Oppenheimer Gives Color On Intrepid Potash Following Earnings Release

Intrepid Potash IPI reported 4Q10 EPS of $0.24, $0.04 above Oppenheimer's estimate, up 170.7% yoy, with volumes and pricing as pre-announced on 1/20. The upside resulted primarily from lower COGS, as the company operated mines at higher operating rates. As Oppenheimer wrote in its 3Q note, fickle ag market dynamics have taken a turn for the better and the company expects at least a "normal" application rate for the spring season. With tight corn and soybean stocks, farmers are "placing a great deal of attention on the need to maximize yield." Additionally, dealer confidence is high and Intrepid has seen dealer orders "well in advance of anticipated spring demand." Oppenheimer maintains '11E EPS at $1.46, six times 2007's, but below 2008's $1.65. Positively, Intrepid's average net realized prices improved sequentially, with potash up $43/ton ad Trio up $49/ton. Declining production costs on higher operating rates should also benefit results going forward; COGS per ton, gross of by-product credits, were $173 in 4Q10 compared to $265 in 4Q09. Oppenheimer has a Perform rating on IPI IPI closed Wednesday at $35.69