Second-Quarter Highlights:
- Net income up 200 percent from 2014
adjusted results
- Operating earnings increased 79
percent
- Salt segment earnings set
second-quarter record
Second-quarter earnings for Compass Minerals (NYSE: CMP), a
leading producer of essential minerals, improved significantly from
2014 results, while revenue was essentially flat.
“Our salt business demonstrated very strong performance this
quarter with record-setting earnings, while our plant nutrition
business continues to perform as expected,” said Fran Malecha,
Compass Minerals’ president and CEO. “I am pleased with the strong
commercial and operational performance across both businesses,
which should ensure we can serve more customers effectively and
efficiently through the fall growing season and the upcoming
winter.”
Net income in the second quarter increased to $13.2 million, or
$0.39 per diluted share, from a loss of $0.7 million, or $0.02 per
diluted share, in the second quarter of 2014. The prior-year
results included costs related to early debt redemption of
approximately $6.9 million, pre-tax. Excluding these costs, net
income in 2014 was $4.4 million, or $0.13 per diluted share.
Salt segment operating earnings increased 210 percent
year-over-year to $21.1 million, primarily driven by improved
pricing. Plant nutrition operating earnings were $16.8 million,
modestly down from $17.9 million in the prior year, due to higher
sulfate of potash production costs when compared to the prior
year.
Consolidated operating earnings rose 79 percent to $24.0 million
from $13.4 million in the 2014 second quarter. Adjusted EBITDA*
increased 34 percent to $43.1 million.
Compass Minerals Financial Results
(in millions, except for earnings per
share)
Three months endedJune
30,
Six months endedJune 30,
2015 2014
2015
2014 Sales $ 183.7 $ 186.6 $ 576.7 $ 608.6 Sales less
shipping and handling (product sales) 142.9 141.8 434.0 433.1
Operating earnings 24.0 13.4 108.7 80.4 Operating margin 13.1 % 7.2
% 18.8 % 13.2 % Net earnings (loss) 13.2 (0.7 ) 73.8 49.5 Net
earnings, excluding special items* 13.2 4.4 73.8 54.6 Diluted
earnings per share (loss) 0.39 (0.02 ) 2.18 1.47 Diluted per-share
earnings, excluding special items* 0.39 0.13 2.18 1.62 EBITDA* 44.3
25.1 151.6 113.6 Adjusted EBITDA* 43.1
32.2 146.9
117.6
*These are non-GAAP financial measures. Reconciliations to GAAP
measures of performance are provided in tables at the end of this
release.
SALT SEGMENT
Salt segment revenue declined 2 percent to $116.3 million from
$118.7 million in the prior year. A 5 percent decrease in segment
sales volumes was largely offset by higher average selling prices
for highway deicing and consumer and industrial products.
Salt segment EBITDA increased to $32.0 million, 83 percent above
2014 results, and the segment’s EBITDA margin expanded from 15
percent to 28 percent. These improvements were driven primarily by
stronger average selling prices and a more profitable product sales
mix compared to the prior-year period.
Highway Deicing Bid Season Update
Compass Minerals estimates that it is 80 percent complete with
the 2015-2016 North American highway deicing bid season. Tendered
volumes in the company’s served area are lower this season than
last year when tendered volumes were well-above average. Despite
this reduction, the company expects to increase committed volumes
above last year’s level. The company’s average awarded bid price
has declined approximately 6 percent compared to a 25 percent
increase achieved during the prior bid season.
Salt Segment Performance
(in millions, except for sales volumes and
prices per short ton)
Three months endedJune
30,
Six months endedJune 30,
2015 2014
2015 2014
Sales $ 116.3 $ 118.7 $ 433.0 $ 471.9 Sales less shipping and
handling (product sales) $ 81.2 $ 81.7 $ 303.4 $ 311.8 Operating
earnings $ 21.1 $ 6.8 $ 98.1 $ 70.3 Operating margin 18.1 % 5.7 %
22.7 % 14.9 % EBITDA* $ 32.0 $ 17.5 $ 119.9 $ 92.4 Sales volumes
(in thousands of tons): Highway deicing 1,011 990 4,858 5,732
Consumer and industrial 466 557
973 1,211 Total salt 1,477 1,547 5,831 6,943
Average sales price (per ton): Highway deicing $ 51.28 $ 44.93 $
60.55 $ 52.23 Consumer and industrial $ 138.19 $ 133.27 $ 142.66 $
142.46 Total salt $ 78.72 $
76.73 $ 74.26 $ 67.97
*This is a non-GAAP financial measure. Reconciliations to GAAP
measures of performance are provided in tables following this
release.
PLANT NUTRITION SEGMENT
Plant nutrition segment revenue totaled $64.1 million which was
$1.5 million lower than prior year results. While average selling
prices for plant nutrition products increased 13 percent from 2014,
increased import competition from Europe and weather-related
reductions in sulfate of potash demand in some east coast markets
resulted in a 13 percent year-over-year decline in total sales
volume.
Plant nutrition EBITDA for the quarter was $23.9 million
compared to $24.8 million in the 2014 period. Improved per-ton
logistics costs partially offset the earnings impact of lower sales
volumes and higher per-unit costs resulting from the planned
increase in use of sourced potassium feedstock following last
year’s poor solar evaporation season.
Plant Nutrition Segment Performance
(in millions, except for sales volumes and
prices per short ton)
Three months endedJune
30,
Six months endedJune 30,
2015 2014
2015 2014
Sales $ 64.1 $ 65.6 $ 137.7 $ 131.7 Sales less shipping and
handling (product sales) $ 58.4 $ 57.8 $ 124.6 $ 116.3 Operating
earnings $ 16.8 $ 17.9 $ 37.6 $ 34.2 Operating margin 26.2 % 27.3 %
27.3 % 26.0 % EBITDA* $ 23.9 $ 24.8 $ 51.7 $ 47.1 Sales volume (in
thousands of tons) 85 98 182 205 Average sales price (per ton)
$ 756 $ 670
$ 757 $ 641
*This is a non-GAAP financial measure. Reconciliations to GAAP
measures of performance are provided in tables following this
release.
OTHER FINANCIAL
HIGHLIGHTS
Selling, general and administrative expenses increased 10
percent from 2014 results primarily due to higher incentive
compensation.
Other income in the current quarter was $1.2 million compared to
other expense in the prior year of $7.1 million, which included
$6.9 million in costs associated with the early redemption of $100
million in 8 percent senior notes due in 2019.
Income tax expense totaled $6.7 million, which resulted in an
effective rate of 34 percent. The increased rate in the quarter
reflects a discrete tax expense related to a change in Canadian tax
law. For the full year, the company continues to expect an
effective tax rate between 27 percent and 28 percent.
OUTLOOK
The company’s second-half and full-year outlook is summarized in
the table below.
For the remainder of the year, the company expects
year-over-year earnings improvement in the salt segment, despite
lower highway deicing bid prices. Assuming average winter weather,
increased highway deicing commitments in North America and lower
salt costs are expected to keep salt segment operating earnings
above prior-year results for the second half of 2015.
In the plant nutrition business, demand for sulfate of potash
continues to be healthy at current price levels, although the
strength of the U.S. dollar and historically low ocean freight
rates are increasing competition in North America. Compass Minerals
remains well-positioned to serve the domestic market due to the
strength of the Protassium+™ sulfate of potash brand, supported by
strong customer relationships and ample product strategically
positioned in key markets.
The company reiterates its full-year EPS guidance of $5.10 to
$5.60 per diluted share.
2015 OUTLOOK:
FULL YEAR EPS - $5.10 to $5.60
Salt Segment 2H15 FY15 Volumes
6.2 million to 7.2 million tons 12 million to 13 million tons
Average Selling Price (per ton) $76 to $80 Operating Earnings
Margin 27% to 29%
Plant Nutrition Segment Volumes 200,000 to
230,000 tons 380,000 to 410,000 tons Average Selling Price (per
ton) $730 to $750 Operating Earnings Margin 22% to 24%
Corporate Corporate and Other Expense ~$52 million Interest
Expense ~$23 million Capital Expenditures $225 to $250 million
Effective Tax Rate 27% to 28%
Conference Call
Compass Minerals will discuss its results on a conference call
tomorrow morning, Tuesday, July 28, at 9:00 a.m. ET. To access the
conference call, interested parties should visit the company’s
website at www.CompassMinerals.com or dial 877-614-0009. Callers
must provide the conference ID number 1706826. Outside of the U.S.
and Canada, callers may dial 913-643-4075. Replays of the call will
be available on the company’s website for two weeks. The replay can
also be accessed by phone for seven days at 888-203-1112,
conference ID 1706826. Outside of the U.S. and Canada, callers may
dial 719-457-0820.
An updated summary of the company’s performance is included in a
presentation available on the company’s website at
www.compassminerals.com/presentation.
About Compass Minerals
Compass Minerals is a leading provider of essential minerals
that provide solutions to nature’s challenges, including salt for
winter roadway safety and other consumer, industrial and
agricultural uses, and specialty plant nutrients that improve the
quality and yield of crops. The company produces its minerals at
locations throughout the U.S. and Canada and in the U.K. For more
information about Compass Minerals and its products, please visit
www.compassminerals.com.
Non-GAAP Measures
Management uses a variety of measures to evaluate the company’s
and its operating segments’ performance. While the consolidated
financial statements provide an understanding of the company’s
overall results of operations, financial condition and cash flows,
management analyzes components of the consolidated financial
statements to identify certain trends and evaluate specific
performance areas. In addition to using U.S. generally accepted
accounting principles (“GAAP”) financial measures, management uses
EBITDA and EBITDA adjusted for items which management believes are
not indicative of the company’s ongoing operating performance
(“Adjusted EBITDA”), both non-GAAP financial measures, to evaluate
the operating performance of the company’s core business operations
because its resource allocation, financing methods and cost of
capital, and income tax positions are managed at a corporate level,
apart from the activities of the operating segments, and the
operating facilities are located in different taxing jurisdictions,
which can cause considerable variation in net income. The company
also uses EBITDA and Adjusted EBITDA to assess its overall and
operating segment operating performance and return on capital
against other companies, and to evaluate potential acquisitions or
other capital projects. EBITDA and Adjusted EBITDA are not
calculated under GAAP and should not be considered in isolation or
as a substitute for net income, cash flows or other financial data
prepared in accordance with GAAP or as a measure of overall
profitability or liquidity. EBITDA and Adjusted EBITDA exclude
interest expense, income taxes and depreciation and amortization,
each of which is an essential element of the company’s cost
structure and cannot be eliminated. Consequently, any measure that
excludes these elements has material limitations. While EBITDA
and Adjusted EBITDA are frequently used as measures of operating
performance, these terms are not necessarily comparable to
similarly titled measures of other companies due to the potential
inconsistencies in the method of calculation. The calculation of
EBITDA and Adjusted EBITDA as used by management is set forth in
the following table.
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. We use words such as “may,” “would,” “could,” “should,”
“will,” “likely,” “expect,” “anticipate,” “believe,” “intend,”
“plan,” “forecast,” “outlook,” “project,” “estimate” and similar
expressions suggesting future outcomes or events to identify
forward-looking statements or forward-looking information. These
statements are based on the company's current expectations and
involve risks and uncertainties that could cause the company's
actual results to differ materially. The differences could be
caused by a number of factors, including weather conditions,
pressure on prices and impact from competitive products, any
inability by us to fund necessary capital expenditures, foreign
exchange rates, and the cost and availability of transportation for
the distribution of our products. For further information on these
and other risks and uncertainties that may affect our business, see
the “Risk Factors” sections of our Annual Report on Form 10-K for
the year ended December 31, 2014. The company undertakes no
obligation to update any forward-looking statements made in this
press release to reflect future events or developments. Because it
is not possible to predict or identify all such factors, this list
cannot be considered a complete set of all potential risks or
uncertainties.
Reconciliation for Net Earnings, Excluding Special Items
(unaudited)
(in millions)
Three months ended
June 30,
Six months ended
June 30,
2015 2014
2015 2014 Net
earnings (loss) $ 13.2 $ (0.7 ) $ 73.8 $ 49.5 Costs of early debt
redemption, net of taxes(1) - 5.1 -
5.1 Net earnings, excluding special items $ 13.2 $ 4.4
$ 73.8 $ 54.6
(1) In June 2014, the company redeemed early
$100 million in senior notes for pre-tax costs of $6.9 million
($5.1 million after applicable income taxes).
Reconciliation for EBITDA and Adjusted EBITDA (unaudited)
(in millions)
Three months ended
June 30,
Six months ended
June 30,
2015 2014
2015 2014 Net
earnings (loss) $ 13.2 $ (0.7 ) $ 73.8 $ 49.5 Interest expense 5.3
4.5 10.7 8.9 Income tax expense 6.7 2.5 28.9 18.0 Depreciation,
depletion and amortization 19.1 18.8
38.2 37.2 EBITDA $ 44.3 $ 25.1 $ 151.6 $ 113.6
Adjustments to EBITDA: Other (income) expense(1) (1.2 )
7.1 (4.7 ) 4.0 Adjusted EBITDA $ 43.1
$ 32.2 $ 146.9 $ 117.6
(1) Primarily includes interest income and foreign
exchange gains and losses. The three and six months ended June 30,
2014, include a charge of $6.9 million related to redeeming and
issues notes.
Reconciliation for Salt Segment
EBITDA (unaudited)
(in millions)
Three months ended
June 30,
Six months ended
June 30,
2015 2014 2015
2014 Operating Earnings $ 21.1 $ 6.8 $ 98.1 $ 70.3
Depreciation, depletion and amortization 10.9 10.7 21.8 22.1
Segment EBITDA $ 32.0 $ 17.5 $ 119.9 $ 92.4
Reconciliation for Plant Nutrition Segment EBITDA
(unaudited)
(in millions)
Three months ended
June 30,
Six months ended
June 30,
2015 2014 2015
2014 Operating Earnings $ 16.8 $ 17.9 $ 37.6 $ 34.2
Depreciation, depletion and amortization 7.1 6.9
14.1 12.9 Segment EBITDA $ 23.9 $ 24.8 $ 51.7 $ 47.1
COMPASS MINERALS INTERNATIONAL,
INC.CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)(in millions, except share and per-share
data)
Three months ended
June 30,
Six months ended
June 30,
2015 2014
2015 2014
Sales $ 183.7 $ 186.6 $ 576.7 $ 608.6 Shipping and handling cost
40.8 44.8 142.7 175.5 Product cost 92.3 104.3
270.2 303.3 Gross profit 50.6 37.5
163.8 129.8 Selling, general and administrative expenses
26.6 24.1 55.1
49.4 Operating earnings 24.0 13.4 108.7 80.4 Other (income)
expense: Interest expense 5.3 4.5 10.7 8.9 Other, net (1.2 )
7.1 (4.7 ) 4.0 Earnings before income
taxes 19.9 1.8 102.7 67.5 Income tax expense 6.7
2.5 28.9 18.0 Net earnings
(loss) $ 13.2 $ (0.7 ) $ 73.8 $ 49.5 Basic net
earnings per common share (loss) $ 0.39 $ (0.02 ) $ 2.18 $ 1.47
Diluted net earnings per common share (loss) $ 0.39 $ (0.02 ) $
2.18 $ 1.47 Cash dividends per share $ 0.66 $ 0.60 $ 1.32 $ 1.20
Weighted-average shares outstanding (in
thousands): (1)
Basic 33,682 33,549 33,654 33,526 Diluted 33,701 33,549 33,675
33,546 (1) Excludes participating securities. Participating
securities include options, PSUs and RSUs that receive
non-forfeitable dividends. Weighted participating securities
included 192,000 and 204,000 for the three and six months ended
June 30, 2015, respectively, and 213,000 and 216,000 for the three
and six months ended June 30, 2014, respectively.
COMPASS MINERALS INTERNATIONAL,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)(in millions)
June 30,
December 31, 2015 2014 ASSETS Cash and
cash equivalents $ 233.7 $ 266.8 Receivables, net 90.5 213.0
Inventories 224.3 199.0 Other current assets 22.5 23.9 Property,
plant and equipment, net 736.5 700.9 Intangible and other
noncurrent assets 222.8 233.6 Total assets $ 1,530.3
$ 1,637.2
LIABILITIES AND STOCKHOLDERS' EQUITY Current
portion of long-term debt $ 3.9 $ 3.9 Other current liabilities
136.2 233.8 Long-term debt, net of current portion 620.6 622.5
Deferred income taxes and other noncurrent liabilities 118.8 123.4
Total stockholders' equity 650.8 653.6 Total
liabilities and stockholders' equity $ 1,530.3 $ 1,637.2
COMPASS MINERALS INTERNATIONAL,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)(in millions)
Six Months Ended June 30,
2015 2014 Net cash
provided by operating activities $ 112.2 $ 161.8
Cash flows from investing activities: Capital expenditures
(89.8 ) (49.0 ) Acquisition of a business - (86.1 ) Insurance
advances for investment purposes, Goderich tornado - 8.7 Other, net
(0.5 ) 3.1 Net cash used in investing
activities (90.3 ) (123.3 ) Cash flows from
financing activities: Proceeds from issuance of long-term debt -
250.0 Principal payments on long-term debt (1.9 ) (100.4 ) Premium
and other payments to refinance debt - (5.5 ) Deferred financing
costs - (3.1 ) Dividends paid (44.6 ) (40.4 ) Proceeds received
from stock option exercises 2.1 4.4 Excess tax benefit (deficiency)
from equity compensation awards 0.1 (0.3 ) Net
cash provided by (used in) financing activities (44.3 )
104.7 Effect of exchange rate changes on cash
and cash equivalents (10.7 ) 1.2 Net change in
cash and cash equivalents (33.1 ) 144.4 Cash and cash equivalents,
beginning of the period 266.8 159.6
Cash and cash equivalents, end of period $ 233.7
$ 304.0
COMPASS MINERALS INTERNATIONAL,
INC.SEGMENT INFORMATION (unaudited)(in
millions)
Three Months Ended June 30, 2015 Salt
Plant Nutrition
Corporate and Other(1) Total
Sales to external customers $ 116.3 $ 64.1 $ 3.3 $ 183.7
Intersegment sales 0.1 2.8 (2.9 ) − Shipping and handling cost 35.1
5.7 − 40.8 Operating earnings (loss) 21.1 16.8 (13.9 ) 24.0
Depreciation, depletion and amortization 10.9 7.1 1.1 19.1 Total
assets (as of end of period) 905.6 563.0 61.7 1,530.3
Three Months Ended June 30, 2014 Salt
Plant Nutrition
Corporate and Other(1) Total
Sales to external customers $ 118.7 $ 65.6 $ 2.3 $ 186.6
Intersegment sales 0.2 2.7 (2.9 ) − Shipping and handling cost 37.0
7.8 − 44.8 Operating earnings (loss) 6.8 17.9 (11.3 ) 13.4
Depreciation, depletion and amortization 10.7 6.9 1.2 18.8 Total
assets (as of end of period) 955.4 517.7 68.1 1,541.2
Six Months Ended June 30, 2015 Salt
Plant Nutrition
Corporate and Other(1) Total
Sales to external customers $ 433.0 $ 137.7 $ 6.0 $ 576.7
Intersegment sales 0.1 3.5 (3.6 ) − Shipping and handling cost
129.6 13.1 − 142.7 Operating earnings (loss) 98.1 37.6 (27.0 )
108.7 Depreciation, depletion and amortization 21.8 14.1 2.3 38.2
Six Months Ended June 30, 2014
Salt Plant Nutrition
Corporate and Other(1)
Total Sales to external customers $ 471.9 $ 131.7 $ 5.0 $
608.6 Intersegment sales 0.4 3.2 (3.6 ) − Shipping and handling
cost 160.1 15.4 − 175.5 Operating earnings (loss) 70.3 34.2 (24.1 )
80.4 Depreciation, depletion and amortization 22.1 12.9 2.2 37.2
(1) Corporate and Other includes corporate entities, records
management operations and other incidental operations and
eliminations. Operating earnings (loss) for corporate and other
includes indirect corporate overhead including costs for general
corporate governance and oversight, as well as costs for the human
resources, information technology and finance functions.
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version on businesswire.com: http://www.businesswire.com/news/home/20150727006114/en/
Compass MineralsInvestor ContactTheresa L. Womble,
+1-913-344-9362Director of Investor
Relationswomblet@compassminerals.comorMedia ContactTara
Hart, +1-913-344-9319External Communications
ManagerMediaRelations@compassminerals.com
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