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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
March 31, 2023
or
☐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
ipilogoa04.jpg
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, Colorado80202
(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 classTrading symbolName of each exchange on which registered
Common Stock, par value $0.001 per shareIPINew 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☐No☒

As of April 30, 2023, the registrant had outstanding 13,158,552 shares of common stock, par value $0.001 per share.

INTREPID POTASH, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION    
ITEM 1. Condensed Consolidated Financial Statements (Unaudited)



i
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)
March 31,December 31,
20232022
ASSETS
Cash and cash equivalents$10,451 $18,514 
Short-term investments4,960 5,959 
Accounts receivable:
Trade, net39,211 26,737 
Other receivables, net854 790 
Inventory, net107,174 114,816 
Prepaid expenses and other current assets4,432 4,863 
Total current assets167,082 171,679 
Property, plant, equipment, and mineral properties, net387,851 375,630 
Water rights19,184 19,184 
Long-term parts inventory, net24,820 24,823 
Long-term investments10,824 9,841 
Other assets, net7,138 7,294 
Non-current deferred tax asset, net184,091 185,752 
Total Assets$800,990 $794,203 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$14,858 $18,645 
Accrued liabilities14,368 16,212 
Accrued employee compensation and benefits6,181 6,975 
Other current liabilities8,843 7,044 
Total current liabilities44,250 48,876 
Advances on credit facility5,000 — 
Asset retirement obligation, net of current portion27,099 26,564 
Operating lease liabilities1,814 2,206 
Finance lease liabilities1,219 — 
Other non-current liabilities1,315 1,479 
Total Liabilities80,697 79,125 
Commitments and Contingencies
Common stock, 0.001 par value; 40,000,000 shares authorized;
12,759,990 and 12,687,822 shares outstanding
at March 31, 2023, and December 31, 2022, respectively13 13 
Additional paid-in capital661,323 660,614 
Retained earnings 80,969 76,463 
Less treasury stock, at cost(22,012)(22,012)
Total Stockholders' Equity720,293 715,078 
Total Liabilities and Stockholders' Equity$800,990 $794,203 
See accompanying notes to these condensed consolidated financial statements.
1
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
March 31,
20232022
Sales$86,920 $104,399 
Less:
Freight costs11,590 10,237 
Warehousing and handling costs2,733 2,476 
Cost of goods sold56,245 44,510 
Gross Margin 16,352 47,176 
Selling and administrative8,858 6,789 
Accretion of asset retirement obligation535 490 
Loss on sale of assets200 100 
Other operating expense (income) 1,385 (267)
Operating Income5,374 40,064 
Other Income (Expense)
Equity in earnings of unconsolidated entities821 — 
Interest expense, net— (33)
Interest income85 — 
Other income13 530 
Income Before Income Taxes6,293 40,561 
Income Tax Expense(1,787)(9,139)
Net Income$4,506 $31,422 
Weighted Average Shares Outstanding:
Basic12,694 13,160 
Diluted12,875 13,595 
Earnings Per Share:
Basic$0.35 $2.39 
Diluted$0.35 $2.31 
See accompanying notes to these condensed consolidated financial statements.
2
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
Three-Month Period Ended March 31, 2023
Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 202212,687,822 $13 $(22,012)$660,614 $76,463 $715,078 
Net income— — — — 4,506 4,506 
Stock-based compensation— — — 1,746 — 1,746 
Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting72,168 — — (1,037)— (1,037)
Balance, March 31, 202312,759,990 $13 $(22,012)$661,323 $80,969 $720,293 
Three-Month Period Ended March 31, 2022
Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsTotal Stockholders' Equity
SharesAmount
Balance, December 31, 202113,149,315 $13 $— $659,147 $4,243 $663,403 
Net income— — — — 31,422 31,422 
Stock-based compensation— — — 1,167 — 1,167 
Exercise of stock options8,727 — — 90 — 90 
Vesting of restricted common stock, net of common stock used to fund employee income tax withholding due upon vesting60,833 — — (2,814)— (2,814)
Balance, March 31, 202213,218,875 $13 $— $657,590 $35,665 $693,268 
See accompanying notes to these condensed consolidated financial statements.
3
INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended March 31,
20232022
Cash Flows from Operating Activities:
Net income $4,506 $31,422 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization9,292 8,898 
Accretion of asset retirement obligation535 490 
Amortization of deferred financing costs75 60 
Amortization of intangible assets80 80 
Stock-based compensation1,746 1,167 
Loss on disposal of assets200 100 
Equity in earnings of unconsolidated entities(821)— 
Distribution of earnings from unconsolidated entities320 — 
Changes in operating assets and liabilities:
Trade accounts receivable, net(12,474)(16,199)
Other receivables, net(92)(384)
Inventory, net7,645 847 
Prepaid expenses and other current assets250 (76)
Deferred tax assets, net1,661 9,000 
Accounts payable, accrued liabilities, and accrued employee
     compensation and benefits		(5,305)(862)
Operating lease liabilities(401)(795)
Other liabilities1,232 362 
Net cash provided by operating activities8,449 34,110 
Cash Flows from Investing Activities:
Additions to property, plant, equipment, mineral properties and other assets(21,039)(6,795)
Purchase of investments(956)(903)
Proceeds from sale of assets65 24 
Proceeds from redemptions/maturities of investments1,500 — 
Net cash used in investing activities(20,430)(7,674)
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INTREPID POTASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended March 31,
20232022
Cash Flows from Financing Activities:
Proceeds from short-term borrowings on credit facility5,000 — 
Payments of financing lease(43)— 
Employee tax withholding paid for restricted stock upon vesting(1,037)(2,814)
Proceeds from exercise of stock options— 90 
Net cash provided by (used in) financing activities3,920 (2,724)
Net Change in Cash, Cash Equivalents and Restricted Cash(8,061)23,712 
Cash, Cash Equivalents and Restricted Cash, beginning of period19,084 37,146 
Cash, Cash Equivalents and Restricted Cash, end of period$11,023 $60,858 
Supplemental disclosure of cash flow information
Net cash paid during the period for:
Interest$59 $22 
Income taxes$9 $13 
Amounts included in the measurement of operating lease liabilities$460 $542 
Accrued purchases for property, plant, equipment, and mineral properties$7,410 $1,505 
Right-of-use assets exchanged for operating lease liabilities$— $546 
Right-of-use assets exchanged for financing lease liabilities$1,677 $— 

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 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 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. See Note 14—Commitments and Contingencies below for further information regarding our water rights.
We also operate certain land, water rights, state grazing leases for cattle, and other related assets in southeast New Mexico. 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.
We have three 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, 2022.
Pronouncements Issued But Not Yet Adopted—We believe that all recently issued accounting pronouncements from the FASB either do not apply to us or will not have a material impact on our Condensed Consolidated Financial Statements.
Reclassifications of Prior Period Presentation —Certain prior period amounts have been reclassified in order to conform to the current period presentation. These reclassifications had no effect on the reported results of operations.

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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
March 31,
20232022
Net income $4,506 $31,422 
Basic weighted-average common shares outstanding12,694 13,160 
Add: Dilutive effect of restricted stock125 320 
Add: Dilutive effect of stock options56 115 
Diluted weighted-average common shares outstanding12,875 13,595 
Basic$0.35 $2.39 
Diluted$0.35 $2.31 

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
March 31,
20232022
Anti-dilutive effect of restricted stock187 125 
Anti-dilutive effect of stock options outstanding156 — 
    
Note 4— CASH, CASH EQUIVALENTS AND RESTRICTED CASH
    We consider financial instruments with original maturities of three months or 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 March 31, 2023, and 2022 (in thousands):
March 31, 2023March 31, 2022
Cash and cash equivalents$10,451 $60,139 
Restricted cash included in other current assets25 175 
Restricted cash included in other long-term assets547 544 
Total cash, cash equivalents, and restricted cash as shown in the statement of cash flows$11,023 $60,858 
    
Restricted cash included in other current and long-term assets on the condensed consolidated balance sheets represents amounts for which 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 March 31, 2023, and December 31, 2022 (in thousands):
March 31, 2023December 31, 2022
Finished goods product inventory$71,826 $74,777 
In-process inventory18,984 24,767 
Total product inventory90,810 99,544 
Current parts inventory, net16,364 15,272 
Total current inventory, net107,174 114,816 
Long-term parts inventory, net24,820 24,823 
Total inventory, net$131,994 $139,639 

Parts inventory is shown net of estimated allowances for obsolescence of $1.3 million as of March 31, 2023, and December 31, 2022.

Note 6 — PROPERTY, PLANT, EQUIPMENT, AND MINERAL PROPERTIES
    Property, plant, equipment, and mineral properties were comprised of the following (in thousands):
March 31, 2023December 31, 2022
Land$24,136 $24,136 
Ponds and land improvements74,138 73,501 
Mineral properties and development costs146,335 146,333 
Buildings and plant89,478 89,014 
Machinery and equipment292,986 288,345 
Vehicles7,709 7,399 
Office equipment and improvements10,625 10,436 
Operating lease ROU assets5,694 5,908 
Breeding stock322 329 
Construction in progress61,938 47,188 
Total property, plant, equipment, and mineral properties, gross$713,361 $692,589 
Less: accumulated depreciation, depletion, and amortization(325,510)(316,959)
Total property, plant, equipment, and mineral properties, net$387,851 $375,630 

We incurred the following expenses for depreciation, depletion, and amortization, including expenses capitalized into inventory, for the following periods (in thousands):
Three Months Ended March 31,
20232022
Depreciation$7,727 $7,188 
Depletion1,177 1,144 
Amortization of right of use assets388 566 
Total incurred$9,292 $8,898 
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Note 7 — DEBT
    Revolving Credit Facility—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 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 Secured Overnight Financing Rate ("SOFR") as a reference rate for borrowings under the credit agreement. Borrowings under the amended credit facility bear interest at SOFR plus an applicable margin of 1.50% to 2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. Borrowings under the revolving credit facility are secured by substantially all of our current and non-current assets, and the obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.
    We occasionally borrow and repay amounts under the revolving credit facility for near-term working capital needs or other purposes and may do so in the future. During the three months ended March 31, 2023, we made $5.0 million in borrowings, and we made no repayments under the revolving credit facility. During the three months ended March 31, 2022, we made no borrowings, and we made no repayments under the revolving credit facility. As of March 31, 2023, we had $5.0 million in borrowings outstanding and no outstanding letters of credit under this facility. As of December 31, 2022, we had no borrowings outstanding and $1.0 million in outstanding letters of credit under this facility.
As of March 31, 2023, we were in compliance with all applicable covenants under the revolving credit facility.
Interest Expense—Interest expense is recorded net of any capitalized interest associated with investments in capital projects. We incurred gross interest expense of $0.2 million and $0.1 million for the three months ended March 31, 2023 and March 31, 2022, respectively.
    Amounts included in interest expense, net for the three months ended March 31, 2023, and 2022 were as follows (in thousands):
Three Months Ended
March 31,
20232022
Interest expense on borrowings$22 $— 
Commitment fee on unused credit facility56 21 
Amortization of deferred financing costs75 60 
Gross interest expense153 81 
Less capitalized interest(153)(48)
Interest expense, net$— $33 
    
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Note 8 — INTANGIBLE ASSETS
    We have water rights, recorded at $19.2 million at March 31, 2023, and December 31, 2022. 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 16.0 years. At March 31, 2023, and December 31, 2022, these intangible assets had a net book value of $5.2 million and $5.2 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 $10.5 million and $18.5 million at March 31, 2023, and December 31, 2022, 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.
Our asset retirement obligation is based on the estimated cost to close 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 reclamation liabilities range from 6.9% to 9.7%. Revisions to the liability occur due to construction of new or expanded facilities, changes in estimated closure costs or economic lives, or if federal or state regulators enact new requirements regarding the closure 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 March 31,
20232022
Asset retirement obligation, at beginning of period$26,864 $27,024 
Accretion of discount535 490 
Total asset retirement obligation, at end of period$27,399 $27,514 
Less current portion of asset retirement obligation$(300)$— 
Long-term portion of asset retirement obligation$27,099 $27,514 
    
The current portion of the asset retirement obligation is included in "Other current liabilities" on the Condensed Consolidated Balance Sheet as of March 31, 2023.
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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 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 March 31, 2023, and December 31, 2022, we had a total of $2.3 million and $2.4 million of contract liabilities, respectively, of which $1.0 million and $0.9 million were current as of March 31, 2023, and December 31, 2022, respectively, and included in "Other current liabilities" on the 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).
As of March 31, 2022, our contract liability balance primarily consisted of prepayments from a customer for future water deliveries under the terms of a water sales agreement. In August 2022, our customer notified us that they were terminating the water sales agreement and in September 2022 we refunded the customer's prepayment balance of $32.6 million. See Note 14—Commitments and Contingencies below for additional information regarding our water rights and repayment of this customer's prepayment balance.
Our deferred revenue activity for the three months ended March 31, 2023, and 2022 is shown below (in thousands):
Three Months Ended March 31,
20232022
Beginning balance$2,374 $33,788 
Additions145 349 
Recognized as revenue during period(245)(114)
Ending Balance$2,274 $34,023 

Disaggregation of Revenue: The tables below show the disaggregation of revenue by product and reconciles disaggregated revenue to segment revenue for the three months ended March 31, 2023, and 2022. 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 March 31, 2023
ProductPotash Segment
Trio® Segment
Oilfield Solutions SegmentIntersegment EliminationsTotal
Potash$47,155 $— $— $(101)$47,054 
Trio®
— 29,053 — — 29,053 
Water80 1,048 1,619 — 2,747 
Salt3,043 173 — — 3,216 
Magnesium Chloride1,137 — — — 1,137 
Brine Water1,082 — 822 — 1,904 
Other— — 1,809 — 1,809 
Total Revenue$52,497 $30,274 $4,250 $(101)$86,920 
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Three Months Ended March 31, 2022
ProductPotash Segment
Trio® Segment
Oilfield Solutions SegmentIntersegment EliminationsTotal
Potash$51,622 $— $— $(95)$51,527 
Trio®
— 39,616 — — 39,616 
Water774 1,202 4,188 — 6,164 
Salt2,634 234 — — 2,868 
Magnesium Chloride815 — — — 815 
Brine Water597 — 739 — 1,336 
Other— — 2,073 — 2,073 
Total Revenue$56,442 $41,052 $7,000 $(95)$104,399 

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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 March 31, 2023, approximately 1.0 million shares remained available for issuance under the Plan.
    In March 2023, the Compensation Committee granted 225,117 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 March 2022, the Compensation Committee granted 104,039 restricted shares to executive officers and other key employees. These awards vest over three years, and in some cases, contain a market condition. As of March 31, 2023, the following awards were outstanding under the Plan (in thousands):
Outstanding as of
March 31, 2023
Restricted Shares399 
Non-qualified Stock Options273 

    Total share-based compensation expense was $1.7 million and $1.2 million for the three months ended March 31, 2023, and 2022, respectively. As of March 31, 2023, we had $10.3 million of total remaining unrecognized compensation expense related to awards that is expected to be recognized over a weighted-average period of 1.6 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 March 31,
20232022
Current portion of income tax expense$126 $139 
Deferred portion of income tax expense1,661 9,000 
Total income tax expense$1,787 $9,139 

    Our effective tax rate for the three months ended March 31, 2023, was 28.4%. Our effective tax rate differed from the statutory rate during this period primarily from the estimated permanent difference between book and tax income for the first quarter of 2023 for the officers' compensation deduction. Additionally, because small changes in projected income may produce significant variations in our estimated annual effective tax rate, we have determined that we are unable to reliably estimate an annual effective tax rate to apply to our income for the quarter ended March 31, 2023, as described in ASC 740. Therefore, we have elected to apply the actual effective tax rate for the quarter to our income since we believe that this is the best estimate of our annual effective tax rate. Our effective tax rate for the three months ended March 31, 2022, was 22.5% which differed from the statutory rate 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 quarter of 2022.

Note 14 — COMMITMENTS AND CONTINGENCIES
Reclamation Deposits and Surety Bonds—As of March 31, 2023, and December 31, 2022, we had $26.5 million and $24.6 million, respectively, of security placed principally with the State of Utah and the Bureau of Land Management for
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eventual reclamation of our various facilities. As of March 31, 2023, $0.5 million consisted of long-term restricted cash deposits and $26.0 million was secured by surety bonds issued by an insurer. As of December 31, 2022, $0.5 million consisted of long-term restricted cash deposits and $24.1 million was secured by surety bonds issued by an insurer. The restricted cash deposits are included in "Other assets, net" on the condensed consolidated balance sheets and the surety bonds are held in place by an annual fee paid to the issuer.
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. We expense legal costs as they are 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 and Other Legal Contingencies
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. The appeal is currently before the New Mexico Court of Appeals and the matter has been fully briefed.
    In 2017 and 2018 the New Mexico Office of the State Engineer ("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. If our appeal of the adjudication court's ruling is unsuccessful, we may have to repay for the water we sold under the preliminary authorizations. Repayment of this water can be up to two times the amount of water removed from the 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 Condensed Consolidated 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 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 had no obligation to deliver water and our customer had no obligation to take water, if available, or make quarterly payments to us. In August 2022, the customer notified us that they were terminating the long-term sales contract and in September 2022, we refunded the $32.6 million outstanding contract liability we had with this 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, we entered into a settlement agreement with NGL in connection with this matter and the lawsuit was dismissed with prejudice on June 29, 2022. The settlement did not have a material impact on our results of operations and the JMA was terminated.
We have estimated contingent liabilities recorded in "Other current liabilities" on the condensed consolidated balance sheets of $5.2 million and $4.2 million as of March 31, 2023, and December 31, 2022, respectively, mainly related to a trespass issue at Intrepid South and the potential underpayment of royalties in 2012 to 2016.

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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, investment securities, 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 nature of these instruments.
Cash Equivalents—As of March 31, 2023, and December 31, 2022, we had cash equivalents of $0.5 million and $1.7 million, respectively.
Held-to-Maturity Investments—As of March 31, 2023, 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 March 31, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Short-term
Corporate bonds$2,994 $— $(18)$2,976 
Government bonds1,966 — (17)1,949 
Total$4,960 $— $(35)$4,925 
Long-term
Corporate bonds$983 $— $(11)$972 
Government bonds1,934 — (11)1,923 
Total$2,917 $— $(22)$2,895 

Our long-term held to maturity investments are recorded in "Long-term investments" on the Condensed Consolidated Balance Sheets. As of March 31, 2023 and December 31, 2022, we had $7.9 million and $8.4 million in held-to-maturity debt investment securities, respectively. Our long-term held-to-maturity investments mature in less than 2 years.
Equity Investments without a Readily Determinable Fair Value—In May 2020, we acquired a non-controlling equity investment in W.D. Von Gonten Laboratories ("WDVGL") for $3.5 million. We account for this investment as an equity investment without a readily determinable fair value and elected to measure our investment, as permitted by GAAP, at cost plus or minus any adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer or impairment. As of March 31, 2023, and December 31, 2022, we had not recorded any adjustments to the carrying value of this investment since the purchase in May 2020. We include this investment in "Long-term investments" on the Condensed Consolidated Balance Sheets.
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In July 2022, WDVGL entered into a purchase agreement with another company (“Acquiror”), a foreign issuer whose shares are traded on the Nasdaq Capital Market (“Nasdaq”). Under the terms of the purchase agreement, WDVGL would be combined with the consulting business owned by W.D. Von Gonten (“Consulting”) to form a new entity, W.D. Von Gonten Engineering, LLC (“Engineering”), and Acquiror would then purchase Engineering in a majority stock transaction at an agreed upon selling price.
Acquiror delivered equity shares and a nominal amount of cash for purchase of Engineering in July 2022, with the number of shares equal to the selling price divided by an assumed $10 share price. Under the terms of the purchase agreement, if Acquiror was current in its SEC filing on June 30, 2023, the actual number of shares would be adjusted to equal the agreed upon purchase price divided by the average closing price of Acquiror’s stock for the ten trading days prior to June 30, 2023, and the stock received from the sale of Engineering would be distributed to the investors in WDVGL and Consulting.
In March 2022, Acquiror disclosed that it had discovered errors in its financial statements for the fiscal years ended December 31, 2018, 2019 and 2020, and was working to file restated financial statements with the SEC. On April 27, 2023, Acquiror disclosed it had not been able to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2021 with the SEC by April 25, 2023, which was the deadline set by Nasdaq Hearings Panel in connection with a delisting proceeding, and Acquiror’s shares were subsequently delisted from Nasdaq. Acquiror also disclosed on April 27, 2023 that it has shifted its focus to filing audited financial statements with the SEC for the fiscal years ended December 31, 2020, 2021 and 2022 to regain compliance with Nasdaq listing standards before the end of 2023. Pursuant to the purchase agreement with Engineering, if the Acquiror does not file current financial statements with the SEC by June 30, 2023, Engineering has the option to terminate the purchase agreement, beginning on July 1, 2023.
While it is unlikely Acquiror will be able to file current financial statements by June 30, 2023, Engineering intends to proceed with the purchase agreement and allow Acquiror additional time to file updated financial statements. We have not impaired our investment in WDVGL because our share of the estimated selling price exceeds the carrying value of our investment in WDVGL. We will continue to monitor the investment for impairment. If Acquiror is unable to file restated financial statements by the end of 2023 and the purchase transaction is not finalized, we may need to impair our investment in WDVGL.

Equity Method Investments—We have committed to invest up to $4.0 million in cash as a limited partner for a 16% interest in PEP Ovation, LP ("Ovation"), of which we had invested $3.2 million of cash as of March 31, 2023, and December 31, 2022. This investment is accounted for under the equity method whereby we recognize our proportional share of the income or loss from our investment in Ovation on a one-quarter lag. This investment is included in "Long-term investments" on the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2023, 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 three segments: potash, Trio® and oilfield solutions. We determine reportable segments 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
March 31, 2023		Potash
Trio®
Oilfield SolutionsOtherConsolidated
Sales$52,497 $30,274 $4,250 $(101)$86,920 
Less: Freight costs5,005 6,686 — (101)11,590 
         Warehousing and handling
         costs		1,480 1,253 — — 2,733 
         Cost of goods sold31,584 20,883 3,778 — 56,245 
Gross Margin$14,428 $1,452 $472 $— $16,352 
Depreciation, depletion, and amortization incurred1
$7,051 $1,206 $907 $208 $9,372 
Three Months Ended
March 31, 2022		Potash
Trio®
Oilfield SolutionsOtherConsolidated
Sales$56,442 $41,052 $7,000 $(95)$104,399 
Less: Freight costs4,023 6,309 — (95)10,237 
         Warehousing and handling
         costs		1,324 1,152 — — 2,476 
         Cost of goods sold22,031 17,451 5,028 — 44,510 
Gross Margin$29,064 $16,140 $1,972 $— $47,176 
Depreciation, depletion, and amortization incurred1
$6,947 $1,008 $787 $236 $8,978 
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;
•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;
•global inflationary pressures and supply chain challenges;
•the impact of global health issues, such as the COVID-19 pandemic, and other global disruptions on our business, operations, liquidity, financial condition and results of operations; and
•the other risks, uncertainties, and assumptions described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022.

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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. 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. Intersegment sales prices are market based and are eliminated.




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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. Our potash average net realized sales price per ton decreased to $485 for the three months ended March 31, 2023, compared to $703 for the same period in 2022. Although global potash production continues to trend below normal rates due to sanctions on Belarusian potash, demand deferral due to high prices led to greater than expected carryover inventory from the 2022 spring season, lessening concerns about potash availability through the second half of 2022. This deferred demand resulted in comfortable inventory positions in most markets to start 2023 and a reset of potash pricing in January 2023 to $480 per ton. During the first quarter of 2023, spot price decreased slightly from the posted Midwest warehouse price to approximately $465 per ton, finding support at current levels with the spring season well underway. Sales volume increased 29% in the first quarter of 2023 compared to the same period in the prior year, primarily due to the deferred demand from the fourth quarter of 2022. Despite the decreased price levels compared to last year, our customers continue to layer in orders as the spring season progresses and we expect most distributors are targeting minimal carryover inventory after the spring season due to an expectation of flat or decreased price levels in the second half of 2023.
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 February through May and September through November when purchasers are looking to have product on hand for the spring and fall application seasons in the U.S. 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.
• Trio® pricing and demand. Our Trio® average net realized sales price per ton decreased to $344 for the three months ended March 31, 2023, compared to $469 for the same period in 2022. Similar to the potash market, buyers ended the 2022 spring season with more inventory than expected and were reluctant to purchase Trio® during the second half of 2022 due to the expectation of declining prices. This led to a reset of pricing in the first quarter of 2023 and sufficient inventory in many regions pressured spot pricing down during the first quarter. Supportive commodity prices and strong farmer balance sheets led to good subscriptions at current price levels, and we expect the sales will continue at a steady pace into the second quarter. In line with potash, we expect most distributors will be targeting minimal carryover inventory after the spring season.
    We also experience seasonality in domestic Trio® demand, with more purchases coming in the first and second quarters in advance of the spring application season in the U.S. In turn, we generally have increased inventory levels in the third and fourth quarters in anticipation of expected demand for the following year.
• Water sales. In the first quarter of 2023, total water sales were $2.7 million compared to $6.2 million during the same period of 2022. Water sales decreased compared to the prior year due to fewer fracs on our South ranch and less water sold from our Caprock water rights. Water purchased to supplement our sales at Intrepid South decreased approximately $1.0 million compared to the period year, resulting in decreased sales compared to the first quarter of 2022.
    See Note 14 of our unaudited condensed consolidated financial statements included in "Item 1. Condensed Consolidated Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q regarding legal proceedings related to our water rights.
• Byproduct sales. We sell byproducts such as salt, magnesium chloride, brines, and water that are derived from our potash and Trio® operations. Byproduct sales were $6.6 million during the first quarter of 2023, compared to $6.3 million for the same period of 2022. 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. Beginning in the summer of 2022, we have experienced increased labor costs and increased costs for various supplies due to inflationary pressures. While overall inflation rates have slowed down to begin 2023, we continue to experience year-over-year cost increases well-above those of the past five years. If potash and Trio® prices remain flat or
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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 or in excess of any price increases, which could result in lower margins and net income.
• 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:

–Substantially completed a new three-lateral horizontal potash cavern at Moab in April of 2023 and expect the cavern will be online in the second quarter of 2023. During the drilling process, we were able to stay in the target interval for longer than any of our other previous drilled horizontal caverns and initial brine measurements show good availability of high-grade KCl. With the addition of the new cavern, we expect to increase brine availability which should result in improved and more consistent production for the next several years.
–Currently drilling the first of 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.
–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 expect installation will be complete in the first half of 2023 and expect greater flow rates within the improved pipeline system in 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.

• 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 continue to progress on a sand mine opportunity on our strategically located South Ranch. We are currently undergoing an archeological study in the area while progressing on necessary permits and sourcing of supplies and equipment. As previously discussed, we are targeting approximately one million tons per year of wet sand. We expect to begin construction in the fourth quarter of 2023. However, delays in obtaining necessary permits and ongoing supply chain issues could delay our construction and subsequent start-up date.
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 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)Three Months Ended March 31,
20232022
Sales1
$86,920 $104,399 
Cost of goods sold$56,245 $44,510 
Gross Margin $16,352 $47,176 
Selling and administrative$8,858 $6,789 
Net Income$4,506 $31,422 
   Average net realized sales price per ton2
Potash$485 $703 
   Trio®
$344 $469 
1Sales include sales of byproducts which were $6.6 million and $6.3 million for the three months ended March 31, 2023, and 2022, 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 March 31, 2023, and 2022
Sales
Our total sales for the first quarter of 2023 decreased $17.5 million, or 17%, as compared to the first quarter of 2022, as potash sales decreased $4.5 million, or 9%, Trio® sales decreased $10.6 million, or 27%, oilfield solutions segment sales decreased $2.8 million, or 39%, partially offset by a $0.3 million increase in byproduct sales.
Our potash sales decreased $4.5 million for the first quarter of 2023, as compared to the first quarter of 2022, as our average net realized sales price per ton decreased 31%, partially offset by a 29% increase in tons sold. We sold more tons of potash in the first quarter of 2023, compared to the first quarter of 2022, as we had fewer tons of potash available to sell to begin 2022. Additionally, regional drought conditions in the U.S. entering the 2022 spring application season negatively affected demand for our potash. Drought conditions in many of these regions improved entering the 2023 spring application season, which increased demand for our potash in the first quarter of 2023.
Potash prices increased significantly during the first quarter of 2022, as strong farm commodity prices coupled with concerns surrounding potash supplied from Eastern European potash producers drove increased purchases. Many distributors forward purchased more tons of potash than historically during the first half of 2022 in anticipation of potential potash shortages. Consequently, as growers deferred demand due to high prices, carryover inventory after the 2022 spring application season was higher than expected, leading to comfortable inventory levels to begin 2022 fall application season. Growers continued a cautious buying approach which led to eventual price declines during the second half of 2022 and in the first quarter of 2023.
Our Trio® sales decreased $10.6 million, or 27%, in the first quarter of 2023, as compared to the first quarter of 2022, as our average net realized sales price per ton decreased 27%, combined with an 8% decrease in tons sold. Our Trio® average net realized sales price per ton decreased during the first quarter of 2023, compared to the first quarter of 2022, as the price of potash and other potassium fertilizers decreased as expected global potassium supply concerns during the first half of 2022 alleviated during the second half of 2022. Trio® demand was also negatively impacted by higher-than-normal carryover inventory levels after the 2022 spring application season with buyers taking a more cautious buying approach to begin 2023 and the relative value of Trio® compared to potash declined due to weakening potash prices.
Our oilfield solutions segment sales, which includes sales of water, brine water, and surface use and easements, decreased $2.8 million, or 39%, in the first quarter of 2023, as compared to the first quarter of 2022, mainly driven by a $2.6 million decrease in water sales. While oil and gas activities near our Intrepid South property remained strong during the first quarter of 2023, our water sales decreased because of the timing of fracs during the first quarter of 2023 compared to the first quarter of 2022.
Our total byproduct sales, which are recorded in either our potash segment or Trio® segment increased $0.3 million or 5% in the first quarter of 2023, as compared to the first quarter of 2022, due to a $0.5 million increase in byproduct brine water
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sales, a $0.3 million increase in byproduct salt sales, and a $0.3 million increase in magnesium chloride sales, partially offset by a $0.8 million decrease in byproduct water sales. Our byproduct brine water sales increased due to continued strong demand related to oil and gas activities in southeastern New Mexico, and our byproduct salt and magnesium chloride sales increased due to winter weather conditions in the western U.S. during the first quarter of 2023. Our byproduct water sales decreased due to our overall decrease in water sold in the first quarter of 2023, compared to the first quarter of 2022.
Cost of Goods Sold
Our total cost of goods sold increased $11.7 million, or 26%, during the first quarter of 2023, as compared to the first quarter of 2022. Our potash cost of goods sold increased $9.6 million, and our Trio® cost of goods sold increased $3.4 million, partially offset by a $1.3 million decrease in our oilfield solutions cost of goods sold.
Our potash cost of goods sold increased 43% as we sold 29% more tons of potash in the first quarter of 2023, compared to the first quarter of 2022. In addition, our potash weighted-average carrying cost per ton increased as various production costs, such as labor and natural gas, increased due to continued inflation.
Our Trio® cost of goods sold increased $3.4 million, or 20%, during the first quarter of 2023, as compared to the first quarter of 2022. While we sold 8% fewer tons of Trio® during the first quarter of 2023, compared to the first quarter of 2022, our Trio® weighted-average cost per ton increased as we incurred increased maintenance expenses and various other production costs, such as labor and natural gas, increased due to continued inflation. In addition, we produced fewer tons in the first quarter of 2023 compared to the first quarter of 2022 which increase our weighted-average cost per ton. Most of our Trio® production costs are fixed and a decrease in Trio® tons produced increases our Trio® weighted average cost per ton.
Our oilfield solutions cost of goods sold decreased $1.3 million, or 25%, during the first quarter of 2023, compared to the first quarter of 2022, as we incurred less water transportation costs and we did not purchase any additional third-party water.
Gross Margin
During the first quarter of 2023, we generated gross margin of $16.4 million compared to gross margin of $47.2 million during the first quarter of 2022. As discussed above, our gross margin decreased mainly due to the lower average net realized sales price per ton for potash and Trio®.
Selling and Administrative Expense
    During the first quarter of 2023, selling and administrative expenses increased 30% compared to the first quarter of 2022. Our corporate salary expense increased $0.8 million, and our stock compensation expense increased $0.5 million. Both increases were related to having more corporate employees in the first quarter of 2023, compared to the first quarter of 2022. Our other professional services expenses, which includes legal expenses, increased $0.5 million related to various ongoing issues involving our water rights and other ongoing legal issues.
Income Tax Expense
    During the first quarter of 2023, we incurred income tax expense of $1.8 million, compared to income tax expense of $9.1 million during the first quarter of 2022.
Net Income
    We generated net income of $4.5 million during the first quarter of 2023, compared to net income of $31.4 million for the first quarter of 2022, due to the factors discussed above.


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Potash Segment
Three Months Ended March 31,
(in thousands, except per ton amounts)20232022
Sales1
$52,497 $56,442 
Less: Freight costs5,005 4,023 
         Warehousing and handling
         costs		1,480 1,324 
         Cost of goods sold31,584 22,031 
Gross Margin$14,428 $29,064 
Depreciation, depletion, and amortization incurred2
$7,051 $6,947 
Potash sales volumes (in tons)89 69 
Potash production volumes (in tons)90 103 
Average potash net realized sales price per ton3
$485 $703 
1 Sales include sales of byproducts which were $5.3 million and $4.8 million for the three months ended March 31, 2023, and 2022, respectively.
2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.
3Average net realized sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."
Three Months Ended March 31, 2023, and 2022
Our potash sales recorded in the potash segment decreased $4.5 million, or 9%, in the first quarter of 2023, compared to the first quarter of 2022, as our average net realized sales price per ton decreased 31%, partially offset by a 29% increase in tons sold. Our tons of potash sold during the first quarter of 2022 was limited because we had less potash available to sell. Additionally, regional drought conditions in the western U.S. entering the 2022 spring application season negatively affected demand for our potash. After the wet winter in much of the western U.S., drought conditions improved entering the 2023 spring application season which increased demand for our potash.
Potash prices increased significantly during the first quarter of 2022, as supportive farm commodity prices drove strong global potash demand. In addition, many global distributors forward purchased more potash tons than historically to build inventory levels because of concerns about global supply shortages related to uncertainty around potash supplied from Eastern European producers. Consequently, as growers deferred demand due to high prices, carryover inventory after the 2022 spring application season was higher than expected, leading to comfortable inventory levels to begin the fall application season. With sufficient potash availability and growers continuing a cautious approach to purchasing potash, price declined during the second half of 2022 and in the first quarter of 2023.
Our potash segment byproduct sales increased $0.5 million, or 11%, in the first quarter of 2023, compared to the first quarter of 2022. The increase in potash segment byproduct sales was driven by a $0.5 million increase in byproduct brine water sales, a $0.4 million increase in potash segment byproduct salt sales, and a $0.3 million increase in byproduct magnesium chloride sales, partially offset by a $0.7 million decrease in potash segment byproduct water sales. Our potash segment byproduct brine water sales increased as oil and gas activity near our facilities in New Mexico remained robust. Our potash segment byproduct salt sales and our byproduct magnesium chloride sales increased due to significant snowfall in various parts of the western U.S. in the first quarter 2023. Our potash segment byproduct water sales decreased due to our overall decrease in water sold in the first quarter of 2023, compared to the first quarter of 2022.
Potash segment freight expense increased 24% in the first quarter of 2023, compared to the first quarter of 2022, as a result of a 29% increase in potash tons sold. 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 increased 43% in the first quarter of 2023, compared to the same period in 2022. Part of the increase is due to selling 29% more tons of potash in the first quarter of 2023. Additionally, our weighted-average carrying cost per ton was higher due to an increase in certain potash production costs, such as labor and natural gas, due to continued inflation.
Our potash segment gross margin decreased $14.6 million in the first quarter of 2023, compared to the same period in 2022, due to the factors discussed above.
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Additional Information Relating to Potash
The table below shows our potash sales mix for the three months ended March 31, 2023, and 2022:
Three Months Ended March 31,
20232022
Agricultural82%75%
Industrial2%6%
Feed16%19%
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Trio® Segment
Three Months Ended March 31,
(in thousands, except per ton amounts)20232022
Sales1
$30,274 $41,052 
Less: Freight costs6,686 6,309 
         Warehousing and handling
         costs		1,253 1,152 
         Cost of goods sold20,883 17,451 
Gross Margin$1,452 $16,140 
Depreciation, depletion, and amortization incurred2
$1,206 $1,008 
Sales volumes (in tons)65 71 
Production volumes (in tons)49 65 
Average Trio® net realized sales price per ton3
$344 $469 
1 Sales include sales of byproducts which were $1.2 million and $1.4 million for the three months ended March 31, 2023, and 2022, respectively.
2 Depreciation, depletion, and amortization incurred excludes depreciation, depletion, and amortization amounts absorbed in or (relieved from) inventory.
3Average net realized sales price per ton is a non-GAAP financial measure. More information about this measure is below under the heading "Non-GAAP Financial Measure."
Three Months Ended March 31, 2023, and 2022
Trio® segment sales decreased 26% during the first quarter of 2023, compared to the first quarter of 2022. Trio® sales decreased $10.6 million, and our Trio® segment byproduct sales decreased $0.2 million. Trio® sales decreased primarily due to a 27% decrease in average net realized sales price per ton, combined with an 8% decrease in Trio® tons sold. Our Trio® sales volumes decreased during the first quarter of 2023 compared to the first quarter of 2022, as we sold less tons of Trio® to domestic customers, partially offset by a slight increase in Trio® tons sold internationally. Also, during 2022, our Trio® sales were positively impacted by high potash prices as customers purchased Trio® due to its relative value to potash.
During the first quarter of 2022, our Trio® average net realized sales price per ton increased due to supportive commodity prices and the tight global supply of potassium fertilizers caused by uncertainty of potassium fertilizers supplied from Eastern Europe. Like potash, Trio® customers ended the 2022 spring application season with high levels of carryover inventory and our Trio® average net realized sales price per ton declined in step with declining potash prices that began in the second half of 2022.
Our Trio® segment byproduct sales decreased due to a decrease in Trio® segment byproduct water sales. Our Trio® segment byproduct water sales decreased due to our overall decrease in water sold compared to the first quarter of 2022.
Trio® freight costs increased 6% in the first quarter of 2023, compared to the first quarter of 2022. While we sold 8% fewer Trio® tons in the first quarter of 2023, compared to the first quarter of 2022, a larger proportion of our first quarter 2023 total tons of Trio® sold were sold internationally. Our international Trio® sales generally incur more freight expense compared to our domestic Trio® sales. 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 increased 20% in the first quarter of 2023, compared to the first quarter of 2022. While our tons of Trio® sold decreased 8%, our weighted average carrying cost per ton increased as we incurred increased labor costs as we continued to operate an additional underground shift at our East facility. Our other Trio® production costs also increased due to continued inflation, and we produced fewer tons of Trio®. We produced 25% fewer tons of Trio® in the first quarter of 2023, compared to the first quarter of 2022, as we experienced an eight-day outage at our East plant. 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 decreased to $1.5 million in the first quarter of 2023, compared to gross margin of $16.1 million in the first quarter of 2022, due mainly to the decrease in average net realized sales price per ton and the other factors discussed above.
Additional Information Relating to Trio®
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    The table below shows the percentage of Trio® tons sold into the domestic and export markets during the three months ended March 31, 2023, and 2022.
United StatesExport
For the Three Months Ended March 31, 202390%10%
For the Three Months Ended March 31, 202291%9%


Oilfield Solutions Segment
    
Three Months Ended March 31,
(in thousands)20232022
Sales$4,250 $7,000 
         Cost of goods sold3,778 5,028 
Gross Margin$472 $1,972 
Depreciation, depletion, and amortization incurred$907 $787 

Three Months Ended March 31, 2023, and 2022
    Our oilfield solutions segment sales decreased $2.8 million in the first quarter of 2023, compared to the same period in 2022, due to a $2.6 million decrease in water sales, a $0.5 million decrease in surface use, rights-of-way and easement revenues, partially offset by a $0.1 million increase in brine water sales. The decrease in water sales in our oilfield solutions segment was due to the timing of frac jobs. Surface use, rights-of-way and easement revenues decreased as we entered into fewer agreements during the first quarter of 2023, compared to the first quarter of 2022.
    Our cost of goods sold decreased $1.3 million, or 25%, for the first quarter of 2023, compared to the same period in 2022, as our sales decreased 39%. Purchased water used to supplement our own water rights decreased $1.0 million compared to the first quarter of 2022, resulting in lower sales and costs of goods sold. Our oilfield solutions cost of goods sold was negatively impacted by increased labor costs during the first quarter of 2023, compared to the first quarter of 2022, as we hired additional employees and the company-wide 2022 salary increase took effect in March 2022.
Gross margin for the first quarter of 2023 decreased $1.5 million compared to the first quarter of 2022, due to the factors discussed above.
    
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.
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    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. Russia's invasion of Ukraine and the related sanctions imposed by several countries against Russia reduced the global supply of oil in 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. Continued rising inflation, albeit at a slower rate in the first quarter of 2023 compared to inflation rates experienced in 2022, has led to increases in certain of 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.
    We pay royalties to federal, state, and private lessors under our mineral leases. These payments typically equal a percentage of sales (less freight) of minerals extracted and sold under the applicable lease. In some cases, federal royalties for potash are paid on a sliding scale that varies with the grade of ore extracted. For the three months ended March 31, 2023 and 2022, our average royalty rate was 4.9% and 4.8%, respectively.
    Income Taxes
We are subject to federal and state income taxes on our taxable income. Our effective tax rate for the three months ended March 31, 2023, was 28.4%. Our effective tax rate differed from the statutory rate during this period primarily from the estimated permanent difference between book and tax income for the officers' compensation deduction. Our effective tax rate for the three months ended March 31, 2022, was 22.5% which differed from the statutory rate 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 quarter of 2022.
Our federal and state income tax returns are subject to examination by federal and state tax authorities.
For the three months ended March 31, 2023, we incurred approximately $1.7 million of deferred income tax expense and $0.1 million of current income tax expense. Our current income tax expense is less than the total tax expense of $1.8 million due to the utilization of net operating losses. For the three months ended March 31, 2022, we incurred income tax expense of $9.1 million.
We evaluate our deferred tax assets and liabilities each reporting period using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the states in which we conduct business. Changing business conditions for normal business transactions and operations, as well as changes to state tax rates and apportionment laws, potentially alter our apportionment of income among the states for income tax purposes. These changes in apportionment laws result in changes in the calculation of our current and deferred income taxes, including the valuation of our deferred tax assets and liabilities. The effects of any such changes are recorded in the period of the adjustment. These adjustments can increase or decrease the net deferred tax asset on our condensed consolidated balance 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 first quarter of 2023, cash paid for property, plant, equipment, mineral properties, intangible and other assets was $21.0 million.
We expect to make capital investments in 2023 of $60 million to $75 million. We anticipate spending approximately $25 million to $35 million on sustaining capital in 2023. We may adjust our investment plans as our expectations for 2023 change. We anticipate the remainder of our 2023 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 March 31, 2023, we had cash and cash equivalents of $10.5 million, compared to $18.5 million at December 31, 2022. The decrease in our cash balance during the first three months of 2023 was driven mainly by cash expenditures related to the acquisition of capital investments and decreases 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 March 31, 2023, and 2022 (in thousands):
Three Months Ended March 31,
20232022
Cash flows provided by operating activities$8,449 $34,110 
Cash flows used in investing activities$(20,430)$(7,674)
Cash flows provided by (used in) financing activities$3,920 $(2,724)

Operating Activities
Net cash provided by operating activities through March 31, 2023, was $8.4 million, a decrease of $25.7 million compared with the first three months of 2022, due to decreased potash and Trio® sales driven by the decreases in our average net realized sales price per ton.
Investing Activities
    Net cash used in investing activities increased by $12.8 million in the first three months of 2023, compared with the same period in 2022 due to a $14.2 million increase in capital investments offset by a net $1.4 million decrease in investment purchases.
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Financing Activities
Revolving Credit Facility—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 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 as a reference rate for borrowings under the credit agreement. Borrowings under the amended credit facility bear interest at SOFR plus an applicable margin of 1.50% to 2.25% per annum, based on our leverage ratio as calculated in accordance with the amended agreement governing the revolving credit facility. Borrowings under the revolving credit facility are secured by substantially all of our current and non-current assets, and the obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.
    We occasionally borrow and repay amounts under the revolving credit facility for near-term working capital needs or other purposes and may do so in the future. During the three months ended March 31, 2023, we made $5 million in borrowings, and we made no repayments under the revolving credit facility. During the three months ended March 31, 2022, we made no borrowings, and we made no repayments under the revolving credit facility. As of March 31, 2023, we had $5 million in borrowings outstanding and no outstanding letters of credit under this facility. As of December 31, 2022, we had no borrowings outstanding and $1.0 million in outstanding letters of credit under this facility.
As of March 31, 2023, we were in compliance with all applicable covenants under the revolving credit facility.
    As of April 28, 2023, we had approximately $9.5 million in cash and cash equivalents and no borrowings under the revolving credit facility.
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. We repurchased 608,657 shares totaling $22.0 million from August 2022 through December 2022. For the three months ended March 31, 2023, and March 31, 2022, we did not repurchase any shares under the share repurchase program.

Critical Accounting Policies and Estimates
    Our Annual Report on Form 10-K for the year ended December 31, 2022, 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, 2022.


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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.     
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 ended March 31, 2023 and 2022:
Three Months Ended March 31,
20232022
(in thousands, except per ton amounts)Potash
Trio®
Potash
Trio®
Total Segment Sales$52,497 $30,274 $56,442 $41,052 
Less: Segment byproduct sales5,342 1,221 4,820 1,436 
          Freight costs3,992 6,685 3,124 6,309 
   Subtotal$43,163 $22,368 $48,498 $33,307 
Divided by:
Tons sold89 65 69 71 
   Average net realized sales price per ton$485 $344 $703 $469 



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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, 2022, describes our exposure to market risk. There have been no significant changes to our market risk exposure since December 31, 2022.

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 the effectiveness of our disclosure controls and procedures as of March 31, 2023. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2023, 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 March 31, 2023, 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.

35
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, 2022. 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, 2022.





36
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
Issuer Purchases of Equity Securities
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 Programs2
January 1, 2023 through January 31, 2023— — —$12,987,860 
February 1, 2023 through February 28, 2023— $— —12,987,860 
March 1, 2023 through March 31, 202337,480 $27.67 —12,987,860 
Total37,480 $27.67 —$12,987,860 
1 Represents shares of common stock we withheld as a payment of withholding taxes due upon vesting of restricted stock held by our employees.
2 Represents the remaining dollar amount available to repurchase shares of common stock under the $35 million share repurchase program approved by the Board of Directors in February 2022. 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 did not repurchase any shares during the first quarter of 2023, and 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
Retirement and Separation Agreement, dated February 8, 2023, between Intrepid Potash, Inc. and Brian Stone (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on February 10, 2023).†
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as amended.*
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.**
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.**
Mine Safety Disclosure Exhibit.*
101.INSInline 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.SCHInline XBRL Taxonomy Extension Schema Document.*
101.CALInline XBRL Extension Calculation Linkbase Document.*
101.LABInline XBRL Extension Label Linkbase Document.*
101.PREInline XBRL Extension Presentation Linkbase Document.*
101.DEFInline XBRL Extension Definition Linkbase Document.*
104Cover 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: May 4, 2023
/s/ Robert P. Jornayvaz III
Robert P. Jornayvaz III - Executive Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Dated: May 4, 2023
/s/ Matthew D. Preston
Matthew D. Preston - Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
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