What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-07 compared with 2022-03-08 · 128 added, 111 removed, 826 unchanged (22% of the section changed)

39 unchanged sentences

The Company analyzes its valuation allowance using historical and projected future operating results.

During 2021, the Company decreased its valuation allowance by $215.9 million as it concluded that it was more likely than not that it would realize its deferred tax assets.

As of December 31, 2022, the Company had gross deferred tax assets of $187.8 million and a related valuation allowance of $2.03 million.

We identified the evaluation of the realizability of the Company’s deferred tax assets as a critical audit matter.

14 unchanged sentences

Cash and cash equivalents $ 18,514 $ 36,452

Short-term investments 5,959 —

Accounts receivable:

7 unchanged sentences

Long-term parts inventory, net 24,823 29,251

Long-term investments 9,841 4,576

Other assets, net 7,294 6,842

7 unchanged sentences

Other current liabilities 7,036 34,571

Current portion of long-term debt — 10,000

Total current liabilities 48,876 73,423

Advances on credit facility — 29,817

Long-term debt, net — 14,926

Asset retirement obligation 26,564 27,024

8 unchanged sentences

Additional paid-in capital 660,614 659,147

Retained earnings (Accumulated deficit) 4,243 ( 245,591 )

Retained earnings 76,463 4,243

Less treasury stock, at cost ( 22,012 ) —

Total Stockholders' Equity 715,078 663,403

16 unchanged sentences

Litigation settlement — — 10,075

(Gain) loss on sale of assets ( 2,542 ) ( 4,250 ) 345

Loss (gain) on sale or disposal of assets 7,470 ( 2,542 ) ( 4,250 )

Other operating expense 4,738 178 735

1 unchanged sentence

Other Income (Expense)

Equity in earnings of unconsolidated entities 689 — —

Interest expense, net ( 101 ) ( 1,468 ) ( 4,289 )

Interest income 176 — —

Other income 305 48 384

1 unchanged sentence

Income (Loss) Before Income Taxes 96,509 40,965 ( 27,149 )

Income Tax Benefit (Expense) 208,869 ( 5 ) ( 53 )

Income Tax (Expense) Benefit ( 24,289 ) 208,869 ( 5 )

Net Income (Loss) $ 72,220 $ 249,834 $ ( 27,154 )

9 unchanged sentences

(In thousands, except share amounts)

Common Stock Additional Paid-in Capital (1)

Common Stock Treasury Stock Additional Paid-in Capital (1)

Retained Earnings (Accumulated) Deficit Total Stockholders' Equity

1 unchanged sentence

Balance, December 31, 2019 12,955,351 $ 13 $ — $ 653,080 $ ( 218,437 ) $ 434,656

Net income — — — 13,631 13,631

Net loss — — — — ( 27,154 ) ( 27,154 )

Stock-based compensation — — — 3,821 — 3,821

4 unchanged sentences

Balance, December 31, 2020 13,049,820 13 — 656,837 ( 245,591 ) 411,259

Net loss — — — ( 27,154 ) ( 27,154 )

Net income — — — — 249,834 249,834

Stock-based compensation — — — 3,012 — 3,012

6 unchanged sentences

Stock-based compensation — — — 6,152 — 6,152

Purchase of treasury stock ( 608,657 ) — ( 22,012 ) — — ( 22,012 )

Vesting of restricted shares, net of common stock

20 unchanged sentences

Allowance for doubtful accounts — — 75

(Gain) Loss on disposal of assets ( 2,542 ) ( 4,250 ) 345

Loss (gain) on disposal of assets 7,470 ( 2,542 ) ( 4,250 )

Equity in earnings of unconsolidated entities ( 689 ) — —

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

15 unchanged sentences

Additions to property, plant, equipment, mineral properties and other assets ( 68,696 ) ( 19,789 ) ( 16,443 )

Additions to intangible assets — — ( 16,873 )

Proceeds from sale of property, plant, equipment, and mineral properties 58 6,042 4,786

Long-term investment ( 1,076 ) ( 3,500 ) —

Purchase of investments ( 13,047 ) ( 1,076 ) ( 3,500 )

Proceeds from redemptions/maturities of investments 2,506 — —

Net cash used in investing activities ( 79,179 ) ( 14,823 ) ( 15,157 )

8 unchanged sentences

Employee tax withholding paid for restricted shares upon vesting ( 4,795 ) ( 791 ) ( 172 )

Repurchases of common stock ( 22,012 ) — —

Proceeds from exercise of stock options 110 89 108

Net cash (used in) provided by financing activities ( 47,282 ) ( 17,043 ) 18,795

Net cash used in financing activities ( 27,704 ) ( 47,282 ) ( 17,043 )

Net Change in Cash, Cash Equivalents, and Restricted Cash ( 18,062 ) 16,962 ( 1,055 )

2 unchanged sentences

Supplemental disclosure of cash flow information

Net cash paid (received) during the period for:

Net cash paid during the period for:

Interest, net of $ 0.3 million of capitalized interest in 2022, $ 0.1 million in 2021, and $ 0.1 million in 2020

13 unchanged sentences

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.

Our extraction and production operations are conducted entirely in the continental U.S.

We produce potash from three solution mining facilities:

68 unchanged sentences

Mineral properties and development costs, which are referred to collectively as mineral properties, include acquisition costs, the cost of drilling production wells, and the cost of other development work, all of which are capitalized.

Exploration costs include geological and geophysical work performed on areas that that do not yet have proven and probable reserves declared.

Exploration costs include geological and geophysical work performed on areas that do not yet have proven and probable reserves declared.

These costs are expensed as incurred.

54 unchanged sentences

These determinations are subject to ongoing assessment.

Cash and Cash Equivalents — Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less.

Cash and Cash Equivalents and Investments — Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less.

We classify our investments in debt securities, which include U.S treasury and government agency obligations, and corporate bonds and notes, as held-to-maturity investments because we have the intent and ability to hold these investments to maturity.

Our held to maturity investments are carried at amortized cost.

We use the equity method of accounting for investments in limited partnerships where we own more than 3% of the limited partnership, as required by the Securities and Exchange Commission.

Under this method of accounting, we record our share of the net earnings or losses of the investee in the "Other Operating Income (Expense)" section of our Consolidated Statements of Operations.

We record equity investments without a readily determinable fair value using the measurement alternative of cost, with adjustments for observable changes in prices resulting from orderly transactions for the identical or similar investments of the same issuer, or impairment.

Fair Value of Financial Instruments — Our financial instruments include cash and cash equivalents, restricted cash, accounts receivable, refundable income taxes, accounts payable and current accrued liabilities.

8 unchanged sentences

When we report a net loss, all potentially dilutive securities are considered anti-dilutive and are excluded from the dilutive loss per share calculation.

Reverse Stock Split — On August 10, 2020, after receiving stockholder approval, the Board of Directors approved an amendment to Certificate of Incorporation to effect a reverse stock split of our common stock, par value $ 0.001 per share, by a ratio of one-for- ten .

Reverse Stock Split — On August 10, 2020, after receiving stockholder approval, the Board of Directors approved an amendment to our Certificate of Incorporation to effect a reverse stock split of our common stock, par value $ 0.001 per share, by a ratio of one-for- ten .

The reverse stock split was effected on August 14, 2020.

1 unchanged sentence

Unless otherwise indicated, all share amounts, per share data, share prices, exercise prices and conversion rates set forth in these notes and the accompanying consolidated financial statements have, where applicable, been adjusted retroactively to reflect this reverse stock split.

Treasury Stock — Repurchases of our common stock are accounted for at cost and are recorded as treasury stock.

Stock‑Based Compensation — We account for stock-based compensation by recording expense using the fair value of the awards at the time of grant.

2 unchanged sentences

For awards with service only conditions we recognize expense using the straight-line recognition method over the requisite service period of the award, which is generally the vesting period of the award.

recognize expense for awards with service and operational performance conditions using the accelerated recognition method over the requisite service period of the award, which is generally the vesting period of the award.

We recognize expense for awards with service and operational performance conditions using the accelerated recognition method over the requisite service period of the award, which is generally the vesting period of the award.

We recognize expense associated with awards that contain both a service condition and a market condition using the accelerated recognition method over the requisite service period of the award, which is generally the longer of the explicit service period or the derived service period (expected date the market condition is estimated to be achieved).

9 unchanged sentences

The adoption of this standard did not have a material impact on our consolidated financial statements.

Pronouncements Issued But Not Yet Adopted —In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04") , which provides optional exceptions to GAAP for certain transactions related to the transition away from The London Interbank Offered Rate ("LIBOR").

The amended guidance is designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements necessitated by the reference rate reform.

Application of the guidance in ASU 2020-04 is optional, is only available in certain situations, and is only available for companies to apply until December 31, 2022.

We are currently evaluating the impacts of reference rate reform and the guidance in ASU 2020-04 on our consolidated financial statements.

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 Consolidated Financial Statements.

Note 3 — EARNINGS PER SHARE

27 unchanged sentences

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 19,084 $ 37,146 $ 20,184

Restricted cash included in "Other assets, net" on the balance sheet at December 31, 2021, 2020, and 2019 represents amounts whose use is restricted by contractual agreements with the Bureau of Land Management or the State of Utah as security to fund future reclamation obligations at our sites.

Restricted cash included in "Other assets, net" on the balance sheet at December 31, 2022, 2021, and 2020 represents amounts whose use is restricted by contractual agreements with the BLM or the State of Utah as security to fund future reclamation obligations at our sites.

Restricted cash included in "Other current assets" on the balance sheet at December 31, 2022 represents cash deposits with supply vendors.

8 unchanged sentences

Total inventory, net $ 139,639 $ 108,107

During the year ended December 31, 2021, we recorded no charges for lower of weighted average cost or estimated net realizable value on our finished goods product inventory.

During the years ended December 31, 2020 and 2019, we recorded charges or approximately, $ 4.0 million, and $ 1.8 million, respectively, as a result of routine assessments of the lower of weighted average cost or estimated net realizable value on our finished goods product inventory.

During the years ended December 31, 2022, and December 31, 2021, we recorded no charges for lower of weighted average cost or estimated net realizable value on our finished goods product inventory.

During the year ended December 31, 2020, we recorded charges of approximately $ 4.0 million, as a result of routine assessments of the lower of weighted average cost or estimated net realizable value on our finished goods product inventory.

Parts inventories are shown net of any required allowances.

During the years ended December 31, 2022, 2021, and 2020, we recorded reserves for obsolete parts inventory of $ 1.8 million, $ 2.1 million and $ 0.5 million, respectively.

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

27 unchanged sentences

Operating lease ROU assets, net Property, plant, equipment, and mineral properties, net $ 3,663 $ 3,398

Finance lease ROU assets, net Property, plant, equipment, and mineral properties, net $ — $ 1,301

Current operating lease liabilities Other current liabilities $ 1,608 $ 1,655

Current finance lease liability Other current liabilities $ — 1,258

Non-current operating lease liabilities Operating lease liabilities $ 2,206 $ 1,879

2 unchanged sentences

Weighted average remaining lease term - operating leases 2.5 years 2.5 years

Weighted average remaining lease term - finance leases 0.00 years 0.30 years

Weighted average discount rate - operating leases 5.4 % 4.6 %

Weighted average discount rate - finance leases — % 1.75 %

The components of lease expense are as follows (amounts in thousands):

9 unchanged sentences

Right-of-Use Assets exchanged for new operating lease liabilities 2,305 1,849

Right-of-Use Assets exchanged for new finance lease liabilities — 1,332

As of December 31, 2022, maturities of lease liabilities are summarized as follows (amounts in thousands):

23 unchanged sentences

Total amortization of intangible assets for the years ended December 31, 2022, 2021, and 2020 was $ 0.3 million.

Total amortization for 2019 was $ 0.2 million.

We estimate the annual amortization expense of intangible assets will be $ 0.3 million for each of the next five years.

Note 9 — DEBT

Credit Facility —We maintain a secured revolving credit facility with Bank of Montreal.

Borrowings under the credit facility bore interest at LIBOR (London Interbank Offered Rate) plus an applicable margin of 1.25 % to 2.00 % per annum, based on our leverage ratio.

We have granted to Bank of Montreal a first lien on substantially all of our current assets and a second lien on substantially all of our non-current assets.

The obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries.

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 (London Interbank Offered Rate) to SOFR (Secured Overnight Financing Rate) as a reference rate for borrowings under the credit agreement.

Borrowings under the amended credit facility bear interest at 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 facility for near-term working capital needs or other purposes and may do so in the future.

For the year ended December 31, 2021, we made no borrowings and repaid $ 29.8 million under the facility.

For the year ended December 31, 2022, we made no borrowings and made no repayments under the facility.

For the year ended December 31, 2021, we made no borrowings and made $ 29.8 million repayments, under the facility.

For the year ended December 31, 2020, we borrowed $ 10.0 million and made no repayments under the facility.

As of December 31, 2021, we had no borrowings outstanding and $ 1.0 million in an outstanding letter of credit under the facility.

As of December 31, 2020, we had $ 29.8 million of borrowings outstanding and $ 1.0 million in an outstanding letter of credit under the facility.

As of December 31, 2022, and 2021, we had no borrowings outstanding and $ 1.0 million in an outstanding letter of credit under the facility.

We had $ 149.0 million available under the facility as of December 31, 2022.

7 unchanged sentences

As a result of the repayment, the Note Purchase Agreement was terminated.

As of December 31, 2020, we had outstanding $ 15.0 million of Series B Senior Notes.

Our total outstanding long-term debt, net, as of December 31, 2020, was as follows (in thousands):

December 31, 2020

Notes and Payroll Protection Loan $ 25,000

Less current portion of long-term debt ( 10,000 )

Less deferred financing costs ( 74 )

Long-term portion of Notes, net $ 14,926

Interest Expense —Interest expense is recorded net of any capitalized interest associated with investments in capital projects.

4 unchanged sentences

Interest expense on borrowings $ — $ 654 $ 2,033

Commitment fee on unused credit facility 155 70 74

Make-whole payments — 505 1,868

4 unchanged sentences

Note 10 — ASSET RETIREMENT OBLIGATION

We recognize an estimated liability for future costs associated with the abandonment and reclamation of our mining properties.

We recognize an estimated liability for future costs associated with the closure 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 abandon and reclaim the mining operations, the economic life of the properties, and federal and state regulatory requirements.

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.

10 unchanged sentences

Total asset retirement obligation, at end of period $ 26,864 $ 27,024 $ 23,872

We estimate approximately $ 6.7 million in payments may occur in the next five years .

Less current portion of asset retirement obligation $ ( 300 ) $ — $ —

Long-term portion of asset retirement obligation $ 26,564 $ 27,024 $ 23,872

We estimate approximately $ 6.4 million in asset retirement payments may occur in the next five years .

Note 11 — REVENUE

Revenue Recognition —Under ASC 606, we recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration we expect to be entitled in exchange for those goods or services.

Contract Balances — As of December 31, 2021, and 2020, we had $ 33.8 million and $ 30.4 million of contract liabilities, respectively, the majority of which are included in "Other current liabilities" on the consolidated balance sheets, primarily related to cash advances received from a customer for water purchases.

Contract Balances — As of December 31, 2022, and 2021, we had $ 2.4 million and $ 33.8 million of contract liabilities, respectively, of which $ 0.9 million and $ 32.9 million were current as of December 31, 2022 and 2021, respectively, and included in "Other current liabilities" on the consolidated balance sheets.

Customer advances received before we have satisfied our performance obligations are accounted for as a contract liability (sometimes referred to in practice as deferred revenue).

We will recognize the deferred revenue at the time the customer calls for water delivery, which we expect will be sourced from our existing long-term water rights.

As of December 31, 2021, 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 the customer's prepayment balance.

Our contract liability activity for the years ended December 31, 2022, 2021, and 2020 is shown below (in thousands):

3 unchanged sentences

Additions 1,823 4,310 17,657

Refund of prepayments ( 32,579 ) — —

Recognized as revenue during period from the beginning balance ( 658 ) ( 941 ) ( 3,850 )

37 unchanged sentences

Cash Bonus Programs —We use cash bonus programs under which our employees may be eligible to receive cash bonuses based on corporate, department, location, or individual performance or other events or accomplishments.

We accrue cash bonus expense related to the current year's performance and we expect to pay in early 2022 a cash bonus to our employees under our 2021 bonus program.

We accrue cash bonus expense related to the current year's performance and we expect to pay in March 2023 a cash bonus to our employees under our 2022 bonus program.

We met our performance metrics related to our 2021 cash bonus program and paid a cash bonus in March 2022.

While we did meet certain performance metrics related to our 2020 cash bonus program, we did not pay a cash bonus under our 2020 cash bonus program.

We did not meet our performance metrics related to the 2019 cash bonus program, and accordingly, we did not pay a cash bonus for 2019 under the program.

Equity Incentive Compensation Plan —Our Board of Directors and stockholders adopted a long-term incentive compensation plan called the Intrepid Potash, Inc.

18 unchanged sentences

• Restricted Shares with Service and Market Conditions — Under the Plan in March 2022, the Compensation Committee granted restricted shares of common stock with service and market conditions to certain members of our executive team as part of their annual compensation package.

The grants vest over three years from the quarter ended in which the volume-weighted average share closing price for 20 consecutive days has met one of the applicable price achievement targets;

The grants vest over three years from the grant date if the volume-weighted average share closing price for 20 consecutive days has met one of the applicable price achievement targets;

provided, however, that no vesting would occur if the volume-weighted average closing price for 20 consecutive days has not met one or more applicable price achievement goals on or before March 17, 2025.

The share price achievement goals of these awards have been met as of December 31, 2022, and will vest over three years subject to continued employment.

Under the Plan in March 2022, the Compensation Committee also granted restricted shares of common stock with service and market conditions to another member of our executive team as part of his annual compensation package.

This grant vests over two years from the quarter ended in which the volume-weighted average share closing price for 20 consecutive trading days has met one of the applicable price achievement targets;

provided, however, that no vesting would occur if the volume-weighted average closing price for 20 consecutive trading days has not met one or more applicable price achievement goals on or before March 17, 2026.

The share price achievement goal for this award has been met as of December 31, 2022, and will vest on June 30, 2023, and June 30, 2024.

Under the Plan in March 2021, the Compensation Committee granted restricted shares of common stock with service and market conditions to certain members of our executive team as part of their annual compensation package.

The grants vest over three years from the quarter ended in which the volume-weighted average share closing price for 20 consecutive days has met one of the applicable price achievement targets;

The share price achievement goals of these awards were met in 2021, and the awards vest over three years from the grant date subject to continued employment.

Under the Plan in December 2021, the Compensation Committee granted restricted shares of common stock with service and market conditions to a member of our executive team as part of his annual compensation package.

1 unchanged sentence

As of December 31, 2021, share price achievement goals have not been met.

Under the plan in 2020 and 2019, the Compensation Committee granted restricted shares of common stock with service and market conditions to a member of our executive team as part of his annual compensation package.

As of December 31, 2022, share price achievement goals have been met and one-half of the shares will vest in 2023, and one-half will vest in 2024.

Under the plan in 2020, the Compensation Committee granted restricted shares of common stock with service and market conditions to a member of our executive team as part of his annual compensation package.

The 2020 grant vests over two years from the quarter ended in which the volume weighted average share closing price for 20 consecutive trading days has met one of the applicable price achievement targets;

As of December 31, 2021, share price achievement targets have been met for the 2020 grant.

The 2019 grant vests over three years ;

provided, however, that no vesting will occur unless and until the volume-weighted average share closing price meets the applicable share price achievement goal on or before March 13, 2024.

As of December 31, 2021, the applicable share price achievement targets for the 2019 award have not been met.

The market conditions for this award were met in 2021, and 47,259 shares vested during 2022 and 47,259 shares will vest in 2023.

During 2022, share price achievement targets were met for shares granted to a member of the executive team in 2019 and 54,570 shares vested in 2022.

We used a Monte Carlo simulation valuation model to estimate the fair value of these awards on the grant date.

15 unchanged sentences

Vested, service only condition ( 97,831 ) $ 24.84

Vested, service and market conditions ( 103,677 ) $ 21.47

Forfeited, service only condition ( 13,561 ) $ 32.17

19 unchanged sentences

1 The intrinsic value of a stock option is the amount by which the market value exceeds the exercise price as of the end of the period presented.

The total intrinsic value of exercised options to purchase stock during 2022 was $ 0.6 million.

The total intrinsic value of exercised options to purchase stock during 2021 and 2020 was immaterial for each year.

13 unchanged sentences

State 3,893 ( 51,727 ) —

Total income tax (benefit) expense $ ( 208,869 ) $ 5 $ 53

Total income tax expense (benefit) $ 24,289 $ ( 208,869 ) $ 5

A reconciliation of the federal statutory income tax rate of 21 % to our effective rate is as follows (in thousands, except percentages):

8 unchanged sentences

Other ( 432 ) ( 400 ) 699

Net (benefit) expense as calculated $ ( 208,869 ) $ 5 $ 53

Net expense (benefit) as calculated $ 24,289 $ ( 208,869 ) $ 5

Effective tax rate 25.2 % ( 509.9 ) % — %

Our effective tax rate for the years ended December 31, 2021, 2020, and 2019 differs from the U.S.

Our effective tax rate for the years ended December 31, 2022, differs from the U.S.

federal statutory rate due to state income taxes, while our effective tax rates for the years ended December 31, 2021, and 2020, differs from the U.S.

federal statutory rate due to the change in valuation allowance.

26 unchanged sentences

Thus, we have concluded that it is more likely than not that most of our $ 187.8 million of deferred tax assets will be realized.

We continue to maintain a valuation allowance of $ 2.0 million against our deferred tax assets related to federal and state R&D credits as we forecast these will expire before being used.

As of December 31, 2020, we had a full valuation allowance against our deferred tax assets.

During 2021, our valuation allowance decreased $ 215.9 million as we have concluded that we will more likely than not realize most of our deferred tax assets.

Our deferred tax assets, net of the valuation allowance at December 31, 2021, and 2020, was $ 209.1 million and zero , respectively

During 2022, our valuation allowance did not change as we continue to maintain a valuation allowance of $ 2.0 million against our deferred tax assets related to federal and state research and development credits as we forecast these will expire before being used.

Our deferred tax assets, net of the valuation allowance at December 31, 2022, and 2021, was $ 185.8 million and $ 209.1 million, respectively

The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the tax jurisdictions in which we conduct business.

20 unchanged sentences

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.

Mosaic Settlement

In March 2020, we entered into a definitive settlement agreement with Mosaic Potash Carlsbad Inc.

("Mosaic") related to a compliant originally brought against us and Steve Gamble in February 2015.

Gamble is a former employee of Intrepid and Mosaic.

Under the terms of the settlement agreement, we paid Mosaic an aggregate of $ 10 million in May 2020 to dismiss all current and future claims arising from this matter against us and the matter is now closed.

In February 2019, Pecos Valley Artesian Conservancy District, Carlsbad Irrigation District, and Otis Mutual Domestic Water Consumers & Sewage Works Association (together, the "Protestants") filed an expedited inter se proceeding against us, Henry McDonald, Select Energy Services, LLC d/b/a Gregory Rockhouse Ranch, and Vision Resources, Inc.

in the Fifth Judicial District Court for the County of Chaves in the State of New Mexico.

This court serves as the adjudication court for the Pecos Stream System, which includes the Pecos River.

The Protestants challenged the validity of our Pecos River water rights, representing approximately 20,000 acre feet per year.

A virtual trial began on December 8, 2020, and concluded on December 18, 2020.

In August 2021, the adjudication court issued its rulings on the validity of our Pecos River water rights.

The adjudication court found that our predecessors had forfeited all but approximately 5,800 feet of water per year, and further ruled 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.

Following briefing on specific issues, requested by the adjudication court, the adjudication court withdrew its initial findings of fact and conclusions of law and entered amended findings of fact and conclusions of law on December 17, 2021.

The order based on these findings of fact and conclusions of law has not yet been entered, but we expect the adjudication court to enter an order based on its findings of fact and conclusions of law in the near future.

We anticipate filing an appeal of the adjudication court's ruling on the validity of our water rights.

In February 2019, an expedited inter se proceeding commenced to determine the validity of our Pecos River water rights, representing approximately 20,000 acre feet per year.

On December 17, 2021, the adjudication court entered its findings of fact and conclusions of law, which held that our predecessors in interest had forfeited all but approximately 5,800 feet of water per year, and further ruled 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 authorizations to sell approximately 5,700 acre feet of water per year from our Pecos River water rights.

The preliminary authorizations allowed for water sales to begin immediately, subject to repayment if the underlying water rights are ultimately found to be invalid.

If the adjudication court enters, as expected, an order based on its amended findings of fact and conclusion of law discussed above, and our expected appeal of the adjudication court's ruling is unsuccessful, we may have to repay for the water we sold under the preliminary authorizations.

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.

5 unchanged sentences

Under this contract we have 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 and future quarterly installments due from the customer as we continue to work to resolve the issue.

In April 2021, we agreed to suspend the second quarter 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.

In the amendment, we agreed to suspend all rights and obligations of both parties under the agreement until July 1, 2022.

During the suspension period, we have no obligation to deliver water and our customer has no obligation to take water, if available, or make quarterly payments to us.

After the suspension period, our customer has the right to terminate the agreement for any reason with thirty days written notice at which time we would be required to repay any outstanding balance for undelivered water.

We are continuing to work with the customer to resolve this issue.

If we are not able to resolve the issue, we may have to repay the $ 32.5 million outstanding contract liability we have with this customer as of December 31, 2021.

During the suspension period, we had no obligation to deliver water and our customer has 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 the Joint Marketing Agreement (“JMA”) that was entered into in May 2019, 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.

NGL is seeking to immediately terminate the JMA as well as compensatory damages.

We are vigorously defending against the lawsuit.

Because this matter is at an early stage, we are unable to reasonably estimate the potential amount of loss, if any.

On June 22, 2022, the parties entered into a settlement agreement 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 effective May 1, 2022.

As of December 31, 2022 we have estimated contingent liabilities recorded in "Other current liabilities" on the consolidated balance sheets of $ 4.2 million, mainly related to a trespass issue at Intrepid South and the potential underpayment of royalties in 2012 to 2016.

At December 31, 2021, our estimated contingent liabilities was immaterial.

We are subject to other claims and legal actions in the ordinary course of business.

10 unchanged sentences

• Level 3—Significant inputs to the valuation model that are unobservable.

As of December 31, 2021, and 2020, our cash consisted of bank deposits.

Other financial assets and liabilities including, accounts receivable, refundable income taxes, accounts payable, accrued liabilities, and advances on credit facility are carried at cost which approximates fair value because of the short-term nature of these instruments.

In May of 2020, we acquired a non-controlling interest in W.D.

Von Gonten Laboratories ("WDVGL") for $ 3.5 million.

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

Other financial instruments consist primarily of cash equivalents, accounts receivable, refundable income taxes, accounts payable, accrued liabilities, and, if any, advances under our credit facility.

With the exception of investment securities, we believe cost approximates fair value for our financial instruments because of the short-term nature of these instruments.

Cash Equivalents —As of December 31, 2022, and December 31, 2021, we had cash equivalents of $ 1.7 million and zero , respectively.

Held-to-Maturity Investments —As of December 31, 2022, we owned debt investment securities classified as held-to-maturity because we have the intent and ability to hold these investments to maturity.

Our held-to-maturity debt investment securities consist of investment grade corporate bonds and U.S.

government issued bonds.

We had no held-to-maturity investments at December 31, 2021.

Our held-to-maturity investments at December 31, 2022, are carried at amortized cost and consist of the following (amounts in thousands):

As of December 31, 2022

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

Corporate bonds $ 3,992 $ — $ ( 24 ) $ 3,968

Government bonds 1,967 — ( 18 ) 1,949

Total $ 5,959 $ — $ ( 42 ) $ 5,917

Corporate bonds $ 499 $ — $ ( 10 ) $ 489

Government bonds 1,935 — ( 26 ) 1,909

Total $ 2,434 $ — $ ( 36 ) $ 2,398

Equity Investments without a Readily Determinable Fair Value —As of December 31, 2022, and 2021, we had a $ 3.5 million non-controlling interest in W.D.

Von Gonten Laboratories ("WDVGL").

This investment is an equity investment without a readily determinable fair value and is recorded at cost with adjustments for observable changes in prices resulting from orderly transactions for the identical or a similar investment of the same issuer, or impairment (a Level 3 input), and is included in "Other assets, net" on the Consolidated Balance Sheets.

We did not record any adjustments to the $ 3.5 million carrying value of the investment during 2022 or 2021.

As of December 31, 2020, the carrying value and the estimated fair value of our outstanding Notes was $ 15.0 million.

The fair value of our Notes was estimated using a discounted cash flow analysis based on current borrowing rates for debt with similar remaining maturities and ratings (a Level 2 input) and is designed to approximate the amount at which the instruments could be exchanged in an arm's-length transaction between knowledgeable willing parties.

Equity Method Investments —We have committed to invest $ 4.0 million in cash as a limited partner for a 16 % interest in PEP Ovation, LP ("Ovation"), of which we had invested $ 3.2 million and $ 1.1 million of cash as of December 31, 2022, and 2021, respectively.

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 and is included in "Long-term investments" on the Condensed Consolidated Balance Sheets.

For the year ended December 31, 2022, our proportional share of Ovation's net income was $ 0.7 million.

Note 16 — EMPLOYEE BENEFITS

24 unchanged sentences

76,524 54,600 21,152 — 152,276

Costs associated with abnormal production 5,973 — — — 5,973

Gross Margin $ 94,769 $ 39,123 $ 7,516 $ — $ 141,408

9 unchanged sentences

87,281 54,847 19,293 — 161,421

Lower of cost or NRV inventory adjustments

Costs associated with abnormal

production and other

5,973 — — — 5,973

Gross Margin (Deficit) $ 11,551 $ ( 8,505 ) $ 7,484 $ — $ 10,530

Gross Margin $ 35,845 $ 16,442 $ 3,477 $ — $ 55,764

Depreciation, depletion, and amortization incurred 2

10 unchanged sentences

1,130 2,885 — — 4,015

Gross Margin $ 27,787 $ 1,100 $ 14,591 $ — $ 43,478

Gross Margin (Deficit) $ 11,551 $ ( 8,505 ) $ 7,484 $ — $ 10,530

Depreciation, depletion, and amortization incurred 2

7 unchanged sentences

Our products are marketed for sale into three primary markets.

These markets are the agricultural market as a fertilizer, the industrial market as a component in drilling fluids for oil and gas exploration, and the animal feed market as a

Credit risks associated with the collection of accounts receivable are primarily related to the impact of external factors on our customers.

These markets are the agricultural market as a fertilizer, the industrial market as a component in drilling fluids for oil and gas exploration, and the animal feed market as a nutrient.

Credit risks associated with the collection of accounts receivable are primarily related to the impact of external

factors on our customers.

Our customers are distributors and end-users whose credit worthiness and ability to meet their payment obligations will be affected by factors in their industries and markets.

1 unchanged sentence

Our industrial sales are significantly influenced by oil and gas drilling activity.

In 2022, we had one customer in our potash and Trio ® segments that accounted for approximately $ 35.0 million of our total consolidated revenues.

"Risks Related to Financial Position, Indebtedness and Additional Capital Needs - The loss or substantial decline in revenue from larger customers or certain industries could have a material adverse effect on our revenues, profitability, and liquidity."

In 2021, and 2020, no customer accounted for more than 10% of our sales.

Because of the size of our company compared to the overall size of the North American market and the regional demands for our products, we believe that a decline in a specific customer's purchases would not have a material adverse long-term effect on our financial results.

In each of the last three years ended December 31, 2021, 2020, and 2019, 97 %, 97 %, and 94 %, respectively, of our total sales were sold to customers located in the United States.

All of our long-lived assets are located in the United States.

In each of the last three years ended December 31, 2022, 2021, and 2020, 94 %, 97 %, and 97 %, respectively, of our total sales were sold to customers located in the U.S.

All of our long-lived assets are located in the U.S.

We maintain cash accounts with several financial institutions.

4 unchanged sentences

Cash generated from operations is held at the parent company level as cash on hand and short- and long-term investments.

Cash on hand totaled $ 36.5 million and $ 19.5 million at December 31, 2021, and 2020, respectively.

Cash and cash equivalents totaled $ 18.5 million and $ 36.5 million at December 31, 2022, and 2021, respectively.

In the event that 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.

1 unchanged sentence

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.

Note 20 — SUBSEQUENT EVENT

Note 20 — SHARE REPURCHASE PROGRAM

In February of 2022, our Board of Directors approved a $ 35 million share repurchase program.

2 unchanged sentences

We may suspend or discontinue the share repurchase program at any time.

In 2022, we repurchased 608,657 shares of our common stock and paid $ 22.0 million under the share repurchase program.

We repurchased no shares of our common stock in 2021 or 2020.

As of December 31, 2022, we have approximately $ 13.0 million of remaining availability under the share repurchase program.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

22 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data