Intrepid Potash (IPI) Misses Q1 EPS by 6c; Announces Idling, Transition of West Facility
Intrepid Potash (NYSE: IPI) reported Q1 EPS of ($0.22), $0.06 worse than the analyst estimate of ($0.16). Revenue for the quarter came in at $73.28 million versus the consensus estimate of $59.8 million.
Intrepid also its decision to idle operations at its West facility and transition the facility to a care-and-maintenance mode.
The West facility, which generated 42% of Intrepid's potash production in 2015, is a conventional mining facility located in Carlsbad, New Mexico. The facility's operations have become increasingly less profitable in recent months as oversupply and foreign competition in the U.S. potash market has pressured prices. The West facility is expected to transition to a care-and-maintenance mode in July. Approximately 300 of Intrepid's employees will be impacted by this decision.
"The decision to idle the West facility was difficult, but necessary in order to better position Intrepid for long-term success," said Intrepid's Executive Chairman, President and CEO Bob Jornayvaz. "I am thankful to all the employees and vendors who work to safely operate the West facility and provide our customers with high quality red granular product. While the transition of this facility to a care-and-maintenance mode significantly reduces our potash production capacity, this move, in combination with the transition of the East facility to Trio®-only production, removes our two most expensive potash facilities from production during this period of low potash prices. We believe our remaining potash production facilities, which consist of our three low-cost solar solution mines, will improve our position on the world cost curve and provide the right model for our portfolio in this challenging environment."
Intrepid's North facility, which had previously served as the primary compaction site for production from the West facility, plans to offer other products, including high value 62% K20 products. Intrepid is also exploring additional ways to generate salt by-product revenues.
The West facility is expected to remain under care and maintenance until such time as Intrepid determines that the cost of resuming production at the facility justifies the anticipated cash flow, considering potash pricing, the costs to run the facility, and other factors.
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