Intrepid Potash Inc (IPI) 2014 Q3 法說會逐字稿

Thank you for standing by. This is the Chorus Call conference operator. Welcome to the Intrepid Potash 2014 third-quarter conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. (Operator Instructions) At this time, I'd like to turn the conference over to Gary Kohn, Vice President Investor Relations. Please go ahead, Mr. Kohn.

Thanks, Joe. Good morning, everyone. Thank you for joining us for our third-quarter conference call. Presenting on today's call will be Bob Jornayvaz, our co-founder, Executive Chairman, President and CEO; Kelvin Feist, Senior Vice President of Sales and Marketing; and Brian Frantz, our interim Chief Financial Officer.

Also in the room with us today are Hugh Harvey, co-founder and Executive Vice Chairman of the Board; Martin Litt, Executive Vice President and General Counsel; and John Mansanti, Executive Vice President of Operations.

I would like to remind everyone that statements made on this call that are not historical fact, or that express a belief, expectation, or intention, including statements about our financial and operational outlook, are forward-looking statements within the meaning of the United States security laws. These statements are not guarantees of future performance, and are based on a number of assumptions which we believe are reasonable.

Forward-looking statements involve risks and uncertainties that could cause the actual results to differ from our expectations. You can find more information about these risks and uncertainties in our annual report on Form 10-K, and subsequent quarterly reports on Form 10-Q as filed with the SEC. We will be filing our third-quarter Form 10-Q later today.

During today's call, we will refer to certain non-GAAP financial and operational measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in yesterday's press release. Our SEC filings and press releases are available on our website at intrepidpotash.com.

With that, I will turn the call over to Bob.

Good morning and welcome, everyone. Thank you for joining us. The strategy for Intrepid is clear and steadfast: Continue to achieve the highest average net realized sales price among our North American peers and lower our cash operating costs so that we can increase our margin and cash generation on every ton we sell.

In the first half of this year, we grew our price advantage beyond historical levels and we believe that expanded it again in the third quarter on strong sales volume. We accomplished this by selling to a broad customer base that we have cultivated across diversified markets.

We also have an expanded set of product offerings beyond just agricultural granular potash. We produce and sell several products that we serve as unique needs of customers in the feed and industrial sectors, each of which represents an important part of our business.

We are now producing an improved granular product that allows us to enhance our distribution strategy by placing more product forward in our field warehouses ahead of demand. Our ability to capture just in time opportunities is essential to better serve farmers' needs and mitigate some of the rail service issues.

We also strive to sell every ton we produce, which affords us the opportunity to choose the best options to maximize price and margin. The other side of creating a stronger cash margin in the long-term is reducing our cash operating costs per ton.

We expect to achieve this by increasing production from our low-cost solar solution facilities while also focusing on improving operating costs at our conventional facilities. One key to lowering cash operating costs is focusing on our three well-located solar solution mines.

We operate these facilities where the arid climate is ideal to evaporation, knowing that within average evaporation rates over a number of years and decades we will benefit from low-cost solar production.

We've been successfully producing low-cost tons at our two facilities in Utah, which have been in operation for decades. And we remain confident in our ability to achieve the same success at our HB facility.

To address the potential change in our cash operating costs for 2015, let me be clear on a few points. Intrepid has and will continue to benefit from producing an increasing number of tons using solar solution mining. It is important to understand, however, that inherent to the process is potential year-to-year variability in production volumes relative to the evaporation rates in a given season.

The nature of solar solution production is that we see higher annual production during those years when above average evaporation conditions exist. And we see lower production in those years with below average evaporation. Furthermore, during a rain event, the potassium in the ponds is not lost. Rather, it re-dissolves in the ponds and remains available for re-crystallization and harvest in the future.

In normal years, the production variations somewhat balance each other out across our properties. This past quarter was an anomaly in that across all of our solar properties we experienced well below average evaporation conditions, which will potentially influence production levels in 2015.

For context, in the third quarter the areas where each of our solar evaporations are located received around three times the average rainfall. In September alone Carlsbad had more than six times its average for the month, which occurred in the last two weeks, while September received 3 1/2 times its normal September rain.

In fact, our Wendover facility is immediately adjacent to the Bonneville salt flats where the hundred-year anniversary of Speed Week was canceled due to water levels. With this Wendover rain and resulting lower evaporation, we will potentially see a decrease in production from this, our lowest cost facility, in 2015 compared with 2014. Moab was only modestly impacted.

Offsetting the decline in Wendover is expected volume growth from HB. It is not a one-for-one offset on cash operating costs in that HB tons, while still significantly cheaper than conventional tons, are produced at higher cost than the Wendover tons, as HB is still ramping up to full production.

The HB ramp up is progressing as planned. And even with the record rain in Carlsbad where HB is located we still expect to be well within our production range for this and next year. To my point about annual weather variability, we expect our 2014 production to be better than average, reflecting the better evaporative season earlier this year.

We expect 2015 to be somewhat below average, as it has been influenced from the past rain event. In total, we currently expect production from HB to be well within our combined production ranges for the first two years. We continue to anticipate HB to operate at full run rates of 150,000 tons to 200,000 tons annually beginning in 2016 at a per-ton cash operating cost of $80 to $100.

As Intrepid's largest shareholder, I'm as disappointed as anyone in the delay and the change in the outlook for next year. I do understand, however, the longer term benefit of lowering our costs by generating more tons using solar evaporation.

Over time, we have proven our ability to excel at solar solution mining, but we do not control the weather. This storm, if you will, is now behind us. And as we experience normal patterns, we will return to more normalized average production levels and costs. And in the event of better evaporation seasons, we have the potential to see higher production levels and lower costs.

On the top of my priority list and everyone else at Intrepid, we are increasing our margin and cash flow on every ton we sell. We expect that we extended our price advantage in the third quarter and we did lower our cash operating costs from the high point last fourth quarter.

We are now generating free cash flow and expect to continue to be cash flow positive as we benefit from our sales strategy, improve our cash operating costs, and reduce our capital spending. Kelvin will now provide more insight on the market. Kelvin?

Thanks, Bob. Through the first nine months of this year, we sold 705,000 tons of potash, 34% more than we sold in the same period last year. We also grew our net average realized sales price for potash to $336 per short ton in the third quarter, a 2% increase from the previous quarter.

There were a number of factors that contributed to our sales and marketing success in the third quarter. We continue to support a significant geographical footprint with a diverse product portfolio. We executed on our solid distribution strategy and built on our strong relationships with our customers.

We met our customers' continued strong agricultural demand ahead of farmers' replenishing the nutrients removed from their 2014 bumper crop. We saw excellent oil and gas activity in the regions we sell. This further supported our successful quarter.

We have filled a good portion of our fourth quarter order book and are focused on producing and delivering our product on a timely basis. Our expectation is for our fourth-quarter pricing to be stable as we continue to have some success in realizing a portion of the recently announced price increase.

Our Trio product remains in high demand. Through nine months of this year, we sold 141,000 tons, 47% more tons than we sold in the same period last year. Trio pricing was stable year over year, showing that customers continue to recognize the value of this specialty product. As demand for Trio continues to outpace supply, improving production trends remain a focus for us. Thanks, and I will now turn the call over to Brian.

Thanks, Kelvin, and good morning. Looking at our results for the third quarter, we earned adjusted EBITDA of $20.5 million, which is flat from last year's third quarter.

We had a net loss of $1.2 million, which included a $3.4 million LCM adjustment. The loss as well as the LCM were in part attributable to the diminished production levels and higher per ton costs at East. We proactively shut down our East facility for six days while we managed through the rain event, which also included some power outages.

We generated cash flow from operations of $105 million during the first nine months of this year. Cash paid for capital expenditures in the first nine months was $55 million. One of our goals this year was to be free cash flow positive and we will achieve that goal.

With all of our major capital projects completed, we continue to plan for capital investments this year in the range of $40 million to $50 million. We had cash and investments totaling $74 million at quarter end, which is up from $35 million at the end of the second quarter.

On the cost side, we've reduced our nine-month SG&A expenses by 22% compared with the same period a year ago. In summary, we're pleased that our sales, marketing and logistic strategies produced another strong sales performance this quarter with positive pricing trends.

We've strengthened our cash position throughout this year and expect to generate increased amounts of free cash flow over the long term as we create more margin and cash flow opportunities through lower operating costs.

To summarize, we have many competitive advantages. We're geographically well situated with distribution capabilities in key markets. We serve a diverse customer base with high quality products. And we operate our facilities at full production rates with the goal of selling what we produce to realize the best average net realized sales price among our North American peers.

Operator, that concludes our prepared remarks and we're ready for questions.

Thank you. (Operator Instructions) Chris Parkinson, Credit Suisse.

The first question I have, can you just talk a little bit about any potential changes in your potash marketing strategy, given the closure of Mosaic's Carlsbad assets? Just any update there would be appreciated.

Chris, thank you, this is Bob. They haven't quite closed it yet but we're seeing lots of positive impacts already. We're seeing increased truck traffic. We're seeing increased langbeinite demand.

We've been able to hire several employees and have several more that we believe will come over as soon as the facility's actually closed down on January 1st. I think given the past rain event and the way in which we voluntarily shut down our facility, we've seen some increased benefits from the choices we made. So it's been nothing but positive.

Perfect. And just a quick follow up. Can you also just talk a little bit about your outlook for North American potash demand next year? Specifically any differences between your agricultural and industrial customers. And then also anything in feed in particular? Thank you.

Well, I'd say right now I'll let Kelvin address this with a little more color. But right now, we'd see our percentages remain pretty well constant. We're still seeing great demand for our industrial product and that remains pretty steadfast.

In talking with our customers and looking forward into the first quarter, we're not seeing any significant change in those different percentages between the ag, industrial and feed. Right now, we've just got really strong book as we look forward in terms of what we're seeing.

It's going to be interesting, given this recent price run up in corn and soy beans just over the last few days. It's just going to be interesting to see how that affects farmers because it's given farmers a great opportunity to do some hedging at significantly higher prices than what they saw just a couple of weeks ago.

So we're seeing really good strong demand for the fourth quarter. And we're having good discussions about the first quarter. So we don't see significant or material changes that are going to affect us and our ability to market all of our product. So right now our outlook going into the first half is pretty strong for Intrepid.

Perfect. Thank you very much.

Mark Connelly, CLSA.

Bob, once again you've sold more potash than you produced, which isn't too surprising. But can you tell us where that leaves your inventories? And if 2015 production is flattish to down, are you going to struggle with low inventory next year if we do have a good demand season?

Well, I don't know that I would say we're going to struggle. To put our production in perspective, our seven-year average of production is about 762,000 tons and our 2014 range is about 850,000 to 860,000 tons. And we see 2015 going up from there.

And in terms of sales, our average over the last seven years has been about 742,000 tons, and our 2014 range is 900,000 to 910,000 tons. So we've hit some pretty darn good milestones in terms of production and sales increases over our past seven-year averages, which we're really proud of, and somehow get lost in the mix in terms of some of the significant increases that we've achieved.

In terms of struggling against inventory, once again, that just gives us a good opportunity for pricing advantages in certain of our regional markets. And so as we've described many times before, not all potash is priced the same in different regional markets. So we believe we're going to have success at selling 100% of our tons. Kelvin, you want to address?

Yes, Mark, maybe I'll just add a little bit of color. You've heard from us in many regards that we've seen excellent demand. So we think that's going to continue. We obviously are supportive of our feed and industrial markets. They're very strong as well.

I think that we're executing our strategy and that's the key to the story for us. And it's working out well. We're going to manage under low inventory levels certainly through the spring season. And that's just the reality of our business and we plan to sell every ton we produce. So that's the reality of our business and it's working out well for us.

Okay. And just one more question. Can -- we know that across the industry there's been a lot more demand for standard in the short run. Can you talk about what you're expecting over the next, say, six months in terms of standard versus granular versus where you've been historically?

Let me start with that. If we look at the discussions that we're having with customers going forward in the next six months, as I said earlier, we don't see any changes to the basic percentage breakdowns that we're seeing. Kelvin, do you want to give some additional color to that?

Yes. I think that your question is more related to the international business. And some of our competitors are seeing a significant difference in standard demand from granular.

Our focus -- and the ag side is granular. Industrial and feed is primarily the smaller, the standard and the finer standard product. So we've seen good, solid demand on the industrial and feed and we see that continuing. And I guess the granular side has been very good to us to date. And we see it continuing certainly through Q4 and into next year.

Okay. So no real shift.

Yes, no.

Thank you.

No.

Benjamin [Ascension], Scotiabank.

Hi, this is Carl Chen stepping in for Ben. And thank you for taking my question. So given some of your competitors have expressed their concerns at logistics issue that we saw in North America this year may (inaudible) in the coming years. How do you plan to build on your new warehousing strategy to mitigate this potential issue in the future?

Well, I'll let Kelvin give it some color, but we think that's one of our distinct advantages by being geographically located in the market. I mean, being physically in the market.

So we've seen our truck traffic increase. We've worked with the railroads to work on very specific unit train objectives. We've worked on just a whole variety of issues, given the logistics challenge, to work within the constrained railroad system to turn that into an advantage.

So I think as our expanded net realized sales price advantage indicates, we've been able to capture on a quicker basis some of the price increases that we've seen. And to get a higher price for our product by focusing on using the logistics problems as a potential advantage. Kelvin, do you want to give that any color?

Yes. I think the reality is our railroad business is primarily single-line haul. And if you think about our competitors, they're typically two- and three-line haul in many cases. So it's a much more complex system and they're moving off [further] distance. So that complicates things as well.

I think from our distribution strategy, if you think about placing product forward, we see farmers that are able to put product on much more quickly than they used to be able to. So we feel like we need to push more product forward into the marketplace. And that's been received very positively from our customer base.

I think the other side is that the other sectors that we support, the industrial and feed, those tend to be more localized and maybe more truck-related markets. And so it takes some of the pressure off of some of those logistics that we mentioned on the railroad side.

I guess we don't see abatement of some of the issues in the short term with the railroads. And I think that's important to understand. And so we've really taken steps to try and minimize as best we can. And I think there's still a lot of challenges to come on that front.

Great. Thank you.

Brett Wong, Piper Jaffray.

Just on that last question, just wondering if you can provide any updates on the specifics around some of the logistics tuck-ins you're pursuing. Where it (multiple speaker) [happens] or any other sort. Some additional --

Well, I guess I don't understand your que -- I mean, clearly, we're trying to move more truck tons. With Mosaic closing their facility, that gives us more truck opportunities. We've really focused on working with the BNSF in terms of our single unit train hauls, if you will, and turning those around by avoiding any switches. By avoiding use of multiple rail in terms of picking our locations that we're selling to. So does that give some color to what --

Yes. I was also kind of wondering, you've talked about pursuing additional warehouse opportunities. If there's any detail there around those opportunities.

No, we just continue to focus in areas where we're freight advantaged and geographically advantaged. We continue to structure those deals that work best for Intrepid in our natural geographic market.

And so that strategy continues to work. I mean, in terms of giving you specifics as to geographic locations, I would just assure you that we're focused on areas where we have the best freight rates and the best freight opportunities in terms of reliable power from the railroad. I mean, it's really working with the railroad to find the best places. It's just constant communication.

Okay, great. That's excellent color. Thanks. And then just a last one from me. If you could discuss your cash deployment priorities, if there's been any changes there.

I'm sorry, what was the question?

(whispering) cash deployment.

Cash deployment.

Cash deployment. So during this last year -- this is Brian, Brett. We're still in that $40 million to $50 million range. And that took care of a lot of the projects that we wrapped up at the first part of the year.

So as we're going into Q4, that level of capital expenditure that we had earlier in the year is clearly dropping down. As we're looking into next year, and we continue to think that that CapEx number probably runs for 2015 still in that $40 million to $50 million range going forward.

Okay, great. Thanks a lot, guys.

Vincent Andrews, Morgan Stanley. Mr. Andrews, you're on.

Joe, we can move to the next one, if Vince isn't there.

Okay. Joel Jackson, BMO Capital Markets.

Could you give a bit of color on Trio for 2015? Do you see greater production in sales? And is there a chance to get some improvements in Trio costs in 2015?

Joel, this is Brian Frantz. Yes, I think as we're looking forward in Trio, we've continued to make progress with our lang plant. In particular, we're making progress turning some of the standard product that we're producing into the pelletized product.

And so I think as we continue to work on that effort, we expect to see some improvements in that going forward into 2015. And so I think that will, at the end of the day, in 2015 we should see some production gains coming off of Trio into 2015.

Okay. And my second question is, from a high level it would seem that your realized potash price in Q3 was at a wider discount, just sort of Midwest benchmarks than we've seen for a few years. And you're also modeling to similar -- or sorry, guiding to similar realized potash price in Q4.

So is there something maybe you can talk about, did you maybe book a lot of your sales earlier? Is there a mix shift going on here? Can you give us some color, please?

Yes, you bet. We looked at that. And I think what you look at, what happened in the third quarter is that Green Markets, which is probably the benchmark you're referring to, was showing an accelerated pace. They were actually showing what some retailers and wholesalers were selling at the high end of that market. And the acceleration that occurred in that happened pretty quick.

We were able to capture most of that. And that the price increase that was announced early in October was basically to set the price to where the current market demand had already taken the price. So I think if you're going to benchmark off the high end of that, those were sales that were being made by wholesalers and retailers on the high end of the market rather than a real reflection of what, say, some of the Canadians' posted price was in the third quarter.

So once again, I think we -- if you appropriately look at that over the quarter and how it accelerated through the quarter, I think we captured as much, if not more, than our peers.

Thank you very much.

Andrew Wong, RBC Capital Markets.

I was just wondering on your expected HB production range for 2016, it's 150 million to 200 million tons (sic). So the range, is that based on weather volatility? So the bottom end would assume more rain and the upper end would assume more sunshine? Or is there something else to that?

That's a good way to look at it. But it's really focused on multi-decade averages. And so when we look at solar solution mining, the good news is Wendover's been in operation since 1932. Moab's been solution mining since 1972. And we have -- Carlsbad actually has a significantly higher net evaporation rate than either Moab or Wendover.

So we take the multi-decade averages and we build them into our models. And that's how we come up with the ranges. But your description of it, in terms of having a low end and a high range, takes into account the weather variability. We just look at it a little differently by looking at the averages.

Okay. That's helpful. And then my next question would be just bigger picture. Now that some of your major projects are pretty much complete and you're getting to that positive cash flow territory, what could we expect next maybe for the next three years? Or what are your priorities going forward?

Well, our number one priority is to add solar evaporation tons. Those are clearly our lowest cost tons. And that's where we have our biggest margin opportunity. And so at every place, every one of our facilities where we have opportunities to increase the production of those tons, the recovery of those tons, the grade of the brine coming into those ponds, we're highly focused on those because those are our highest margin tons.

Our second is really looking at our unbelievable langbeinite reserves that we sit on and how to best maximize the very unique langbeinite reserves that our East mine sits on. As you know, we currently mine from a mixed ore body.

There's ten different ore zones out there and we sit on top of several langbeinite ore bodies over our mine that have not yet been tapped. And so trying to really figure out the best way to start to incorporate those incredible reserves into our production stream, because langbeinite is such a great product and gives us great margin opportunities as well.

And then we continue to be focused on our conventional assets. And how we drive down costs at our conventional assets. And so as we've said before, what we're seeing is with the Mosaic shutdown at our Carlsbad regional area, we're seeing the opportunity to see a more reliable power grid.

As we noticed in the September storm event, it was regional power outages. And so we look forward to having a little bit better power availability. We look to having better water resource availability. More employees to hire in the work force.

We're also seeing slightly reduced interest in employees going into the oil field, given the recent declines in oil prices. So we're seeing a lot of macro trends that are very positive for us in Carlsbad. And we're going to continue to work on those to increase our margins.

That's great. Thanks.

Adam Samuelson, Goldman Sachs.

I apologize, I jumped on late. Was hoping, just make sure clarify on the production guidance next year. Is it -- in the implications for sales, I mean -- the -- I -- by my math, I'm getting sales down 50,000 tons. And is that entirely lower Wendover tons relative to 2014 with a little bit of growth at HB partially offsetting? Tell me the mix of output from the different mines next year that drives the shipment decline.

Adam, this is Brian. As you know we're looking at where the production numbers are going to come through for next year. And we are seeing production numbers still in that 850,000 to 900,000 range as we talk about that going forward.

So as we look at sales levels going through in 2015, as Kelvin talked about, we'll continue to look at trying to sell each ton that we have into that market where we get that best net realized sales price.

As Kelvin also talked a little bit earlier, we do have a little bit lower inventory levels at this point in time. And as we manage through that, particularly in the first half of next year, but we still think we'll be able to take advantage of a lot of market opportunities going forward into 2015.

Okay, that's helpful. And as you think about the outlook into 2016, and I think there's some pretty -- the expectations on unit cost production as you get the full benefit of HB. Is the -- whereas next year kind of you -- cash costs and potash are going to be in that 195 to flattish, close to 200 with 2014. Be -- looking to 2016, is there still an expectation that you have the full benefit of HB that you could see that $15 to $25 decline in the average costs for the enterprise?

Well, HB is performing right in line with expectations. We're very pleased with the results that we're seeing with HB. And so the one thing about weather averages is that weather tends to revert to the main -- or revert back to the average.

So when you do have a rain event over the next few years, generally you're going to see better evaporation seasons. So we like to stick to the big picture and look at the multi-year averages or the multi-decade weather averages.

So if you believe in averages, we have every reason to believe that our solar solution facilities in 2016 should perform well within the ranges that they've historically performed. And given what we're seeing at HB, we're extremely pleased with how it's performing so far.

Okay. And on that basis, can you talk, also, about opportunities that you have in your conventional facilities at East and West? And where -- how the mine plants look as you look out beyond the next 12 months into maybe better ore grade parts of the mine? Or opportunities to improve the throughput and yield and lower the cost?

Well, if we look at West, West clearly has the opportunity to mine and to -- or without getting into the weeds and lots of specifics, as we've discussed before, we have what we like to refer to as the stacked ore body that we're mining into at West, which has higher ore grades.

However, with it comes higher slimes, if you will. And we think we're prepared for that by having just completed the building of a new thickener and refurbishment of two old thickeners as well as expanding different technologies that we have to deal with those -- that clay content or those slimes.

We've also come up with several ways that we've worked to take potash from our tails, if you will, and circulate it into HB, which gives us the opportunity for additional systematic recoveries, if you will.

So instead of having losses, the ability to recover those tons that we're formally reporting details. Those are some of the opportunities at West as well as numerous -- I mean, I could go into rod mill expansions and things to really give you incredible recovery opportunities.

Without getting into too many details, but if we look over at East, what we're really focused on is that we sit on top of this incredible langbeinite ore body that's on tap for us that we're looking at different ways to incorporate those pure lang reserves that we haven't tapped into yet into our current production stream to increase our langbeinite production. And significantly reduce our langbeinite costs because it's such a great product.

So there's a lot of different ways that we're looking at. How do we substantially increase our langbeinite production at East? Because we sit on such great untapped ore bodies. I hope that's a bit of color in terms of where we're headed.

No, that's very helpful. I'll get back in queue. Thanks very much.

Christopher Perrella, Bloomberg Intelligence.

The Amax mine potential there, would that be about the same capital costs as it took to get the HB mine up and running?

No, not remotely. Amax would start out with just injecting and withdrawing brine. That's a mine that we own and -- or have leased. And had the opportunity to exploit and we're in the permitting process of that right now.

And so we would start out by taking that high grade brine and putting it into our existing ponds. So that's how we see Amax. And as we've described many times, we see incremental add-on opportunities, or bolt-on opportunities, to our cur -- to the footprint that's already been built out.

That's sort of the beauty of having built the HB facilities that we built, given the pond system that we've built, the mill that we've built and the current mines that we're flooding, is the ability to bolt on, if you will, additional underground surface area that's got substantial potash left to be recovered in other areas of the mine that we've just begun flooding. So we see them as bolt-on rather than one massive cap spend.

Okay, thank you. And just a question, the higher per ton cost in potash in the third quarter, the bulk of the -- I guess going forward it'll be just from the dilution in Wendover and the impact from the shutdown of the East should only be a one quarter effect?

Yes. Chris, this is Brian. Yes, as we look at that, yes, the impacts on East certainly were one quarter. You've got a little bit of inventory there that will get sold here in the fourth quarter, where there'll be a small impact there.

But by and large, the production on the underground facility should be unaffected going forward with that. And then the solar properties, as Bob talked about, particularly HB continues to perform as we expect it will here in the fourth quarter.

So that -- it's more of a mix question that you're referring to than anything else at this point.

Okay, thank you very much.

We have one question from Don Carson, Susquehanna Financial.

This is actually [Suli Salim] on for Don Carson. I wanted to ask about your outlook for Q4 in terms of your average realized potash price and why you're not necessarily seeing the price appreciation. And if that's a result of maybe not completing your summer fill orders.

No, in fact I don't think you're really understanding. In the third quarter, we achieved the price increase before our peers. So our price went up faster than our peers. And so we captured the majority of that price increase before it was announced.

And so we're really proud of that fact. And I think that's gotten lost in the messaging. And we continue to see our ability to capture that into the fourth quarter. And we're seeing strength in the demand for our product.

And so that's why we mention that we see stable pricing in the fourth quarter because we already achieved a good portion of that increase in the third quarter.

Okay. Thank you.

This concludes the time we have allocated for questions for today's call. I'll turn the conference back over to Mr. Jornayvaz for closing comments.

I want to thank everybody for taking the time to dial in and appreciate your interest in Intrepid. We look forward to speaking with everybody in the near future. Thank you again.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.