What changed in this filing

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Item 1A. Risk Factors

2025-03-04 compared with 2024-03-07 · 81 added, 50 removed, 504 unchanged (21% of the section changed)

28 unchanged sentences

• A significant disruption to our information technology systems could adversely affect our business and operating results.

• We face risks related to cybersecurity threats and incidents.

• Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data.

• Our business may be adversely affected by union activities.

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This growth continues until the market is over-saturated, leading to decreased prices and lower-capacity utilization until the cycle repeats.

Despite supply disruptions from the Russia-Ukraine conflict in 2022 and 2023, global productive capacity remains higher than demand and significant brownfield and greenfield expansion projects are in progress.

Despite supply disruptions from the Russia-Ukraine conflict in 2022 and 2023 which reduced production for a two-year period, global production in 2024 was approximately 70.6 million metric tonnes and is forecasted to be approximately 71.5 million metric tonnes in 2025.

Global productive capacity remains higher than demand and significant brownfield and greenfield expansion projects are in progress.

Tariffs and retaliatory tariffs, either proposed or enacted, could also impact the supply and demand balance.

As a result of these factors, the prices and demand for potash can be volatile.

This volatility can reduce profit margins and negatively affect our results of operations.

We sell most of our potash and Trio ® into the spot market in the U.S.

We sell most of our potash and Trio ® into the spot market

In addition, potash and Trio ® do not have active hedge markets like many other commodities have.

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In many cases, sales of water require governmental permits or approvals.

A decision to deny, delay, revoke, or modify a permit or approval could prevent us from selling water, increase the cost to provide water, or result in our having to refund prepayments that we have received for future water sales.

A decision to deny, delay, revoke, or modify a permit or approval could prevent us from selling water, increase the cost to provide water, or result in us having to refund prepayments that we have received for future water sales.

If oil or gas prices decline, if oil and gas development in the Permian Basin decreases, or if demand for fresh water in the Permian Basin declines for other reasons, the demand for water under our water rights could be adversely affected.

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A decline in oil and gas drilling, especially in the Permian Basin, could reduce our sales of water, brines, and potassium chloride and result in reduced revenue from our other oilfield related offerings.

For example, the decline in oil and gas drilling in 2020 due to restrictions implemented by local, state and federal authorities in response to the COVID-19 pandemic and the resulting impacts of these restrictions on the global economy as a whole, reduced our sales of water, brine, and potassium chloride and revenue for other oilfield related offerings into industrial markets in 2020 and the first quarter of 2021.

In addition, oil and gas developers are regularly looking for ways to use more produced water instead of fresh water in oil and gas development and operations.

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We may alter or expand our operations or continue to pursue acquisitions, which could adversely affect our business if we are unable to manage any expansion or acquisition effectively.

We continue to look for opportunities designed to maximize the value of our existing assets, such as through increased production and sales of water, salt, and brine.

We continue to look for opportunities designed to maximize the value of our existing assets, such as through increased production and sales of potash, water, salt, and brine.

For example, in 2019 we purchased water and real property assets in southeastern New Mexico, which we refer to as Intrepid South, in an effort to expand our water sales and other revenue from the oil and gas industry.

We may also enter into new or complementary businesses that expand our product offerings beyond our existing assets, which may include leveraging our existing oil and gas businesses in southeast New Mexico and expand into additional

oil and gas midstream and upstream activities.

For instance, as part of this strategy, in May 2020, we acquired an 11% equity stake in the W.D.

Von Gonten Laboratories, a global industry leader in drilling and completion chemistry and a strong supporter of the use of potassium chloride in oil and gas drilling and completion activities.

We may also enter into new or complementary businesses that expand our product offerings beyond our existing assets.

We may also expand into new products or services in our current industry or other industries.

Ultimately, we may be unsuccessful in implementing any alteration of our activities or expansion initiatives.

we may be unsuccessful in implementing any alteration of our activities or expansion initiatives.

Further, we may not be able to fully realize any anticipated benefits of these initiatives.

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Similarly, if we do not have adequate storage capacity to manage varying inventory needs, we may need to reduce production or lower the price at which we sell product, either of which would adversely affect our results of operations.

In mid-2016, we transitioned our East mine to Trio ® -only, resulting in an increased supply of Trio ® .

Previously, Trio ® was supply-constrained, which meant that we did not see as much seasonality with respect to purchases as we did for potash.

As purchasers have gained increased confidence in our ability to supply this product closer to the traditional spring application season in the U.S., these purchasers have moved to more of a just-in-time purchasing model.

As a result, we now experience more traditional seasonality with respect to our domestic Trio ® sales, which exposes us to inventory and demand risks similar to those with respect to our potash.

We market Trio ® in various countries around the world, all of which have different climates and fertilizer-application patterns.

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Other companies could seek to create and market chemically similar alternatives to langbeinite, some of which could be superior to langbeinite, or less costly to produce.

In addition, companies sometimes blend several nutrients to obtain a product with similar

agronomic benefits as langbeinite.

In addition, companies sometimes blend several nutrients to obtain a product with similar agronomic benefits as langbeinite.

The market for langbeinite and our Trio ® sales could be affected by the success of these and other products that are competitive with langbeinite, which could adversely affect the viability of our Trio ® business and our results of operations and financial condition.

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disputes and losses associated with overseas shipping;

tariffs, export controls, and trade duties;

export controls, and trade duties;

additional time and effort to obtain product certifications;

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restrictions on the transfer of funds;

changes in legal and regulatory requirements or import policies including sanctions;

changes in legal and

regulatory requirements or import policies including sanctions;

compliance with potentially unfamiliar local laws and customs;

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An impairment loss is measured and recorded based on the discounted estimated future cash flows.

In 2023, we recorded total impairment charges to our long-lived assets and mineral properties of $43.3 million.

We recorded impairment charges of $31.9 million related to our long-lived assets and mineral property assets at our East mine.

In 2024, we recorded total impairment charges to our long-lived assets and mineral properties of $10.7 million, of which $4.4 million related to assets at our East mine and $6.4 million related to certain assets in our oilfield solutions segment.

In 2023, we recorded total impairment charges of $43.3 million, of which $31.9 million related to our long-lived assets and mineral property assets at our East mine.

We determined that sufficient indicators of potential impairment existed because higher Trio ® production costs and lower realized Trio ® prices led to negative gross margins for our Trio ® segment.

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An impairment loss is measured and recorded based on the current fair value of the asset.

After recording impairment charges to our long-lived assets in the fourth quarter of 2023, we believe the carrying values of our long-lived assets and our indefinite-lived intangible assets were realizable as of the balance sheet dates.

After recording impairment charges to our long-lived assets in 2024, we believe the carrying values of our long-lived assets and our indefinite-lived intangible assets were realizable as of the balance sheet dates.

However, future events could cause us to conclude otherwise.

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In periods when the market prices for our products fall below our cost to produce them and the lower prices are not expected to be temporary, we are required to write down the value of our inventories.

We recorded $4.0 million of lower of cost or net realizable value adjustments in our potash segment in 2024.

Any write-down of our inventory would adversely affect our financial condition and results of operations, possibly materially.

We recorded $6.5 million of lower of cost or net realizable value adjustments in 2023, $3.8 million in our Trio ® segment, and $2.7 million in our potash segment.

Weakening of foreign currencies against the U.S.

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potash prices as the foreign suppliers attempt to maintain their margins.

However, if these local currencies

weaken in comparison to the U.S.

However, if these local currencies weaken in comparison to the U.S.

dollar, foreign suppliers may lower prices to increase sales volume while again maintaining a margin in their local currency.

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In particular, the labor market around Carlsbad, New Mexico, is competitive and employee turnover is generally high.

In that market, we compete for experienced workers with several other employers, including natural resource and hazardous waste facilities, oil and gas producers, and another producer of langbeinite.

In that market, we compete for experienced workers with several other

employers, including natural resource and hazardous waste facilities, oil and gas producers, and another producer of langbeinite.

If we are unable to attract and retain quality workers, the development and growth of our business could suffer, or we could be required to raise wages to keep our employees, hire less qualified workers, or incur higher training costs.

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The occurrence of any of these events could have an adverse effect on our results of operations.

For example, in mid-2016, we idled our West mine and transitioned our East mine to Trio ® -only, resulting in our laying off a significant number of skilled employees in New Mexico.

For example, in mid-2016, we idled our West mine and transitioned our East mine to Trio ® -only, resulting in us laying off a significant number of skilled employees in New Mexico.

This may make it more difficult for us to re-hire skilled employees in the future.

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Our senior management team has developed and implemented first-of-their-kind processes and other innovative ideas that are important to our business.

If we are unable to retain these individuals, our operations could be disrupted and we may be unable to achieve our business strategies and grow effectively.

Our success depends, in part, upon the performance and continued services of our senior leadership team.

We do not currently maintain "key person" life insurance on any of our management personnel.

If we are unable to retain these individuals, our operations could be disrupted and we may be unable to achieve our business strategies and grow effectively.

On September 30, 2024, Robert P.

Jornayvaz III resigned from all positions with the Company and its subsidiaries and affiliates following his extended medical leave of absence.

Jornayvaz was our co-founder and had an in-depth knowledge and understanding of our business operations.

He served as our Chief Executive Officer from our formation in 2008 until 2010, and again from 2014 until the time of his resignation.

He also served as our Executive Chairman of the Board since 2010.

The Company's Board of Directors (the "Board") appointed Kevin S.

Crutchfield as Chief Executive Officer and a member of the Board as a Class III director, effective December 2, 2024.

We have less product diversification than nearly all of our competitors, which could have an adverse effect on our financial condition and results of operations.

A significant portion of our revenue comes from the sale of potash and langbeinite, whereas nearly all of our competitors are diversified, primarily into nitrogen- or phosphate-based fertilizer businesses or other chemical or industrial businesses.

In addition, a majority of our sales are to customers in the U.S., and generally these customers are concentrated in key geographies where we have a freight advantage.

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Any such access, disclosure or other loss of information could disrupt our operations and the services we provide to customers, damage our reputation or our relationships with our customers or result in legal claims or proceedings, any of which could adversely affect our business, reputation, and operating results.

We face risks related to cybersecurity threats and incidents.

We regularly face attempts by others to gain unauthorized access through the internet, or to introduce malicious software, to our information technology (“IT”) systems.

Individuals or organizations, including malicious hackers and insider threats including employees and third-party service providers, or intruders into our physical facilities, at times attempt to gain unauthorized access to our software, network, and services.

We could also be a target of malicious attackers who attempt to gain access to our network or data centers;

steal proprietary information related to our business, products, employees, suppliers and customers;

interrupt our systems and services or those of our suppliers, customers, or others;

or demand a ransom to return

control of such systems and services.

Such attempts—including but not limited to—social engineering or “phishing” attempts, denial of service attacks and malware (including viruses, trojans and keyloggers) are increasing in number, intensity and in technical sophistication, and are increasingly difficult to detect for periods of time, especially as they relate to attacks on third-party vendors, and, if successful, expose us and any affected parties to risk of loss or misuse of proprietary or confidential information or disruptions of our business operations, including our manufacturing operations.

These attacks are often carried out by motivated and highly skilled actors, who are increasingly well-resourced.

Our IT infrastructure also includes services provided by third parties, and these service providers can experience breaches of their systems and products that impact the security of our systems and our proprietary or confidential information.

In addition, certain factors, such as rapid technology evolution, including increased adoption of artificial intelligence, and geopolitical events, have increased cybersecurity risks.

A substantial breach of our or one of our service providers’ systems could damage our reputation and result in the loss of revenues, or the misuse of confidential data, manufacturing challenges or disruption, diversion of management attention, litigation, regulatory action and damage to our relationships with vendors, business partners and customers, and we may incur significant expenses to resolve such issues.

Finally, the SEC has adopted new rules that require us to provide greater disclosures around cybersecurity risk management, strategy, and governance, as well as disclose the occurrence of material cybersecurity incidents.

We cannot yet predict or estimate the amount of additional costs we will incur in order to comply with these rules or the timing of such costs.

These rules and regulations may also require us to report a cybersecurity incident before we have been able to fully assess its impact or remediate the underlying issue.

Efforts to comply with such reporting requirements could divert management’s attention from our incident response and could potentially reveal system vulnerabilities to threat actors.

Failure to timely report incidents under these or other similar rules could also result in monetary fines, sanctions, or subject us to other forms of liability.

This regulatory environment is increasingly challenging and may present material obligations and risks to our business, including significantly expanded compliance burdens, costs, and enforcement risks.

Artificial intelligence presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal data.

Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.

As with many technological innovations, artificial intelligence presents risks and challenges that could impact our business.

We may adopt and integrate generative artificial intelligence tools into our systems for specific use cases reviewed by legal and information security.

Our vendors may incorporate generative artificial intelligence tools into their offerings without disclosing this use to us, and the providers of these generative artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors’ ability to maintain an adequate level of service and experience.

If we, our vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative artificial intelligence, we may lose valuable intellectual property and confidential information, and our reputation and the public perception of the effectiveness of our security measures could be harmed.

Further, bad actors around the world use increasingly sophisticated and rapidly evolving methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property.

Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.

Our business may be adversely affected by union activities.

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Our current collective bargaining agreement with the union, which became effective on June 1, 2023, expires on May 31, 2026.

Although we believe that our relations with our unionized employees are good, we may not be successful in negotiating a new collective bargaining agreement as a result of general economic, financial,

competitive, legislative, political, and other factors beyond our control.

Although we believe that our relations with our unionized employees are good, we may not be successful in negotiating a new collective bargaining agreement as a result of general economic, financial, competitive, legislative, political, and other factors beyond our control.

Any new agreement could result in a significant increase in our labor costs.

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In any of these events, our financial condition and results of operations could be adversely affected.

We updated our mineral reserves and resources as of December 31, 2023, and we determined we do not have any mineral reserves at our East facility because the mineral deposit could not be economically extracted.

Existing and further oil and gas development in the Designated Potash Area could impair our potash reserves, which could adversely affect our financial condition or results of operations.

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If costs associated with capital expenditures increase or if our earnings decrease significantly or we do not have access to the capital markets, we could have difficulty funding any necessary or desirable capital expenditures at an acceptable rate or at all.

This could limit the expansion of our production or make it difficult for us to sustain

our existing operations at optimal levels.

This could limit the expansion of our production or make it difficult for us to sustain our existing operations at optimal levels.

Increased costs for capital expenditures could also have an adverse effect on the profitability of our existing operations and returns from our most recent strategic projects.

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In some cases, the construction or commissioning processes could force us to slow or shut down normal operations at the affected facility for a period of time, which would cause lower production volume and higher production costs per ton.

In addition, our management team and other employees may be required to spend a significant amount of time addressing strategic projects, which could mean that our normal operations receive less time and attention.

In addition, our management team and other employees may be required to spend a significant amount

of time addressing strategic projects, which could mean that our normal operations receive less time and attention.

As we proceed with one or more of these strategic projects, we may not realize the expected benefits despite substantial investments, they may cost significantly more than we expect, or we may encounter additional risks that we did not initially anticipate.

Future indebtedness could adversely affect our financial condition and impair our ability to operate our business.

As of December 31, 2023, we had $4 million in outstanding borrowings under a revolving credit facility that allows us to borrow up to $150 million.

As of December 31, 2024, we had no outstanding borrowings under a revolving credit facility that allows us to borrow up to $150 million.

This credit facility expires in 2027.

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Adverse conditions in the domestic and global economy and disruptions in the financial markets could negatively affect our results of operations and financial condition.

Global and domestic economic volatility and uncertainty, for example, as a result of rising interest rates, a recession or fear of a recession, global trade uncertainties, international conflicts, epidemics or other significant health concerns, and inflation, can create uncertainty for farmers and customers in the geographic areas where we sell our products.

Global and domestic economic volatility and uncertainty, for example, as a result of rising interest rates, a recession or fear of a recession, global trade uncertainties, tariffs, international conflicts, epidemics or other significant health concerns, and inflation, can create uncertainty for farmers and customers in the geographic areas where we sell our products.

If farmers reduce, delay, or forgo their potash and Trio ® purchases because of economic volatility or uncertainties the results of our operations would be adversely affected.

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Despite diversification across multiple industries, including agricultural, industrial, and feed, larger customers, at times, comprise a significant portion of our sales revenue.

For example, in 2023, one customer in our potash and Trio ® segments accounted for approximately 12%, or $33.4 million, of our total consolidated revenues.

In 2022, this same customer accounted for approximately 10%, or $35.0 million of our total consolidated revenues.

For example, in 2024 one customer in our potash and Trio ® segments accounted for approximately 10%, or $25.6 million, or our total consolidated revenues.

In 2023 and 2022, this same customer accounted for approximately 12%, or $33.4 million, and 10%, or $35.0 million of our total consolidated revenues, respectively.

If we experience a significant decline in sales from our larger customers or in certain industries, it may be difficult to replace those sales which could have a material effect on our results of operations.

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In addition, new laws and regulations, including economic sanctions, or new interpretations of or enforcement practices with respect to existing laws and regulations, could similarly impact our business.

For example, we are subject to significant regulation under MSHA and OSHA.

For example, the recent imposition of additional tariffs, or proposed tariffs, by the U.S.

on various countries (as well as potential retaliatory tariffs against the U.S.), could increase our cost of doing business and may lead to further challenges for us in the various markets in which we operate.

Additionally, we are subject to significant regulation under MSHA and OSHA.

High-profile mining accidents could prompt governmental authorities to enact new laws and regulations that apply to our operations or to more strictly enforce existing laws and regulations.

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Reporting of royalties is subject to periodic audits by federal and state officials.

The Office of Natural Resources Revenue

("ONRR") completed their draft audit report of our New Mexico royalty reporting in September 2019.

The Office of Natural Resources Revenue ("ONRR") completed their draft audit report of our New Mexico royalty reporting in September 2019.

As of February 2025, we are continuing to progress on the audit in cooperation with ONRR.

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Our international activities create the risk of unauthorized payments or offers of payments in violation of the FCPA or other anti-corruption laws by one of our employees, consultants, sales agents, or distributors even though these persons are not always subject to our control.

Although we have implemented policies and training designed to promote compliance with these laws, these persons may take actions in violation of our policies.

Although we have implemented policies and training designed to

promote compliance with these laws, these persons may take actions in violation of our policies.

Any violations of the FCPA or other anti-corruption laws could result in significant civil or criminal penalties and have an adverse effect on our reputation.

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The Paris Agreement entered into force in November 2016 after more than 170 nations, including the U.S., ratified or otherwise indicated their intent to be bound by the agreement.

After previously withdrawing, the U.S.

rejoined the Paris Agreement in January 2021.

and other countries' actions to implement the

mandates of the Paris Agreement or otherwise impose regulations on our industry or our customers’ industries aimed at reducing GHG emissions could have an adverse effect on our business.

It is possible that future legislation or regulation addressing climate change, including in response to the Paris Agreement or any new international agreements, could adversely affect our operations, energy, raw material and transportation costs, results of operations, liquidity or capital resources, and these effects could be material or adversely impact us.

After previously withdrawing and rejoining the Paris Agreement, in January 2025 the U.S.

began the process of withdrawing from the Paris Agreement.

Actions to implement the mandates of the Paris Agreement or otherwise impose regulations on our industry or our customers’ industries aimed at reducing GHG emissions could have an adverse effect on our business.

It is possible that future legislation or regulation addressing climate change, including, any changes to existing agreements or any new international agreements, could adversely affect our operations, energy, raw material and transportation costs, results of operations, liquidity or capital resources, and these effects could be material or adversely impact us.

In addition, to the extent climate change restrictions imposed in countries where our competitors operate, such as Canada, Russia, and Belarus, are less stringent than in the U.S., our competitors could gain cost or other competitive advantages over us.

We have also made certain public statements regarding our commitment to the environment and our focus on protecting the environments, resources, and ecosystems surrounding our locations.

Although we intend to work closely with communities and make it a priority to protect the natural resources surrounding our operation, we may be required to expend significant resources to do so, which could increase our operational costs.

Although we intend to work closely with

communities and make it a priority to protect the natural resources surrounding our operation, we may be required to expend significant resources to do so, which could increase our operational costs.

Further, there can be no assurance of the extent to which our goals will be achieved, or that any future investments we make in furtherance of achieving such target and goal will meet investor expectations or legal standards, if any, regarding sustainability performance.

Moreover, we may determine that it is in the best interest of our Company and our stockholders to prioritize other business, social, governance or sustainable investments over the achievement of our current plans based on economic, technological developments, regulatory and social factors, business strategy or pressure from investors, activist groups or other stakeholders.

Moreover, we may determine that it is in the best interest of our Company and our stockholders to prioritize other business investments over the achievement of our current plans based on economic, technological developments, regulatory and social factors, business strategy or pressure from investors, activist groups, or other stakeholders.

If we are unable to meet these commitments, then we could incur adverse publicity and reaction from investors, activist groups, or other stakeholders, which could adversely impact the perception of us and our products and services by current and potential customers, as well as investors, which could in turn adversely impact our results of operations.

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For example, our water disposal processes rely on dikes and reclamation ponds that could breach or leak, resulting in a possible prohibited release into the environment.

Moreover, although the North and East mines in New Mexico and the Moab mine in Utah are designated as zero discharge facilities under the applicable water quality laws and regulations, these mines could experience some water discharges during significant rainfall events.

Moreover, although the North mine in New Mexico and the Moab mine in Utah are designated as zero discharge facilities under the applicable water quality laws and regulations, these mines could experience some water discharges during significant rainfall events.

We expect that we will be required to continue to invest in environmental controls at our facilities and that these expenses could be significant.

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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 1A. Risk Factors