Intrepid’s debt

Last year, Intrepid Potash (IPI) went through several credit amendments with its lenders. Each amendment would give lenders and the company more time for the fertilizer market (MOO) environment to reverse. However, it took longer than expected. In March 2017, Intrepid Potash announced a public offering. Intrepid Potash stated that it would use the proceeds to help repay the outstanding debt on its senior notes.

Intrepid Potash’s Debt Position Changed in 2017

Lower debt

The proceeds from the public offering helped the company reduce its debt, as you can see in the above chart. In 3Q16, the company’s debt-to-equity ratio rose to 39%, which gradually fell to 22% in 1Q17 and 15% in 3Q17. It’s exactly where the company was about two years ago.

In 3Q17, the market environment for potash fertilizers (MOO) found stability and prices increased YoY (year-over-year). In Fertilizer Price Update: Week Ended December 15, we saw that granular potash prices in NOLA (New Orleans) rose 9% YoY and 16% in Brazil during the same period. The positive movement in potash prices also benefited the potash segments for PotashCorp (POT), Agrium (AGU), and Mosaic (MOS).

Reduced debt and improved prices lifted the market sentiment. It’s also reflected in analysts’ EPS (earnings per share) estimates for Intrepid Potash. We’ll discuss the EPS estimates in the next part.

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