Intrepid Potash Inc. is implementing a number of cost-savings initiatives to better align its cost structure with the current business environment, most specifically the declining potash prices experienced since mid-2013 and the conclusion of its major capital projects.
The cost-savings initiatives include the elimination of approximately 7 percent of the workforce, including capital-project-related support associated with the company's major capital projects, which are nearly complete. Additional cost-savings measures involve decreases in executive compensation, reduction in the use of outside professionals, and cutbacks in other general and administrative expense items.
Intrepid estimates saving approximately $15 million annually from these initiatives, with the majority being in general and administrative expense and the remainder being cost of goods sold. The workforce reduction is expected to result in a first quarter 2014 pre-tax charge of approximately $1.5 million to $2.0 million.
"These are difficult, but necessary decisions. The changes we have made better position Intrepid in today's market environment and enhance our long-term competitiveness," said Dave Honeyfield, Intrepid's president and chief financial officer. "We have taken a thoughtful approach to ensure that we are balancing the current market environment with what we see as a healthy long-term business model with a continued commitment to safe operations. We are treating those impacted by these changes with the respect and fairness they deserve, while creating value for our shareholders by running Intrepid as efficiently as possible."