What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-04 compared with 2024-03-07 · 193 added, 198 removed, 274 unchanged (59% of the section changed)

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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:

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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.

We sell a portion of water from these water rights to support oil and gas operations and development in the Permian Basin.

We continually work to expand our sales of water.

In May 2019, we acquired certain land, water rights, federal and 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 to other companies, where such sales provide a solution to a company's need.

We also have certain land, water rights, federal grazing leases, and other related assets in southeast New Mexico.

We refer to these assets and operations as "Intrepid South." Intrepid South generates revenue from sales of various oilfield related products and services, including but not limited to, water, brine, surface use and right-of-way agreements, a produced water royalty agreement, and caliche sales.

We have three segments:

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For each of the years ended December 31, 2024, 2023, and 2022, a majority of our byproduct sales were accounted for in the potash segment.

Recent Developments

In April 2024, our Board of Directors (the "Board") granted Robert P.

Jornayvaz III, our Executive Chairman of the Board and Chief Executive Officer (the "CEO"), a medical leave of absence, while he recovered from a non-work related accident.

Our Board appointed Matthew D.

Preston, our Chief Financial Officer, as principal executive officer.

Our Board also temporarily delegated all responsibilities of the Chairman of the Board to Barth Whitham, Lead Director.

Our Board also appointed Hugh E.

Harvey, our co-founder with Mr.

Jornayvaz, to serve as a Class III director on the Board.

On July 10, 2024, our Board announced that it was unlikely that Mr.

Jornayvaz would return from his extended medical leave of absence and it had initiated a search process to identify a successor to Mr.

Jornayvaz in the CEO role.

On September 30, 2024, Mr.

Jornayvaz resigned as CEO and as a member of our Board.

On November 26, 2024, our Board appointed Kevin S.

Crutchfield as CEO of the Company and a member of the Board as a Class III director, in each case effective December 2, 2024.

On January 14, 2025, our Board increased the size of the Board from seven directors to eight directors, and the Board appointed Gonzalo Avendano as an additional independent director to the fill the vacancy created by the expansion of the Board and to serve as a Class I director of the Company.

Significant Business Trends and Activities

Our financial results have been, or are expected to be, impacted by several significant trends and activities, including impacts from global health issues, such as the COVID-19 pandemic, and other global disruptions.

Given the dynamic nature of such disruptions, we cannot reasonably estimate the impacts of such disruptions, if any, on our financial condition, results of operations, liquidity or cash flows in the future.

Our financial results have been, or are expected to be, impacted by several significant trends and activities, including impacts from global disruptions.

Given the dynamic nature of such disruptions, we cannot reasonably estimate the impacts of

such disruptions, if any, on our financial condition, results of operations, liquidity, or cash flows in the future.

We expect that any such disruptions may have a material effect on revenue growth, financial condition, liquidity, and overall profitability in future reporting periods.

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• Potash pricing and demand.

In 2023, potash remained a significant driver of our profitability, comprising 47% of our total sales.

Our average net realized sales price for potash decreased in 2023 to $466 per ton compared to $713 per ton for 2022.

Agricultural pricing peaked at $800 per ton in April 2022 as a result of sanctions on Belarusian potash and concerns about global potash supply due to Russia's invasion of Ukraine.

Prices started to decrease in the fall of 2022 as global potash production rates improved.

Agricultural potash pricing was $480 per ton at the beginning of 2023 and decreased from there.

Despite the declining potash price, demand remained strong throughout 2023 with two good

application seasons in the spring and fall supported by above average commodity prices.

In January 2024, a winter-fill agricultural potash program was announced decreasing the list price to $385 per ton in January 2024 during a ten-day order window, before the list price increased by $30 per ton.

We saw a good response to the program and expect distributors will continue to layer in tons as the 2024 spring season continues, with most distributors targeting minimal carryover inventory to end the spring.

We expect to realize the increased price after the order window on certain spot sales in the first quarter of 2024.

Our average net realized sales price for potash decreased to $377 per ton in 2024 compared to $466 per ton in 2023 as global potash production improved back to 2021 levels leading to a more balanced global potash market.

In January 2025, a winter-fill agricultural potash program was announced decreasing the list price for agricultural potash by $20 per ton to $315 per ton during a one-week order window, before the list price increased back to $340 per ton.

Subscription under the fill program was generally positive, with most customers placing orders for the entirety of their first quarter needs.

After the fill program and subsequent price increase, U.S potash prices are trading in line with global prices levels, supported by improving crop prices and a positive outlook on spring planting.

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.

As a smaller producer relative to the overall market, 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.

The interaction of global potash supply and demand, ocean, land, and barge freight rates, currency fluctuations, tariffs, and crop commodity values and outlook, also influence pricing.

• Trio ® pricing and demand.

Our average net realized sales price for Trio ® decreased to $321 per ton in 2023, compared to $479 per ton in 2022, as Trio ® price generally followed price decreases in potash.

After the January 2024 price announcement for potash, we maintained our posted Trio ® price of $330 per ton for premium Trio ® , $320 per ton for granular and $290 per ton for standard Trio ® , which is approximately $75 per ton below the price levels in January 2023.

We've seen good subscription for the 2024 spring season and similar to past years we expect distributors to target minimal carryover inventory into summer.

Our average net realized sales price for Trio ® decreased to $311 per ton in 2024, compared to $321 per ton in 2023, as increasing sulfate values mostly offset declines in potassium pricing during the year.

In January 2025, improving agricultural commodity prices led to strong early season demand and customers were willing to commit to the majority of their spring needs.

Given the good demand and continued improvements in sulfate pricing, we increased our posted price for Trio ® by $20 per ton in late January to $375 per ton, and expect to realize the higher price levels on tons shipped in the second quarter of 2025.

Our ability to realize the increased prices may be affected by, among other things, weather, planting decisions, rail car availability, commodity price decreases, and the price and availability of other potassium products.

Overall average net realized sales price per ton for Trio ® will continue to be impacted by the percentage of international sales, particularly to offshore markets.

Competition from lower cost alternatives and freight costs continue to negatively impact our average net realized sales price per ton to offshore markets.

Competition from lower cost alternatives and freight costs continues to negatively impact our average net realized sales price per ton to offshore markets.

We plan to continue a price-over-volume strategy internationally by focusing on those international markets where we obtain the highest average net realized sales price per ton and thus the highest margin.

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We continue to operate our facilities at reduced production levels that approximate expected demand and allow us to manage inventory levels.

• Strategic Focus on our Solar Solution Mining Facilities.

Key current and future projects include:

◦ We successfully commissioned Phase Two of the HB Injection Pipeline Project in the third quarter of 2024.

Since commissioning, our brine injection rates have averaged approximately 1,900 gallons per minute, which is 30% higher than the previous gallons per minute injection rate highs achieved in 2014.

◦ We completed the construction of a new primary pond in Wendover in June 2024 and are in the process of filling the pond with brine.

Similar to our caverns at the Moab and HB mines, the primary ponds at Wendover serve as the brine storage area, and adding another primary pond will help us meet our goals of maximizing brine availability, increasing brine grade, and improving production.

We expect to see the production benefits of the new primary pond beginning in 2025 - 2026 production year.

◦ HB AMAX Cavern - In the third quarter of 2024, we started the permitting process to drill a sample well into the AMAX Cavern at HB in order to measure the brine chemistry of the existing cavern.

AMAX is the largest cavern in the HB system and is expected to serve as an expansion area to the original HB caverns which have been in service for over ten years.

We are close to completing the permitting process and expect to drill the well in the second quarter of 2025.

• Water sales.

Water sales decreased in 2024 to $13.6 million, compared to $15.2 million in 2023.

The decrease is attributable to fewer fracs on our South Ranch and more fresh water used at our HB facility to improve injection rates while we complete the second phase of our new HB injection pipeline.

In addition to fewer fracs on our South Ranch in 2023, we purchased less water for resale resulting in fewer sales but also a corresponding decrease in costs.

In 2023, we purchased $1.4 million of water for resale compared to $6.4 million in 2022.

We continue to see certain operators switch to using exclusively recycled water or a combination of fresh water and recycled water when completing wells.

We believe this change is due to the growing focus on water conservation efforts, environmentally responsible operations and the large amounts of produced water that is present in certain basins and formations, such as the Delaware Basin in southeast New Mexico.

By recycling and reusing produced water, operators are able to reduce freshwater purchases and decrease the cost of transporting and disposing of produced water into disposal wells.

An update to legal proceedings concerning our water rights is contained in Note 14 to our audited consolidated financial statements included in "Item 8.

Financial Statements and Supplementary Data" of this Annual Report.

The majority of our water sales are from Intrepid South, where we sell water through our truck station or directly to operators.

In 2024, we supplied water for one drilling program during the third quarter which accounted for approximately $5.5 million, or 40%, of our total water sales.

Due to the large drilling program, we purchased $3.6 million of water for resale during 2024, a $2.2 million increase compared to 2023.

Overall, we have seen a trend towards larger frac operations on Intrepid South due to the increasing length and number of laterals drilled.

These operations require significant amounts

of water for a sustained period which has resulted in us relying more on third-party water to meet the needs of operators as we are unable to provide the volumes necessary with our own wells and pond infrastructure.

While oil and gas activity remains strong in southeast New Mexico and on Intrepid South, we expect continued volatility in our water sales as the amount of water required varies between frac operations and the timing of operations is difficult to predict.

• Byproduct sales.

Byproduct sales increased to $30.6 million in 2023 compared to $26.7 million in 2022, driven primarily by a $1.7 million increase in magnesium chloride sales at our Wendover facility due to increased pricing.

Byproduct brine sales into oil and gas markets in southeast New Mexico increased $0.9 million during 2023 as we successfully implemented multiple per-barrel price increases in 2023 while continuing to grow sales volumes.

Byproduct water and salt sales both increased $0.7 million compared to the prior year.

• Strategic Focus on our Solar Solution Mining Facilities.

Key current and future projects include:

◦ We successfully commissioned the Eddy Shaft Brine Extraction Project in October 2023 at our HB Solar Solution Mine.

This project targets a significant, high-grade brine pool in the Eddy Cavern that is estimated to contain approximately 270 million gallons of brine at an expected grade of over 9% potassium chloride (“KCl”).

Access to this brine pool immediately increases the brine available to our pond system and we expect to see incremental production contributions starting in the second half of 2024.

◦ We continue to work through the permitting and contracting processes for the replacement extraction well at our HB Solar Solution Mine and expect the well will be commissioned in the second quarter of 2024.

This new extraction well is designed to have a long-term operational life and will initially target approximately

330 million gallons of high-grade brine from the Eddy Cavern at HB, with this additional brine being at lower depths than the Eddy Shaft project can access.

◦ Phase Two of the HB Injection Pipeline Project is the installation of an in-line pigging system to clean the pipeline and remove scaling to help ensure more consistent flow rates.

We continue to work through the permitting requirements with commissioning expected in the first half of 2024, assuming we have no further delays in permitting.

Upon Phase 2 commissioning, we expect our brine injection rates to be the highest in company history, which is key for maximizing brine availability and residence time.

◦ We started construction on a new primary pond in Wendover to increase the brine evaporative area, which will result in two primary ponds when complete.

Similar to our caverns at Moab and HB, the primary ponds at Wendover serve as the brine storage area, and adding another primary pond will help us meet our goals of maximizing brine availability, increasing our brine grade, and improving our production.

We expect this project to be commissioned in the third quarter of 2024.

• Diversification of products and services.

Our revenue from brine and other oilfield products and services recorded in our oilfield solutions segment increased by $0.6 million in 2023, compared to 2022, mainly driven by an increase in brine sales at Intrepid South.

Brine sales from our HB facility are recorded as byproduct revenue in our potash segment.

Our total brine sales and byproduct brine sales were $8.3 million during 2023, compared to $6.1 million during 2022.

We continue to progress on a sand mine opportunity at Intrepid South and have received all necessary permits to begin construction and full operation.

We are currently evaluating the market and our options, including the potential to add a strategic partner.

Byproduct sales decreased to $25.3 million in 2024 compared to $30.6 million in 2023, driven primarily by a $5.6 million decrease in byproduct water sales as we increased the volume of water used for injection at our HB plant and we sold fewer barrels of water from our Caprock water rights.

Magnesium chloride sales decreased $2.8 million compared to 2023, as limited snowfall events in the first half of 2024, combined with customers entering 2024 with high-levels of inventory of dust control magnesium chloride, reduced sales during the year.

Byproduct brine sales into oil and gas markets in southeast New Mexico increased $2.6 million during 2024 as consistent oil and gas activity near our operations led to a 17% increase in barrels sold compared to the prior year.

• Other oilfield products and services.

Our revenue from brine and other oilfield products and services, excluding water, recorded in our oilfield solutions segment decreased to $11.1 million in 2024, compared to $11.7 million in 2023, mainly driven by a $1.0 million decrease in surface use and right of way revenue at Intrepid South.

In the fourth quarter of 2024, we recorded impairment charges of $6.4 million mainly related to our frac sand opportunity and other oilfield related equipment as it is unlikely we will continue to pursue this opportunity as we focus on our core business.

We still hold the necessary permits for the sand operation and believe the potential for a frac sand operation increases the overall value of Intrepid South.

Consolidated Results

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Cost of Goods Sold $ 171,415 $ 187,278

Lower of cost or net realized value inventory adjustments $ 3,957 $ 6,492

Gross Margin $ 29,082 $ 36,846

(Loss) Income Before Income Taxes (44,062) 96,509

Income Tax Benefit (Expense) 8,389 (24,289)

Net (Loss) Income $ (35,673) $ 72,220

Loss Before Income Taxes (18,512) (44,062)

Income Tax (Expense) Benefit (194,333) 8,389

Net Loss $ (212,845) $ (35,673)

Average Net Realized Sales Price per Ton 2

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Consolidated Results for the Years Ended December 31, 2024, and 2023

Our total sales decreased $58.5 million, or 17% in 2023, compared to 2022, as potash segment sales decreased $35.5 million, Trio ® segment sales decreased $15.6 million, and our oilfield solutions segment sales decreased $7.4 million.

Our total sales decreased $24.4 million, or 9% in 2024, compared to 2023, as potash segment sales decreased $31.1 million, partially offset by an increase of $3.2 million in Trio ® segment sales and an increase of $3.4 million in oilfield solutions segment sales.

Our total potash segment sales decreased $31.1 million during 2024, compared to 2023, driven by a decrease of $30.9 million in potash sales.

Our potash sales decreased as our potash average net realized sales price per ton decreased 35%, partially offset by a 16% increase in tons of potash sold.

Generally strong crop prices supported good potash demand during 2023.

Potash prices peaked during the second quarter of 2022 and have steadily declined in each succeeding quarter as global production rates and product availability improved.

The decrease in potash sales during 2023 was partially offset by an increase of $1.9 million in potash segment byproduct sales.

The increase in potash segment byproduct sales was due to increased byproduct magnesium chloride sales and increased byproduct brine sales.

Our byproduct magnesium chloride sales increased as we realized higher prices during 2023, compared to 2022.

Our byproduct brine sales increased due to continuing strong oil and gas activities near our facilities in New Mexico during 2023.

Our total Trio ® segment sales decreased by $15.6 million during 2023, compared to 2022, driven by a decrease of $17.6 million in Trio ® sales.

Our Trio ® average net realized sales price per ton decreased 33% during 2023, partially offset by a 16% increase in tons of Trio ® sold.

Similar to potash, Trio ® prices have declined in each succeeding quarter after peaking during the second quarter of 2022.

Generally strong crop prices and lower Trio ® prices drove good demand for Trio ® .

The decrease in Trio ® sales was partially offset by an increase of $2.0 million in Trio ® segment byproduct sales during 2023, as our Trio ® byproduct water sales increased as a larger portion of our total water sales was byproduct water used in our Trio ® production process.

Our oilfield solutions segment sales decreased by $7.4 million in 2023, compared to 2022, mainly driven by a decrease of $7.9 million in water sales during 2023.

Water sales decreased as we purchased $5.0 million less in third-party water for resale in 2023, compared to 2022, and we used more water at our HB facility to improve injection rates while we complete the second phase of our new HB injection pipeline.

Our potash sales decreased as our potash average net realized sales price per ton decreased 19%, combined with a 7% decrease in tons of potash sold.

Our average net realized sales price per potash ton decreased in 2024 compared to 2023, as the available supply of potash increased in 2024.

We sold fewer tons of potash in 2024, compared to 2023, as we began 2024 with less inventory of potash to sell due to lower potash production from our HB and Wendover facilities during the second half of 2023.

Potash production improved at our HB and Wendover facilities during 2024 compared to 2023, but annual production at our Wendover facility remains below its historical annual production level.

Potash segment byproduct sales decreased $0.1 million in 2024 compared to 2023, as decreases in magnesium chloride and byproduct water sales were mostly offset by increases in brine water and salt sales.

Our total Trio ® segment sales increased by $3.2 million during 2024 compared to 2023, driven by an increase of $8.4 million in Trio ® sales, partially offset by a decrease of $5.2 million in Trio ® segment byproduct sales.

We sold 11% more tons of Trio ® in 2024 compared to 2023, partially offset by a 3% decrease in our Trio ® average net realized sales price per ton during 2024, compared to 2023.

Our Trio ® byproduct sales decreased as we did not sell any Trio ® segment byproduct water in 2024, while we sold $5.3 million in Trio ® segment byproduct water in 2023.

Our oilfield solutions segment sales increased by $3.4 million in 2024, compared to 2023, driven by an increase of $4.0 million in water sales, and an increase of $0.1 million in brine water sales, partially offset by a $0.7 million decrease in other products and services.

Our oilfield solutions segment water revenues increased due to the completion of a large frac on Intrepid South during the third quarter of 2024.

Demand for brine water sales remained strong in 2024 due to continued oil and gas activity in the Permian Basin near Intrepid South.

Sales of our other products and services decreased in 2024, compared to

2023, due to a decrease in surface use and easement sales.

Surface use and easement sales fluctuate based on the time of recognizing sales from the various performance obligations contained in the underlying agreements.

Cost of Goods Sold

Our total cost of goods sold increased $35.0 million, or 23%, in 2023, compared to 2022.

Our potash segment cost of goods increased $20.9 million, or 27%, and our Trio ® segment cost of goods sold increased $19.7 million, or 36%, partially offset by a decrease of $5.6 million, or 27%, in our oilfield solutions segment cost of goods sold.

Our potash segment cost of goods sold mainly increased due to selling 16% more tons of potash in 2023, compared to 2022.

In addition to selling more tons of potash in 2023, our weighted average carrying cost per ton increased as production labor costs, including contract labor and benefits, increased in 2023.

We also produced fewer tons of potash during 2023 compared to 2022 and, because most of our production costs are fixed, a decrease in tons produced causes our weighted average price per ton to increase.

Our Trio ® segment cost of goods sold increased in 2023 compared to 2022 as we sold 16% more tons of Trio ® in 2023, and our weighted average carrying costs increased as we incurred more production labor expenses and produced fewer tons compared to the prior year.

Our oilfield solutions segment cost of goods sold decreased in 2023, as we purchased $5.0 million less in third-party water for resale in 2023, compared to 2022.

Lower of Cost or Net Realizable Value Inventory Adjustments

During 2023, we recorded lower of cost or net realizable value inventory adjustments of $6.5 million as our weighted average carrying costs for certain potash and Trio ® products exceeded our expected selling price for those products.

As discussed above, our average net realized sales price per ton for potash and Trio ® declined during 2023, and our weighted average carrying costs for potash and Trio ® increased during 2023.

We did not record any lower of cost or net realizable value inventory adjustments during 2022.

Our total cost of goods sold decreased $15.9 million, or 8%, in 2024, compared to 2023.

Our potash segment cost of goods decreased $13.5 million, or 14%, and our Trio ® segment cost of goods sold decreased $4.3 million, or 6%, partially offset by an increase of $1.9 million, or 13%, in our oilfield solutions segment cost of goods sold.

Our potash segment cost of goods sold decreased 14% in 2024 compared to 2023, due to selling 7% fewer tons of potash in 2024, compared to 2023.

In addition to selling fewer tons of potash in 2024, we produced 32% more tons of potash in 2024 compared to 2023, which lowered our per ton production costs.

A significant portion of our production costs are fixed and an increase in the number of potash tons produced decreases our per ton production costs.

Our Trio ® segment cost of goods sold decreased 6% in 2024 compared to 2023.

We sold 11% more tons of Trio ® in 2024 compared to 2023, but our weighted average carrying cost per ton of Trio ® decreased as we incurred less production labor, natural gas, and depreciation expenses in 2024 compared to 2023.

Trio ® segment labor costs decreased as we operated fewer shifts in 2024 compared to 2023.

Trio ® segment depreciation expense decreased in 2024 compared to 2023 due to the impairment that was recorded in December 2023 for our Trio ® segment assets.

Trio ® segment natural gas expenses decreased in 2024 compared to 2023, as natural gas prices spiked in early 2023 due to supply constraints in the western U.S.

In addition, we produced 16% more tons of Trio ® in 2024 compared to 2023.

Because a significant portion of our production costs are fixed, an increase in tons produced reduces our production costs per ton.

Our oilfield solutions segment cost of goods sold increased 13% in 2024 compared to 2023, as we purchased more third-party water for resale in 2024 compared to 2023, to meet the demand for a large frac on Intrepid South.

Lower of Cost or Net Realizable Value ("NRV") Inventory Adjustments

During 2024, we recorded lower of cost or NRV inventory adjustments of $4.0 million as our weighted average carrying costs for certain potash products exceeded our expected selling price for those products.

During the year ended December 31, 2023, we recorded lower of cost or NRV adjustments of $6.5 million as our weighted average carrying costs for certain potash and Trio ® products exceeded our expected selling price for those products.

As discussed above, during 2024 compared to 2023, our average net realized sales price per ton for potash and Trio ® decreased but the amount of lower of cost or NRV inventory adjustments recorded was less in 2024 compared to 2023 because our weighted average carrying costs for potash and Trio ® also decreased.

Our gross margin percentage decreased to 11% in 2024, compared to 13% in 2023.

The decrease was driven primarily by a decrease in sales revenue due to decreases in our average net realized sales price per ton for both potash and Trio ® , increases in both potash and Trio ® cost of goods sold, and recording lower of cost or net realizable value inventory adjustments during 2023.

The decrease was driven primarily by a decrease in sales revenue due to decreases in our average net realized sales price per ton for both potash and Trio ® .

Selling and Administrative Expense

In 2023, selling and administrative expenses increased $0.6 million or 2% from 2023.

The increase in 2023 was due mainly to increases in labor and benefits expense as a result of salary increases given to employees in April 2023.

Selling and administrative expenses increased $0.5 million or 2% in 2024 compared to 2023, as increases in severance and labor expenses were partially offset by decreases in stock compensation and legal expenses.

Impairment of Long-Lived Assets

During the year ended December 31, 2024, we recorded total impairment charges of $10.7 million.

During the year ended December 31, 2022, we recorded no impairment charges.

In the fourth quarter of 2023, given the decrease in our gross margin for our Trio ® segment we determined that sufficient indicators of potential impairment of our Trio ® segment long-lived assets existed.

We performed a recoverability test and determined that the carrying value of our Trio ® segment long-lived assets was not recoverable.

During the year ended December 31, 2023, we recorded total impairment charges of $43.3 million.

In 2023, we recorded an impairment related to our Trio ® segment assets because the net book value exceeded the estimated fair value of the assets.

We engaged a third-party valuation firm to determine the fair value of our Trio ® segment assets.

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The carrying value of our Trio ® segment asset group exceeded its fair value, and we recorded an impairment charge of $31.9 million.

Our long-lived assets at our West facility have been in care and maintenance since July 2016.

Given the length of time since the assets were placed in care and maintenance, we engaged a third-party valuation firm to determine if the fair value of the West assets supports the carrying value of those assets.

For any Trio ® segment capital spending during 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets and recorded an impairment of $4.4 million.

In 2024, in our Oilfield Solutions Segment we recorded impairment charges of $6.4 million mainly related to our frac sand opportunity and other oilfield related equipment.

Although we still hold the necessary permits for the sand operation, it is unlikely we will continue to pursue this opportunity as we focus on our core business.

In 2023, we recorded impairment charges of $1.5 million related to certain assets in our Oilfield Solutions Segment, specifically certain water recycling equipment and an investment in a non-operating interest in an oil and gas investment.

In 2023 in our potash segment, we recorded an impairment charge of $9.9 million related to the assets at the West facility, which were placed in care and maintenance in 2016, and given the length of time since the assets were placed in care and maintenance, we engaged a third-party valuation firm to determine the fair value of the West assets.

The fair value of the West assets was determined using the expected proceeds received in an orderly sale of the individual assets.

The carrying value of the West assets exceeded the fair value of those assets, and we recorded an impairment charge of $9.9 million during the fourth quarter of 2023.

Finally, during 2023, we recorded impairment charges of $1.5 million related to certain assets in our Oilfield Solutions Segment, specifically certain water recycling equipment and an investment in a non-operating interest in an oil and gas investment.

Loss on Sale or Disposal of Assets

During 2024, we recorded a $2.0 million loss on the sale or disposal of assets in the normal course of business, compared to a loss of $0.8 million during 2023.

During the fourth quarter of 2022, we worked on drilling a new extraction well for our HB solar solution mine.

During the drilling process, the planned well failed and we expensed approximately $6.2

million of costs related to the project.

In addition, we also incurred approximately $1.2 million in losses related to the disposal of various other assets in the normal course of business.

Our loss on sale or disposal of assets in 2024 resulted from the sale of excess lay flat water tubing.

Other Operating Income

In 2024, we recognized other operating income of $5.2 million compared to $1.3 million in 2023.

During 2024, we recognized $4.5 million in other operating income related to the Third Amendment to the Cooperative Development Agreement we signed with XTO in December 2023 that became effective in January 2024.

As discussed in further detail in Note 9- Other Long-Term Deferred Income to the Consolidated Financial Statements, we are recognizing as other operating income the estimated transaction price associated with the Amendment on a straight-line basis over the term of the Amendment.

Also in 2024, we recognized $0.7 million from various miscellaneous items as other operating income.

Other Operating Expense

In 2023, we recognized other operating expense of $2.2 million compared to $4.7 million in 2022.

During 2023, we recorded an additional $1.0 million for fines and penalties related to a trespass on federal surface minerals at Intrepid South.

We settled this trespass issue with the BLM during 2023, and the matter is now closed.

We also recorded $0.5 million of additions in our allowance for obsolete inventory, $0.5 million in care and maintenance expenses and we accrued $0.4 million related to a potential violation of one of our environmental permits.

During 2022, we recorded $1.8 million of additions in our allowance for obsolete inventory, accrued $1.7 million for fines and penalties related to a trespass on federal surface minerals at Intrepid South, $1.6 million related to potential underpayment of royalties found during an ongoing royalty audit by the Department of the Interior's Office of Natural Resources Revenue ("ONRR") and care and maintenance expenses of $0.6 million.

During 2023 we recorded income tax benefit of $8.4 million compared to an income tax expense of $24.3 million in 2022.

During 2023, we recorded a $1.1 million valuation allowance against certain state net operating loss carryforwards due to a change in the forecast of the amount of the loss carryforwards that may be used before expiration.

Other operating expense increased $2.6 million in 2024 compared to 2023, mainly due to recording an additional $1.9 million related to the potential underpayment of federal mineral royalties from 2012 through 2016.

We recorded income tax expense of $194.3 million in 2024 as we increased our valuation allowance against our deferred tax assets by $199.0 million as we have concluded that it is more likely than not that our deferred tax assets will not be realized.

The expense associated with increasing the valuation allowance was partially offset by the income tax benefit associated with our loss before income taxes.

In 2023, we recorded an income tax benefit of $8.4 million as we incurred a loss before income taxes, which was partially offset by a $1.1 million increase in our valuation allowance.

Our 2024 net income decreased $177.2 million to a net loss of $212.8 million.

The decrease was primarily due to the decreased gross margins in our potash and Trio ® segments and the impairment expense recorded in 2023.

The decrease is due to the increase in the deferred tax assets valuation allowance, partially offset by decreased impairment expense recorded in 2024 compared to 2023.

Potash Segment Results

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Cost of goods sold 83,974 97,452

Lower of cost or NRV inventory adjustments 2,709 —

Lower of cost or net realized value inventory adjustments 3,957 2,709

Gross Margin $ 17,420 $ 35,049

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Potash Segment Results for the Years Ended December 31, 2024, and 2023

Our total potash segment sales in 2023 decreased $35.5 million, or 19%, compared to 2022, as potash sales recorded in the potash segment decreased 22%, partially offset by an 8% increase in potash segment byproduct sales.

Potash sales recorded in the potash segment decreased $37.4 million, or 22%, in 2023 compared to 2022, as our potash average net realized sales price per ton decreased 35%, partially offset by a 16% increase in potash tons sold.

Potash prices peaked during the second quarter of 2022 and steadily declined in each succeeding quarter as global production rates and

product availability improved.

Our potash tons sold increased in 2023, as supporting farm commodity prices and lower potash prices continued to drive solid demand.

Potash segment byproduct sales increased $1.9 million, or 8%, in 2023 compared to 2022, due to a $1.7 million increase in byproduct magnesium chloride sales, a $0.9 million increase in byproduct brine sales, a $0.7 million increase in potash byproduct salt sales, partially offset by a decrease of $1.3 million in potash byproduct water sales.

Our byproduct magnesium chloride sales increased as we realized higher prices during 2023, compared to 2022.

Our total potash segment sales in 2024 decreased $31.1 million, or 20%, compared to 2023, as potash sales recorded in the potash segment decreased 24% while potash segment byproduct sales were essentially unchanged.

Potash sales recorded in the potash segment decreased $31.0 million, or 24%, in 2024 compared to 2023, as our potash average net realized sales price per ton decreased 19%, combined with a 7% decrease in potash tons sold.

Potash prices declined during 2024 as available global inventory increased compared to 2023.

We sold fewer tons of potash in 2024 compared to 2023, as we began 2024 with less inventory of potash to sell due to lower potash production from our HB and Wendover facilities during the second half of 2023.

Potash production improved at our HB and Wendover facilities in 2024 compared to 2023, but 2024 production from our Wendover facility remained below its historical production level.

Potash segment byproduct sales decreased $0.1 million, in 2024 compared to 2023, due to a $2.8 million decrease in byproduct magnesium chloride sales, partially offset by a $2.6 million increase in byproduct brine sales.

Our byproduct magnesium chloride sales decreased in 2024 compared to 2023, due to mild winter weather which decreased demand for our deicing product in the first and fourth quarters of 2024, and we saw less demand from the dedust market impacting sales in the second and third quarters of 2024.

Our byproduct brine sales increased due to continuing strong oil and gas activities near our facilities in New Mexico during 2024.

Our byproduct salt sales increased due to strong demand from feed and industrial salt customers and higher realized pricing during 2023.

Our potash byproduct water sales decreased as we had less byproduct water to sell because we used more water at our HB facility to improve injection rates as we work to complete the second phase of our new HB injection pipeline.

Potash cost of goods sold increased $20.9 million, or 27%, in 2023, compared to 2022, mainly due to a 16% increase in potash tons sold.

In addition, our weighted average carrying cost per ton increased mainly due to a 15%, or $3.8 million increase in production labor, contract labor, and benefits expenses in 2023.

Our total tons of potash produced decreased 17% in 2023, compared to 2022, which also increased our per ton production costs.

Because most of our production costs are fixed, decreases in tons produced result in higher per ton costs.

Potash segment freight expenses were virtually unchanged in 2023, compared to 2022, even though we sold 16% more tons of potash.

Increases in potash freight expense from selling more tons of potash in 2023 were offset by a decrease in freight expense associated with our potash byproduct salt sales.

Potash cost of goods sold decreased $13.5 million, or 14%, in 2024, compared to 2023, due to a 7% decrease in potash tons sold and a decrease in our per ton production costs.

Our per ton production costs decreased in 2024 compared to 2023, as we produced 32% more tons of potash during 2024 compared to 2023.

A significant portion of our production costs are fixed and an increase in tons produced results in lower per ton production costs.

Potash segment freight expenses decreased 11% in 2024 compared to 2023, as we sold 7% fewer tons of potash.

Our freight expense is impacted by the rates charged by carriers, geographic distribution of our products and by the proportion of customers arranging for and paying their own freight costs.

We produced 17% fewer tons of potash during 2023 compared to 2022, due to reduced brine grades at our HB and Wendover facilities.

During 2023, we recorded $2.7 million in lower of cost or net realizable value inventory adjustments as our weighted average carry cost per ton exceeded our expected net realizable value per potash ton.

As discussed above, our potash average net realized sales price per ton decreased during 2023 while our weighted average carrying cost per ton increased in 2023.

We did not record any lower of cost or net realizable value inventory adjustments during 2022.

Our potash segment gross margin decreased $59.7 million in 2023, compared to 2022, due to the $35.5 million decrease in potash segment sales, increased cost of goods sold expense, and recording lower of cost or net realizable value inventory adjustments, as discussed above.

Our long-lived assets at our West facility have been in care and maintenance since July 2016.

The fair value of the West assets was determined using the expected proceeds received in an orderly sale of the individual assets.

The carrying value of the West assets exceeded the fair value of those assets, and we recorded an impairment charge of $9.9 million during the fourth quarter of 2023.

We produced 32% more tons of potash during 2024 compared to 2023, as production increased at all of our facilities, with the largest increase at our HB facility.

The new extraction well placed in-service in June 2024 allowed us to extract high-grade brine from the Eddy Cavern of the HB mine, improving our overall brine grade into our pond system.

During 2024, we recorded $4.0 million in lower of cost or net realizable value inventory adjustments for certain potash products as our weighted average carry cost per ton exceeded our expected net realizable value per potash ton.

weighted average carrying cost per ton decreased in 2024, average potash prices also declined in 2024.

We recorded $2.7 million in lower of cost or net realizable value inventory adjustments for certain potash products during 2023.

Our potash segment gross margin decreased $17.6 million in 2024, compared to 2023, due to the $31.1 million decrease in potash segment sales.

Potash Segment - Additional Information

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69,980 74,308

Lower of cost or NRV inventory adjustments

Gross (Deficit) Margin $ (3,995) $ 39,123

Lower of cost or net realized value inventory adjustments — 3,783

Gross Margin (Deficit) $ 4,438 $ (3,995)

Depreciation, Depletion, and Amortization incurred 2

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Trio ® Segment Results for the Years Ended December 31, 2024, and 2023

Our total Trio ® segment sales decreased $15.6 million, or 13%, in 2023, as compared to 2022, as Trio ® sales decreased $17.6 million, or 15%, partially offset by a $2.0 million increase, or 51%, in Trio ® segment byproduct sales.

Our 2023 Trio ® sales decreased $17.6 million, or 15%, in 2023, as compared to 2022, as our average net realized sales price per ton decreased 33%, partially offset by a 16% increase in Trio ® tons sold.

Similar to potash, Trio ® prices peaked during the second quarter of 2022, and steadily declined in each succeeding quarter as global production rates and product availability of potassium fertilizers improved.

Our increase in tons sold in 2023 benefited from the reduced sales volumes we experienced in the second half of 2022, as customers delayed purchases in anticipation of lower price levels combined with overall strong commodity prices throughout 2023.

Our Trio ® byproduct sales increased $2.0 million in 2023 due to an increase in byproduct water sales.

Trio ® freight costs increased 18% in 2023, compared to 2022, mainly related to a 16% increase in Trio ® tons sold.

Our total Trio ® segment sales increased $3.2 million, or 3%, in 2024 compared to 2023, as Trio ® sales increased $8.4 million, or 9%, partially offset by a $5.2 million decrease, or 89%, in Trio ® segment byproduct sales.

Our Trio ® sales increased $8.4 million, or 9%, in 2024 compared to 2023, as we sold 11% more tons partially offset by a 3% decrease in our average net realized sales price per ton.

Sales volumes increased in 2024 compared to 2023, as we sold more Trio ® tons into row crop markets, particularly driven by the sulfate value of Trio ® .

Similar to potash prices discussed above, Trio ® average net realized sales price per ton decreased in 2024 as potassium fertilizer supplies improved in 2024 compared to 2023.

Our Trio ® segment byproduct sales decreased $5.2 million in 2024 compared to 2023, due to a decrease in Trio ® segment byproduct water sales.

We sold less Trio ® segment byproduct water in 2024 compared to 2023, as we increased the volume of water used for injection at our HB plant and we sold fewer barrels of water from our Caprock water rights.

Trio ® freight costs increased 11% in 2024 compared to 2023, related to an 11% increase in Trio ® tons sold.

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.

Generally, our Trio ® freight expense is higher than our potash freight expense because we sell potash to regional customers located closer to our production facilities.

Our Trio ® segment cost of goods sold increased 36% in 2023, compared to 2022, driven by a 16% increase in Trio ® tons sold combined with an increase in our per-ton production costs.

We also began 2023 with a higher average cost per ton of inventory compared to 2022.

Our Trio ® production costs increased in 2023, compared to the prior year, due to a 6%, or $1.8 million, increase in labor and benefits, a 12%, or $1.8 million, increase in operating and maintenance supplies, a 49%, or $1.8 million increase in depreciation due to increased capital investments, and a 61%, or $1.0 million increase in property taxes and insurance, partially offset by a 22%, or $1.0 million decrease in royalty expense due to decreased sales revenue.

We recorded $3.8 million in lower of cost or net realizable value inventory adjustments in 2023, due to increased carrying costs of our Trio ® inventory and lower realized prices compared to 2022.

Our Trio ® segment gross margin decreased $43.1 million in 2023, compared 2022, due to the factors discussed above.

Our Trio ® segment cost of goods sold decreased 6% in 2024 compared to 2023.

Trio ® segment labor costs decreased as we operated fewer shifts in 2024 compared to 2023.

Trio ® segment depreciation expense decreased in 2024 compared to 2023 due to the impairment that was recorded in December 2023 for our Trio ® segment assets.

Trio ® segment natural gas expenses decreased in 2024 compared to 2023, as natural gas prices spiked in early 2023 due to supply constraints in the western U.S.

In addition, we produced 16% more tons of Trio ® in 2024 compared to 2023.

Because a significant portion of our production costs are fixed, an increase in tons produced reduces our production costs per ton.

In 2024, we did not record any lower of cost or net realizable value inventory adjustments.

In 2023, we recorded $3.8 million in lower of cost or net realizable value inventory adjustments.

Our Trio ® segment gross margin increased by $8.4 million in 2024 compared to 2023, due to the factors discussed above.

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The carrying value of our Trio ® segment asset group exceeded its fair value of those assets, and we recorded an impairment charge of $31.9 million.

For any Trio ® segment capital spending in 2024, we also estimated the fair value of those assets using the expected proceeds received in an orderly sale of those new assets and recorded impairment charges of $4.4 million.

Trio ® Segment - Additional Information

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Oilfield Solutions Segment Results for the Years Ended December 31, 2024, and 2023

Our oilfield solutions segment sales decreased 26% in 2023, compared to 2022.

Water sales decreased $7.9 million in 2023 to $9.6 million, and revenue from right-of-way agreements, surface damages and easements decreased $0.7 million.

Brine sales increased $1.4 million, and produced water disposal royalties increased $0.1 million during 2023, compared to 2022.

Water sales decreased as we purchased $5.0 million less in third-party water for resale in 2023, compared to 2022 and we used more water at our HB facility to improve injection rates while we complete the second phase of our new HB injection pipeline.

Brine sales increased $1.4 million as we sold increased volumes of brine at a higher per-barrel price in 2023, compared to 2022.

Oilfield solutions sales are highly correlated to oil and gas activities near our facilities in New Mexico and oil prices continued to support oil and gas exploration activities in the Permian Basin near our Intrepid South property in southeast New Mexico during 2023.

Cost of goods sold decreased 27% in 2023, compared to 2022, primarily due to a $5.0 million decrease in third-party water purchased for resale.

We incurred $0.6 million in increased labor and benefits expenses and a $0.6 million increase in depreciation related to new infrastructure placed in service in 2023, compared to 2022.

These increased costs were partially offset by a $0.5 million decrease in royalty expense in 2023, compared to 2022, due to reduced water sales.

Gross margin decreased $1.7 million, or 23%, in 2023 compared to 2022, due to the factors described above.

Our oilfield solutions segment sales increased 16% in 2024 compared to 2023, driven by an increase of $4.0 million in water sales, and an increase of $0.1 million in brine water sales, partially offset by a $0.7 million decrease in sales of other products and services.

Our oilfield solutions segment water sales increased due to the completion of a large frac on Intrepid South during the third quarter of 2024.

Demand for brine water sales remained strong in 2024 due to continued oil and gas activity in the Permian Basin near Intrepid South.

Our other products and services sales decreased in 2024 compared to 2023, due to a decrease in surface use and easement sales.

Surface use and easement sales fluctuate based on the timing of recognizing sales from the various performance obligations contained in the underlying agreements.

Cost of goods sold increased 13% in 2024 compared to 2023, as we purchased more third-party water for resale to meet the demand for the large frac completed on Intrepid South.

Gross margin increased $1.4 million, or 25%, in 2024 compared to 2023, due to the factors described above.

Specific Factors Affecting Our Results

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.

Our gross sales are derived from the sales of potash, Trio ® , water, salt, magnesium chloride, brine water and various other products and services.

Total sales are determined by the quantities of product we sell and the sales prices we realize.

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Our average royalty rate was 4.9%, 4.9%, and 4.8% in 2024, 2023, and 2022, respectively.

In addition to royalties, we are also subject to resource and severance taxes in the state of New Mexico.

We incur costs to transfer water from our water source to our customers' facilities.

Our operating costs depend on the distance and amount of water we must transfer.

For water sold from certain of our water sources, we pay the State of New Mexico $0.11 per barrel of water sold.

Additionally, water rights in New Mexico are subject to a stated point of diversion, purpose and place of use, and many of our water rights were originally issued for uses relating to our mining operations, or in the case of the water rights at Intrepid South, for agricultural uses.

To sell water commercially under these rights, we must apply for a permit from the OSE to change point of diversion, purpose and/or place of use of the underlying water rights.

Third parties often protest our applications and the decisions made by the OSE concerning the changes to our water rights permits.

Third parties often protest our applications and the decisions made by the OSE concerning the changes to our

water rights permits.

As we have worked to sell more water commercially, we have incurred significant legal expenses associated with defending our water rights as they proceed through adjudication and obtaining water permits and approvals.

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We also reduce deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In determining how much of a valuation allowance to recognize we consider our projections of future taxable income.

All available evidence, both positive and negative, that may affect the realizability of deferred tax assets is identified and considered in determining the appropriate amount of the valuation allowance.

We have concluded a valuation allowance of $3.2 million was required as of December 31, 2023, and $2.0 million as of December 31, 2022.

The amount of valuation allowance increased in 2023 as compared to 2022, due to a change in the forecast of the amount of state net operating losses that may be used before expiration.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

As of December 31, 2024, we were in a cumulative three-year income position as a result of income generated during the year ended December 31, 2022.

Since the 2022 income year will cease to be part of the cumulative three-year test in the next twelve months, we forecast that by the end of 2025, we will be in a three-year cumulative loss position which is significant negative evidence that is difficult to overcome when evaluating the realizability of our deferred tax assets.

As a result, we have concluded a valuation allowance against our deferred tax assets of $202.2 million was required as of December 31, 2024.

Our valuation allowance against our deferred tax assets was $3.2 million as of December 31, 2023.

Our effective tax rate for the years ended December 31, 2024, 2023, and 2022 was (1,049.8)%, 19.0%, and 25.2%, respectively.

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federal statutory rate primarily due to the change in the valuation allowance.

The effective tax rate for the years ended December 31, 2022, and 2021, differs from the U.S.

federal statutory rate due to state income taxes, and the change in valuation allowance, respectively.

During the year ended December 31, 2023, we recognized $8.5 million of deferred federal tax benefit, $0.1 million of deferred state tax expense, and $0.1 million of current state income tax expense.

The effective tax rate for the year ended December 31, 2023, differs from the U.S.

federal statutory rate primarily due to the change in the valuation allowance.

During the year ended December 31, 2024, we recognized $146.5 million of deferred federal tax expense, $47.8 million of deferred state tax expense, and $0.1 million of current state income tax expense.

For the year ended December 31, 2021, we recognized $157.3 million deferred federal tax benefit, $51.7 million of deferred state tax benefit and $0.2 million of current state income tax expense.

During the year ended December 31, 2023, we recognized $8.5 million of deferred federal tax benefit, $0.1 million of deferred state tax expense and $0.1 million of current state income tax expense.

For the year ended December 31, 2022, we recognized $19.4 million of deferred federal tax expense, $3.9 million of deferred state tax expense and $1.0 million of current state income tax expense.

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.

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These adjustments can increase or decrease the net deferred tax asset on the balance sheet and impact the corresponding deferred tax benefit or deferred tax expense on the income statement.

A valuation allowance is recognized for deferred tax assets if it is more likely than not that a portion or all of the net deferred tax assets will not be realized.

As of December 31, 2023, we were in a cumulative three-year income position.

The cumulative three-year income position is significant positive evidence when evaluating the realizability of our deferred tax assets.

Additionally, industry trends and forecasts as well as internal forecasts of future business show sustained amounts of taxable income.

Thus, we have concluded it is more likely than not that most of our $197.4 million of deferred tax assets will be realized.

Liquidity and Capital Resources

Our operations have primarily been funded from cash on hand, cash generated by operations, and proceeds from debt and equity offerings.

During 2023, we generated $43.2 million in cash flows from operating activities and we ended the year with $4.1 million of cash and cash equivalents, compared with $18.5 million at December 31, 2022.

As of December 31, 2023, we had $146.0 million available to borrow under our credit facility, $4.0 million in outstanding borrowings, and no outstanding lette rs of credit.

Our operations have primarily been funded from cash on hand, cash generated by operations, and proceeds from financing activities, primarily debt offerings.

During 2024, we generated $72.5 million in cash flows from operating activities, which included a $45 million cash payment received in January 2024 under the Third Amendment to the Cooperative Development Agreement with XTO, and we ended the year with $41.3 million of cash and cash equivalents, compared with $4.1 million at December 31, 2023.

As of December 31, 2024, we had $150.0 million available to borrow under our credit facility, no outstanding borrowings, and no outstanding lette rs of credit.

With the remaining availability under our credit facility and expected cash generated from operations, we believe we have sufficient liquidity to meet our obligations for the next twelve months.

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Cash flows used in investing activities $ (29,531) $ (59,554)

Cash flows provided by (used in) financing activities $ 1,892 $ (27,704)

Cash flows (used in) provided by financing activities $ (5,717) $ 1,892

Our revolving credit agreement contains restrictions on our ability to declare and pay dividends.

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Operating Activities

Total cash provided by operating activities for the year ended December 31, 2023, was $43.2 million, a decrease of $45.6 million compared with the year ended December 31, 2022.

The decrease was mainly driven by decreased potash and Trio ® net realized sales prices.

Prior year operating cash flows included a $32.6 million refund paid in September 2022 of a customer's prepayment for future water deliveries.

Total cash provided by operating activities for the year ended December 31, 2024, was $72.5 million, an increase of $29.3 million compared with the year ended December 31, 2023.

The increase was mainly driven by a $45 million cash payment received in January 2024 under the Third Amendment to the Cooperative Development Agreement with XTO, partially offset by decreased potash and Trio ® net realized sales prices.

Investing Activities

Total cash used in investing activities decreased $19.6 million in 2023, compared to 2022, primarily a result of an $11.6 million decrease in purchases of investments compared to the prior year.

Total cash used in investing activities decreased $30.0 million in 2024, compared to 2023, primarily a result of a $26.4 million decrease in additions to property, plant, equipment, and mineral properties compared to the prior year.

Proceeds from the sale of property, plant, and equipment increased $4.7 million primarily due to proceeds received from the sale of water recycling equipment.

Proceeds from the redemption/maturity of investments decreased $3.0 million in 2024, compared to 2023.

In 2023, we invested $1.4 million of cash in investment grade, short-term debt instruments.

Additions to property, plant, equipment, and mineral properties also decreased $3.5 million in 2023, compared to the prior year.

Proceeds from the redemption/maturity of investments increased $3.5 million in 2023, compared to 2022.

Financing Activities

Total cash flows provided by financing activities increased $29.6 million in 2023, as compared to 2022.

During 2022, we paid $22.0 million under a share repurchase program.

We did not repurchase any shares in 2023.

Proceeds from borrowings on the credit facility (net of repayments) increased $4.0 million and employee tax withholding paid for restricted shares upon vesting decreased $3.3 million in 2023, compared to the prior year.

We did not have any outstanding borrowings under our credit facility in 2022.

Total cash used in financing activities increased $7.6 million in 2024, as compared to 2023.

Payments on borrowings on the credit facility (net of borrowings) increased $8.0 million compared to the prior year.

Payments on financing lease obligations increased $0.3 million in 2024 compared to the prior year.

Employee tax withholding paid for restricted shares upon vesting decreased $0.7 million in 2024 compared to the prior year.

Share Repurchase Program

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

We made no repurchases of shares for the twelve months ended December 31, 2023.

We made no repurchases of shares for the twelve months ended December 31, 2024, and 2023.

For the twelve months ended December 31, 2022, we repurchased 608,657 shares with a total cost of $22.0 million, or a weighted average price per share of $36.17.

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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, 2023, we made $9.0 million in borrowings and $5.0 million in repayments 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, 2024, we made no borrowings and $4.0 million in repayments under the facility.

For the year ended December 31, 2023, we made $9.0 million in borrowings and made $5.0 million in repayments under the facility.

As of December 31, 2024, we had no borrowings outstanding and no outstanding letters of credit under the facility.

As of December 31, 2023, we had $4.0 million in borrowings outstanding and no outstanding letters of credit under the facility.

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

We had $150.0 million available under the facility as of December 31, 2024.

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During 2024, we paid cash of $38.7 million to acquire property, plant, equipment, and mineral properties.

We expect to make capital investments in 2024 of $40 million to $50 million.

We anticipate spending approximately $20 million to $25 million on sustaining capital projects in 2024, with the remainder of our estimated spending on opportunity projects, which include the completion of phase two of our new HB injection pipeline project, a new extraction well at our HB mine, and a new primary pond at our Wendover facility.

We may adjust our investment plans as our expectations for 2024 change.

We expect to make capital investments in 2025 of $36 million to $42 million with the majority of this spending being sustaining capital projects.

We anticipate our 2025 operating plans and capital programs will be funded out of operating cash flows and existing cash.

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An impairment loss is measured and recorded based on the excess of the carrying amount of long-lived assets over its estimated fair value.

In 2023, we recorded an impairment charge for long-lived assets and mineral properties at two of our facilities in New Mexico.

In 2024, we recorded impairment charges for long-lived assets in our Trio ® and oilfield solutions segments.

The impairment charge equals the difference between the carrying value of the assets or asset group and the estimated fair value of the assets or asset group.

We estimated the fair value of mineral properties using a discounted cash flow technique and we used the estimated fair value of the other assets using estimated proceeds received in an orderly sale of these assets.

Significant estimates used in the estimated fair values include inputs to arrive at estimated net cash flows, such as product selling prices, volumes of product sold, and production costs.

We estimated the fair value of the assets using estimated proceeds received in an orderly sale of these assets.

Estimated proceeds received in an orderly sale of an asset have a high degree of subjectivity and actual proceeds received in an orderly sale of assets may vary from the estimates used, which may result in further impairment charges.

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Market price fluctuations of potash or Trio ® , as well as increased production costs or reduced recovery rates, could render resources and reserves containing relatively lower grades of mineralization uneconomic to exploit and might result in a reduction of resources and reserves.

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.

We updated our mineral reserves and resources as of December 31, 2024, for our HB facility and we updated our mineral reserves and resources as of December 31, 2023, for all our other facilities.

We determined we do not have any mineral reserves at our East facility because the mineral deposit could not be economically extracted.

All mineral deposits at our East facility are categorized as a mineral resource.

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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 7. Management’s Discussion and Analysis