Welcome to the Intrepid Potash Second Quarter and First Half 2016 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Jennifer Holmquist [ph], Investor Relations. Please go ahead.

Thanks, Anastasia. Good morning and welcome, everyone. I remind you that parts of our discussion today will include forward-looking statements as defined by the U.S. Securities Laws. These statements are not guarantees of future performance and are based on a number of assumptions which we believe are reasonable. These statements are based on information available to us today and we assume no obligation to update them. You can find more information about risks and uncertainties to our future performance in our periodic filings filed with the SEC. 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 this morning's press release. Our SEC filings and press releases are available on our website at intrepidpotash.com. Presenting on the call today are Bob Jornayvaz, our Co-Founder, Executive Chairman, President and CEO and Brian Frantz, Senior Vice President and Chief Accounting Officer. Jeff Blair, our Vice President of Sales and Marketing is also available for Q&A. And with that I'll handle the call over to Bob

Thank you, Jennifer and good morning, everyone. Before I dive into commentary regarding our circuit quarter and first half results, I would like to first address the developments related to the ongoing negotiations with our lenders as I realize this is top of mind for many of you. As you saw in our releases this morning in this past Friday, we have reached an agreement in principle on the terms of our senior notes. As part of these negotiations, we also agreed to extend the maturity date of our existing credit facility by two months, reduce that facility to $1 million for letters of credit only and received a commitment letter or an alternative lending facility whether I replace our existing facility. While I stress that these agreements are subject to various conditions and definitive documentation, we're obviously pleased with the progress this represents in our negotiations. We currently expect to have definitive documentation completed by the end of September. In the meantime we have received a waiver on the current debt covenants for both our notes and for our existing revolver until September 30 to allow us time to get everything formally documented. It is too soon to divulge any further details, however I can tell you today we believe these agreements will provide Intrepid with the liquidity to continue executing on our business plans. Turning to the second quarter, this quarter represented a significant period of transition for the company as we idled operations at West in early July and we transitioned East to a Trio only facility. These activities had a meaningful impact on our results in the quarter so I would like to spend a moment giving you updates on where we're today. We successfully transitioned West in the care and maintenance in early July and…

Thanks, bob and good morning, everyone. For those of you that have been following the company for a while, you've noticed we've presented our potash and Trio numbers differently than we have in prior periods. We now report results for two segments, potash and Trio. Further, in response to recently issued SEC guidance, we've reduced the non-GAAP measures that we're providing. Our net loss and our adjusted EBITDA continue to be most impacted by declines in potash and Trio pricing which weighed heavy on our top line through the three and six-month periods. Top line sales declined 30% and 34% during the second quarter and year-to-date compared with the same periods in 2015. These declines were led by year-over-year declines in potash sales despite having achieved higher potash sales volumes in both 2016 periods. Our average net realized sales price per ton decreased more than 40% in both the second quarter and year-to-date periods. Sales mix negatively impacted both top line sales and gross margin as sales into the industrial markets continue to be slow due to lower levels of oil and gas drilling activity. Declines in potash pricing yielded lower of cost to market adjustments of $2.9 million and $11.9 million during the second year and year-to-date periods respectively. For Trio pricing and volumes were down in both the quarter and year-to-date periods resulting from overall softness in the fertilizer market in the trends Bob discussed earlier. These price declines coupled with start-up costs for the newly transitioned East facility weighed on a gross margin for the Trio segment in the second quarter and year-to-date periods. During the second quarter of 2016, we incurred $1.1 million in abnormal production cost associated with the brief shutdown of the East plant as we transitioned it from a mixed ore [ph] facility…

[Operator Instructions]. The first question is from Christopher Parkinson of Credit Suisse. Please go ahead.

This is Graham Wells [ph] stepping in for Chris. I was just wondering if you could add a little bit of color around regional trends you're seeing in terms of demand both for Trio and for MOP and then also just wondering if you can add a little commentary in terms of the pricing pressures that you see on the Trio front moving forward. That would be very helpful, thank you.

In terms of demand models, we really just don't see any significant changes to historic models. I mean we're seeing great moisture in our truck markets. Soil moisture and so when we look at the crops that are going to be grown in the State of Texas and the surrounding areas, our footprint obviously because we're producing fewer tons of potash, it's going to be really guided around our very solid truck market. So from a command standpoint, given the fact that we’re going to be a smaller producer, I think we're going to have better opportunities to select and choose the markets that we're really participating into. On the Trio side, from a pricing perspective, we saw Mosaic take the price down but we're seeing great opportunities from our customers as we sign up new customers and new geographies. This product has previously been constrained and so we see our opportunities to continue to grow this market in a product that we just previously didn't have available to sell. So it's very difficult to go grow a market when you don't physically have the product to offer into it. So as we see that opportunity, we just see it continue to expand.

The next question is from Mark Connelly of CLSA. Please go ahead.

I was hoping, Brian, if you could just clarify for me. I think you talked about labor transition costing primarily behind you and then you talked about the burn-off of the inventory. Are all of your primary transition costs behind you once the inventory is done? I'm just trying to get a sense of, you know, whether there's something else that we should be expecting in this next quarter or two before you get to clean numbers? And then second, can you talk about the distribution system and how that system changes now, how much more or less flexible it will be and will you have more proportionately in consignment or less when all this inventory has worked out?

Sure, Mark, this is Brian. I'll take the West question and maybe Bob follow up on the distribution system question. Yes, so on the idling of West, yes, we've recognized all of those costs that we anticipate to be incurred related to the idling of facility. Those came through in the second quarter. So you see all of those. As we go forward, you know, the facility is under care and maintenance so we have a little bit of labor and associated costs with that to maintain the facility, you know, bump the motors, check the shafts, things of that nature going forward. So if we choose to restart in the future we're able to do so. So you will see some of those costs going forward but in terms of the transition costs themselves, those have all been recognized. As we sell down the inventory that's been produced, unfortunately we took those costs down to lower cost to market so assuming prices stay where they are which, you know, Bob kind of addressed that we think we're at or near the bottom, we shouldn't see any incremental hits to the income statement related to those as well. So I think hopefully that answers your question. If not, we can--

As to the distribution system, we've increased the distribution system, if you will, in a variety of ways. I'm not going to go into a lot of details quite frankly simply because I'm just not going to lay out our marketing plan for Trio but I can tell you that we've significantly ratched up our ability to distribute - ramped up both domestically and globally. What was the second part of you were question? I apologize

I just wanted to understand whether on the potash side you would have proportionately more or proportionally less on consignment once you blow through all this inventory?

Yes we should have significantly less, a very small amount in fact and we just got our good strong local truck markets that we have before in selected warehouses that we’re working with that provide us the opportunity to kind of stay out of the consignment world?

The next question is from Sandy Klugman of Vertical Research Partners. Please go ahead.

Domestic potash prices have been particularly weak, particularly when taken in the context of the 94 million acre year for U.S. corn. One of your competitors this morning commented that the weakness we're seeing in offshore prices is more a function of currency than market oversupply. Given how close you are to domestic market, I was hoping you could maybe comment on what you perceive to be the biggest driver of the lower price environment that we're seeing?

Yes, I would say number one first and foremost it was some of the imports that came in in the first half of the year. As you remember we saw both [indiscernible] Mosaic try to take up the price $15 and then PCS's fill program takes the price up $20. So we're feeling a pretty solid bottom as we've seen the three major Canadian producers announce price increases and given the nature of the order book that started late last week, we feel like we've seen a bottom whether it's a long term bottom or just a short term bottom, we've definitely felt a bounce pricing-wise in the short term. But I would say the primary reason for the price declines that we saw in the first half were a lot of the competitive tons that came from both Russia and [indiscernible] Russia.

And then as it relates to Trio, is your capacity increases, are they sufficient enough to put pressure on pricing and when you look at the offshore markets, where do you see the best opportunities for growth in Trio demand?

You know, all I can tell you is that from a global standpoint we're having a tremendous amount of interest so we'll get into various countries later as we move forward with executing on our marketing plan but we're seeing very solid interest. We don't believe that we should see a lot of pricing on [indiscernible], on Trio specifically given the amount and the nature of conversations that we're having with customers. So we feel there's adequate demand out there and we finally have supply that is going to fill up pretty significant demand profile.

This is Jeff. I think when we talk about pricing, pricing to the customer your net realized price back to us, I think our comments there, similar around - our free lane [ph] obviously expand as we grow and look for new markets and so there's an impact on some pricing there. But I think I would echo Bob's comments. We've had good interest. We're getting the logistics in place but some of those are going to get longer obviously to make sure we can find the right markets. So that has an impact on our pricing back to the plant.

[Operator Instructions]. The next question is from Josh Spector of UBS. Please go ahead.

I was wondering if you could just help me understand how much production of potash came from West in the second quarter and then also as you look to the second half and work through inventory and continue to ramp down potash production, what do you look for year-on-year so if you had 200K tons roughly last year in potash, are you able to give a rough feel for what you're looking at in the second half of this year?

This is Brian. I think I'll try to take that. Typically we don't talk about specific production levels from our facilities, though I would ask you to go back and take a look at our 10K and in our 10K you will see estimated production capacity levels in there. And I think, you know, our second quarter numbers are probably pretty reflective if you were to take a look at those and bring those back to a quarterly level. So we were thankfully we were able to operate West safely during the period of time in the second quarter there and I think those numbers would be in-line with what you would have seen in our 10K.

Okay. So there's pretty much in line roughly full quarter production.

Yes, I think that's a fair place to be thinking about it.

And do you guys talk about what you would expect for second half at all?

No. I mean certainly again going back to the 10K numbers, if you can take out the West and the East facility production numbers from it and you look at just our solar numbers from an annual basis, I think, you know, we're tracking towards that at this point in time. It's still fairly early during the evaporation season but I think if you look at though 10K numbers that will get you where you want to be.

There are no more questions. I would like to turn it back over to Bob Jornayvaz for closing remarks.

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

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