $20,184 $37,146 $20,184 

10


INTREPID POTASH, INC.
DISAGGREGATION OF REVENUE AND SEGMENT DATA (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands)


Three Months Ended December 31, 2021
ProductPotash Segment
Trio® Segment
Oilfield Solutions SegmentIntersegment EliminationsTotal
Potash$33,211 $— $— $(70)$33,141 
Trio®
— 22,775 — — 22,775 
Water110 1,547 6,086 — 7,743 
Salt3,004 290 — — 3,294 
Magnesium Chloride2,018 — — — 2,018 
Brines464 — 394 — 858 
Other— — 1,999 1,999 
Total Revenue$38,807 $24,612 $8,479 $(70)$71,828 


Year Ended December 31, 2021
ProductPotash Segment
Trio® Segment
Oilfield Solutions SegmentIntersegment EliminationsTotal
Potash$130,460 $— $— $(247)$130,213 
Trio®
— 91,125 — — 91,125 
Water2,050 4,355 15,594 — 21,999 
Salt9,592 578 — — 10,170 
Magnesium Chloride7,847 — — — 7,847 
Brines1,802 — 1,129 — 2,931 
Other— — 6,047 — 6,047 
Total Revenue$151,751 $96,058 $22,770 $(247)$270,332 























11




Three Months Ended December 31, 2020
ProductPotash SegmentTrio® SegmentOilfield Solutions SegmentIntersegment EliminationsTotal
Potash$22,558 $— $— $(69)$22,489 
Trio®
— 13,870 — — 13,870 
Water296 1,481 3,974 — 5,751 
Salt2,311 214 — — 2,525 
Magnesium Chloride2,017 — — — 2,017 
Brines374 — 141 — 515 
Other— — 1,275 — 1,275 
Total Revenue$27,556 $15,565 $5,390 $(69)$48,442 



Year Ended December 31, 2020
ProductPotash SegmentTrio® SegmentOilfield Solutions SegmentIntersegment EliminationsTotal
Potash$92,500 $— $— $(322)$92,178 
Trio®
— 65,344 — — 65,344 
Water1,253 4,444 14,701 — 20,398 
Salt8,103 499 — — 8,602 
Magnesium Chloride4,855 — — — 4,855 
Brines1,349 — 438 — 1,787 
Other— — 3,790 — 3,790 
Total Revenue$108,060 $70,287 $18,929 $(322)$196,954 


























12



Three Months Ended December 31, 2021Potash
Trio®
Oilfield SolutionsOtherConsolidated
Sales(1)
$38,807 $24,612 $8,479 $(70)$71,828 
Less: Freight costs3,717 4,139 — (70)7,786 
Warehousing and handling costs
1,165 1,043 — — 2,208 
Cost of goods sold
19,030 11,517 7,059 — 37,606 
Costs associated with abnormal
production and other
2,379 — — — 2,379 
Gross Margin$12,516 $7,913 $1,420 $— $21,849 
Depreciation, depletion, and amortization incurred(2)
$6,933 $1,272 $790 $212 $9,207 
Year Ended December 31, 2021Potash
Trio®
Oilfield SolutionsOtherConsolidated
Sales(1)
$151,751 $96,058 $22,770 $(247)$270,332 
Less: Freight costs17,483 20,656 — (247)37,892 
Warehousing and handling costs
5,169 4,113 — — 9,282 
Cost of goods sold
87,281 54,847 19,293 — 161,421 
Costs associated with abnormal production5,973 — — 5,973 
Gross Margin$35,845 $16,442 $3,477 $— $55,764 
Depreciation, depletion, and amortization incurred(2)
$26,828 $5,477 $2,996 $656 $35,957 
Three Months Ended December 31, 2020Potash
Trio®
Oilfield SolutionsOtherConsolidated
Sales(1)
$27,556 $15,565 $5,390 $(69)$48,442 
Less: Freight costs4,324 4,481 — (69)8,736 
Warehousing and handling costs
1,186 963 — — 2,149 
Cost of goods sold
18,199 10,496 3,048 — 31,743 
Gross Margin (Deficit)$3,847 $(375)$2,342 $— $5,814 
Depreciation, depletion, and amortization incurred(2)
$7,051 $1,512 $718 $211 $9,492 
Year Ended December 31, 2020Potash
Trio®
Oilfield SolutionsOtherConsolidated
Sales(1)
$108,060 $70,287 $18,929 $(322)$196,954 
Less: Freight costs17,026 20,431 — (322)37,135 
Warehousing and handling costs
4,857 4,574 — — 9,431 
Cost of goods sold
73,496 50,902 11,445 — 135,843 
Lower of cost or net realizable value inventory adjustments
1,130 2,885 — — 4,015 
Gross Margin (Deficit)$11,551 $(8,505)$7,484 $— $10,530 
Depreciation, depletion and, amortization incurred(2)
$26,536 $6,068 $2,663 $843 $36,110 

(1) Segment sales include the sales of byproducts generated during the production of potash and Trio®.
(2) Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation and depletion amounts absorbed in or (relieved from) inventory.
13


INTREPID POTASH, INC.
UNAUDITED NON-GAAP RECONCILIATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(In thousands, except per share amounts)

To supplement Intrepid's consolidated financial statements, which are prepared and presented in accordance with GAAP, Intrepid uses several non-GAAP financial measures to monitor and evaluate its performance. These non-GAAP financial measures include adjusted net income, adjusted net income per diluted share, adjusted EBITDA, and average net realized sales price per ton. These non-GAAP financial measures should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, because the presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.

Intrepid believes these non-GAAP financial measures provide useful information to investors for analysis of its business. Intrepid uses these non-GAAP financial measures as one of its tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. Intrepid believes these non-GAAP financial measures are used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Diluted Share

Adjusted net income (loss) and adjusted net income (loss) per diluted share are calculated as net income (loss) or net income (loss) per diluted share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers these non-GAAP financial measures to be useful because they allow for period-to-period comparisons of its operating results excluding items that Intrepid believes are not indicative of its fundamental ongoing operations.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss):


Three Months Ended December 31,Year Ended December 31,
2021202020212020
Net Income (Loss)$223,860 $(711)$249,834 $(27,154)
Adjustments
Litigation settlement— — — 10,075 
Loss (gain) on sale of assets18 191 (2,542)(4,250)
Gain on extinguishment of debt— — (10,113)— 
Make-whole payment(1)
— — 505 1,869 
Write-off of deferred financing fees(2)
— — 60 128 
Valuation allowance for deferred tax assets(215,910)— (215,910)— 
          Total adjustments(215,892)191 (228,000)7,822 
Adjusted Net Income (Loss)$7,968 $(520)$21,834 $(19,332)


14



Reconciliation of Net Income (Loss) per Share to Adjusted Net Income (Loss) per Share:

Three Months Ended December 31,Year Ended December 31,
2021202020212020
Net Income (Loss) Per Diluted Share$16.66 $(0.05)$18.66 $(2.09)
Adjustments
Litigation settlement— — — 0.78 
Loss (gain) on sale of assets— 0.01 (0.19)(0.33)
Gain on extinguishment of debt— — (0.76)— 
Make-whole payment(1)
— — 0.04 0.14 
Write-off of deferred financing fees(2)
— — — 0.01 
Valuation allowance for deferred tax assets(16.06)— (16.12)— 
          Total adjustments(16.06)0.01 (17.03)0.60 
Adjusted Net Income (Loss) Per Diluted Share$0.60 $(0.04)$1.63 $(1.49)

(1) As a result of early repayments of its senior notes, Intrepid incurred make-whole payments, which are reflected on the income statement as interest expense.
(2) As a result of early repayments of principal on its senior notes, Intrepid wrote off a portion of the financing fees that had previously been capitalized related to the senior notes. The write-offs of deferred financing fees are reflected in Intrepid's financial statements as interest expense.







15

Average Potash and Trio® Net Realized Sales Price per Ton

Average net realized sales price per ton for potash is calculated as potash segment sales less potash segment byproduct sales and potash freight costs and then dividing that difference by the number of tons of potash sold in the period. Likewise, average net realized sales price per ton for Trio® is calculated as Trio® segment sales less Trio® segment byproduct sales and Trio® freight costs and then dividing that difference by Trio® tons sold. Intrepid considers average net realized sales price per ton to be useful, and believe it to be useful for investors, because it shows Intrepid's potash and Trio® average per-ton pricing without the effect of certain transportation and delivery costs. When Intrepid arranges transportation and delivery for a customer, it includes in revenue and in freight costs the costs associated with transportation and delivery. However, some of Intrepid's customers arrange for and pay their own transportation and delivery costs, in which case these costs are not included in Intrepid's revenue and freight costs. Intrepid uses average net realized sales price per ton as a key performance indicator to analyze potash and Trio® sales and price trends.

Reconciliation of Sales to Average Potash and Trio® Net Realized Sales Price per Ton:

Potash Segment
Three Months Ended December 31,
20212020
Total Segment Sales$38,807 $27,556 
Less: Segment byproduct sales5,596 4,998 
          Potash freight costs2,465 3,249 
   Subtotal
$30,746 $19,309 
Divided by:
Potash tons sold (in thousands)61 78 
   Average net realized sales price per ton
$504 $248 


Potash Segment
20212020
Total Segment Sales$151,751 $108,060 
Less: Segment byproduct sales21,291 15,560 
          Potash freight costs13,639 13,270 
   Subtotal$116,821 $79,230 
Divided by:
Potash tons sold (in thousands)331 317 
   Average net realized sales price per ton$353 $250 



16


Trio® Segment
Three Months Ended December 31,
20212020
Total Segment Sales
$24,612 $15,565 
Less: Segment byproduct sales1,837 1,695 
         Trio® freight costs
4,139 4,481 
   Subtotal
$18,636 $9,389 
Divided by:
Trio® tons sold (in thousands)
48 50 
   Average net realized sales price per ton$388 $188 

Trio® Segment
20212020
Total Segment Sales
$96,058 $70,287 
Less: Segment byproduct sales4,933 4,943 
         Trio® freight costs
20,656 20,416 
   Subtotal
$70,469 $44,928 
Divided by:
Trio® tons sold (in thousands)
239 230 
   Average net realized sales price per ton$295 $195 

17

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation, and amortization (or adjusted EBITDA) is calculated as net income (loss) adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. Intrepid considers adjusted EBITDA to be useful because the measure reflects Intrepid's operating performance before the effects of certain non-cash items and other items that Intrepid believes are not indicative of its core operations. Intrepid uses adjusted EBITDA to assess operating performance.
Reconciliation of Net Income (Loss) to Adjusted EBITDA:

Three Months Ended December 31,Year Ended December 31,
2021202020212020
Net Income (Loss)$223,860 $(711)$249,834 $(27,154)
Adjustments
        Gain on extinguishment of debt— — (10,113)— 
        Litigation settlement— — — 10,075 
        Loss (gain) on sale of assets18 191 (2,542)(4,250)
        Interest expense42 412 1,468 4,289 
        Income tax (benefit) expense(208,869)47 (208,869)5 
        Depreciation, depletion, and amortization9,126 9,411 35,635 35,788 
        Amortization of intangible assets81 81 322 322 
        Accretion of asset retirement obligation535 435 1,858 1,738 
          Total adjustments(199,067)10,577 (182,241)47,967 
Adjusted Earnings Before Interest, Taxes, Depreciation,
     and Amortization$24,793 $9,866 $67,593 $20,813 







18