Earlier in this series, we saw that Intrepid Potash (IPI) has been impacted by the weak potash market. The resulting debt burden puts the company at a risk of default. In this final part of the series, we will look at how Intrepid is positioning itself to deal with these challenges.
Is Trio the answer?
Over the years, Intrepid Potash (IPI) has shifted its business model to focus more on Trio. According to the company’s recent 10-K filings, Trio is its “specialty fertilizer that delivers potassium, sulfate and magnesium in a single particle and has the added benefit of being low in chloride.”
In addition, the company states that it is one of the only two companies that produces this kind of product, with the other being Mosaic (MOS). Recently, the company also moved toward transforming its East facility to produce Trio only. The company believes that with the expansion of Trio, it can increase its margins as well as cash flows.
The company’s push to expand its Trio production, as a mix of total of potash and Trio, appears to be the company’s answer to deal with current challenges that have put its margins in the red. In 2Q16, the Trio segment had negative gross margins.
Only time will tell whether this will help Intrepid Potash to keep afloat in an industry (MOO) where PotashCorp (POT), Mosaic (MOS), and Agrium (AGU) have a heavy presence in the North America, which is IPI’s primary market.