Boston, MA 05/05/2014 (wallstreetpr) – Intrepid Potash, Inc. (NYSE:IPI) had very little to show for the Q1 operations. The company reported a loss and raised the alarm over the Q2 performance despite claiming that it enjoys logistical and geographic advantages.
The company’s biggest challenge this year is transportation. The loss in Q1 came courtesy of the inadequacy of transportation services due to the harsh winter weather. However, the company also observed that Q2 was under threat because the available railcars were not adequate to meet its transportation.
The company transports its commodities through railcars and trucks. However, transportation crisis is biting in the southeastern New Mexico mining region. The demand for transportation services has gone up while transport providers are facing overstretched capacity.
The post-winter season is causing a transportation crisis as mining companies seek to get their backlog to customers after several months of delays increase demand for railcars. But for Intrepid Potash, Inc. (NYSE:IPI), the issue of the transportation crisis is more pronounced because its commodity-supply should reach farmers before the seeding season. If the company fails to meet farmers demand for fertilizer before the seeding window, the challenge will be that farmers will skip application or reduce their demand for fertilizer, which will impact the sales of Intrepid.
Management optimism
Even in a challenging business environment, the management of Intrepid Potash, Inc. (NYSE:IPI) believes that all is not lost. The company believes that 2014 could still turn out to be a positive year for the company especially after making internal improvements. The company recently trimmed its workforce by 7 percent and expects to realize significant costs savings based on that adjustment.
Q1 in numbers
Intrepid Potash, Inc. (NYSE:IPI) reported a net loss of $0.4 million. Production in the quarter remained almost flat on a year-over-year basis. Cash and cash equivalent in the quarter were $3.23 billion, a significant improvement from $0.39 million in Q42103.
Although the company acknowledged drop in potash prices from an average of $417 per ton in Q42013 to $317 per ton currently, Intrepid expects to benefit from its cost-cut efforts and logistical and geographic advantages.
