Intrepid Potash’s 4Q13 earnings: Why IPI has lost 20% of its value

Market Realist

Why did Intrepid Potash stock sink 9% after its earnings release? (Part 1 of 4)

Fourth quarter earnings

For the fourth quarter ended December 31, 2013, Intrepid Potash (IPI) reported an adjusted net loss of $8.2 million, or $0.11 per diluted share (adjusted EPS), compared to $19.6 million, or EPS of $0.26, for the same quarter of 2012.

IPI is a small cap with current market cap of $1.06 billion. It’s the largest potash producer in the U.S. Potash sales represented 85% of IPI’s 2013 revenues. The remaining 15% comes from the sales of Langbeinite, a specialty fertilizer marketed as “Trio.” IPI’s largest peers include Mosaic (MOS), Potash Corp (POT), and Agrium (AGU). Unlike its peers, IPI produces and sells virtually all of its potash within the U.S.

The fertilizer industry has been shaken over the past couple of years. Fertilizer prices—especially potash prices—have been decreasing, causing companies to generate fewer revenues and earnings. Plus, crop prices have been declining as well, causing demand for fertilizers to decrease.

Over the past 12 months, IPI has lost more than 20% of its value. Analysts were expecting earnings of $0.01 adjusted EPS, making IPI miss estimates by $0.12. Earnings were announced on Wednesday, after the market closed. After the company’s earnings call a couple weeks ago, IPI’s share price declined almost 9%, to $13.96.

To learn more about the company, see the Market Realist series Intrepid Potash: An investor’s guide to the American producer.

Continue to Part 2

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