Why Intrepid Potash Could Report a Steep Revenue Decline in 1Q16

Intrepid Potash (IPI) generates revenue from two products: potash and Trio. The potash product line constitutes MOP (muriate of potash) while Trio is the company’s brand name for sulfate of potash magnesia, or langbeinite. In 2015, IPI earned 77% of its revenues from potash and the remaining 23% from Trio.

For 1Q16, Wall Street analysts are expecting the company to report sales of $54.7 million, as compared to $117 million in the corresponding quarter one year ago in 1Q15. This would translate into a revenue decline of 48%. It would also represent the fourth consecutive quarter for the company to be reporting a year-over-year decline in revenue.

On the other hand, analysts are expecting Potash Corporation (POT) to report a 30% decline in 1Q16, Mosaic (MOS) to report a 26% decline, and Agrium (AGU) to report a 5% decline. These dismal revenue growth figures underline the ongoing challenges in the agricultural fertilizer sector (MOO).

For 2016, Wall Street analysts are estimating Intrepid Potash to report $202 million in revenue, which would be a 29% decline from 2015. The market expectations for 2016 has priced in the soft expectations for fertilizers during the year. This is the single most important reason why Intrepid Potash may be seeing a steep decline in its 2016 revenues.

In the next part, we’ll cover potash prices in greater detail.