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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended

~~June~~September 30, 2022

☐

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission File Number: 001-34025

INTREPID POTASH, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		26-1501877
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
707 17th Street, Suite 4200
Denver,	Colorado	80202
(Address of principal executive offices)		(Zip Code)

(303) 296-3006

(Registrant’s telephone number, including area code)



(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

IPI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

As of ~~July~~October 31, 2022, the registrant had outstanding ~~13,610,993~~13,488,946 shares of common stock, par value $0.001 per share.

Table of Contents

INTREPID POTASH, INC.

TABLE OF CONTENTS


						Page
			PART I - FINANCIAL INFORMATION			1
			ITEM 1. Condensed Consolidated Financial Statements (Unaudited)			1
			Condensed Consolidated Balance Sheets			1
			Condensed Consolidated Statements of Operations			2
			Condensed Consolidated Statements of Stockholders' Equity			3
			Condensed Consolidated Statements of Cash Flows			4
			Notes to Condensed Consolidated Financial Statements			6
			ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2021
			ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			4144
			ITEM 4. Controls and Procedures			4144
			PART II - OTHER INFORMATION			4245
			ITEM 1. Legal Proceedings			4245
			ITEM 1A. Risk Factors			4346
			ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			4447
			ITEM 3. Defaults Upon Senior Securities			4447
			ITEM 4. Mine Safety Disclosures			4447
			ITEM 5. Other Information			4447
			ITEM 6. Exhibits			4548
			Signatures			4649

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

INTREPID POTASH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


		June 30,		December 31,			September 30,		December 31,
		2022		2021			2022		2021
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	81,927	$	36,452	Cash and cash equivalents	$	49,209	$	36,452
Short-term investments	Short-term investments	5,980		—		Short-term investments	4,970		—
Accounts receivable:	Accounts receivable:					Accounts receivable:
Trade, net	Trade, net	32,639		35,409		Trade, net	38,229		35,409
Other receivables, net	Other receivables, net	1,635		989		Other receivables, net	2,124		989
Refundable income taxes		21		—

Inventory, net	Inventory, net	82,644		78,856		Inventory, net	96,913		78,856
Prepaid expenses and other current assets	Prepaid expenses and other current assets	4,379		5,144		Prepaid expenses and other current assets	6,558		5,144
Total current assets	Total current assets	209,225		156,850		Total current assets	198,003		156,850

Property, plant, equipment, and mineral properties, net	Property, plant, equipment, and mineral properties, net	347,834		341,117		Property, plant, equipment, and mineral properties, net	358,729		341,117

Water rights	Water rights	19,184		19,184		Water rights	19,184		19,184
Long-term parts inventory, net	Long-term parts inventory, net	26,622		29,251		Long-term parts inventory, net	25,398		29,251

Long-term investments						Long-term investments	11,696		4,576

Other assets, net	Other assets, net	16,025		11,418		Other assets, net	7,377		6,842
Non-current deferred tax asset, net	Non-current deferred tax asset, net	192,134		209,075		Non-current deferred tax asset, net	187,527		209,075
Total Assets	Total Assets	$	811,024	$	766,895	Total Assets	$	807,914	$	766,895
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable	Accounts payable	$	9,869	$	9,068	Accounts payable	$	14,114	$	9,068

Income taxes payable		—		41

Accrued liabilities	Accrued liabilities	12,775		22,938		Accrued liabilities	22,996		22,938
Accrued employee compensation and benefits	Accrued employee compensation and benefits	6,038		6,805		Accrued employee compensation and benefits	8,157		6,805

Other current liabilities	Other current liabilities	34,330		34,571		Other current liabilities	3,847		34,612
Total current liabilities	Total current liabilities	63,012		73,423		Total current liabilities	49,114		73,423

Asset retirement obligation		28,004		27,024
Asset retirement obligation, net of current portion						Asset retirement obligation, net of current portion	27,204		27,024
Operating lease liabilities	Operating lease liabilities	1,859		1,879		Operating lease liabilities	2,116		1,879
Other non-current liabilities	Other non-current liabilities	1,310		1,166		Other non-current liabilities	1,007		1,166
Total Liabilities	Total Liabilities	94,185		103,492		Total Liabilities	79,441		103,492
Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies
Common stock, 0.001 par value; 40,000,000 shares authorized;	Common stock, 0.001 par value; 40,000,000 shares authorized;					Common stock, 0.001 par value; 40,000,000 shares authorized;
13,265,813 and 13,149,315 shares outstanding
at June 30, 2022, and December 31, 2021, respectively		13		13
13,195,080 and 13,149,315 shares outstanding						13,195,080 and 13,149,315 shares outstanding
at September 30, 2022, and December 31, 2021, respectively						at September 30, 2022, and December 31, 2021, respectively	13		13
Additional paid-in capital	Additional paid-in capital	657,453		659,147		Additional paid-in capital	658,860		659,147

Retained earnings	Retained earnings	59,373		4,243		Retained earnings	72,481		4,243
Less treasury stock, at cost						Less treasury stock, at cost	(2,881)		—
Total Stockholders' Equity	Total Stockholders' Equity	716,839		663,403		Total Stockholders' Equity	728,473		663,403
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	811,024	$	766,895	Total Liabilities and Stockholders' Equity	$	807,914	$	766,895

See accompanying notes to these condensed consolidated financial statements.

Table of Contents

INTREPID POTASH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Sales	Sales	$	91,740	$	67,888	$	196,139	$	139,351	Sales	$	74,752	$	59,153	$	270,891	$	198,504
Less:	Less:									Less:
Freight costs	Freight costs	9,227		10,115		19,464		22,193		Freight costs	7,793		7,911		27,257		30,104
Warehousing and handling costs	Warehousing and handling costs	2,204		2,378		4,680		5,010		Warehousing and handling costs	2,541		2,066		7,221		7,076
Cost of goods sold	Cost of goods sold	38,498		41,196		83,008		88,841		Cost of goods sold	37,648		34,974		120,656		123,815

Costs associated with abnormal production										Costs associated with abnormal production	—		3,594		—		3,594
Gross Margin	Gross Margin	41,811		14,199		88,987		23,307		Gross Margin	26,770		10,608		115,757		33,915

Selling and administrative	Selling and administrative	7,218		6,612		14,007		12,403		Selling and administrative	8,551		5,890		22,558		18,293
Accretion of asset retirement obligation	Accretion of asset retirement obligation	490		441		980		882		Accretion of asset retirement obligation	491		441		1,471		1,323

Loss (gain) on sale of assets	Loss (gain) on sale of assets	1,066		(2,567)		1,166		(2,565)		Loss (gain) on sale of assets	10		5		1,176		(2,560)
Other operating expense (income)	Other operating expense (income)	1,242		(583)		975		(577)		Other operating expense (income)	264		192		1,239		(385)
Operating Income	Operating Income	31,795		10,296		71,859		13,164		Operating Income	17,454		4,080		89,313		17,244

Other Income (Expense)	Other Income (Expense)									Other Income (Expense)
Equity in earnings of unconsolidated entities										Equity in earnings of unconsolidated entities	766		—		766		—
Interest expense, net	Interest expense, net	(24)		(918)		(57)		(1,344)		Interest expense, net	(28)		(82)		(85)		(1,426)
Interest income	Interest income	15		—		17		—		Interest income	77		—		94		—
Other income	Other income	11		8		539		17		Other income	(258)		25		281		42
Gain on extinguishment of debt	Gain on extinguishment of debt	—		10,113		—		10,113		Gain on extinguishment of debt	—		—		—		10,113

Income Before Income Taxes	Income Before Income Taxes	31,797		19,499		72,358		21,950		Income Before Income Taxes	18,011		4,023		90,369		25,973

Income Tax Expense	Income Tax Expense	(8,089)		—		(17,228)		—		Income Tax Expense	(4,903)		—		(22,131)		—
Net Income	Net Income	$	23,708	$	19,499	$	55,130	$	21,950	Net Income	$	13,108	$	4,023	$	68,238	$	25,973

Weighted Average Shares Outstanding:	Weighted Average Shares Outstanding:									Weighted Average Shares Outstanding:
Basic	Basic	13,246		13,089		13,203		13,071		Basic	13,256		13,123		13,221		13,089
Diluted	Diluted	13,620		13,338		13,690		13,335		Diluted	13,489		13,367		13,567		13,352
Earnings Per Share:	Earnings Per Share:									Earnings Per Share:
Basic	Basic	$	1.79	$	1.49	$	4.18	$	1.68	Basic	$	0.99	$	0.31	$	5.16	$	1.98
Diluted	Diluted	$	1.74	$	1.46	$	4.03	$	1.65	Diluted	$	0.97	$	0.30	$	5.03	$	1.95

See accompanying notes to these condensed consolidated financial statements.

Table of Contents

INTREPID POTASH, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)


		Six-Month Period Ended June 30, 2022										Nine-Month Period Ended September 30, 2022
		Common Stock			Additional Paid-in Capital			Retained Earnings		Total Stockholders' Equity					Common Stock						Treasury Stock			Additional Paid-in Capital							Retained Earnings				Total Stockholders' Equity
		Shares	Amount				Retained Earnings							Shares		Amount							Additional Paid-in Capital					Retained Earnings
Balance, December 31, 2021	Balance, December 31, 2021	13,149,315	$	13	$	659,147		$	4,243	$	663,403		Balance, December 31, 2021		13,149,315				$	—	$	659,147				$	4,243						$	663,403

Net income	Net income	—	—		—			55,130		55,130			Net income		—				—				—			—							68,238				68,238
Stock-based compensation	Stock-based compensation	—	—		2,558			—		2,558			Stock-based compensation		—		—				—			3,965							—				3,965
Exercise of stock options	Exercise of stock options	10,718	—		110			—		110			Exercise of stock options		10,718		—				—			110							—				110
Purchase of treasury stock													Purchase of treasury stock		(70,733)		—				(2,881)			—							—				(2,881)
Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	105,780	—		(4,362)			—		(4,362)			Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting		105,780		—				—			(4,362)							—				(4,362)
Balance, June 30, 2022		13,265,813	$	13	$	657,453		$	59,373	$	716,839
Balance, September 30, 2022													Balance, September 30, 2022		13,195,080		$	13			$	(2,881)		$	658,860						$	72,481			$	728,473

		Three-Month Period Ended June 30, 2022										Three-Month Period Ended September 30, 2022
		Common Stock			Additional Paid-in Capital			Retained Earnings		Total Stockholders' Equity					Common Stock						Treasury Stock			Additional Paid-in Capital							Retained Earnings				Total Stockholders' Equity
		Shares	Amount				Retained Earnings							Shares		Amount							Additional Paid-in Capital					Retained Earnings
Balance, March 31, 2022		13,218,875	$	13	$	657,590		$	35,665	$	693,268
Balance, June 30, 2022													Balance, June 30, 2022		13,265,813				$	13				$	—				$	657,453							$	59,373	$	716,839

Net income	Net income	—	—		—			23,708		23,708			Net income		—		—				—			—							13,108				13,108
Stock-based compensation	Stock-based compensation	—	—		1,391			—		1,391			Stock-based compensation		—		—				—			1,407							—				1,407
Purchase of treasury stock													Purchase of treasury stock		(70,733)		—				(2,881)			—							—				(2,881)
Exercise of stock options	Exercise of stock options	1,991	—		20			—		20			Exercise of stock options		—		—				—			—							—				—
Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	44,947	—		(1,548)			—		(1,548)			Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting		—		—				—			—							—				—
Balance, June 30, 2022		13,265,813	$	13	$	657,453		$	59,373	$	716,839
Balance, September 30, 2022													Balance, September 30, 2022		13,195,080		$	13			$	(2,881)		$	658,860						$	72,481			$	728,473

		Six-Month Period Ended June 30, 2021										Nine-Month Period Ended September 30, 2021
		Common Stock			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders' Equity					Common Stock						Treasury Stock			Additional Paid-in Capital							Accumulated Deficit				Total Stockholders' Equity
		Shares	Amount				Accumulated Deficit							Shares		Amount							Additional Paid-in Capital					Accumulated Deficit
Balance, December 31, 2020	Balance, December 31, 2020	13,049,820	$	13	$	656,837		$	(245,591)	$	411,259		Balance, December 31, 2020		13,049,820				$	—	$	656,837				$	(245,591)						$	411,259

Net income	Net income	—	—		—			21,950		21,950			Net income		—				—				—			—							25,973				25,973
Stock-based compensation	Stock-based compensation	—	—		1,655			—		1,655			Stock-based compensation		—		—				—			2,289							—				2,289
Exercise of stock options	Exercise of stock options	4,913	—		51			—		51			Exercise of stock options		7,826		—				—			81							—				81
Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	66,354	—		(380)			—		(380)			Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting		66,464		—				—			(382)							—				(382)
Balance, June 30, 2021		13,121,087	$	13	$	658,163		$	(223,641)	$	434,535
Balance, September 30, 2021													Balance, September 30, 2021		13,124,110		$	13			$	—		$	658,825						$	(219,618)			$	439,220

		Three-Month Period Ended June 30, 2021										Three-Month Period Ended September 30, 2021
		Common Stock			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders' Equity					Common Stock						Treasury Stock			Additional Paid-in Capital							Accumulated Deficit				Total Stockholders' Equity
		Shares	Amount				Accumulated Deficit							Shares		Amount							Additional Paid-in Capital					Accumulated Deficit
Balance, March 31, 2021		13,065,654	$	13	$	657,566		$	(243,140)	$	414,439
Balance, June 30, 2021													Balance, June 30, 2021		13,121,087				$	13				$	—				$	658,163							$	(223,641)	$	434,535

Net income	Net income	—	—		—			19,499		19,499			Net income		—		—				—			—							4,023				4,023
Stock-based compensation	Stock-based compensation	—	—		765			—		765			Stock-based compensation		—		—				—			634							—				634
Exercise of stock options	Exercise of stock options	725	—		7			—		7			Exercise of stock options		2,913		—				—			30							—				30
Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting	54,708	—		(175)			—		(175)			Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting		110		—				—			(2)							—				(2)
Balance, June 30, 2021		13,121,087	$	13	$	658,163		$	(223,641)	$	434,535
Balance, September 30, 2021													Balance, September 30, 2021		13,124,110		$	13			$	—		$	658,825						$	(219,618)			$	439,220

See accompanying notes to these condensed consolidated financial statements.

Table of Contents


INTREPID POTASH, INC.	INTREPID POTASH, INC.					INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS					CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)	(In thousands)					(In thousands)
		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	55,130	$	21,950	Net income	$	68,238	$	25,973
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization	Depreciation, depletion and amortization	16,923		18,079		Depreciation, depletion and amortization	25,285		26,509
Accretion of asset retirement obligation	Accretion of asset retirement obligation	980		882		Accretion of asset retirement obligation	1,471		1,323
Amortization of deferred financing costs	Amortization of deferred financing costs	120		194		Amortization of deferred financing costs	187		254
Amortization of intangible assets	Amortization of intangible assets	161		161		Amortization of intangible assets	241		241
Stock-based compensation	Stock-based compensation	2,558		1,655		Stock-based compensation	3,965		2,289

Loss (gain) on disposal of assets	Loss (gain) on disposal of assets	1,166		(2,565)		Loss (gain) on disposal of assets	1,176		(2,560)

Gain on extinguishment of debt	Gain on extinguishment of debt	—		(10,113)		Gain on extinguishment of debt	—		(10,113)

Allowance for parts inventory obsolescence	Allowance for parts inventory obsolescence	1,600		—		Allowance for parts inventory obsolescence	1,750		—
Equity in earnings of unconsolidated entities						Equity in earnings of unconsolidated entities	(766)		—

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Trade accounts receivable, net	Trade accounts receivable, net	2,770		(235)		Trade accounts receivable, net	(2,820)		(9,936)
Other receivables, net	Other receivables, net	(646)		(893)		Other receivables, net	(1,111)		(1,872)

Inventory, net	Inventory, net	(2,759)		13,767		Inventory, net	(15,954)		11,678
Prepaid expenses and other current assets	Prepaid expenses and other current assets	673		495		Prepaid expenses and other current assets	(1,504)		(1,148)
Deferred tax assets, net	Deferred tax assets, net	16,941		—		Deferred tax assets, net	21,548		—
Accounts payable, accrued liabilities, and accrued employee compensation and benefits	Accounts payable, accrued liabilities, and accrued employee compensation and benefits	(11,412)		6,023		Accounts payable, accrued liabilities, and accrued employee compensation and benefits	999		15,254

Operating lease liabilities	Operating lease liabilities	(1,233)		(1,061)		Operating lease liabilities	(1,619)		(1,616)
Other liabilities	Other liabilities	257		3,097		Other liabilities	(31,974)		3,147
Net cash provided by operating activities	Net cash provided by operating activities	83,229		51,436		Net cash provided by operating activities	69,112		59,423

Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Additions to property, plant, equipment, mineral properties and other assets	Additions to property, plant, equipment, mineral properties and other assets	(22,774)		(6,626)		Additions to property, plant, equipment, mineral properties and other assets	(37,100)		(12,437)

Purchase of investments	Purchase of investments	(10,899)		—		Purchase of investments	(12,864)		—
Proceeds from sale of assets	Proceeds from sale of assets	46		6,042		Proceeds from sale of assets	46		6,042

Proceeds from redemptions/maturities of investments						Proceeds from redemptions/maturities of investments	1,504		—

Net cash used in investing activities	Net cash used in investing activities	(33,627)		(584)		Net cash used in investing activities	(48,414)		(6,395)

Table of Contents


INTREPID POTASH, INC.	INTREPID POTASH, INC.					INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS					CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)	(In thousands)					(In thousands)
		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Debt prepayment costs	Debt prepayment costs	—		(505)		Debt prepayment costs	—		(505)
Repayments of long-term debt	Repayments of long-term debt	—		(15,000)		Repayments of long-term debt	—		(15,000)

Repayments of short-term borrowings on credit facility						Repayments of short-term borrowings on credit facility	—		(29,817)
Payments of financing lease	Payments of financing lease	—		(1,258)		Payments of financing lease	—		(1,258)

Capitalized debt fees						Capitalized debt fees	(933)		—
Employee tax withholding paid for restricted stock upon vesting	Employee tax withholding paid for restricted stock upon vesting	(4,362)		(380)		Employee tax withholding paid for restricted stock upon vesting	(4,362)		(382)

Repurchases of common stock						Repurchases of common stock	(2,881)		—
Proceeds from exercise of stock options	Proceeds from exercise of stock options	110		51		Proceeds from exercise of stock options	110		81
Net cash used in financing activities	Net cash used in financing activities	(4,252)		(17,092)		Net cash used in financing activities	(8,066)		(46,881)

Net Change in Cash, Cash Equivalents and Restricted Cash	Net Change in Cash, Cash Equivalents and Restricted Cash	45,350		33,760		Net Change in Cash, Cash Equivalents and Restricted Cash	12,632		6,147
Cash, Cash Equivalents and Restricted Cash, beginning of period	Cash, Cash Equivalents and Restricted Cash, beginning of period	37,146		20,184		Cash, Cash Equivalents and Restricted Cash, beginning of period	37,146		20,184
Cash, Cash Equivalents and Restricted Cash, end of period	Cash, Cash Equivalents and Restricted Cash, end of period	$	82,496	$	53,944	Cash, Cash Equivalents and Restricted Cash, end of period	$	49,778	$	26,331

Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Net cash paid during the period for:	Net cash paid during the period for:					Net cash paid during the period for:
Interest	Interest	$	44	$	777	Interest	$	66	$	851
Income taxes	Income taxes	$	334	$	91	Income taxes	$	679	$	131
Amounts included in the measurement of operating lease liabilities	Amounts included in the measurement of operating lease liabilities	$	983	$	1,169	Amounts included in the measurement of operating lease liabilities	$	1,419	$	1,769
Accrued purchases for property, plant, equipment, and mineral properties	Accrued purchases for property, plant, equipment, and mineral properties	$	3,477	$	1,420	Accrued purchases for property, plant, equipment, and mineral properties	$	7,373	$	1,842
Right-of-use assets exchanged for operating lease liabilities	Right-of-use assets exchanged for operating lease liabilities	$	794	$	340	Right-of-use assets exchanged for operating lease liabilities	$	1,588	$	546

See accompanying notes to these condensed consolidated financial statements.

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INTREPID POTASH, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1— COMPANY BACKGROUND

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

Our extraction and production operations are conducted entirely in the continental United States. We produce potash from 3three solution mining facilities: our HB solution mine in Carlsbad, New Mexico, our solution mine in Moab, Utah, and our brine recovery mine in Wendover, Utah. We also operate the North compaction facility in Carlsbad, New Mexico, which compacts and granulates product from the HB mine. We produce Trio® from our conventional underground East mine in Carlsbad, New Mexico.

We have permitted, licensed, declared and partially adjudicated water rights in New Mexico that support our mining and industrial operations. Water that is not used to support our mining and industrial operations is primarily sold to support oil and gas development in the Permian Basin in New Mexico near our Carlsbad facilities. We continue to work to expand our water business. In May 2019, we acquired certain land, water rights, state grazing leases for cattle, and other related assets from Dinwiddie Cattle Company. We refer to these assets and operations as "Intrepid South." Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights, to customers where such sales provide a solution to such customer's operations in the oil and gas industry. See Note 14—Commitments and Contingencies below for further information regarding our water rights.

We have 3three segments: potash, Trio®, and oilfield solutions. We account for sales of byproducts as revenue in the potash or Trio® segment based on which segment generates the byproduct. Intersegment sales prices are market based and are eliminated.

"Intrepid," "our," "we," or "us," means Intrepid Potash, Inc. and its consolidated subsidiaries.

Note 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation—Our unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of interim financial information, have been included. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Adopted Accounting Standards—In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. Most amendments within this standard were required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We adopted this standard on January 1, 2021. The effect of the adoption of this standard had an immaterial impact on our condensed consolidated financial statements.

~~Pronouncements Issued But Not Yet Adopted~~Reclassifications of Prior Period Presentation —~~In March 2020, the FASB issued ASU No. 2020-04,~~ ~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~ ~~("ASU 2020-04"), which provides optional exceptions~~Certain prior period amounts have been reclassified in order to ~~GAAP for certain transactions related~~conform to the ~~transition away from The London Interbank Offered Rate ("LIBOR"). The amended guidance is designed to provide relief from~~current period presentation. These reclassifications had no effect on the ~~accounting analysis and impacts that may otherwise be required for modifications to agreements necessitated by the reference rate reform. Application~~reported results of ~~the guidance in ASU 2020-04 is optional, is only available in certain situations, and is only available for~~operations.

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~~companies to apply until December 31, 2022. We are currently evaluating the impacts of reference rate reform and the guidance in ASU 2020-04 on our consolidated financial statements.~~

Note 3— EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. For purposes of determining diluted earnings per share, basic weighted-average common shares outstanding is adjusted to include potentially dilutive securities, including restricted stock, stock options, and performance units. The treasury-stock method is used to measure the dilutive impact of potentially dilutive shares. Potentially dilutive shares are excluded from the diluted weighted-average shares outstanding computation in periods in which they have an anti-dilutive effect. The following table shows the calculation of basic and diluted earnings per share (in thousands, except per share amounts):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Net income	Net income	$	23,708	$	19,499	$	55,130	$	21,950	Net income	$	13,108	$	4,023	$	68,238	$	25,973

Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	13,246		13,089		13,203		13,071		Basic weighted-average common shares outstanding	13,256		13,123		13,221		13,089
Add: Dilutive effect of restricted stock	Add: Dilutive effect of restricted stock	209		185		245		199		Add: Dilutive effect of restricted stock	143		177		223		197
Add: Dilutive effect of stock options	Add: Dilutive effect of stock options	165		64		242		65		Add: Dilutive effect of stock options	90		67		123		66

Diluted weighted-average common shares outstanding	Diluted weighted-average common shares outstanding	13,620		13,338		13,690		13,335		Diluted weighted-average common shares outstanding	13,489		13,367		13,567		13,352

Basic	Basic	$	1.79	$	1.49	$	4.18	$	1.68	Basic	$	0.99	$	0.31	$	5.16	$	1.98
Diluted	Diluted	$	1.74	$	1.46	$	4.03	$	1.65	Diluted	$	0.97	$	0.30	$	5.03	$	1.95

The following table shows the shares that have an anti-dilutive effect and are excluded from the diluted weighted-average shares outstanding computations (in thousands):


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2022	2021	2022	2021		2022	2021	2022	2021
Anti-dilutive effect of restricted stock	Anti-dilutive effect of restricted stock	38	96	11	80	Anti-dilutive effect of restricted stock	106	54	64	85

Anti-dilutive effect of stock options outstanding	Anti-dilutive effect of stock options outstanding	—	62	—	100	Anti-dilutive effect of stock options outstanding	—	224	—	180

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Note 4— CASH, CASH EQUIVALENTS AND RESTRICTED CASH

We consider financial instruments with original maturities of three months of less to be cash equivalents. Total cash, cash equivalents and restricted cash, as shown on the condensed consolidated statements of cash flows are included in the following accounts at ~~June~~September 30, 2022, and 2021 (in thousands):


		June 30, 2022		June 30, 2021			September 30, 2022		September 30, 2021
Cash and cash equivalents	Cash and cash equivalents	$	81,927	$	53,250	Cash and cash equivalents	$	49,209	$	25,637
Restricted cash included in other current assets	Restricted cash included in other current assets	25		175		Restricted cash included in other current assets	25		175
Restricted cash included in other long-term assets	Restricted cash included in other long-term assets	544		519		Restricted cash included in other long-term assets	544		519
Total cash, cash equivalents, and restricted cash as shown in the statement of cash flows	Total cash, cash equivalents, and restricted cash as shown in the statement of cash flows	$	82,496	$	53,944	Total cash, cash equivalents, and restricted cash as shown in the statement of cash flows	$	49,778	$	26,331

Restricted cash included in other current and long-term assets on the condensed consolidated balance sheets represents amounts whose use is restricted by contractual agreements with various entities, principally the Bureau of Land Management or the State of Utah, as security to fund future reclamation obligations at our sites.

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Note 5— INVENTORY AND LONG-TERM PARTS INVENTORY

The following summarizes our inventory, recorded at the lower of weighted-average cost or estimated net realizable value, as of ~~June~~September 30, 2022, and December 31, 2021 (in thousands):


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Finished goods product inventory	Finished goods product inventory	$	44,663	$	42,492	Finished goods product inventory	$	49,310	$	42,492
In-process inventory	In-process inventory	27,135		27,211		In-process inventory	34,359		27,211
Total product inventory	Total product inventory	71,798		69,703		Total product inventory	83,669		69,703
Current parts inventory, net	Current parts inventory, net	10,846		9,153		Current parts inventory, net	13,244		9,153
Total current inventory, net	Total current inventory, net	82,644		78,856		Total current inventory, net	96,913		78,856
Long-term parts inventory, net	Long-term parts inventory, net	26,622		29,251		Long-term parts inventory, net	25,398		29,251
Total inventory, net	Total inventory, net	$	109,266	$	108,107	Total inventory, net	$	122,311	$	108,107

Parts inventory is shown net of estimated allowances for obsolescence of ~~$2.9~~$1.7 million as of ~~June~~September 30, 2022, and $3.2 million as of December 31, 2021.

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Note 6 — PROPERTY, PLANT, EQUIPMENT, AND MINERAL PROPERTIES

Property, plant, equipment, and mineral properties were comprised of the following (in thousands):


		June 30, 2022		December 31, 2021			September 30, 2022		December 31, 2021
Land	Land	$	24,136	$	24,136	Land	$	24,136	$	24,136
Ponds and land improvements	Ponds and land improvements	71,031		69,261		Ponds and land improvements	72,205		69,261
Mineral properties and development costs	Mineral properties and development costs	144,279		144,255		Mineral properties and development costs	144,279		144,255
Buildings and plant	Buildings and plant	84,834		84,268		Buildings and plant	88,778		84,268
Machinery and equipment	Machinery and equipment	280,313		272,323		Machinery and equipment	285,267		272,323
Vehicles	Vehicles	7,340		6,855		Vehicles	7,449		6,855
Office equipment and improvements	Office equipment and improvements	9,842		8,956		Office equipment and improvements	10,102		8,956
Operating lease ROU assets	Operating lease ROU assets	5,340		7,763		Operating lease ROU assets	5,190		7,763
Breeding stock	Breeding stock	317		308		Breeding stock	329		308
Construction in progress	Construction in progress	21,690		11,469		Construction in progress	29,530		11,469
Total property, plant, equipment, and mineral properties, gross	Total property, plant, equipment, and mineral properties, gross	$	649,122	$	629,594	Total property, plant, equipment, and mineral properties, gross	$	667,265	$	629,594
Less: accumulated depreciation, depletion, and amortization	Less: accumulated depreciation, depletion, and amortization	(301,288)		(288,477)		Less: accumulated depreciation, depletion, and amortization	(308,536)		(288,477)
Total property, plant, equipment, and mineral properties, net	Total property, plant, equipment, and mineral properties, net	$	347,834	$	341,117	Total property, plant, equipment, and mineral properties, net	$	358,729	$	341,117

In May 2021, we sold approximately 330 acres of land we owned in Texas for $6.0 million and recorded a gain of $2.8 million.

We incurred the following expenses for depreciation, depletion, and amortization, including expenses capitalized into inventory, for the following periods (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Depreciation	Depreciation	$	7,344	$	7,356	$	14,532	$	14,851	Depreciation	$	7,519	$	7,294	$	22,051	$	22,145
Depletion	Depletion	286		721		1,430		2,196		Depletion	459		600		1,889		2,796
Amortization of right of use assets	Amortization of right of use assets	395		521		961		1,032		Amortization of right of use assets	384		536		1,345		1,568
Total incurred	Total incurred	$	8,025	$	8,598	$	16,923	$	18,079	Total incurred	$	8,362	$	8,430	$	25,285	$	26,509

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Note 7 — DEBT

Revolving Credit Facility—~~We maintain~~In August 2022, we and certain of our subsidiaries entered into the Second Amended and Restated Credit Agreement with a syndicate of lenders with the Bank of Montreal, as administrative agent, which provides for a revolving credit facility. The agreement amended our existing revolving credit facility ~~with Bank of Montreal. As of June 30, 2022,~~to, among other things, increase the amount available under the facility from $75 million to $150 million, extend the maturity date to August 4, 2027, and transition from LIBOR to SOFR (Secured Overnight Financing Rate) as a reference rate for borrowings under the credit agreement. Borrowings under the amended credit facility bear interest at ~~LIBOR (London Interbank Offered Rate)~~SOFR plus an applicable margin of ~~1.25%~~1.50% to ~~2.00%~~2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. ~~We have granted to Bank of Montreal a first lien on~~Borrowings under the revolving credit facility are secured by substantially all of our current and non-current ~~assets. The~~assets, and the obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.

We occasionally borrow and repay amounts under the revolving credit facility for near-term working capital needs or other purposes and may do so in the future. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, ~~and June 30, 2021,~~ we made no borrowings and we made no repayments under the revolving credit facility. During the three and nine months ended September 30, 2021, we made no borrowings and we made $29.8 million of repayments under the revolving credit facility. As of ~~June~~September 30, 2022, and December 31, 2021, we had no borrowings outstanding and $1 million in outstanding letters of credit under this facility.

As of ~~June~~September 30, 2022, we were in compliance with all applicable covenants under the revolving credit facility.

In August 2022, we amended the revolving credit facility to increase the amount available under the facility from $75 million to $150 million, and to extend the maturity date to August 4, 2027. Borrowings under the amended credit facility will bear interest at SOFR (Secured Overnight Financing Rate) plus an applicable margin 1.50% to 2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility.

PPP Loan—In April 2020, we received a $10 million loan under the Paycheck Protection Program (the "PPP") under the CARES Act. We submitted our application for forgiveness of the full amount of the loan in November 2020. In June 2021, we received notice that the Small Business Administration had remitted funds to our bank to fully repay our PPP loan and accrued interest. Accordingly, we recognized a gain of $10.1 million related to the forgiveness of the PPP loan and the associated accrued interest on the PPP loan.

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Senior Notes—In June 2021 we repaid the remaining $15.0 million of principal outstanding on our Series B Senior Notes due April 14, 2023 (the "Series B Senior Notes") and satisfied all obligations under the Amended and Restated Note Purchase Agreement, dated as of October 31, 2016, by and among the Company and each of the purchasers named therein (as amended, the "Note Purchase Agreement"). As a result of the repayment, the Note Purchase Agreement was terminated.

Interest Expense—Interest expense is recorded net of any capitalized interest associated with investments in capital projects. We incurred gross interest expense of $0.1 million ~~and $0.9 million~~ for the three months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021, ~~respectively,~~ and ~~$0.2~~$0.3 million and ~~$1.4~~$1.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and ~~June~~September 30, 2021 respectively.

Amounts included in interest expense, net for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Interest on debt borrowings	Interest on debt borrowings	$	22	$	302	$	43	$	667	Interest on debt borrowings	$	47	$	50	$	90	$	717
Make-whole payments	Make-whole payments	—		503		—		505		Make-whole payments	—		—		—		505
Amortization of deferred financing costs	Amortization of deferred financing costs	60		126		120		194		Amortization of deferred financing costs	67		60		187		254
Gross interest expense	Gross interest expense	82		931		163		1,366		Gross interest expense	114		110		277		1,476
Less capitalized interest	Less capitalized interest	(58)		(13)		(106)		(22)		Less capitalized interest	(86)		(28)		(192)		(50)
Interest expense, net	Interest expense, net	$	24	$	918	$	57	$	1,344	Interest expense, net	$	28	$	82	$	85	$	1,426

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Note 8 — INTANGIBLE ASSETS

We have water rights, recorded at $19.2 million at ~~June~~September 30, 2022, and December 31, 2021. Our water rights have indefinite lives and are not amortized. We evaluate our water rights at least annually on October 1 for impairment, or more frequently if circumstances require.

We account for other intangible assets as finite-lived intangible assets and amortize those intangible assets over the period of estimated benefit, using the straight-line method. The weighted average amortization period for the other intangible assets is approximately 17 years. At ~~June~~September 30, 2022, and December 31, 2021, these intangible assets had a net book value of ~~$5.4~~$5.3 million and $5.6 million, respectively, and are included in "Other assets, net" on the Condensed Consolidated Balance Sheets.

Note 9— FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS OF POSSIBLE FUTURE

PUBLIC DEBT

Intrepid Potash, Inc., as the parent company, has no independent assets or operations, and operations are conducted solely through its subsidiaries. Cash generated from operations is held at the parent-company level as cash on hand and cash equivalents and totaled ~~$81.9~~$49.2 million and $36.5 million at ~~June~~September 30, 2022, and December 31, 2021, respectively. If one or more of our wholly-owned operating subsidiaries guarantee public debt securities in the future, those guarantees will be full and unconditional and will constitute the joint and several obligations of the subsidiary guarantors. The assets and liabilities of our other subsidiaries are immaterial. There are no restrictions on our ability to obtain cash dividends or other distributions of funds from the subsidiary guarantors, except those imposed by applicable law.

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Note 10 — ASSET RETIREMENT OBLIGATION

We recognize an estimated liability for future costs associated with the abandonment and reclamation of our mining properties. A liability for the fair value of an asset retirement obligation and a corresponding increase to the carrying value of the related long-lived asset are recorded as the mining operations occur or the assets are acquired. ~~As of June 30, 2022, and December 31, 2021, our asset retirement obligation was $28.0 million, and $27.0 million, respectively.~~

Our asset retirement obligation is based on the estimated cost to abandon and reclaim the mining operations, the economic life of the properties, and federal and state regulatory requirements. The liability is discounted using credit adjusted risk-free rate estimates at the time the liability is incurred or when there are upward revisions to estimated costs. The credit adjusted risk-free rates used to discount our abandonment liabilities range from 6.9% to 9.7%. Revisions to the liability occur due to construction of new or expanded facilities, changes in estimated abandonment costs or economic lives, or if federal or state regulators enact new requirements regarding the abandonment or reclamation of mines.

Following is a table of the changes to our asset retirement obligation for the following periods (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Asset retirement obligation, at beginning of period	Asset retirement obligation, at beginning of period	$	27,514	$	24,313	$	27,024	$	23,872	Asset retirement obligation, at beginning of period	$	28,004	$	24,780	$	27,024	$	23,872

Liabilities settled										Liabilities settled	(511)		—		(511)		—
Liabilities incurred										Liabilities incurred	250		—		250		—
Changes in estimated obligations	Changes in estimated obligations	—		26		—		26		Changes in estimated obligations	—		—		—		26
Accretion of discount	Accretion of discount	490		441		980		882		Accretion of discount	491		441		1,471		1,323
Total asset retirement obligation, at end of period	Total asset retirement obligation, at end of period	$	28,004	$	24,780	$	28,004	$	24,780	Total asset retirement obligation, at end of period	$	28,234	$	25,221	$	28,234	$	25,221

The current portion of the asset retirement obligation of $1.0 million is included in "Other current liabilities" on the condensed consolidated balance sheet as of September 30, 2022.

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Note 11 — REVENUE

Revenue Recognition—We account for revenue in accordance with ASC Topic 606 Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, we recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration we expect to be entitled in exchange for those goods or services. The timing of revenue recognition, billings, and cash collection may result in contract assets or contract liabilities.

Contract Balances: As of ~~June~~September 30, 2022, and December 31, 2021, we had ~~$34.1~~a total of $1.5 million and $33.8 million of contract liabilities, respectively, ~~the majority~~ of which ~~are~~$0.5 million and $32.9 million were current as of September 30, 2022, and December 31, 2021, respectively, and included in "Other current liabilities" on the ~~Condensed Consolidated Balance Sheets, primarily related to cash advances received from a customer for water purchases.~~condensed consolidated balance sheets. Customer advances received before we have satisfied our performance obligations are accounted for as a contract liability (sometimes referred to in practice as deferred revenue). ~~We will recognize~~

As of December 31, 2021, our contract liability balance primarily consisted of prepayments from a customer for future water deliveries under the ~~deferred revenue at~~terms of a water sales agreement. In August 2022, our customer notified us that they were terminating the ~~time~~water sales agreement and in September 2022 we refunded the ~~customer calls for water delivery.~~customer's prepayment balance of $32.6 million. See Note 14—Commitments and Contingencies below for additional information regarding our water ~~rights.~~ rights and repayment of the customer's prepayment balance.

Our deferred revenue activity for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021 is shown below (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Beginning balance	Beginning balance	$	34,023	$	33,842	$	33,788	$	30,418	Beginning balance	$	34,110	$	33,631	$	33,788	$	30,418
Additions	Additions	241		—		590		3,972		Additions	124		146		714		4,119
Refund of prepayments										Refund of prepayments	(32,579)		—		(32,579)		—
Recognized as revenue during period	Recognized as revenue during period	(154)		(211)		(268)		(759)		Recognized as revenue during period	(150)		(71)		(418)		(831)
Ending balance		$	34,110	$	33,631	$	34,110	$	33,631
Ending Balance										Ending Balance	$	1,505	$	33,706	$	1,505	$	33,706

Disaggregation of Revenue: The tables below show the disaggregation of revenue by product and reconciles disaggregated revenue to segment revenue for the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021. We believe the disaggregation of revenue by products best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic conditions (in thousands):

Three Months Ended June 30, 2022
Product Potash Segment
Trio® Segment
Oilfield Solutions Segment Intersegment Eliminations Total
Potash $ 43,885 $ — $ — $ (66) $ 43,819
Trio®
— 34,687 — — 34,687
Water 363 724 3,692 — 4,779
Salt 2,658 56 — — 2,714
Magnesium Chloride 1,199 — — — 1,199
Brine Water 722 — 648 — 1,370
Other — — 3,172 — 3,172
Total Revenue $ 48,827 $ 35,467 $ 7,512 $ (66) $ 91,740
Six Months Ended June 30, 2022
Product Potash Segment Trio® Segment Oilfield Solutions Segment Intersegment Eliminations Total
Potash $ 95,507 $ — $ — $ (161) $ 95,346
Trio®
— 74,303 — — 74,303
Water 1,137 1,926 7,880 — 10,943
Salt 5,292 290 — — 5,582
Magnesium Chloride 2,014 — — — 2,014
Brine Water 1,319 — 1,387 — 2,706
Other — — 5,245 — 5,245
Total Revenue $ 105,269 $ 76,519 $ 14,512 $ (161) $ 196,139

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	Three Months Ended September 30, 2022
Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	$	36,177	$	—	$	—	$	(68)	$	36,109
Trio®	—		23,158		—		—		23,158
Water	427		796		5,380		—		6,603
Salt	2,845		89		—		—		2,934
Magnesium Chloride	2,008		—		—		—		2,008
Brine Water	897		—		792		—		1,689
Other	—		—		2,251		—		2,251
Total Revenue	$	42,354	$	24,043	$	8,423	$	(68)	$	74,752

	Nine Months Ended September 30, 2022
Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	$	131,684	$	—	$	—	$	(228)	$	131,456
Trio®	—		97,461		—		—		97,461
Water	1,564		2,722		13,260		—		17,546
Salt	8,137		378		—		—		8,515
Magnesium Chloride	4,022		—		—		—		4,022
Brine Water	2,215		—		2,179		—		4,394
Other	—		—		7,497		—		7,497
Total Revenue	$	147,622	$	100,561	$	22,936	$	(228)	$	270,891

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		Three Months Ended June 30, 2021											Three Months Ended September 30, 2021
Product	Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total		Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	Potash	$	32,881	$	—	$	—	$	(60)	$	32,821	Potash	$	26,573	$	—	$	—	$	(55)	$	26,518
Trio®	Trio®	—		26,340		—		—		26,340		Trio®	—		19,495		—		—		19,495
Water	Water	520		514		1,783		—		2,817		Water	263		1,310		4,382		—		5,955
Salt	Salt	2,008		70		—		—		2,078		Salt	2,540		22		—		—		2,562
Magnesium Chloride	Magnesium Chloride	1,880		—		—		—		1,880		Magnesium Chloride	1,921		—		—		—		1,921
Brine Water	Brine Water	404		—		229		—		633		Brine Water	376		—		301		—		677
Other	Other	—		—		1,319		—		1,319		Other	—		—		2,025		—		2,025
Total Revenue	Total Revenue	$	37,693	$	26,924	$	3,331	$	(60)	$	67,888	Total Revenue	$	31,673	$	20,827	$	6,708	$	(55)	$	59,153

		Six Months Ended June 30, 2021											Nine Months Ended September 30, 2021
Product	Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total		Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	Potash	$	70,675	$	—	$	—	$	(122)	$	70,553	Potash	$	97,248	$	—	$	—	$	(177)	$	97,071
Trio®	Trio®	—		48,855		—		—		48,855		Trio®	—		68,348		—		—		68,348
Water	Water	1,679		1,498		5,125		—		8,302		Water	1,942		2,808		9,507		—		14,257
Salt	Salt	4,047		266		—		—		4,313		Salt	6,587		288		—		—		6,875
Magnesium Chloride	Magnesium Chloride	3,908		—		—		—		3,908		Magnesium Chloride	5,829		—		—		—		5,829
Brine Water	Brine Water	961		—		434		—		1,395		Brine Water	1,338		—		735		—		2,073
Other	Other	—		—		2,025		—		2,025		Other	—		—		4,051		—		4,051
Total Revenue	Total Revenue	$	81,270	$	50,619	$	7,584	$	(122)	$	139,351	Total Revenue	$	112,944	$	71,444	$	14,293	$	(177)	$	198,504

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Note 12 — COMPENSATION PLANS

Equity Incentive Compensation Plan—Our Board of Directors and stockholders adopted a long-term incentive compensation plan called the Intrepid Potash, Inc. Amended and Restated Equity Incentive Plan (the "Plan"). The Plan was most recently amended and restated in May 2022. We have issued common stock, restricted stock, performance units, and non-qualified stock option awards under the Plan. At ~~June~~September 30, 2022, approximately 1.1 million shares remained available for issuance under the Plan.

In March 2022, the Compensation Committee granted 104,039 shares of restricted stock to executive officers and other key employees. These awards vest over three years, and in some cases, contain a market condition. In May 2022, the Compensation Committee granted 6,635 restricted shares to members of our Board of Directors. These awards vest ~~over~~after one year. As of ~~June~~September 30, 2022, the following awards were outstanding under the Plan (in thousands):



						Outstanding as of ~~June~~September 30, 2022
Restricted Shares						~~347~~345

Non-qualified Stock Options						273

Total share-based compensation expense was $1.4 million and ~~$0.8~~$0.6 million for the three months ended ~~June~~September 30, 2022, and 2021, respectively, and ~~$2.6~~$4.0 million and ~~$1.7~~$2.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively. As of ~~June~~September 30, 2022, we had ~~$9.7~~$8.3 million of total remaining unrecognized compensation expense related to awards that is expected to be recognized over a weighted-average period of ~~1.5~~1.4 years.

Note 13 — INCOME TAXES

Our anticipated annual tax rate is impacted primarily by the amount of taxable income associated with each jurisdiction in which our income is subject to income tax, permanent differences between the financial statement carrying amounts and tax bases of assets and liabilities, and the benefit associated with the estimated effect of the percentage depletion deduction.

A summary of our provision for income taxes is as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Current portion of income tax expense	Current portion of income tax expense	$	148	$	—	$	287	$	—	Current portion of income tax expense	$	296	$	—	$	583	$	—
Deferred portion of income tax expense	Deferred portion of income tax expense	7,941		—		16,941		—		Deferred portion of income tax expense	4,607		—		21,548		—
Total income tax expense	Total income tax expense	$	8,089	$	—	$	17,228	$	—	Total income tax expense	$	4,903	$	—	$	22,131	$	—

Our effective tax rate for the three and nine months ended ~~June~~September 30, 2022, was 27.2% and ~~2021, was 25.4% and 0%, respectively, and our effective tax rate for the six months ended June 30, 2022, and 2021, was 23.8% and 0%~~24.5%, respectively. Our effective tax rate differed from the statutory rate during this period primarily from the estimated permanent difference between book and tax income for 2022 for the percentage depletion deduction, as well as the effect of state income tax law changes enacted during the first ~~half~~nine months of 2022. Our effective tax rate for the three and ~~six~~nine months ended ~~June~~September 30, 2021, was zero percent which differed from the statutory rate primarily due to the valuation allowance that was established to offset our deferred tax assets.

Note 14 — COMMITMENTS AND CONTINGENCIES

Reclamation Deposits and Surety Bonds—As of ~~June~~September 30, 2022, and December 31, 2021, we had ~~$23.1~~$23.5 million and $23.0 million, respectively, of security placed principally with the State of Utah and the Bureau of Land Management for eventual reclamation of our various facilities. ~~Of this total requirement,~~As of September 30, 2022, $0.5 million consisted of long-term restricted cash deposits ~~reflected~~and $23.0 million was secured by surety bonds issued by an insurer. As of December 31, 2021, $0.5 million consisted of long-term restricted cash deposits and $22.5 million was secured by surety bonds issued by an insurer.

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The restricted cash deposits are included in "Other assets, net" on the condensed consolidated balance sheets and ~~$22.6 million was secured by surety bonds issued by an insurer. The~~the surety bonds are held in place by an annual fee paid to the issuer and a letter of credit.

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We may be required to post additional security to fund future reclamation obligations as reclamation plans are updated or as governmental entities change requirements.

Legal—We are subject to claims and legal actions in the ordinary course of business. Legal costs are expensed as incurred. While there are uncertainties in predicting the outcome of any claim or legal action, except as noted below, we believe the ultimate resolution of these claims or actions is not reasonably likely to have a material adverse effect on our financial condition, results of operations, or cash flows.

Water Rights

In February 2019, an expedited inter se proceeding commenced to determine the validity of our Pecos River water rights, representing approximately 20,000 acre feet per year. On December 17, 2021, the adjudication court entered its findings of fact and conclusions of law, which held that our predecessors in interest had forfeited all but approximately 5,800 acre feet of water per year, and that of the remaining 5,800 acre feet of water that had not been forfeited, all but 150 acre feet of water had been abandoned prior to 2017. On March 17, 2022, the adjudication court entered the subfile order and partial final judgment and decree, which adopted the court's December 17, 2021 findings of fact and conclusion of law and specifies our right to 150 acre feet per annum of water for industrial-salt processing use. On April 15, 2022, we filed a notice of appeal of the adjudication court's ruling on the validity of our water rights as well as motion to stay the effect of the adjudication court's ruling on any repayment requirement the New Mexico Office of State Engineer ("OSE") may seek to impose following entry of the subfile order and partial final decree. We ultimately withdrew our motion to stay on June 10, 2022, after the OSE indicated it would not seek immediate repayment of any water used pursuant to the emergency or preliminary authorizations, described below.

In 2017 and 2018 the OSE had granted us preliminary and emergency authorizations to sell approximately 5,700 acre-feet of water per year from our Pecos River Water rights. The preliminary and emergency authorizations allowed for water sales to begin immediately, subject to repayment if the underlying water rights were ultimately found to be invalid. Since the adjudication court entered the subfile order and partial final decree based on its amended findings of fact and conclusion of law discussed above, if our appeal of the subfile order and partial final decree is unsuccessful, we may have to repay the water pumped under the preliminary authorizations. Repayment of this water could be up to two times the amount of water removed from the Pecos River. Repayment is customarily made in-kind over a period of time but can take other forms including cash repayment. If we are not able to repay in-kind due to the lack of remaining water rights or logistical constraints, we may need to purchase water to meet this repayment or be subject to a cash repayment. We cannot reasonably estimate the potential volume, timing, or form of repayment, if any, and have not recorded a loss contingency in our statement of operations related to this legal matter.

In March 2021, we received notice from a customer of a default under the terms of a long-term sales contract because we have been unable to deliver water to diversion points specified in the contract. We have relied primarily upon our Pecos River water rights to deliver water under this contract, the majority of which are currently unavailable due to the factors discussed above. Under this contract we had previously received quarterly installments of approximately $3.9 million for the future delivery of water to the customer. In April 2021, we agreed to suspend the second quarter 2021 and future quarterly installments due from the customer as we ~~continue~~continued to work to resolve the issue. In December 2021, we amended our long-term sales agreement with the customer due to our inability to deliver water. Under the amendment, we agreed to suspend all rights and obligations of both parties under the agreement until July 1, 2022. During the suspension period, we ~~have~~had no obligation to deliver water and our customer ~~has~~had no obligation to take water, if available, or make quarterly payments to us. After the suspension period, our customer has the right to terminate the agreement for any reason with thirty days written notice at which time we would be required to repay any outstanding balance for undelivered water. Although we are continuing to work withIn August 2022, the customer ~~to resolve this issue,~~notified us that they were terminating the long-term sales contract and in September 2022, we ~~believe it is likely we will need to repay~~refunded the $32.6 million outstanding contract liability we ~~have~~had with this ~~customer as of June 30, 2022.~~customer. See Note 11—Revenue above for additional information.

In August 2021, NGL Energy Partners (NGL), our partner in a Joint Marketing Agreement (“JMA”) filed suit against us alleging, amongst other items, we overcharged the JMA for various operating costs and that we used third party water to service certain fracs when JMA water should have been used in those fracs. On June 22, 2022, the parties entered into a settlement agreement and the lawsuit was dismissed with prejudice on June 29, 2022. The settlement ~~agreement~~ did not have a material impact on our results of operations and the JMA was terminated.

~~Note 15~~

~~— FAIR VALUE~~

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Note 15 — FAIR VALUE

We measure our financial assets and liabilities in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date:

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Inputs, other than Level 1, that are either directly or indirectly observable.

Level 3 - Unobservable inputs developed using estimates and assumptions which reflect those that market participants would use.

The classification of fair value measurement within the hierarchy is based upon the lowest level of input that is significant to the measurement.

Other financial instruments consist primarily of cash equivalents, accounts receivable, refundable income taxes, accounts payable, accrued liabilities, and, if any, advances under our credit facility. With the exception of investment securities, we believe cost approximates fair value for our financial instruments because of the short-term ~~natures~~nature of these instruments.

Cash Equivalents—As of ~~June~~September 30, 2022, and December 31, 2021, we had cash equivalents of ~~$1.6~~$1.2 million and zero, respectively.

Held-to-Maturity Investments—As of ~~June~~September 30, 2022, we owned debt investment securities classified as held-to-maturity because we have the intent and ability to hold these investments to maturity. Our held-to-maturity debt investment securities consist of investment grade corporate bonds and U.S. government issued bonds. These debt securities are carried at amortized cost and consist of the following (amounts in thousands):


		As of June 30, 2022									As of September 30, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Short-term	Short-term									Short-term
Corporate bonds	Corporate bonds	$	4,010	$	—	$	(7)	$	4,003	Corporate bonds	$	3,002	$	—	$	(19)	$	2,983
Government bonds	Government bonds	1,970		2		—		1,972		Government bonds	1,968		—		(12)		1,956
Total	Total	$	5,980	$	2	$	(7)	$	5,975	Total	$	4,970	$	—	$	(31)	$	4,939
Long-term	Long-term									Long-term
Corporate bonds	Corporate bonds	$	485	$	—	$	(1)	$	484	Corporate bonds	$	1,988	$	—	$	(25)	$	1,963
Government bonds	Government bonds	1,909		7		—		1,916		Government bonds	1,904		—		(25)		1,879
Total	Total	$	2,394	$	7	$	(1)	$	2,400	Total	$	3,892	$	—	$	(50)	$	3,842

Our long-term held to maturity investments are recorded in ~~"Other assets, net"~~"Long-term investments" on the Consolidated Balance Sheets. As of December 31, 2021, we had no held-to-maturity debt investment securities. Our long-term held-to-maturity investments mature in less than 2 years.

Equity Investments without a Readily Determinable Fair Value—As of ~~June~~September 30, 2022, and December 31, 2021, we had a $3.5 million non-controlling equity investment in W.D. Von Gonten Laboratories ("WDVGL"). This investment is an equity investment without a readily determinable fair value and is recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer, or impairment (a Level 3 input), and is included in ~~"Other assets, net"~~"Long-term investments" on the Condensed Consolidated Balance Sheets. We did not record any adjustments to the carrying value of the investment during the ~~six~~nine months ended ~~June~~September 30, 2022, or the twelve months ended December 31, 2021.

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Equity Method Investments—We have committed to invest $4.0 million in cash as a limited partner for a 16% interest in PEP Ovation, LP ("Ovation")~~. Ovation invests in working interests~~, of ~~oil and gas wells, located primarily in the Permian Basin. As of June 30, 2022, and December 31, 2021,~~which we had invested $3.5 million and $1.1 million ~~respectively, in Ovation.~~of cash as of September 30, 2022, and December 31, 2021, respectively. This investment is anaccounted for under the equity investment without a readily determinable fair value and is recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investmentmethod whereby we recognize our proportional share of the ~~same issuer,~~income or ~~impairment (a Level 3 input),~~loss from our investment in Ovation on a one-quarter lag and is included in ~~"Other assets, net"~~"Long-term investments" on the Condensed Consolidated Balance Sheets. ~~We did not record any adjustments to~~For the ~~carrying value of the investment during the six~~nine months ended ~~June~~September 30, 2022, ~~or the twelve months ended December 31, 2021.~~our proportional share of Ovation's net income was $0.8 million.

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Note 16 — BUSINESS SEGMENTS

Our operations are organized into 3three segments: potash, Trio® and oilfield solutions. The reportable segments are determined by management based on several factors including the types of products and services sold, production processes, markets served and the financial information available for our chief operating decision maker. We evaluate performance based on the gross margins of the respective business segments and do not allocate corporate selling and administrative expenses, among others, to the respective segments. Intersegment sales prices are market-based and are eliminated in the "Other" column. Information for each segment is provided in the tables that follow (in thousands).


Three Months Ended June 30, 2022		Potash		Trio®		Oilfield Solutions		Other		Consolidated
Three Months Ended September 30, 2022												Three Months Ended September 30, 2022	Potash		Trio®		Oilfield Solutions		Other		Consolidated
Sales	Sales	$	48,827	$	35,467	$	7,512	$	(66)	$	91,740	Sales	$	42,354	$	24,043	$	8,423	$	(68)	$	74,752
Less: Freight costs	Less: Freight costs	3,682		5,611		—		(66)		9,227		Less: Freight costs	3,726		4,135		—		(68)		7,793
Warehousing and handling costs	Warehousing and handling costs	1,209		995		—		—		2,204		Warehousing and handling costs	1,414		1,127		—		—		2,541
Cost of goods sold	Cost of goods sold	19,011		15,809		3,678		—		38,498		Cost of goods sold	17,342		12,278		8,028		—		37,648

Gross Margin	Gross Margin	$	24,925	$	13,052	$	3,834	$	—	$	41,811	Gross Margin	$	19,872	$	6,503	$	395	$	—	$	26,770
Depreciation, depletion, and amortization incurred1	Depreciation, depletion, and amortization incurred1	$	6,085	$	1,042	$	803	$	176	$	8,106	Depreciation, depletion, and amortization incurred1	$	6,318	$	1,072	$	867	$	185	$	8,442

Six Months Ended June 30, 2022		Potash		Trio®		Oilfield Solutions		Other		Consolidated
Nine Months Ended September 30, 2022												Nine Months Ended September 30, 2022	Potash		Trio®		Oilfield Solutions		Other		Consolidated
Sales	Sales	$	105,269	$	76,519	$	14,512	$	(161)	$	196,139	Sales	$	147,622	$	100,561	$	22,936	$	(228)	$	270,891
Less: Freight costs	Less: Freight costs	7,705		11,920		—		(161)		19,464		Less: Freight costs	11,430		16,055		—		(228)		27,257
Warehousing and handling costs	Warehousing and handling costs	2,533		2,147		—		—		4,680		Warehousing and handling costs	3,947		3,274		—		—		7,221
Cost of goods sold	Cost of goods sold	41,041		33,261		8,706		—		83,008		Cost of goods sold	58,383		45,538		16,735		—		120,656

Gross Margin	Gross Margin	$	53,990	$	29,191	$	5,806	$	—	$	88,987	Gross Margin	$	73,862	$	35,694	$	6,201	$	—	$	115,757
Depreciation, depletion, and amortization incurred1	Depreciation, depletion, and amortization incurred1	$	13,033	$	2,050	$	1,590	$	411	$	17,084	Depreciation, depletion, and amortization incurred1	$	19,350	$	3,122	$	2,458	$	596	$	25,526

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Three Months Ended June 30, 2021		Potash		Trio®		Oilfield Solutions		Other		Consolidated
Three Months Ended September 30, 2021												Three Months Ended September 30, 2021	Potash		Trio®		Oilfield Solutions		Other		Consolidated
Sales	Sales	$	37,693	$	26,924	$	3,331	$	(60)	$	67,888	Sales	$	31,673	$	20,827	$	6,708	$	(55)	$	59,153
Less: Freight costs	Less: Freight costs	4,138		6,037		—		(60)		10,115		Less: Freight costs	3,928		4,038		—		(55)		7,911
Warehousing and handling costs	Warehousing and handling costs	1,306		1,072		—		—		2,378		Warehousing and handling costs	1,241		825		—		—		2,066
Cost of goods sold	Cost of goods sold	22,118		16,653		2,425		—		41,196		Cost of goods sold	18,385		10,528		6,061		—		34,974

Costs associated with abnormal production												Costs associated with abnormal production	3,594		—		—		—		3,594
Gross Margin	Gross Margin	$	10,131	$	3,162	$	906	$	—	$	14,199	Gross Margin	$	4,525	$	5,436	$	647	$	—	$	10,608
Depreciation, depletion, and amortization incurred1	Depreciation, depletion, and amortization incurred1	$	6,460	$	1,376	$	700	$	143	$	8,679	Depreciation, depletion, and amortization incurred1	$	6,257	$	1,321	$	818	$	114	$	8,510

Six Months Ended June 30, 2021		Potash		Trio®		Oilfield Solutions		Other		Consolidated
Nine Months Ended September 30, 2021												Nine Months Ended September 30, 2021	Potash		Trio®		Oilfield Solutions		Other		Consolidated
Sales	Sales	$	81,270	$	50,619	$	7,584	$	(122)	$	139,351	Sales	$	112,944	$	71,444	$	14,293	$	(177)	$	198,504
Less: Freight costs	Less: Freight costs	9,838		12,477		—		(122)		22,193		Less: Freight costs	13,766		16,515		—		(177)		30,104
Warehousing and handling costs	Warehousing and handling costs	2,762		2,248		—		—		5,010		Warehousing and handling costs	4,004		3,072		—		—		7,076
Cost of goods sold	Cost of goods sold	49,867		32,801		6,173		—		88,841		Cost of goods sold	68,251		43,329		12,235		—		123,815

Costs associated with abnormal production												Costs associated with abnormal production	3,594		—		—		—		3,594
Gross Margin	Gross Margin	$	18,803	$	3,093	$	1,411	$	—	$	23,307	Gross Margin	$	23,329	$	8,528	$	2,058	$	—	$	33,915
Depreciation, depletion and amortization incurred1	Depreciation, depletion and amortization incurred1	$	13,637	$	2,883	$	1,388	$	332	$	18,240	Depreciation, depletion and amortization incurred1	$	19,895	$	4,204	$	2,206	$	445	$	26,750

1 Depreciation, depletion, and amortization incurred for potash and Trio® excludes depreciation, depletion and amortization amounts absorbed in or relieved from inventory.

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933, as amended. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements in this Quarterly Report other than statements of historical fact are forward-looking statements. Forward-looking statements include statements about, among other things, our future results of operations and financial position, our business strategy and plans, our ESG (as defined below) initiatives and our objectives for future operations. In some cases, you can identify these statements by forward-looking words, such as "estimate," "expect," "anticipate," "project," "plan," "intend," "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "will," "could," "predict," and "continue." Forward-looking statements are only predictions based on our current knowledge, expectations, and projections about future events.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including the following:

•changes in the price, demand, or supply of our products and services;

•challenges and legal proceedings related to our water rights;

•our ability to successfully identify and implement any opportunities to grow our business whether through expanded sales of water, Trio®, byproducts, and other non-potassium related products or other revenue diversification activities;

•the costs of, and our ability to successfully execute, any strategic projects;

•declines or changes in agricultural production or fertilizer application rates;

•declines in the use of potassium-related products or water by oil and gas companies in their drilling operations;

•our ability to prevail in outstanding legal proceedings against us;

•our ability to comply with the terms of our revolving credit facility, including the underlying covenants, to avoid a default under that 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;

•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 our solar solution mines;

•increased labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise;

•changes in the prices of raw materials, including chemicals, natural gas, and power;

•our ability to obtain and maintain any necessary governmental permits or leases relating to current or future operations;

•interruptions in rail or truck transportation services, or fluctuations in the costs of these services;

•our inability to fund necessary capital investments;

•the impact of the COVID-19 pandemic on our business, operations, liquidity, financial condition and results of operations; and

•the other risks, uncertainties, and assumptions described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2021, as updated by our subsequent Quarterly Reports on Form 10-Q.

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

In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report may not occur and actual results could differ materially and adversely from those anticipated or implied in these forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements to conform those statements to actual results or to reflect new information or future events.

Throughout this Quarterly Report, we refer to average net realized sales price per ton, which is a non-GAAP financial measure. More information about this measure, including a reconciliation of this measure to the most directly comparable GAAP financial measure, is below under the heading "Non-GAAP Financial Measure."

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Company Overview

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

Our extraction and production operations are conducted entirely in the continental United States. We produce potash from three solution mining facilities: our HB solution mine in Carlsbad, New Mexico, our solution mine in Moab, Utah, and our brine recovery mine in Wendover, Utah. We also operate our North compaction facility in Carlsbad, New Mexico, which compacts and granulates product from the HB mine. We produce Trio® from our conventional underground East mine in Carlsbad, New Mexico. Until mid-2016, we also produced potash from our East and West mines in Carlsbad, New Mexico.

We have permitted, licensed, declared and partially adjudicated water rights in New Mexico under which we sell water primarily to support oil and gas development in the Permian Basin near our Carlsbad facilities. We continue to work to expand our sales of water. In May 2019, we acquired certain land, water rights, state grazing leases for cattle, and other related assets from Dinwiddie Cattle Company. We refer to these assets and operations as "Intrepid South." Due to the strategic location of Intrepid South, part of our long-term operating strategy is selling small parcels of land, including restricted use agreements of surface or subsurface rights to customers, where such sales provide a solution to a customer's operations in the oil and gas industry.

We have three segments: potash, Trio®, and oilfield solutions. We account for the sale of byproducts as revenue in the potash or Trio® segment based on which segment generated the byproduct.

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Environmental, Social, and Governance

We are committed to a goal of providing consistent returns to our shareholders while maintaining a strong sense of good corporate citizenship that places a high value on the welfare of our employees, the communities in which we operate, the customers we serve, and the world as a whole. We believe that prioritizing, improving, and managing our Environmental, Social, and Governance (“ESG”) goals will allow us to better create long-term value for our investors. We have made our ESG program a key initiative for our management team and we are committed to develop a plan that will provide focused reporting on ESG issues that we believe are the most relevant to our business and that are the most important to our stakeholders. We understand that clearly disclosing the goals and metrics related to our ESG programs will allow our stakeholders to be informed about our progress and we look forward to expanding our ESG disclosures in future periods. A summary of our ESG goals under the United Nations Sustainable Development Goals framework is available on our website at intrepidpotash.com. The information found on, or that can be accessed through, our website is not part of this or any other report we file with, or furnish to, the SEC. An update on recent ESG highlights and initiatives is shown below.

Commitment to the Environment

We rely on the environments, resources and ecosystems surrounding our locations in all segments of our business. We work closely with our communities and make it a priority to protect the natural resources surrounding our operations.

–Full-Cycle Water Management - We are actively developing water treatment and recycling operations in the Delaware Basin. Recycled water will reduce the amount of produced water that is injected into produced water disposal wells.

–Solar solution mining potash - All of our potash is currently produced at solar solution mines, one of the most environmentally friendly and energy efficient mining techniques. We inject a naturally occurring, salt saturated brine solution into underground caverns or previously shuttered mine workings. This brine selectively dissolves the remaining potash, which is then pumped back to the surface and into evaporation ponds. During the spring and summer months, the brine naturally evaporates, leaving only the salt and potash solids in the ponds, which we then process into the products we sell. By using solar energy, we do not need to burn natural gas or coal to evaporate our brine ponds.

–Salt laydown at the Bonneville Salt Flats - We are committed to helping maintain the environments in which we operate, one of which is the Bonneville Salt Flats near our Wendover, Utah mine. Since 2005, we have donated free of cost to the Bureau of Land Management ("BLM") nearly 7 million tons of salt that has been deposited on the racetrack to help preserve this unique attraction in northwest Utah. We drilled an additional brackish well in 2021 to increase the brine available for the salt laydown project.

–We are the only OMRI-listed muriate of potash and langbeinite producer in the United States. We became OMRI-listed in 2007 for our langbeinite, or Trio® product, and in 2018 for our potash products at our Moab and Wendover operating facilities. We are also registered in the Organic Input Material Program through the California Department of Food and Agriculture, a program which registers fertilizers that can be used in organic crop and food production.

–We work closely with the BLM and other government and regulatory agencies to preserve historical sites near our operations such as the Maroon Cliffs in Carlsbad, New Mexico and petroglyphs near our Utah operations. We also work with and have supported agencies dedicated to studying and protecting endangered species near our operations such as the sand dune lizards in New Mexico.

Our Social Impact and Supporting our Communities

Our employees live and work in small, tight-knit communities and we are deeply involved in volunteering and being active community members.

Our New Mexico operations have partnered with the United Way of Carlsbad and South Eddy County since 2004, participating in a variety of community-focused events and activities such as United Way's annual Day of Caring event. We encourage all our employees to volunteer in their communities and we offer all our full-time employees three paid volunteer days each year to support either a charitable organization of their choosing or participate in an Intrepid sponsored volunteer project.

Our Commitment to a Diverse Workforce

We are committed to recruiting and hiring processes that encourage and embrace diversity. We believe a diverse workforce leads to greater collaboration, innovation, and improves shareholder returns. We celebrate the diversity and differences in our employees. We support a variety of organizations within our communities including the Women's Leadership Foundation, a Colorado based organization with the goal of opening more board of director positions to women leaders in Colorado and beyond.

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Our Commitment to Safety

Safety audits are conducted across all our locations to ensure a thoughtful approach can be taken that increases the safe execution of all tasks. Through our audits and dialogue, we educate ourselves and understand the potential hazards present, create best practices that can be shared, and address areas where improvements can be made. Prior to each task, employees are required to: assemble the proper personal protection equipment, tools, permits, etc., ensure the area is safe for employees and contractors, discuss the task with all stakeholders, and understand how the task is related to the overall business.

We conduct safety audits of our operations on a monthly basis. The data from these safety audits is collected to analyze where, what, and why gaps exist, and to provide meaningful information that results in safer work for our employees.

In August 2021, our East Mine in Carlsbad, New Mexico received the National 2020 Sentinels of Safety Award in the large underground nonmetal category. The Sentinels of Safety Award is presented by the National Mining Association each year to recognize the outstanding safety achievements of mining operations across a variety of categories. Our East Mine was also awarded the Rocky Mountain Mining Institute's 2022 Safety Award for Large Underground Mines, an award given for the outstanding safety performance at the mine during 2021.

In October 2022, our East Mine in Carlsbad, New Mexico was awarded the National 2021 Sentinels of Safety Award in the large underground nonmetal category, its second consecutive year receiving the award.

Business Ethics

Since inception, Intrepid has placed the highest emphasis on conducting its business with honesty and integrity. These standards are expected of management and employees alike, and we continuously strive to create a corporate culture of honesty, integrity, and trust.

The policies we have developed are intended to:

–Maintain and communicate our core value of integrity and disseminate our core values and the legal requirements applicable to good business conduct and ethical behavior.

–Provide annual refresher training on company policies, values, interpreting laws, and handling a variety of potential company-related issues and situations.

–Provide resources for employees to report any suspected violations of our company policies, including an anonymous employee hotline via phone and internet.

–Provide clear and well-defined procedures by which employees can easily obtain information, ask questions, and, if necessary, report any suspected violations of any of our Business Ethics policies.

–Maintain and communicate a Code of Business Conduct and Ethics which clearly articulates the company’s values, culture, and practices.

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Significant Business Trends and Activities

Our financial results have been, or are expected to be, impacted by several significant trends and activities, which are described below. We expect that the trends described below may continue to impact our results of operations, cash flows, and financial position.

• Potash pricing and demand. ~~Strong demand~~Our potash average net realized sales price per ton increased to $734 for ~~potash~~the three months ended September 30, 2022, compared to $381 for the same period in 2021, as multiple price increases announced over the last year continued ~~into the second quarter of 2022 as higher~~to improve our realized pricing. We expect current agricultural commodity prices ~~supported~~and good farmer economics to continue to support application rates across our markets and we believe most customers see good value in ~~most of our markets.~~ potash in today's market despite minimal restock after the spring season.

Compared to the prior year, we saw minimal buying in the latter part of the second quarter as buyers ~~remain~~were reluctant to hold inventory for future application at current price levels. ~~Sales~~This sentiment continued through the third quarter as limited demand resulted in good product availability in most markets and kept most buyers from purchasing tons that were not committed to end users for immediate application. As a result, sales volume decreased ~~39%~~26% in ~~both~~ the ~~second~~third quarter ~~and first half~~ of 2022, when compared to the same period in the prior year. Sales volumes for the nine months ended September 30, 2022, decreased 36% when compared to the same period in the prior year ~~periods,~~ due to the minimal restock after the spring season combined with reduced inventory levels across our facilities to begin the year and less spring production due to a lower than average 2021 summer evaporation season.

~~Our~~Global potash ~~average net realized sales price per ton increased to $738 for the three months ended June 30, 2022, compared to $319 for the same period in 2021,~~production remains below normal levels as multiple price increases announced over the last year continued to improve our realized pricing. We expect current commodity prices and good farmer economics will continue to support application rates across our markets and we believe most customers see good value in potash in today's market. Inventory carryover after a compressed spring season and increased credit exposure due to current price levels has resulted in a slow start to third quarter sales, although we expect demand will improve as harvest progresses. Sanctionssanctions on Belarusian potash are significantly limiting export opportunities for Belarusian product and we believe production rates in Belarus will remain well-below normal rates for the foreseeable future. In addition, the timeline for production capacity increases previously announced by Russian potash producers is becoming more uncertain.continue to limit exports. Canadian producers have responded to these production decreases with incremental production ramp-ups, but there are limited near-term supply increases available to replace the tons we believe are currently offline and we expect global supply will be significantly below normal levels in 2022, and likely longer.

As a small producer, domestic pricing of our potash is influenced principally by the price established by our competitors. The interaction of global potash supply and demand, ocean, land, and barge freight rates, currency fluctuations, and crop commodity values and outlook, also influence pricing. Our price expectations could be affected by, among other things, weather, planting decisions, rail car availability, commodity price decreases and the price and availability of other potassium products.

We experience seasonality in potash demand, with more purchases historically occurring in March through May and September through November when purchasers are looking to have product on hand for the spring and fall application seasons in the United States. Various factors affect potash sales and shipments, thereby increasing volatility of sales volumes from quarter to quarter and season to season. The specific timing of when farmers apply potash remains highly weather dependent and varies across the numerous growing regions within the U.S. The timing of potash sales is also significantly influenced by the marketing programs of potash producers, as well as storage volumes closer to the farm gate. Our sales volumes into the industrial market correlate to drilling activity in the oil and gas market. While most COVID-19 related restrictions have been lifted, reinstatement of such restrictions may impact future fertilizer application seasons if such actions affect available labor, transportation logistics, or cause supply disruptions.

• Trio® pricing and demand. ~~Second~~Third quarter 2022 Trio® results benefited from the multiple price increases announced in recent quarters, resulting in ~~second~~third quarter 2022 average net realized pricing of ~~$493~~$488 per ton compared to ~~$271~~$336 per ton in the same period of 2021. Trio® sales volume in the ~~second~~third quarter of 2022 decreased ~~21%~~15% compared to the prior year period as ~~higher prices limited restock late in the second quarter with most~~ buyers ~~positioning themselves~~remain reluctant to ~~hold minimal carryover inventory after the spring season.~~refill storage for future application periods at current price levels.

We also experience seasonality in domestic Trio® demand, with more purchases coming in the first and second quarters in advance of the spring application season in the U.S. In turn, we generally have increased inventory levels in the third and fourth quarters in anticipation of expected demand for the following year. Further actions taken in response to the COVID-19 pandemic may also impact seasonal demand patterns if there is an effect on available labor, transportation logistics, or supply disruptions. We continue to operate extra underground shifts to increase our availability of Trio® in response to continued good demand and a favorable outlook.

• Water sales. In the ~~second~~third quarter of 2022, total water sales were ~~$4.8~~$6.6 million compared to ~~$2.8~~$6.0 million during the same period of 2021. Rig counts, oil pricing, and oilfield activity continue to support drilling and completion activity near our operations, although global economic uncertainty and the conflict in Ukraine ~~and the potential for future restrictions enacted by state and local governments resulting from the COVID-19 pandemic make~~makes forecasting future oilfield activities difficult.

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See Note 14 of our unaudited condensed consolidated financial statements included in "Item 1. Condensed Consolidated Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q regarding legal proceedings related to our water rights.

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• Byproduct sales. We sell byproducts such as salt, magnesium chloride, brines, and water that are derived from our potash and Trio® operations. Byproduct sales were ~~$5.7~~$7.1 million during the ~~second~~third quarter of 2022, compared to ~~$5.4~~$6.4 million for the same period of 2021. ~~Magnesium chlorides sales decreased compared to the prior year due to a mild winter and wet weather in early spring, which decreased road dedust sales to begin the quarter.~~ Salt sales increased compared to the prior year period due to growth in the industrial salt market combined with higher realized pricing. Brine sales improved compared to the prior year as we capitalized on increased oilfield activity near our operations.

• Inflation. Heightened levels of inflation have led to increased labor expense and other production costs. We have experienced increased costs for various supplies as suppliers have raised prices in response to inflationary pressures. During the first ~~half~~three quarters of 2022, increases in our selling price per ton of potash and Trio® have outpaced our increased production costs. However, if potash and Trio® prices remain flat or decline, inflation remains at current levels or increases for an extended period of time, and we are unable to mitigate the impact of inflation, our production costs could increase further ~~resulting~~or in excess of any price increases, which could result in lower margins and net income.

• Weather impact. Evaporation rates in 2021 were below average across our facilities which led to decreased potash production in the second half of 2021 and led to decreased potash production in the spring of 2022 when compared to the prior year. We received a significant amount of rainfall at our HB facility in Carlsbad, New Mexico late in the summer of 2021 which limited the amount of solids available in our ponds. As a result of the reduced potash production, we recorded abnormal production costs of $6.0 million in ~~the~~ fiscal year 2021. ~~We expect~~

• Strategic Focus on our Solar Solution Mining Facilities. Improved financial position allows us to accelerate capital investment to enhance the production of our solar solution mines. Key current and future projects include:

–Drilling a least one new horizontal potash ~~production rates will return to normal rates~~cavern at Moab beginning in the ~~third~~fourth quarter of 2022 ~~with~~to increase brine availability which should result in improved and more consistent production ~~beginning~~for the next several years

–A series of horizontal wells into the original Moab mine to drain high grade potash brine from low spots (sumps) which we believe have collected significant quantities of high grade brine is planned for 2023

–Installation of an improved pipeline system to our HB Solar Solution Mine, which is designed to increase water volume and flow capacity through the pipeline to efficiently inject water into the HB Solar Solution Mine as part of our mining process. We will use various water rights to meet the water demands of HB Solar Solution Mine through the improved pipeline system that should allow us to efficiently produce additional solar tons and conduct the operations of our processing facilities at a lower cost. We expect to improve the injection rate capability of our pipeline system as early as the first quarter of 2023, and expect greater flow rates within the improved pipeline system in ~~August 2022.~~second half of 2023

–Successfully completed a deep brine well in Wendover in the fourth quarter of 2022 which has increased brine availability and should allow us to better manage variable weather and evaporation rates

–At least one additional deep brine well and two brackish water wells are planned for our Wendover facility in 2023

• Diversification of products and services. In addition to the products discussed above, Intrepid generates revenue from right-of-way agreements, surface damages and easements, caliche sales, a produced water royalty, and sales of cattle. We are also currently negotiating water transfer agreements with customers throughout the basin to utilize our existing infrastructure.

We announced in the first quarter of 2022 that Intrepid has initiated a joint feasibility study alongside the New Mexico Produced Water Research Consortium ("NMPWRC") and the New Mexico Environment Department ("NMED") to evaluate the potential of using treated produced water from oil and gas operations as injectate for our HB solar solution mine. Intrepid has produced a pilot project scoping document which has been accepted by the NMPWRC. As part of the pilot project scope we continue to do laboratory work to identify constituents in produced water and the variability we are likely to encounter when sourcing produced water from different operators and formations. We have also engaged a third party to design equipment and processes related to the pilot project. We believe the earliest we would begin a pilot test is the second half of 2023. Further evaluation of produced water constituents and the treatment process necessary to use produced water at our HB solar solution mine may cause us to experience further delays to our schedule and we may decide to discontinue the project altogether.

We have begun the initial development planning for a ~~frac~~ sand mine opportunity on our strategically located South Ranch. This project has the potential to produce over 600k tons per year of ~~frac~~ sand for sale into the Delaware Basin. Total capital investment is estimated at $16 ~~million, which is expected~~million. We are targeting initial production late in Q1 2023, although ongoing supply chain issues and timing around the receipt of necessary permits remains uncertain. This could delay our first production to ~~be split evenly between 2022 and 2023. Our goal is for operations to begin towards~~ the ~~end of the first quarter~~second half of 2023.

We continue to review opportunities to leverage our existing oil and gas midstream businesses in southeast New Mexico and expand into additional oil and gas midstream and upstream activities. This expansion may be through organic growth, other strategic investments, partnerships, or acquisitions of complementary businesses that expand our product and

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service offerings beyond our existing assets or products. Additionally, we may expand into oil and natural gas exploration and production or into new products or services in our current industry or other industries.

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Consolidated Results


(in thousands, except per ton amounts)	(in thousands, except per ton amounts)	Three Months Ended June 30,				Six Months Ended June 30,				(in thousands, except per ton amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Sales1	Sales1	$	91,740	$	67,888	$	196,139	$	139,351	Sales1	$	74,752	$	59,153	$	270,891	$	198,504

Cost of goods sold	Cost of goods sold	$	38,498	$	41,196	$	83,008	$	88,841	Cost of goods sold	$	37,648	$	34,974	$	120,656	$	123,815

Gross Margin	Gross Margin	$	41,811	$	14,199	$	88,987	$	23,307	Gross Margin	$	26,770	$	10,608	$	115,757	$	33,915

Selling and administrative	Selling and administrative	$	7,218	$	6,612	$	14,007	$	12,403	Selling and administrative	$	8,551	$	5,890	$	22,558	$	18,293

Net Income	Net Income	$	23,708	$	19,499	$	55,130	$	21,950	Net Income	$	13,108	$	4,023	$	68,238	$	25,973

Average net realized sales price per ton2	Average net realized sales price per ton2									Average net realized sales price per ton2
Potash	Potash	$	738	$	319	$	713	$	300	Potash	$	734	$	381	$	718	$	319
Trio®	Trio®	$	493	$	271	$	476	$	251	Trio®	$	488	$	336	$	482	$	271

1Sales include sales of byproducts which were ~~$5.7~~$7.1 million and ~~$5.4~~$6.4 million for the three months ended ~~June~~September 30, 2022, and 2021, respectively, and ~~$12.0~~$19.0 million and ~~$12.4~~$18.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively.

2Average net realized sales price per ton is a non-GAAP financial measure. More information about this non-GAAP financial measure is below under the heading "Non-GAAP Financial Measure."

Consolidated Results for the Three Months Ended ~~June~~September 30, 2022, and 2021

Sales

Our total sales for the ~~second~~third quarter of 2022 increased ~~$23.9~~$15.6 million, or ~~35%~~26%, as compared to the ~~second~~third quarter of 2021, as potash sales increased ~~$11.0~~$9.6 million, or ~~34%~~36%, Trio® sales increased ~~$8.3~~$3.7 million, or ~~32%~~19%, oilfield solutions segment sales increased ~~$4.2~~$1.7 million, and byproduct sales increased ~~$0.3~~$0.6 million.

Our potash sales increased ~~$11.0~~$9.6 million for the ~~second~~third quarter of 2022, as compared to the ~~second~~third quarter of 2021, as our average net realized sales price per ton increased ~~131%~~93%, partially offset by a ~~39%~~26% decrease in tons sold. ~~Good demand~~Potash pricing remained strong as the global supply of potash remained tight due to the uncertainty of potash supply from Eastern Europe and ~~tight near-term inventory levels have led~~due to ~~multiple price increases since the second half of 2021.~~supportive crop economics. Our potash sales volumes decreased in the ~~second~~third quarter of 2022, as compared to the ~~second~~third quarter of 2021, as ~~potash customers have been~~distributors ended the 2022 spring application season with more inventory than in 2021, and remained reluctant to ~~build inventory during the summer months~~purchase tons that were not committed to end users for the fall application season. During the second quarter of 2021, a summer fill program was announced in May 2021, which incentivized customers to take delivery of product beginning late in the second quarter of 2021. A similar summer fill program was not offered by the major potash producers during the second quarter of 2022. Also, we had fewer potash tons to sell during the second quarter of 2022, compared to the second quarter of 2021. Below average evaporation rates across our facilities in 2021 led to decreased potash production during the second half of 2021 and the first half of 2022.immediate application.

Our Trio® sales increased ~~$8.3~~$3.7 million, or ~~32%~~19%, in the ~~second~~third quarter of 2022, as compared to the ~~second~~third quarter of 2021, as our average net realized sales price per ton increased ~~82%~~45%, partially offset by a ~~21%~~15% decrease in tons sold. Our Trio® average net realized sales price per ton increased during the third quarter of 2022, compared to the third quarter of 2021, as the price of potash and other potassium fertilizers has increased due to ~~multiple price increases announced since the second half of 2021. Our~~global supply concerns, partially offset by an increase in Trio® ~~product is primarily applied~~sales internationally, which generally have a lower average net realized sales price due to increased freight expense compared to domestic sales. Our tons of Trio® sold declined as we sold fewer tons of Trio® domestically during the ~~spring application season and similar~~third quarter of 2022, compared to ~~potash customers, Trio~~the third quarter of 2021,®as domestic customers have been reluctant to ~~build~~restock inventory for ~~the spring 2023~~future application ~~season.~~periods, partially offset by an increase in Trio® tons sold internationally.

Our oilfield solutions segment sales, which includes sales of water, brine water, and surface use and easements, increased ~~$4.2~~$1.7 million, or ~~126%~~26%, in the ~~second~~third quarter of 2022, as compared to the ~~second~~third quarter of ~~2021. Our~~2021, driven by a $1.0 million increase in water sales, ~~recorded~~a $0.5 million increase in ~~the~~brine water sales, and a $0.2 million increase in our other oilfield solutions ~~segment increased 107%~~products and ~~our~~services. Our oilfield solutions sales ~~from surface use and easement agreements increased 198% during the second quarter of 2022, compared to the second quarter of 2021. The increase in sales was~~increases were driven by increased oil and gas activities near our Intrepid South property ~~as oil prices were higher in the second quarter of 2022, compared to the second quarter of 2021.~~during 2022.

Our total byproduct sales, which are recorded in either our potash segment or Trio® segment increased ~~$0.3~~$0.6 million or 6%10% in the ~~second~~third quarter of 2022, as compared to the ~~second~~third quarter of 2021, due to ~~$0.6 million increase in salt sales,~~ a ~~$0.3~~$0.5 million increase in byproduct brine water sales, a $0.4 million increase in byproduct salt sales, partially offset by a ~~$0.7~~$0.4 million decrease in ~~magnesium chloride~~byproduct water sales. Our byproduct brine water sales increased due to increased oil and gas activities and our byproduct salt sales increased due to an increase in sales to the industrial salt ~~market and our~~market. Our byproduct ~~brine~~ water sales ~~increased due to increased oil and gas activities. Most~~decreased as a higher percentage of our ~~magnesium chloride~~total barrels of water sold was from Intrepid South and those water sales were recorded in our oilfield solutions segment.

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~~sales during the second quarter are used as a dedusting agent. Wet weather in various parts of the U.S. in April reduced demand for dedusting products.~~

Cost of Goods Sold

Our total cost of goods sold ~~decreased~~increased $2.7 million, or 7%8%, during the ~~second~~third quarter of 2022, as compared to the ~~second~~third quarter of 2021. Our ~~potash~~oilfield solutions cost of goods ~~sold decreased by $3.1~~increased $2.0 million ~~or 14%,~~ and our Trio® cost of goods sold ~~decreased $0.8~~increased $1.8 million, ~~or 5%,~~ partially offset by a ~~$1.3~~decrease of $1.0 million ~~increase~~ in our potash cost of goods sold.

Our oilfield solutions cost of goods ~~sold. We~~ sold ~~39%~~increased $2.0 million, or 32%, during the third quarter of 2022, compared to the third quarter of 2021, as we incurred increased water transportation costs and we purchased additional third-party water to meet customers' water demand.

Our Trio® cost of goods sold increased $1.8 million, or 17%, during the third quarter of 2022, as compared to the third quarter of 2021. While we sold 15% fewer tons of Trio® during the third quarter of 2022, compared to the third quarter of 2021, our Trio® weighted average cost per ton increased as we incurred increased labor costs as we operated an additional underground shift at our East facility, other production costs continued to increase due to continued inflation, royalty expense increased due to increased revenues and we produced fewer tons of Trio® as we mined lower grade ore. Most of our Trio® production costs are fixed and a decrease in Trio® tons produced increases our Trio® weighted average cost per ton.

Our potash cost of goods sold decreased 6% as we sold 26% fewer tons of potash in the ~~second~~third quarter of 2022, compared to ~~second~~the third quarter of ~~2021, but~~2021. However, our potash weighted average carrying cost per ton increased as certain production costs, ~~increased~~such as natural gas and electricity, continued to increase due to continued inflation and we produced fewer tons of potash due to below average evaporation in 2021 across all of our potash facilities. Most of our production costs are fixed and a decrease in tons produced increases our per ton weighted average cost. Our Trio® ~~cost of goods sold decreased $0.8 million, or 5%, during the second quarter of 2022, as compared to the second quarter of 2021, due to a 21% decrease in Trio~~® tons sold partially offset by an increase in production costs due to inflation. Our cost of goods sold for the Oilfield Solutions segment increased $1.3 million, or 52%, during the second quarter of 2022, compared to the second quarter of 2021, as we incurred increased contract labor and rental costs related to the development of a full-cycle water management operation and we also incurred increased royalty expense ~~due~~as sales revenues increased.

Abnormal Production

During the third quarter of 2021, the Carlsbad, New Mexico area where our HB solar solution mining facility is located received significant rainfall, well above the historical rainfall average during this period. Additionally, humidity was higher than normal and temperatures were cooler than average during the third quarter of 2021, which reduced our pond production and our ability to ~~increased water sales.~~extract brine. Because of 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 $3.6 million during the third quarter of 2021. We did not incur any abnormal production costs during the third quarter of 2022.

Gross Margin

During the ~~second~~third quarter of 2022, we generated gross margin of ~~$41.8~~$26.8 million compared to gross margin of ~~$14.2~~$10.6 million during the ~~second~~third quarter of 2021, due to the factors discussed above.

Selling and Administrative Expense

During the ~~second~~third quarter of 2022, selling and administrative expenses increased 9%45% compared to the ~~second~~third quarter of ~~2021, driven by increases~~2021. Our legal expenses increased $1.2 million due to various issues involving our water rights and other legal matters. Our stock compensation expense increased $1.1 million due to the timing of grant awards in 2022, compared to 2021. Finally, our labor and benefits expense ~~and an increase in lease expenses.~~

~~Gain/(Loss) on Sale of Assets~~

During the second quarter of 2022, we disposed of various assets in the normal course of business and recorded a loss of $1.1 million. In the second quarter of 2021, we sold 326 acres of land in Texas for $6.0 million and recognized a gain on the sale of the land of $2.8 million. We purchased this land in May 2019 for the development of a produced water disposal facility and had permitted two disposal wells on the property. The gain recorded on the sale of the land was partially offset by losses of $0.2 million related to the disposal of various other assets during the normal course of business.

~~Gain on Extinguishment of Debt~~

~~In June 2021, we recognized a gain of $10.1 million related to the forgiveness of a $10 million Payroll Protection Program ("PPP") loan and the associated accrued interest on the loan.~~

~~Interest Expense~~

~~During the second quarter of 2022, our interest expense decreased $0.9~~increased $0.5 million as ~~compared to the second quarter of 2021, as~~ we ~~repaid the remaining $15.0 million outstanding principal balance on our Series B Senior Notes~~have hired additional employees in ~~June 2021,~~2022 and ~~we repaid the $10.0 million outstanding balance on our credit facility~~annual salary increases became effective in ~~early August 2021.~~March 2022.

Income Tax Expense

During the ~~second~~third quarter of 2022, we incurred income tax expense of ~~$8.1~~$4.9 million, and we incurred no income tax expense during the ~~second~~third quarter of 2021. As of ~~June~~September 30, 2021, we had a full valuation allowance against our deferred tax assets and any changes in our deferred tax assets were offset by a corresponding change in our valuation allowance. Since we released substantially all of our valuation allowance in the fourth quarter of 2021, changes in our deferred tax assets are no longer fully offset by a change in our valuation allowance.

Net Income

We generated net income of ~~$23.7~~$13.1 million during the ~~second~~third quarter of 2022, compared to net income of ~~$19.5~~$4.0 million for the ~~second~~third quarter of 2021, due to the factors discussed above.

Consolidated Results for the ~~Six~~Nine Months Ended ~~June~~September 30, 2022, and 2021

Our total sales for the ~~six~~nine months ended ~~June~~September 30, 2022, increased ~~$56.8~~$72.4 million, or ~~41%~~36%, as compared to the ~~six~~nine months ended ~~June~~September 30, 2021. Our potash sales during the first ~~half~~nine months of 2022 increased ~~$24.8~~$34.4 million, or 35%, compared to the first ~~half~~nine months of 2021, as our potash average net realized sales price per ton ~~also~~ increased ~~138%~~125%, partially offset by a ~~39%~~36% decrease in tons sold. Our average net realized sales price per ton increased as strong commodity prices support robust application and global supply remained tight due to ~~multiple price increases announced since second half~~the uncertainty of ~~2021.~~potash supplied from Eastern Europe. Our potash sales volumes decreased in the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021, as distributors have been reluctant to purchase potash to build inventories in anticipation of the fall application season. Also, we had fewer potash tons to ~~sell during the first half of 2022. Below average evaporation rates across our facilities in 2021 led to decreased potash~~

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~~production~~sell during the ~~second half~~first nine months of ~~2021 and the first half~~2022, as we produced fewer tons of ~~2022. Additionally, as discussed above,~~ potash ~~customers have been reluctant~~due to ~~build inventory during the summer months for the fall application season. During the second quarter of 2021, a summer fill program was announced~~below average evaporation rates across our facilities in ~~May 2021, which incentivized customers to take delivery of product beginning late in the second quarter of~~ 2021. ~~A similar summer fill program was not offered by the major potash producers during the second quarter of 2022.~~

Our Trio® sales increased ~~$25.4~~$29.1 million, or ~~52%~~43%, during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021. Our Trio® average net realized sales price per ton increased ~~90%~~78% during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021, due to ~~multiple price increases announced since the second half~~tight global supplies of ~~2021.~~potassium fertilizers. We sold ~~10%~~12% fewer tons of Trio® in the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021. ~~As mentioned above, our~~Our Trio® product is primarily applied during the spring application season, and similar to potash customers, Trio® customers have been reluctant to purchase Trio® to build inventory for the spring 2023 application season.

Our ~~water~~oilfield solutions segment sales, ~~excluding byproduct~~which includes sales of water, ~~sales, and our~~ brine water, ~~sales, excluding byproduct brine water sales,~~and surface use and easements, increased ~~$2.8~~$8.6 million, ~~and $1.0 million, respectively, in~~or 60%. during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021. ~~Oil~~Oilfield solutions segment water sales and ~~gas activities~~brine water sales increased ~~during the first half of 2022, as oil prices were higher during the first half of 2022, compared to the first half of 2021.~~

$3.8 million, and $1.4 million, respectively. Our sales of other oilfield solution segment offerings, including ~~caliche, right-of-way~~surface use and easement agreements, surface ~~damages~~minerals, and ~~easements,~~produced water royalties increased ~~$3.2~~$3.4 million, or ~~159%~~85%, in the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021, driven by a ~~$2.3~~$2.7 million increase in surface use and easement revenues, a ~~$0.5~~$0.6 million increase in produced water royalties, and a ~~$0.4~~$0.2 million increase in surface mineral sales. Our oilfield solutions segment sales ~~as oilfield~~increased due to increased oil and gas activities ~~increased~~ during the first ~~half~~nine months of 2022, compared to the same period in 2021, as oil prices were generally higher in the 2022 period compared to the 2021 period.

Our total byproduct sales, which are recorded in either our potash segment or Trio® segment, increased $0.2 million, or 1%, in the first nine months of 2022, compared to the first ~~half~~nine months of ~~2021.~~

2021, as our byproduct salt sales increased $1.6 million, our byproduct brine water sales increased $0.9 million, partially offset by a decrease of $1.8 million in byproduct magnesium chloride sales and a decrease of $0.5 million in byproduct water sales. Our ~~total~~ byproduct brine water sales ~~decreased $0.4 million, or 3%, in~~increased due to increased oil and gas activities during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of ~~2021, as our byproduct magnesium chloride sales decreased $1.9 million, partially offset by a $1.3 million increase in our~~2021. Our byproduct salt sales increased due to increased sales in the industrial salt market and ~~a $0.4 million increase in our byproduct brine water sales.~~higher salt prices. Our byproduct magnesium chloride product is used primarily as a deicing agent during the winter months and as a dedusting agent during the spring and summer months. Our ~~tons of~~ magnesium chloride ~~decreased due to~~sales declined as mild winter weather ~~during~~in various parts of the ~~first quarter of 2022,~~U.S. decreased demand for deicing products and a wet ~~April~~weather in the early spring months in various parts of the U.S ~~which reduced~~decreased demand for dedusting agents. Our byproduct ~~salt~~water sales ~~increased due to increased~~decreased as a higher percentage of our total barrels of water sold was from Intrepid South and recorded in our oilfield solutions segment. Water sales from Intrepid South are recorded in our oilfield solutions segment while water sold that was used in the production of potash and Trio® is recorded as byproduct water sales in the ~~industrial salt market and our byproduct brine water sales increased as oilfield activities increased during the first half of 2022.~~potash or Trio® segments.

Cost of Goods Sold

Our total cost of goods sold decreased ~~$5.8~~$3.2 million, or 7%3%, during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021. Our potash cost of goods sold decreased ~~$8.8~~$9.9 million, or ~~18%~~14%, during the ~~first half~~nine months of 2022, compared to the first ~~half~~nine months of 2021, as we sold ~~39%~~36% fewer tons of potash, ~~but~~partially offset by an increase in our weighted average carrying cost per ton caused by increased as production costs ~~increased~~ due to ~~inflation and~~inflation. Additionally, we produced fewer tons of potash in 2022, due to below average evaporation across all of our potash facilities during 2021. Most of our potash production costs are fixed and a decrease in potash tons produced increases our per ton weighted average cost. Additionally, we incurred increased royalty expense as our potash sales revenue increased in 2022.

Our Trio® cost of goods sold increased ~~$0.5~~$2.2 million, or 1%5%, during the first ~~half~~nine months of 2022, compared to the first ~~half~~months of 2021. While we sold ~~10%~~12% fewer tons of Trio®, our weighted average carrying cost per ton increased as production costs increased due to ~~inflation.~~inflation and we incurred increased royalty expense as our Trio® sales revenue increased in 2022.

Our oilfield solutions cost of goods sold increased ~~$2.5~~$4.5 million, or ~~41%~~37%, during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021, due mainly to increased royalties ~~related~~and increased water transportation costs as we sold more water in the 2022 period. Additionally, we purchased more water from third parties during the 2022 period to meet water ~~sales~~demand from our customers.

Abnormal Production

As discussed above, we recorded abnormal production costs of $3.6 million during the third quarter of 2021. as wet weather and ~~we incurred increased contract labor and other~~reduced evaporation rates decreased our production at our HB solar solution facility. We did not incur any abnormal production costs ~~related to~~during the ~~development~~nine months ended September 30, 2022.

Table of ~~a full-cycle water management operation.~~Contents

Gross Margin

During the first ~~half~~nine months of 2022, we generated gross margin of ~~$89.0~~$115.8 million compared to gross margin of ~~$23.3~~$33.9 million for the first ~~half~~nine months of 2021, driven by a ~~41%~~36% increase in total sales, ~~combined with~~partially offset by a 7%3% decrease in our total cost of goods sold, as discussed above.

Gain/(Loss) on Sale of Assets

In the first ~~half~~nine months of 2022, we disposed of various assets in the normal course of business and recorded a loss of $1.2 million. In the first ~~half~~nine months of 2021, we sold 326 acres of land in Texas for $6.0 million and recognized a gain on the sale of the land of $2.8 million. We purchased this land in May 2019 for the development of a produced water disposal facility and had permitted two disposal wells on the property. The gain recorded on the sale of the land was partially offset by losses of $0.2 million related to the disposal of various other assets in the normal course of business.

Gain on Extinguishment of Debt

In June 2021, we recognized a gain of $10.1 million related to the forgiveness of the $10 million ~~PPP~~Paycheck Protection Program loan and the associated accrued interest on the ~~loan, as mentioned above.~~loan.

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Selling and Administrative Expense

During the first ~~half~~nine months of 2022, selling and administrative expenses increased ~~13%~~23% as compared to the first ~~half~~nine months of 2021. The increase was driven by ~~increased~~an increase of $1.6 million in labor and benefits expense during ~~2022.~~2022, due to increasing wages and hiring more people, an increase of $1.6 million in stock compensation expenses due to the timing of awards granted in 2022 compared to 2021, partially offset by a decrease in consulting expenses.

Income Tax Expense

During the first nine months of 2022, we incurred income tax expense of $22.1 million, and we incurred no income tax expense during the first nine months of 2021. As of September 30, 2021, we had a full valuation allowance against our deferred tax assets and any changes in our deferred tax assets were offset by a corresponding change in our valuation allowance. Since we released substantially all of our valuation allowance in the fourth quarter of 2021, changes in our deferred tax assets are no longer fully offset by a change in our valuation allowance.

Net Income

We generated net income of ~~$55.1~~$68.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022, as compared to a net income of ~~$22.0~~$26.0 million for the ~~six~~nine months ended ~~June~~September 30, 2021, due to the factors discussed above.

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Potash Segment


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per ton amounts)	(in thousands, except per ton amounts)	2022		2021		2022		2021		(in thousands, except per ton amounts)	2022		2021		2022		2021
Sales1	Sales1	$	48,827	$	37,693	$	105,269	$	81,270	Sales1	$	42,354	$	31,673	$	147,622	$	112,944
Less: Freight costs	Less: Freight costs	3,682		4,138		7,705		9,838		Less: Freight costs	3,726		3,928		11,430		13,766
Warehousing and handling costs	Warehousing and handling costs	1,209		1,306		2,533		2,762		Warehousing and handling costs	1,414		1,241		3,947		4,004
Cost of goods sold	Cost of goods sold	19,011		22,118		41,041		49,867		Cost of goods sold	17,342		18,385		58,383		68,251

Costs associated with abnormal production										Costs associated with abnormal production	—		3,594		—		3,594
Gross Margin	Gross Margin	$	24,925	$	10,131	$	53,990	$	18,803	Gross Margin	$	19,872	$	4,525	$	73,862	$	23,329
Depreciation, depletion, and amortization incurred2	Depreciation, depletion, and amortization incurred2	$	6,085	$	6,460	$	13,033	$	13,637	Depreciation, depletion, and amortization incurred2	$	6,318	$	6,257	$	19,350	$	19,895

Potash sales volumes (in tons)	Potash sales volumes (in tons)	56		92		126		208		Potash sales volumes (in tons)	46		62		172		270
Potash production volumes (in tons)	Potash production volumes (in tons)	25		51		128		164		Potash production volumes (in tons)	36		37		164		201

Average potash net realized sales price per ton3	Average potash net realized sales price per ton3	$	738	$	319	$	713	$	300	Average potash net realized sales price per ton3	$	734	$	381	$	718	$	319

1 Sales include sales of byproducts which were ~~$4.9~~$6.2 million and ~~$4.8~~$5.1 million for the three months ended ~~June~~September 30, 2022, and 2021, respectively, and ~~$9.8~~$15.9 million and ~~$10.6~~$15.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022, and 2021, respectively.

2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.

3Average net realized per ton sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."

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Three Months Ended September 30, 2022, and 2021

Potash sales recorded in the potash segment increased $9.6 million, or 36%, in the third quarter of 2022, compared to the third quarter of 2021, as our average net realized sales price per ton increased 93% as global supply remained tight due to the uncertainty of potash supplied from Eastern Europe. Our potash sales volumes decreased in the third quarter of 2022, as compared to the third quarter of 2021, as distributors ended the 2022 spring application season with more inventory than in 2021, and remain reluctant to purchase tons that are not committed to end users for immediate application.

Our potash segment byproduct sales increased $1.1 million, or 21%, in the third quarter of 2022, compared to the third quarter of 2021. The increase in potash segment byproduct sales was driven by a $0.5 million increase in potash segment byproduct brine sales, a $0.3 million increase in potash segment byproduct salt sales, and a $0.2 million increase in potash segment byproduct water sales. Increased potash segment byproduct brine sales and potash segment byproduct water sales were due to increased oil and gas activities. Increased potash segment byproduct salt sales were due to increased sales in the industrial salt market.

Potash segment freight expense decreased 5% in the third quarter of 2022, compared to the third quarter of 2021, as a result of a 26% decrease in potash tons sold, partially offset by an inflationary increase in freight rates. Our potash freight expense is also impacted by the geographic distribution of our potash and byproduct sales and by the proportion of customers arranging for and paying their own freight costs.

Our potash segment cost of goods sold decreased 6% in the third quarter of 2022, compared to the same period in 2021. While we sold 26% fewer tons of potash in the third quarter of 2022, our weighted average carrying cost per ton was higher due to an increase in certain potash production costs, such as natural gas and electricity, caused by inflation.

During the three months ended September 30, 2021, we recorded abnormal production costs of $3.6 million. The Carlsbad, New Mexico area where our HB solar solution mining facility is located, experienced unusually wet, humid weather during the evaporation season. Because of the wet, humid weather, our evaporation and extraction rates were well below normal, resulting in fewer harvestable tons of potash from our HB solution ponds. We did not record any abnormal production costs during the three months ended September 30, 2022.

Our potash segment gross margin increased $15.3 million in the third quarter of 2022, compared to the same period in 2021, due to the factors discussed above.

Nine Months Ended September 30, 2022, and 2021

Potash segment sales during the first nine months of 2022 increased $34.7 million compared to the same period in 2021, as potash sales increased $34.4 million, and potash segment byproduct sales increased $0.2 million. Our potash sales increased due to a 125% increase in our average net realized sales price per ton, partially offset by a 36% decrease in tons of potash sold. As discussed above, our potash sales volumes decreased in the first nine months of 2022, as compared to the first nine months of 2021, as we had fewer potash tons to sell during the first nine months of 2022. Below average evaporation rates across our facilities in 2021, led to decreased potash production during the first nine months of 2022. Additionally, as discussed above, potash customers have been reluctant to build inventory during the summer months for the fall application season. Average net realized sales price per ton was higher due to strong overall commodity pricing, favorable farm economics, and tight global supplies of potash due to the uncertainty of potash supplied from Eastern Europe. Increases in potash segment by product salt sales and by product brine water sales were mostly offset by a decrease in magnesium chloride sales. Potash byproduct salt sales increased due to increased sales in the industrial salt market and potash byproduct brine sales increased due to increased oil and gas activities in 2022. As mentioned above, our byproduct magnesium chloride product is used primarily as a deicing agent during the winter months and as a dedusting agent during the spring and summer months. Our magnesium chloride sales declined as mild winter weather in various parts of the U.S. decreased demand for deicing products and wet weather in the early spring months in various parts of the U.S decreased demand for dedusting agents.

Potash segment freight expense decreased $2.3 million, or 17%, in the first nine months of 2022, compared to the first nine months of 2021, as a result of a 36% decrease in sales volume, partially offset by an inflationary increase in freight rates. Our freight expense is also impacted by the geographic distribution of our potash and byproduct sales and by the proportion of customers arranging for and paying their own freight costs.

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Our potash segment cost of goods sold decreased $9.9 million, or 14%, compared to the prior year. While our potash tons sold decreased 36%, our weighted average carrying cost per ton increased due to increased potash production costs caused by inflationary pressures and below average evaporation rates across our facilities in 2021, which led to an 18% decrease in potash tons produced during the first nine months of 2022. Most of our production costs are fixed and a decrease in tons produced increases our per ton weighted average cost.

As discussed above, during the nine months ended September 30, 2021, we recorded abnormal production costs of $3.6 million to due wet weather in the Carlsbad, New Mexico area during the 2021 evaporation season. We did not record any abnormal production costs during the nine months ended September 30, 2022.

Our potash segment gross margin increased $50.5 million in the first nine months of 2022, compared to the same period in 2021, due to the factors discussed above.

Additional Information Relating to Potash

The table below shows our potash sales mix for the three and nine months ended September 30, 2022, and 2021:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Agricultural	61%	69%	69%	80%
Industrial	11%	10%	8%	5%
Feed	28%	21%	23%	15%

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Trio® Segment


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per ton amounts)	2022		2021		2022		2021
Sales1	$	24,043	$	20,827	$	100,561	$	71,444
Less: Freight costs	4,135		4,038		16,055		16,515
Warehousing and handling costs	1,127		825		3,274		3,072
Cost of goods sold	12,278		10,528		45,538		43,329


Gross Margin	$	6,503	$	5,436	$	35,694	$	8,528
Depreciation, depletion, and amortization incurred2	$	1,072	$	1,321	$	3,122	$	4,204

Sales volumes (in tons)	39		46		169		191
Production volumes (in tons)	52		56		175		175

Average Trio® net realized sales price per ton3	$	488	$	336	$	482	$	271

1 Sales include sales of byproducts which were $0.9 million and $1.3 million for the three months ended September 30, 2022, and 2021, respectively, and $3.1 million and $3.1 million for the nine months ended September 30, 2022, and 2021, respectively.

2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.

3Average net realized per ton sales price per ton is a non-GAAP financial measure. More information about this measure, is below under the heading "Non-GAAP Financial Measure."

Three Months Ended ~~June 30, 2022, and 2021~~

Potash sales recorded in the potash segment increased $11.0 million, or 33%, in the second quarter of 2022, compared to the second quarter of 2021, as our average net realized sales price per ton increased 131%. Strong demand and tight near-term inventory levels have led to multiple price increases since the second half of 2021. We sold fewer tons of potash in the second quarter of 2022, compared to the second quarter of 2021, as we had less potash available to sell. Below average evaporation rates across our facilities in 2021 led to decreased potash production during the second half of 2021, and the first half of 2022. Additionally, potash customers have been reluctant to build potash inventory during the summer months for the fall application season. During the second quarter of 2021, a summer fill program was announced in May 2021, which incentivized potash customers to take delivery of product beginning late in the second quarter of 2021. A similar summer fill program was not offered by the major potash producers during the second quarter of 2022.

Our potash segment byproduct sales increased $0.1 million, or 3%, in the second quarter of 2022, compared to the second quarter of 2021. The increase in potash segment byproduct sales was driven by a $0.7 million increase in potash segment salt sales and a $0.3 million increase in potash segment brine sales, partially offset by a $0.7 million decrease in magnesium chloride sales, and a $0.2 million decrease in potash segment byproduct water sales. Potash segment byproduct salt sales increased due to an increase in sales to the industrial salt market. Our byproduct magnesium chloride product is used mainly as a dedusting agent during the spring and summer months. Our tons of magnesium chloride sold decreased as wet weather in April 2022 in various parts of the U.S reduced demand for dedusting agents. Water that is used in the production of potash and is then sold to customers is recorded as byproduct revenue in the potash segment, while water sold at Intrepid South is recorded in our oilfield solutions segment.

Potash segment freight expense decreased 11% in the second quarter of 2022, compared to the second quarter of 2021, as a result of a 39% decrease in potash tons sold. Our potash freight expense is impacted by the geographic distribution of our potash and byproduct sales and by the proportion of customers arranging for and paying their own freight costs.

Our potash segment cost of goods sold decreased 14% in the second quarter of 2022, compared to the same period in 2021. While we sold 39% fewer tons of potash in the second quarter of 2022, our weighted average carrying cost per ton was higher due to increased potash production costs caused by inflation and below average evaporation across our facilities in 2021, led to a 51% decrease in potash tons produced during the second quarter of 2022. Most of our potash production costs are fixed and a decrease in potash tons produced increases our per ton weighted average cost.

~~Our potash segment gross margin increased $14.8 million in the first quarter of 2022, compared to the same period in 2021, due to the factors discussed above.~~

~~Six Months Ended June 30, 2022, and 2021~~

Potash segment sales during the first half of 2022 increased $24.0 million compared to the same period in 2021, as potash sales increased $24.8 million, partially offset by a $0.8 million decrease in potash segment byproduct sales. Our potash

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sales increased due to a 138% increase in our average net realized sales price per ton, partially offset by a 39% decrease in tons of potash sold. As discussed above, our potash sales volumes decreased in the first half of 2022, as compared to the first half of 2021, as we had fewer potash tons to sell during the first half of 2022. Below average evaporation rates across our facilities in 2021, led to decreased potash production during the second half of 2021 and the first half of 2022. Additionally, as discussed above, potash customers have been reluctant to build inventory during the summer months for the fall application season. During the second quarter of 2021, a summer fill program was announced in May 2021, which incentivized customers to take delivery of product beginning late in the second quarter of 2021. A similar summer fill program was not offered by the major potash producers during the second quarter of 2022. Average net realized sales price per ton was higher due to price increases announced since the second half of 2021.

Potash segment freight expense decreased $2.1 million, or 22%, in the first half of 2022, compared to the first half of 2021, as a result of a 39% decrease in sales volume. Our freight expense is impacted by the geographic distribution of our potash and byproduct sales and by the proportion of customers arranging for and paying their own freight costs.

Our potash segment cost of goods sold decreased $8.8 million, or 18%, compared to the prior year. While our potash tons sold decreased 39%, our weighted average carrying cost per ton increased due to increased potash production costs caused by inflationary pressures and below average evaporation rates across our facilities in 2021, led to a 22% decrease in potash tons produced during the first half of 2022. Most of our production costs are fixed and a decrease in tons produced increases our per ton weighted average cost.

~~Our potash segment gross margin increased $35.2 million in the first six months of 2022, compared to the same period in 2021, due to the factors discussed above.~~

~~Additional Information Relating to Potash~~

~~The table below shows our potash sales mix for the three and six months ended June 30, 2022, and 2021:~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Agricultural 68% 81% 72% 83%
Industrial 9% 5% 7% 4%
Feed 23% 14% 21% 13%

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~~Trio~~® ~~Segment~~

Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per ton amounts) 2022 2021 2022 2021
Sales1
$ 35,467 $ 26,924 $ 76,519 $ 50,619
Less: Freight costs 5,611 6,037 11,920 12,477
         Warehousing and handling
         costs 995 1,072 2,147 2,248
         Cost of goods sold 15,809 16,653 33,261 32,801
Gross Margin $ 13,052 $ 3,162 $ 29,191 $ 3,093
Depreciation, depletion, and amortization incurred2
$ 1,042 $ 1,376 $ 2,050 $ 2,883
Sales volumes (in tons) 59 75 131 145
Production volumes (in tons) 58 63 123 119
Average Trio® net realized sales price per ton3
$ 493 $ 271 $ 476 $ 251

1 Sales include sales of byproducts which were $0.8 million and $0.6 million for the three months ended June 30, 2022, and 2021, respectively, and $2.2 million and $1.8 million for the six months ended June 30, 2022, and 2021, respectively.

2 ~~Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.~~

3~~Average net realized per ton sales price per ton is a non-GAAP financial measure. More information about this measure, is below under the heading "Non-GAAP Financial Measure."~~

~~Three Months Ended June~~September 30, 2022, and 2021

Trio® segment sales increased ~~32%~~15% during the ~~second~~third quarter of 2022, compared to the ~~second~~third quarter of 2021. Trio® sales increased ~~$8.3~~$3.7 million, ~~and~~partially offset by a decrease in our Trio® segment byproduct sales ~~increased $0.2~~of $0.4 million. Trio® sales increased primarily due to a ~~82%~~45% increase in average net realized sales price per ton, partially offset by a ~~21%~~15% decrease in Trio® tons sold. Our Trio® average net realized sales price per ton increased due to ~~several price increases announced since~~supportive commodity prices and the ~~second half~~tight global supply of ~~2021.~~potassium fertilizers caused by uncertainty of potassium fertilizers supplied from Eastern Europe. Domestic Trio® sales volumes decreased in the third quarter of 2022, compared to the third quarter of 2021, partially offset by increased international Trio® volumes. Similar to our potash customers, our domestic Trio® customers ~~worked~~have been reluctant to ~~end the spring season with minimal~~build inventory ~~on hand which slowed our sales towards the end of the second quarter.~~for upcoming application periods at current price levels. Our Trio® segment byproduct sales ~~increased $0.2 million~~decreased due to ~~an increase~~a decrease in Trio® segment byproduct water sales. Our Trio® segment byproduct water sales decreased as a higher percentage of our total barrels of water sold was from Intrepid South. Water sales from Intrepid South are recorded in our oilfield solutions segment while water sold that was used in the production of Trio® is recorded as byproduct water sales in the Trio® segment.

Trio® freight costs ~~decreased 7%~~increased 2% in the ~~first~~third quarter of 2022, compared to the ~~first~~third quarter of ~~2021, due a decrease of 21% in~~2021. While we sold 15% fewer Trio® tons ~~sold.~~in the third quarter of 2022, compared to the third quarter of 2021, we saw an inflationary increase in freight rates and we sold more tons of Trio® internationally. Our freight expense is impacted by the geographic distribution of our Trio® sales and by the proportion of customers arranging for and paying their own freight costs.

Our Trio® cost of goods sold ~~decreased 5%~~increased 17% in the ~~second~~third quarter of 2022, compared to the ~~second~~third quarter of 2021. While our tons of Trio® sold decreased ~~21%~~15%, our weighted average carrying cost per ton increased as we incurred increased labor costs as we operated an additional underground shift at our East facility, other production costs continued to increase due to continued inflation, royalty expense increased due to increased revenues and we produced fewer tons of Trio® ~~production costs caused by inflationary pressures and we~~. We produced 8%7% fewer tons of Trio® in the ~~second~~third quarter of 2022, compared to the ~~second~~third quarter of ~~2021.~~2021, as we mined lower grade ore. Most of our production costs are fixed and a decrease in tons produced increases our per ton weighted average cost.

Our Trio® segment gross margin increased to ~~$13.1~~$6.5 million in the ~~second~~third quarter of 2022, compared to gross margin of ~~$3.2~~$5.4 million in the ~~second~~third quarter of 2021, due mainly to the increase in average net realized sales price per ton and the other factors discussed above.

~~Six~~Nine Months Ended ~~June~~September 30, 2022, and 2021

Trio® segment sales increased ~~51%~~41% during the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of ~~2021.~~2021 as Trio® sales increased ~~$25.4~~$29.1 million, ~~and~~while our Trio® segment byproduct sales ~~increased $0.5 million.~~were flat. Our Trio® sales increased due to a ~~90%~~78% increase in our average net realized sales price per ton, partially offset by a ~~10%~~12% decrease in Trio® tons sold. Our Trio® average net realized sales price per ton increased due to ~~several price increases announced since~~supportive commodity prices and the ~~second half~~tight global supply of ~~2021.~~potassium fertilizers caused by uncertainty of potassium fertilizers supplied from Eastern Europe. Domestic Trio® sales volumes decreased, partially

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offset by increased international Trio® volumes. Similar to our potash customers, our domestic Trio® customers ~~worked~~have been reluctant to ~~end the spring season with minimal~~build inventory ~~on hand which slowed our sales towards the end of the second quarter. Our Trio~~® ~~segment byproduct sales increased due primarily to $0.4 million increase in Trio~~® ~~segment byproduct water sales.~~for upcoming application periods at current price levels.

Trio® freight costs decreased 4%3% in the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021, due to a ~~10%~~12% decrease in Trio® tons ~~sold.~~sold, partially offset by inflationary increase in freight rates and we sold more tons of Trio® internationally. Our freight expense is impacted by the geographic distribution of our Trio® sales and by the proportion of customers arranging for and paying their own freight costs.

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Our Trio® cost of goods sold increased 1%5% in the first ~~half~~nine months of 2022, compared to the first ~~half~~nine months of 2021. While our tons of Trio® sold decreased ~~10%~~12% our weighted average carrying cost per ton increased as we incurred increased labor costs as we operated an additional underground shift at our East facility, other production costs continued to increase due to continued inflation, and royalty expense increased due to increased ~~production costs caused by inflationary pressures.~~revenues..

Our Trio® segment generated gross margin increased to ~~$29.2~~$35.7 million in the first ~~half~~nine months of 2022, compared to gross margin of ~~$3.1~~$8.5 million in the first ~~half~~nine months of 2021, due mainly to the increase in average net realized sales price per ton and the other factors discussed above.

Additional Information Relating to Trio®

The table below shows the percentage of Trio® tons sold into the domestic and export markets during the three and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021.

United States Export
For the Three Months Ended June 30, 2022 90% 10%
For the Six Months Ended June 30, 2022 91% 9%
For the Three Months Ended June 30, 2021 94% 6%
For the Six Months Ended June 30, 2021 94% 6%


	United States	Export
For the Three Months Ended September 30, 2022	62%	38%
For the Nine Months Ended September 30, 2022	84%	16%

For the Three Months Ended September 30, 2021	90%	10%
For the Nine Months Ended September 30, 2021	93%	7%

Oilfield Solutions Segment


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2022		2021		2022		2021
Sales	Sales	$	7,512	$	3,331	$	14,512	$	7,584	Sales	$	8,423	$	6,708	$	22,936	$	14,293

Cost of goods sold	Cost of goods sold	3,678		2,425		8,706		6,173		Cost of goods sold	8,028		6,061		16,735		12,235

Gross Margin	Gross Margin	$	3,834	$	906	$	5,806	$	1,411	Gross Margin	$	395	$	647	$	6,201	$	2,058
Depreciation, depletion, and amortization incurred	Depreciation, depletion, and amortization incurred	$	803	$	700	$	1,590	$	1,388	Depreciation, depletion, and amortization incurred	$	867	$	818	$	2,458	$	2,206

Three Months Ended ~~June~~September 30, 2022, and 2021

Our oilfield solutions segment sales increased ~~$4.2~~$1.7 million in the ~~second~~third quarter of 2022, compared to the same period in 2021, due to a ~~$1.9~~$1.0 million increase in water sales, a ~~$1.4~~$0.4 million increase in surface use, rights-of-way and easement revenues, and a ~~$0.4~~$0.5 million increase in brine water sales, a $0.3 million increase in caliche sales, and a $0.2 million increase in produced water royalties. The increase in sales of our oilfield solutions products was due to the increased oil and gas activities as oil prices were higher in the second quarter of 2022, compared to the same period in 2021.

Our cost of goods sold increased $1.3 million, or 52%, for the second quarter of 2022, compared to the same period in 2021, due to increased contract labor expenses related to the development of a full-cycle water management operation, increased royalty expense due to increased sales and increased fuel and electrical expenses due to inflationary pressures.

~~Gross margin for the second quarter of 2022, increased $2.9 million compared to the second quarter of 2021, due to the factors discussed above.~~

~~Six Months Ended June 30, 2022, and 2021~~

Our oilfield solutions segment sales increased $6.9 million, or 91%, during the first half of 2022, compared to the same period in 2021, due to a $2.8 million increase in water sales, a $2.3 million increase in surface use, rights-of-way and easement revenues, a $1.0 million increase in brine water sales, a $0.5 million increase in produced water royalty revenues and a $0.4 million increase in caliche sales. The increase in sales of our oilfield solutions products was due to the increased oil and gas activities as oil prices were generally higher in the third quarter of 2022, compared to the same period in 2021.

Our cost of goods sold increased $2.0 million, or 32%, for the third quarter of 2022, compared to the same period in 2021, as we purchased more third-party water to meet customer water demand, increased royalty expense due to increased water revenues and increased fuel and electrical costs caused by inflationary pressures.

Gross margin for the third quarter of 2022, decreased $0.3 million compared to the third quarter of 2021, due to the factors discussed above.

Nine Months Ended September 30, 2022, and 2021

Our oilfield solutions segment sales increased $8.6 million, or 60%, during the first nine months of 2022, compared to the same period in 2021, due to a $3.8 million increase in water sales, a $2.7 million increase in surface use, rights-of-way and easement revenues, a $1.4 million increase in brine water sales, a $0.6 million increase in produced water royalty revenues and

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a $0.2 million increase in surface minerals sales. The increase in sales of our oilfield solutions products was due to the increased oil and gas activities as oil prices were generally higher in the first ~~half~~nine months of 2022, compared to the same period in 2021.

Our cost of goods sold increased ~~$2.5~~$4.5 million, or ~~41%~~37%, during the first ~~half~~nine months of 2022, compared to the same period in 2021. Our cost of goods sold increased during the first nine months of 2022, compared to the first nine months of 2021, due to purchasing more third-party water to meet customer demand, increased water transfer costs as we sold more water, increased contract labor ~~and rental expenses~~ related to the development of a full-cycle water management operation, increased royalty expense ~~due to~~as water revenues increased ~~sales~~ and increased fuel and electrical expenses due to ~~inflationary pressures.~~continued inflation.

Gross margin for the first ~~half~~nine months of 2022, increased ~~$4.4~~$4.1 million compared to the same period in the prior year, due to the factors discussed above.

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Specific Factors Affecting Our Results

Sales

Our gross sales are derived from the sales of potash, Trio®, water, salt, magnesium chloride, brine water and various other products and services offered to oil and gas producers. Total sales are determined by the quantities of product we sell and the sales prices we realize. For potash, Trio® and salt, we quote prices to customers both on a delivered basis and on the basis of pick-up at our plants and warehouses. We incur freight costs on most of our potash, Trio® and salt sales, but some customers arrange and pay for their own freight directly. When we arrange and pay for freight, our quotes and billings are based on expected freight costs to the points of delivery. When we calculate our potash and Trio® average net realized sales price per ton, we deduct any freight costs included in sales before dividing by the number of tons sold. We believe the deduction of freight costs provides a more representative measure of our performance in the market due to variations caused by ongoing changes in the proportion of customers paying for their own freight, the geographic distribution of our products, and freight rates. Freight rates have been increasing, and if we are unable to pass the increased freight costs on to the customer, our average net realized sales price per ton is negatively affected. We manage our sales and marketing operations centrally and we work to achieve the highest average net realized sales price per ton we can by evaluating the product needs of our customers and associated logistics and then determining which of our production facilities can best satisfy these needs.

The volume of product we sell is determined by demand for our products and by our production capabilities. We operate our potash and Trio® facilities at production levels that approximate expected demand and take into account current inventory levels and expect to continue to do so for the foreseeable future.

Our water sales and other products and services offered through our oilfield solutions segment are driven by demand from oil and gas exploration companies drilling in the Permian Basin. As such, demand for our water is generally stronger during a cyclical expansion of oil and gas drilling. Likewise, a cyclical contraction of oil and gas drilling may decrease demand for our water and the other products and services offered through our oilfield solutions segment. Restrictions in place during the first ~~half~~nine months of 2021 to help contain the COVID-19 pandemic caused a decrease in the demand for oil, resulting in lower prices and decreased oil and gas activities. As most of those restrictions were lifted before the start of 2022, the demand for oil has recovered and prices have rebounded, which in turn has led to increased drilling activities. Further, Russia's invasion of Ukraine and the related sanctions imposed by several countries against Russia has ~~the potential of reducing~~reduced the global supply of oil in ~~2022.~~2022, which is expected to continue for the foreseeable future.

Cost of Goods Sold

Our cost of goods sold reflects the costs to produce our products. Many of our production costs are largely fixed and, consequently, our cost of sales per ton on a facility-by-facility basis tends to move inversely with the number of tons we produce, within the context of normal production levels. Our principal production costs include labor and employee benefits, maintenance materials, contract labor, and materials for operating or maintenance projects, natural gas, electricity, operating supplies, chemicals, depreciation and depletion, royalties, and leasing costs. Inflationary pressures during the first ~~half~~nine months of 2022 have led to increases in our production costs. Certain elements of our cost structure associated with contract labor, consumable operating supplies, reagents, and royalties are variable, but these variable elements make up a smaller component of our total cost structure. Our costs often vary from period to period based on the fluctuation of inventory, sales, and production levels at our facilities.

Our production costs per ton are also impacted when our production levels change, due to factors such as changes in the grade of ore delivered to the plant, levels of mine development, plant operating performance, and downtime. Because all of our potash is produced from solution mining, weather has a significant impact on our potash production. We expect that our labor and contract labor costs in Carlsbad, New Mexico, will continue to be influenced most directly by the demand for labor in the local region where we compete for labor with another fertilizer company, companies in the oil and gas industry, and a nuclear waste processing and storage facility.

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We pay royalties to federal, state, and private lessors under our mineral leases. These payments typically equal a percentage of sales (less freight) of minerals extracted and sold under the applicable lease. In some cases, federal royalties for potash are paid on a sliding scale that vary with the grade of ore extracted. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, our average royalty rate was ~~4.8%.~~5.0%, and 4.9%, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2021, our average royalty rate was ~~4.6% and 4.7%, respectively.~~4.8%.

Income Taxes

We are subject to federal and state income taxes on our taxable income. Our effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2022, was ~~23.8%~~24.5%. Our effective tax rate differed from the statutory rate during this period primarily from the estimated permanent difference between book and tax income for 2022 for the percentage depletion deduction as well as the effect of state income tax law changes enacted during the first ~~half~~nine months of 2022. Our effective tax rate for the ~~six~~nine months ended ~~June~~September 30, 2021, was

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zero percent which differed from the statutory rate primarily due to the valuation allowance that was established to offset our deferred tax assets.

Our federal and state income tax returns are subject to examination by federal and state tax authorities.

For the ~~six~~nine months ended ~~June~~September 30, 2022, we incurred approximately ~~$16.9~~$21.5 million of deferred income tax expense and ~~$0.3~~$0.6 million of current income tax expense. Our current income tax expense is less than the total tax expense of ~~$17.2~~$22.1 million due to the utilization of net operating losses. For the ~~six~~nine months ended ~~June~~September 30, 2021 we incurred no income tax expense.

We evaluate our deferred tax assets and liabilities each reporting period using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the states in which we conduct business. Changing business conditions for normal business transactions and operations, as well as changes to state tax rates and apportionment laws, potentially alter our apportionment of income among the states for income tax purposes. These changes in apportionment laws result in changes in the calculation of our current and deferred income taxes, including the valuation of our deferred tax assets and liabilities. The effects of any such changes are recorded in the period of the adjustment. These adjustments can increase or decrease the net deferred tax asset on our condensed consolidated balance sheet, and thus increase or decrease the deferred tax benefit or deferred income tax expense on the income statement.

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Capital Investments

During the ~~second~~third quarter of 2022, and the first ~~half~~nine months of 2022, cash paid for property, plant, equipment, mineral properties, intangible and other assets was ~~$16.0~~$14.3 million and ~~$22.8~~$37.1 million, respectively.

We ~~now~~ expect to make capital investments in 2022 of $65 million to $75 million. We anticipate spending approximately $35 million on sustaining capital, ~~which is towards the top end of our previous range,~~ as we continue to pull projects forward in response to supply chain and inflationary pressures. Given the significant amount of work occurring in the fourth quarter of 2022, we expect cash used for capital investments will be near the lower end of the total accrued capital investment range shown above. Planned opportunity capital includes an additional cavern at our Moab facility, the beginning of an improved pipeline system for our HB facility, and additional brackish and deep-brine wells at our Wendover facility. We may adjust our investment plans as our expectations for 2022 change. We anticipate the remainder of our 2022 operating plans and capital programs will be funded out of operating cash flows and existing cash. We may also use our revolving credit facility, to the extent available, to fund capital investments.

Liquidity and Capital Resources

As of ~~June~~September 30, 2022, we had cash and cash equivalents of ~~$81.9~~$49.2 million, compared with cash on-hand of $36.5 million at December 31, 2021. The increase in our cash balance during the first ~~half~~nine months of 2022 was driven mainly by increases in the average net realized sales price per ton for both Potash and Trio®.

Our operations have primarily been funded from cash on hand, cash generated by operations, borrowings under our revolving credit facility, and proceeds from debt and equity offerings. We continue to monitor our future sources and uses of cash and anticipate that we will adjust our capital allocation strategies when, and if, determined by our Board of Directors. We may, at any time we deem conditions favorable, attempt to improve our liquidity position by accessing debt or equity markets in accordance with our existing debt agreements. We also may raise capital in the future through the issuance of additional equity or debt securities, subject to prevailing market conditions. However, there is no assurance that we will be able to successfully raise additional capital on acceptable terms or at all. With our current cash on hand, the remaining availability under our credit facility, and the expected cash generated from operations, we believe we have sufficient liquidity to meet our obligations for the next twelve months.

The following summarizes our cash flow activity for the three months ended ~~June~~September 30, 2022, and 2021 (in thousands):


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Cash flows provided by operating activities	Cash flows provided by operating activities	$	83,229	$	51,436	Cash flows provided by operating activities	$	69,112	$	59,423
Cash flows used in investing activities	Cash flows used in investing activities	$	(33,627)	$	(584)	Cash flows used in investing activities	$	(48,414)	$	(6,395)
Cash flows used in financing activities	Cash flows used in financing activities	$	(4,252)	$	(17,092)	Cash flows used in financing activities	$	(8,066)	$	(46,881)

Operating Activities

Net cash provided by operating activities through ~~June~~September 30, 2022, was ~~$83.2~~$69.1 million, an increase of ~~$31.8~~$9.7 million compared with the first ~~half~~nine months of 2021, due to increased potash and Trio® ~~sales.~~sales driven by the increases in our average net realized sales price per ton.

Investing Activities

Net cash used in investing activities increased by ~~$33.0~~$42.0 million in the first ~~half~~nine months of 2022, compared with the same period in 2021 due to a ~~$16.1~~$24.7 million increase in capital investments and a ~~$10.9~~net $11.4 million increase in investment purchases. During the first ~~half~~nine months of 2022, we invested ~~$8.4~~$8.9 million of our excess cash on-hand in investment grade, highly-liquid, shorter-term debt instruments. We also invested an additional $2.5 million in a ~~pool of working interests in~~limited partnership that owns oil and gas ~~wells managed by a third party.~~assets in the Permian Basin.

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Financing Activities

RevolvingCredit Facility—~~We maintain~~In August 2022, we and certain of our subsidiaries entered into the Second Amended and Restated Credit Agreement with a syndicate of lenders with the Bank of Montreal, as administrative agent, which provides for a revolving credit facility. The agreement amended our existing revolving credit facility ~~with Bank of Montreal. As of June 30, 2022,~~to, among other things, increase the amount available under the facility from $75 million to $150 million, extend the maturity date to August 4, 2027, and transition from LIBOR to SOFR (Secured Overnight Financing Rate) as a reference rate for borrowings under the ~~revolving~~credit agreement. Borrowings under the amended credit facility bear interest at ~~LIBOR (London Interbank Offered Rate)~~SOFR plus an applicable margin of ~~1.25%~~1.50% to ~~2.00%~~2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. ~~We have granted to Bank of Montreal a first lien on~~Borrowings under the revolving credit facility are secured by substantially all of our current and non-current ~~assets. The~~assets, and the obligations under the ~~revolving~~ credit facility are unconditionally guaranteed by several of our subsidiaries.

We occasionally borrow and repay amounts under the revolving credit facility for near-term working capital needs or other purposes and may do so in the future. During the ~~six~~three and nine months ended ~~June~~September 30, 2022, we made no borrowings and we made no repayments under the revolving credit facility. During the three and nine months ended September 30, 2021, we made no borrowings and we made $29.8 million of repayments under the revolving credit facility. As of ~~June~~September 30, 2022, and December 31, 2021, we had no borrowings outstanding and $1 million in outstanding letters of credit under this facility.

As of ~~June~~September 30, 2022, we were in compliance with all applicable covenants under the revolving credit facility.

As of ~~July~~October 31, 2022, we had approximately ~~$85~~$46 million in cash and cash equivalents.

Share Repurchase Program

—In February 2022, our Board of Directors approved a $35 million share repurchase program. Under the share repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of share repurchases, if any, will be at our sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. We may suspend or discontinue the share repurchase program at any time. ~~As of June~~For the three and nine months ended September 30, 2022, we ~~have not~~ repurchased ~~any~~70,733 shares at a weighted average price per share of $40.66 under the share repurchase program.

Critical Accounting Policies and Estimates

Our Annual Report on Form 10-K for the year ended December 31, 2021, describes the critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. We have not made any significant changes to our critical accounting policies since December 31, 2021.

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Non-GAAP Financial Measure

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, from time to time we use "average net realized sales price per ton," which is a non-GAAP financial measure. This non-GAAP financial measure should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, because the presentation of this non-GAAP financial measure varies among companies, our presentation of this non-GAAP financial measure may not be comparable to similarly titled measures used by other companies.

We believe average net realized sales price per ton, when used in conjunction with GAAP financial measures, provides useful information to investors for analysis of our business and operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to the key metric we use in our financial and operational decision making. We use this non-GAAP financial measure as one of our tools in comparing period-over-period performance on a consistent basis and when planning, forecasting, and analyzing future periods. We believe this non-GAAP financial measure is used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the potash mining industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions.

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Average Net Realized Sales Price per Ton

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

Below is a reconciliation of average net realized sales price per ton to segment sales, the most directly comparable GAAP financial measure for the three months and ~~six~~nine months ended ~~June~~September 30, 2022, and 2021:


		Three Months Ended June 30,															Three Months Ended September 30,
		2022						2021									2022						2021
(in thousands, except per ton amounts)	(in thousands, except per ton amounts)	Potash				Trio®		Potash				Trio®		(in thousands, except per ton amounts)			Potash				Trio®		Potash		Trio®
Total Segment Sales	Total Segment Sales	$	48,827			$	35,467	$	37,693			$	26,924	Total Segment Sales			$	42,354			$	24,043	$	31,673	$	20,827
Less: Segment byproduct sales	Less: Segment byproduct sales	4,942				780		4,812				584		Less: Segment byproduct sales			6,177				885		5,100		1,332
Freight costs	Freight costs	2,563				5,609		3,486				6,037		Freight costs			2,430				4,135		2,879		4,038
Subtotal	Subtotal	$	41,322			$	29,078	$	29,395			$	20,303	Subtotal			$	33,747			$	19,023	$	23,694	$	15,457

Divided by:	Divided by:													Divided by:
Tons sold	Tons sold	56				59		92				75		Tons sold			46				39		62		46
Average net realized sales price per ton	Average net realized sales price per ton	$	738			$	493	$	319			$	271	Average net realized sales price per ton			$	734			$	488	$	381	$	336

		Six Months Ended June 30,															Nine Months Ended September 30,
		2022						2021									2022						2021
(in thousands, except per ton amounts)	(in thousands, except per ton amounts)	Potash				Trio®		Potash				Trio®		(in thousands, except per ton amounts)			Potash				Trio®		Potash		Trio®

Total Segment Sales	Total Segment Sales			$	105,269					$	76,519				$	81,270			$	50,619		Total Segment Sales	$	147,622	$	100,561	$	112,944	$	71,444
Less: Segment byproduct sales	Less: Segment byproduct sales	9,762				2,216		10,595				1,764		Less: Segment byproduct sales			15,938				3,100		15,696		3,096
Freight costs	Freight costs	5,687				11,919		8,295				12,477		Freight costs			8,117				16,054		11,174		16,515
Subtotal	Subtotal	$	89,820			$	62,384	$	62,380			$	36,378	Subtotal			$	123,567			$	81,407	$	86,074	$	51,833

Divided by:	Divided by:													Divided by:
Tons sold	Tons sold	126				131		208				145		Tons sold			172				169		270		191
Average net realized sales price per ton	Average net realized sales price per ton	$	713			$	476	$	300			$	251	Average net realized sales price per ton			$	718			$	482	$	319	$	271

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Part II, Item 7A., "Quantitative and Qualitative Disclosure About Market Risk," of our Annual Report on Form 10-K for the year ended December 31, 2021, describes our exposure to market risk. There have been no significant changes to our market risk exposure since December 31, 2021.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act." Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures are also designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures as of ~~June~~September 30, 2022. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 2022, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~June~~September 30, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Intrepid have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

For information regarding litigation, other disputes and regulatory proceedings see Part I - Item1. Financial Statements, Note 14 - Commitments and Contingencies.

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ITEM 1A.RISK FACTORS

Our future performance is subject to a variety of risks and uncertainties that could materially and adversely affect our business, financial condition, results of operations, and the trading price of our common stock. These risks and uncertainties are described in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to these risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2021.

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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities						Issuer Purchases of Equity Securities
Period	Period	(a) Total Number of Shares Purchased1	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs	Period	(a) Total Number of Shares Purchased1	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs
April 1, 2022 through April 30, 2022		29,416	114.14		—	N/A
May 1, 2022 through May 31, 2022		—	$	—	—	N/A
June 1, 2022 through June 30, 2022		7,260	$	60.33	—	N/A
July 1, 2022 through July 31, 2022							July 1, 2022 through July 31, 2022	—	—		—	$	35,000,000
August 1, 2022 through August 31, 2022							August 1, 2022 through August 31, 2022	5,950	$	43.41	5,950	34,741,421
September 1, 2022 through September 30, 2022							September 1, 2022 through September 30, 2022	64,783	$	40.40	64,783	32,124,191
Total	Total	36,676	$	103.49	—	N/A	Total	70,733	$	40.66	70,733	$	32,124,191

1Represents shares of common stock ~~withheld~~purchased under the $35 million share repurchase program approved by ~~us as payment~~the Board of ~~withholding taxes due upon~~Directors in February 2022. Under the ~~vesting~~share repurchase program, we may repurchase shares from time to time in the open market or in privately negotiated transactions. The timing, volume and nature of ~~restricted stock held by~~share repurchases, if any, will be at our ~~employees.~~sole discretion and will be dependent on market conditions, liquidity, applicable securities laws, and other factors. We may suspend or discontinue the share repurchase program at any time.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

We are committed to providing a safe and healthy work environment. The objectives of our safety programs are to eliminate workplace accidents and incidents, preserve employee health, and comply with all safety- and health-based regulations. We seek to achieve these objectives by training employees in safe work practices; establishing, following, and improving safety standards; involving employees in safety processes; openly communicating with employees about safety matters; and recording, reporting, and investigating accidents, incidents, and losses to avoid recurrence. As part of our ongoing safety programs, we collaborate with the Mine Safety and Health Administration (“MSHA”) and the New Mexico Bureau of Mine Safety to identify and implement accident prevention techniques and practices.

Our East, West, and North facilities in New Mexico are subject to regulation by MSHA under the Federal Mine Safety and Health Act of 1977 and the New Mexico Bureau of Mine Safety. MSHA inspects these facilities on a regular basis and issues various citations and orders when it believes a violation has occurred under federal law. Exhibit 95.1 to this Quarterly Report on Form 10-Q provides the information concerning mine safety violations and other regulatory matters required by SEC rules. Our Utah and HB facilities are subject to regulation by the Occupational Health and Safety Administration and, therefore, are not required to be included in the information provided in Exhibit 95.1.

ITEM 5.OTHER INFORMATION

None.

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ITEM 6.EXHIBITS


Exhibit No.						Description


10.1						~~Intrepid Potash, Inc.~~Second Amendment to Amended and Restated ~~Equity Incentive Plan~~Credit Agreement, dated August 4, 2022, by and among Intrepid Potash, Inc., the subsidiaries party thereto, the lenders party thereto, and Bank of Montreal, as administrative agent (incorporated by reference to Exhibit 10.1 of ~~our current~~the Company’s Current Report on ~~From~~Form 8-K, filed on ~~May 23,~~August 9, 2022).†
31.1						Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*

31.2						Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*

32.1						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

95.1						Mine Safety Disclosure Exhibit.*

101.INS						Inline XBRL Instance Document (Note that the instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document).*

101.SCH						Inline XBRL Taxonomy Extension Schema Document.*

101.CAL						Inline XBRL Extension Calculation Linkbase Document.*

101.LAB						Inline XBRL Extension Label Linkbase Document.*

101.PRE						Inline XBRL Extension Presentation Linkbase Document.*

101.DEF						Inline XBRL Extension Definition Linkbase Document.*

104						Cover page Interactive Data File (formatted as Inline XBRL and contained in exhibit 101)

* Filed herewith.

** Furnished herewith.

~~† Management contract or compensatory plan or arrangement~~

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						INTREPID POTASH, INC. (Registrant)

Dated: ~~August 5,~~November 3, 2022						/s/ Robert P. Jornayvaz III
						Robert P. Jornayvaz III - Executive Chairman of the Board and Chief Executive Officer (Principal Executive Officer)




Dated: ~~August 5,~~November 3, 2022						/s/ Matthew D. Preston
						Matthew D. Preston - Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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	Three Months Ended June 30, 2022
Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	$	43,885	$	—	$	—	$	(66)	$	43,819
Trio®	—		34,687		—		—		34,687
Water	363		724		3,692		—		4,779
Salt	2,658		56		—		—		2,714
Magnesium Chloride	1,199		—		—		—		1,199
Brine Water	722		—		648		—		1,370
Other	—		—		3,172		—		3,172
Total Revenue	$	48,827	$	35,467	$	7,512	$	(66)	$	91,740

	Six Months Ended June 30, 2022
Product	Potash Segment		Trio® Segment		Oilfield Solutions Segment		Intersegment Eliminations		Total
Potash	$	95,507	$	—	$	—	$	(161)	$	95,346
Trio®	—		74,303		—		—		74,303
Water	1,137		1,926		7,880		—		10,943
Salt	5,292		290		—		—		5,582
Magnesium Chloride	2,014		—		—		—		2,014
Brine Water	1,319		—		1,387		—		2,706
Other	—		—		5,245		—		5,245
Total Revenue	$	105,269	$	76,519	$	14,512	$	(161)	$	196,139


	United States	Export
For the Three Months Ended June 30, 2022	90%	10%
For the Six Months Ended June 30, 2022	91%	9%

For the Three Months Ended June 30, 2021	94%	6%
For the Six Months Ended June 30, 2021	94%	6%