Fourth-Quarter Highlights:
- Solid demand drove year-over-year
increases in revenue for Plant Nutrition business
- Salt results pressured by a late start
to winter
- One-time tax charges reduced
fourth-quarter 2017 results to a loss of $0.13 per diluted share;
excluding the tax charges, earnings per diluted share were
$1.66
Full-Year Highlights:
- Produquímica fully integrated,
contributed approximately $375 million in revenue and $49 million
in operating earnings
- Most major capital investment projects
to drive long-term growth completed
- Achieved $12 million in on-going
savings from cost reduction program
Compass Minerals (NYSE: CMP), a leading producer of essential
minerals, reported a year-over-year increase in fourth-quarter
revenue and operating earnings driven by improved Plant Nutrition
South America results, which more than offset weather-driven
weakness in the company's Salt business. The company also announced
that its Board of Directors has approved a dividend for the first
quarter of 2018 of $0.72 per share.
“While this has been a challenging year for Compass Minerals,
our results are demonstrating the value of our strategy to balance
our winter weather exposure by growing our plant nutrition business
with a strong focus on innovative specialty products,” said Fran
Malecha, Compass Minerals’ president and CEO. “Further, we have
completed key capital investments critical to increasing our
production capabilities and efficiency, while still returning
almost $100 million directly to shareholders through our dividend.
I believe our actions have positioned the company for significant
top and bottom line growth and improved free cash flow over the
next several years.”
Fourth-quarter 2017 net loss was $4.4 million, or $0.13 per
diluted share, which compares to net earnings of $97.6 million, or
$2.87 per diluted share in the prior year. Excluding the impact of
special items in both years, fourth quarter 2017 net earnings
increased 22 percent year over year to $56.2 million from $46.1
million. The special items in the 2017 fourth quarter include the
estimated impact of U.S. tax law changes, in addition to a one-time
tax expense stemming from a settlement reached with U.S. and
Canadian tax authorities. Specific details regarding all special
items, along with reconciliations of any non-GAAP measures used in
this press release, can be found in the tables at the end of this
press release.
Full-year net earnings declined to $42.7 million, or $1.25 per
diluted share, from $162.7 million, or $4.79 per diluted share in
2016. Excluding special items for each year, 2017 full-year net
earnings were $93.3 million, or $2.75 per diluted share, compared
to $111.2 million, or $3.27 per diluted share in 2016.
Total revenue in the fourth quarter increased 3 percent to
$457.9 million from the prior-year fourth quarter. For the full
year, the company reported total revenue of $1.36 billion compared
to $1.14 billion in 2016. This 20 percent increase was primarily
attributed to the full-year inclusion of Plant Nutrition South
America results, partially offset by a year-over-year reduction in
Salt segment revenue. The Plant Nutrition South America segment was
formed in October 2016 following the completion of the Produquímica
acquisition.
Consolidated operating earnings in the fourth quarter of 2017
increased 23 percent from prior-year results of $65.3 million. The
2016 fourth quarter results included a one-time asset impairment
charge of $3.1 million in the Plant Nutrition North America segment
and additional acquisition-related expenses of $8.4 million in the
Plant Nutrition South America segment. Excluding these special
items, consolidated operating earnings improved 5 percent as
increased earnings in the Plant Nutrition South America segment
offset a year-over-year decline in Salt segment earnings.
Full-year 2017 consolidated operating earnings of $159.2 million
were negatively impacted by a 31 percent year-over-year decline in
Salt operating earnings, which was partially offset by the addition
of the Plant Nutrition South America segment and increased Plant
Nutrition North America operating earnings.
Compass Minerals Financial Results
(in millions, except for earnings per
share)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Sales $ 457.9 $ 443.2 $ 1,364.4 $ 1,138.0 Operating earnings $ 80.4
$ 65.3 $ 159.2 $ 174.6 Operating margin 17.6 % 14.7 % 11.7 % 15.3 %
Adjusted operating earnings(1) $ 80.4 $ 76.8 $ 163.5 $ 186.1
Adjusted operating margin(1) 17.6 % 17.3 % 12.0 % 16.4 % Net (loss)
earnings $ (4.4 ) $ 97.6 $ 42.7 $ 162.7 Net earnings, excluding
special items(1) $ 56.2 $ 46.1 $ 93.3 $ 111.2 Diluted (loss)
earnings per share $ (0.13 ) $ 2.87 $ 1.25 $ 4.79 Diluted earnings
per share, excluding special items(1) $ 1.66 $ 1.35 $ 2.75 $ 3.27
EBITDA(1) $ 109.8 $ 153.0 $ 277.8 $ 321.7 Adjusted EBITDA(1)
$ 113.7 $ 104.7 $
286.5 $ 275.0 (1) Adjusted
operating earnings; net earnings, excluding special items; diluted
earnings per share, excluding special items; EBITDA (earnings
before interest, taxes, depreciation and amortization) and adjusted
EBITDA are non-GAAP financial measures. Reconciliations to the most
directly comparable GAAP financial measures are provided in tables
at the end of this press release.
SALT SEGMENT
Salt segment fourth-quarter revenue declined 2 percent from
prior year as a modest increase in highway deicing revenue
partially offset lower consumer and industrial results. The
increase in highway deicing revenue was primarily driven by
improved deicing sales in the U.K. compared to last year. The late
start to winter weather in North America, however, limited sales of
consumer and commercial deicing products and drove a 10 percent
decline in consumer and industrial sales volumes.
For the full year, Salt segment revenue decreased $42.7 million
as mild winter weather reduced Salt sales volumes by 5 percent and
total average selling prices by 1 percent.
Salt segment operating earnings declined 8 percent in the fourth
quarter of 2017 from 2016 results. This decrease was driven by
increased shipping and handling costs resulting from an unfavorable
geographic sales mix, combined with increased freight rates and
fuel costs.
For the full year, the Salt segment generated $138.0 million in
operating earnings compared to $200.6 million in 2016. Salt segment
operating margin for 2017 declined to 17.9 percent from 24.7
percent in 2016 due to increased product and logistics costs, as
well as lower average selling prices.
Salt Segment Performance
(in millions, except for sales volumes and
prices per short ton)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Sales $ 260.7 $ 265.0 $ 769.2 $ 811.9 Operating earnings $ 59.4 $
64.6 $ 138.0 $ 200.6 Operating margin 22.8 % 24.4 % 17.9 % 24.7 %
Adjusted operating earnings(1) $ 59.4 $ 64.6 $ 140.0 $ 200.6
Adjusted operating margin(1) 22.8 % 24.4 % 18.2 % 24.7 % EBITDA(1)
$ 75.3 $ 77.1 $ 193.0 $ 247.3 EBITDA(1) margin 28.9 % 29.1 % 25.1 %
30.5 % Adjusted EBITDA(1) $ 75.3 $ 77.1 $ 195.0 $ 247.3 Adjusted
EBITDA(1) margin 28.9 % 29.1 % 25.4 % 30.5 % Sales volumes (in
thousands of tons): Highway deicing 2,969 3,022 8,565 8,966
Consumer and industrial 623 689 2,035 2,147
Total salt 3,592 3,711 10,600 11,113 Average sales prices
(per ton): Highway deicing $ 53.25 $ 51.94 $ 53.13 $ 54.73 Consumer
and industrial $ 164.55 $ 156.81 $ 154.34 $ 149.63 Total salt
$ 72.57 $ 71.42
$ 72.56 $ 73.06 (1)
Adjusted operating earnings, EBITDA and adjusted EBITDA are
non-GAAP financial measures. Reconciliations to the most directly
comparable GAAP financial measures are provided in tables at the
end of this press release.
Winter Weather Effect
The company recorded 57 fourth-quarter 2017 winter weather
events in the 11 cities the company tracks, which was above the
10-year average of 45.2. Much of the increased winter weather
activity occurred in eastern U.S. geographies where the company
typically has fewer highway deicing sales contracts. In addition
many of the snow events occurred in the last two weeks of December,
thus having a limited impact on fourth-quarter 2017 sales. As a
result, the company estimates that variations from average winter
weather had a negative impact on fourth-quarter 2017 Salt segment
sales and earnings.
Estimated Effect of Winter Weather on Salt Segment
Performance
(dollars in millions)
Three months endedDecember 31,
Calendar year(1) 2017
2016 2017 2016 Favorable
(unfavorable) to average weather: Sales ($20) to ($25) negligible
($50) to ($60) ($70) to ($80) Operating earnings ($6)
to ($10) negligible ($20) to ($25)
($35) to ($40) (1) Includes estimated impact
for the three months ended March 31 and the three months ended
December 31.
PLANT NUTRITION NORTH
AMERICA
Revenue generated by the Plant Nutrition North America segment
grew 12 percent from fourth quarter 2016 results primarily due to
an 11 percent increase in sales volumes. A modest year-over-year
increase in the average selling price for Plant Nutrition North
America products was driven by an increase in sales of higher value
micronutrients.
For the full year, the segment generated $210 million in
revenue, which was 3 percent above prior-year results driven by
increased sales volumes.
Fourth-quarter 2017 operating earnings for the segment were
$10.2 million compared to $8.0 million in the prior-year quarter.
The 2016 results included a $3.1 million charge related to an asset
impairment. As a percent of sales, Plant Nutrition North America
generated an operating margin of 14.6 percent compared to an
adjusted operating margin of 17.7 percent in the fourth quarter of
2016. The year-over-year margin decline was primarily attributable
to increased shipping and handling cost related to freight rate
pressures. In addition, increased depreciation expense due to the
final commissioning of new equipment at the company's Ogden, Utah,
manufacturing facility further pressures operating margin.
Revenue growth and lower production costs lifted full-year 2017
operating earnings 31 percent above 2016 GAAP operating results and
19 percent when adjusting for special items. Operating and EBITDA
margins for full-year 2017 also expanded from prior-year
results.
Plant Nutrition North America Segment Performance
(dollars in millions, except for prices
per short ton)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Sales $ 70.0 $ 62.6 $ 210.0 $ 203.0 Operating earnings $ 10.2 $ 8.0
$ 27.7 $ 21.1 Operating margin 14.6 % 12.8 % 13.2 % 10.4 % Adjusted
operating earnings(1) $ 10.2 $ 11.1 $ 28.9 $ 24.2 Adjusted
operating(1) margin 14.6 % 17.7 % 13.8 % 11.9 % EBITDA(1) $ 20.4 $
16.8 $ 64.6 $ 54.5 EBITDA(1) margin 29.1 % 26.8 % 30.8 % 26.8 %
Adjusted EBITDA(1) $ 20.4 $ 19.9 $ 65.8 $ 57.6 Adjusted EBITDA(1)
margin 29.1 % 31.8 % 31.3 % 28.4 % Sales volumes (in thousands of
tons) 105 95 327 313 Average sales price (per ton) $
666 $ 657 $ 642
$ 648 (1) Adjusted operating earnings,
EBITDA and adjusted EBITDA are non-GAAP financial measures.
Reconciliations to the most directly comparable GAAP financial
measures are provided in tables at the end of this press release.
PLANT NUTRITION SOUTH
AMERICA
Fourth-quarter 2017 revenue in the Plant Nutrition South America
segment grew 10 percent from prior-year results as sales volumes
rose 6 percent and average selling prices increased 3 percent.
Strong demand for the company's innovative specialty plant
nutrients drove both the increased sales volumes and improved
average selling price.
The segment generated operating earnings of $25.1 million,
compared to $8.0 million in the fourth quarter of 2016. The
prior-year results included acquisition-related costs of
approximately $8.4 million. When compared to 2016 adjusted
operating earnings, 2017 fourth-quarter operating earnings rose 53
percent driven by increased sales of higher value agriculture
products. This improved sales mix also produced a significant
improvement in the segment's operating margin which expanded to
20.2 percent.
For the full year, while sales volumes of our high-value,
innovative specialty plant nutrients sold directly to growers
were stronger than 2016, agriculture sales volumes to distributors
declined as did the segment’s chemical solutions sales volumes. As
a result, Plant Nutrition South America sales volumes were below
company expectations and approximately 9 percent below 2016
results, which included periods during which Compass Minerals did
not have complete ownership.
The table below represents results only for the periods during
which Compass Minerals had full control of Produquímica.
Plant Nutrition South America Segment Performance
(dollars in millions, except for prices
per short ton)
Three months endedDecember 31,
Full Year 2017 2016
2017 Sales $ 124.4 $ 113.5 $ 375.0 Operating earnings $ 25.1
$ 8.0 $ 49.1 Operating margin 20.2 % 7.0 % 13.1 % Adjusted
operating earnings(1) $ 25.1 $ 16.4 $ 49.1 Adjusted operating(1)
margin 20.2 % 14.4 % 13.1 % EBITDA(1) $ 29.7 $ 13.3 $ 72.5
EBITDA(1) margin 23.9 % 11.7 % 19.3 % Adjusted EBITDA(1) $ 29.7 $
21.7 $ 72.5 Adjusted EBITDA(1) margin 23.9 % 19.1 % 19.3 % Sales
volumes (in thousands of tons) Agriculture 130 122 432 Chemical
solutions 75 72 289 Total sales volumes 205
194 721 Average sales prices (per ton): Agriculture $ 753 $ 713 $
632 Chemical Solutions $ 347 $ 372 $ 351 Total Plant Nutrition
South America $ 605 $ 587
$ 520 (1) Adjusted operating earnings,
EBITDA and Adjusted EBITDA are non-GAAP financial measures.
Reconciliations to the most directly comparable GAAP financial
measures are provided in tables at the end of this press release.
OTHER FINANCIAL
HIGHLIGHTS
Two significant tax developments materially impacted 2017 net
earnings and increased tax expense for the 2017 fourth-quarter to
$67.7 million compared to $10.5 million in fourth-quarter 2016. The
largest impact resulted from the U.S. Tax Cuts and Jobs Act, which
requires a one-time tax on un-remitted foreign earnings. Based on
current company estimates, this one-time tax totals approximately
$55.2 million. The total reported tax was partially offset by a
remeasurement of the company's deferred tax liabilities, which
resulted in a tax benefit of approximately $8.4 million. Going
forward, the company expects to have low-cost access to all foreign
earnings, which should provide greater financial flexibility.
In addition, the company recorded a net tax expense of $13.8
million in the 2017 fourth quarter related to the company’s
Canadian tax positions for the years 2007 through 2016 as a result
of a settlement with Canadian and U.S. tax authorities. This
agreement, in addition to the previously disclosed favorable ruling
regarding Canadian federal tax reassessments for 2004 through 2006,
significantly reduces the company’s remaining potential tax
liabilities from disputed reassessments.
Selling, general and administrative (SG&A) expenses for
full-year 2017 rose $42.5 million from 2016 results primarily due
to the full-year inclusion of Produquímica which was acquired in
October 2016. The increase was partially offset by cost savings
initiatives that were introduced in July 2017.
OUTLOOK
The company expects that increased winter weather activity in
late December and January will benefit 2018 Salt segment results
and currently anticipates full-year 2018 Salt segment sales volumes
to exceed 2017 results and the company's 10-year average of 11.7
million tons. Assuming average winter weather continues, revenue
for the first half of 2018 is expected to increase when compared to
prior-year results, which were negatively impacted by lower winter
weather demand for deicing products. A combination of high cost
carry-over inventory and increased shipping and handling costs are
expected to pressure Salt segment operating margins for the first
half of 2018.
Steady growth in demand for the company's sulfate of potash and
innovative micronutrient products is expected to lift full-year
Plant Nutrition North America 2018 volumes above 2017 results.
Given our view of spring fertilizer demand, the company anticipates
a modest year-over-year increase in first-half 2018 revenue. The
segment's operating margin is expected to decline for the first
half of the year as a result of increased logistics costs and
depreciation expense.
In our Plant Nutrition South America segment, we expect the
positive momentum we have experienced with our innovative,
high-value specialty plant nutrients to push full-year sales
volumes and first-half revenue ahead of 2017 results.
Given this outlook and current expectations regarding the
company's full-year effective tax rate and interest expense, the
company has established a full-year EPS guidance range of $2.75 to
$3.25 per diluted share.
2018 OUTLOOK: FULL YEAR EPS - $2.75 to $3.25
1H18 FY18 Salt
Segment Volume 11.8 million to 12.6 million tons Revenue $400
million to $440 million Operating earnings margin 11% to 13%
Plant Nutrition North America Segment Volume 320,000 to
350,000 tons Revenue $90 million to $110 million Operating earnings
margin 10% to 12%
Plant Nutrition South America Segment
Volume 700,000 to 900,000 tons Revenue $125 million to $150 million
Operating earnings margin 1% to 3%
Corporate Corporate and
other expense ~$60 million Interest expense ~$53 million
Depreciation, depletion and amortization ~$137 million Capital
expenditures $100 million to $110 million Effective tax rate
~26%
DIVIDEND DECLARED
The Board of Directors of Compass Minerals has approved a
dividend for the first quarter of 2018 of $0.72 per share. This
dividend is payable March 15, 2018, to shareholders of record as of
the close of business on March 1, 2018.
“This dividend is a compelling indicator of the Board of
Directors' confidence in our strategy for growth and value
creation, particularly given the headwinds we've faced,” said Mr.
Malecha. “By keeping the dividend at its current rate, which
represents an attractive yield of more than 4 percent, we expect to
have greater financial flexibility to continue executing our
strategic plan, while still demonstrating our commitment to return
value directly to shareholders.”
Conference Call
Compass Minerals will discuss its results on a conference call
tomorrow morning, Wednesday, February 14, at 9:00 a.m. ET. To
access the conference call, please visit the company’s website at
www.CompassMinerals.com or dial 877-614-0009. Callers must provide
the conference ID number 6916779. 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.
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 nutrition minerals that
improve the quality and yield of crops. The company produces its
minerals at locations throughout the U.S., Canada, Brazil and 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, operating earnings, 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 are 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 tables.
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including without limitation statements about the company’s
ability to position itself for growth and improved free cash flow;
low-cost access to foreign earnings, financial flexibility; demand
growth; growth and value creation strategy; commitments to return
value to shareholders; and the company’s outlook for the first half
of 2018 and the full year of 2018, including its expectations
regarding earnings per share (“EPS”), revenue, volumes, operating
earnings margin, corporate and other expense, interest expense,
depreciation, depletion and amortization, capital expenditures and
tax rates. 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 without limitation (i)
weather conditions, (ii) pressure on prices and impact from
competitive products, (iii) any inability by the company to fund
necessary capital expenditures or successfully implement any
capital projects, (iv) foreign exchange rates and the cost and
availability of transportation for the distribution of the
company’s products, (v) the ability to successfully integrate
acquired businesses, and (vi) any inability by the company to
successfully implement its restructuring plans or cost-saving
initiatives. For further information on these and other risks and
uncertainties that may affect the company’s business, see the “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” sections of the company’s
Annual Report on Form 10-K for the year ended December 31, 2017 to
be filed with the SEC and its Quarterly Reports on Form 10-Q for
the quarters ended March 31, June 30 and September 30, 2017 filed
with the SEC. 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.
Special Items Impacting the Three Months ended December
31, 2017
(unaudited, in millions, except share
data)
Item description Segment
Line item Amount Tax
effect After tax EPS
impact One-time expense from U.S. & Canadian tax settlement
Corporate & other Income tax
expense $ (13.8 ) $ — $
(13.8 ) $ (0.41 ) Net estimated impact of new U.S.
tax law(1) Corporate & other Income
tax expense (46.8 ) —
(46.8 ) (1.38 ) Totals $ (60.6 )
$ — $ (60.6 ) $
(1.79 ) (1) On December 22, 2017, the U.S. enacted the Tax
Cuts and Jobs Act, which significantly changes U.S. corporate
income tax laws by reducing the U.S. corporate income tax rate to
21% beginning in 2018 and imposes a one-time mandatory tax on
previously deferred foreign earnings. As a result of this new tax
legislation, the company recorded a provisional net charge of $46.8
million during the fourth quarter of 2017.
Special Items
Impacting the Twelve Months ended December 31, 2017
(unaudited, in millions, except share
data)
Item description Segment
Line item Amount Tax
effect After tax EPS
impact One-time expense from U.S. & Canadian tax settlement
Corporate & other Income tax
expense $ (13.8 ) $ — $
(13.8 ) $ (0.41 ) Net estimated impact of new U.S.
tax law(1) Corporate & other Income tax expense (46.8 ) — (46.8
) (1.38 ) Tax benefit of releasing certain deferred tax asset
valuation allowances Corporate & other Income tax expense 13.0
— 13.0 0.38 Restructuring charges Corporate & other SG&A
(1.1 ) 0.4 (0.7 ) (0.02 ) Restructuring charges Salt COGS and
SG&A (2.0 ) 0.7 (1.3 ) (0.04 ) Restructuring charges
Plant Nutrition North America COGS and
SG&A (1.2 ) 0.2
(1.0 ) (0.03 ) Totals $ (51.9 )
$ 1.3 $ (50.6 ) $
(1.50 ) (1) On December 22, 2017, the U.S. enacted the Tax
Cuts and Jobs Act, which significantly changes U.S. corporate
income tax laws by reducing the U.S. corporate income tax rate to
21% beginning in 2018 and imposes a one-time mandatory tax on
previously deferred foreign earnings. As a result of this new tax
legislation, the company recorded a provisional net charge of $46.8
million during the fourth quarter of 2017.
Special Items
Impacting the Three and Twelve Months ended December 31, 2016
(unaudited, in millions, except share
data)
Item description Segment
Line item Amount Tax
effect After tax EPS
impact Gain from remeasurement of equity method investment
Corporate & other Separately stated
$ 59.3 $ — $ 59.3
$ 1.75 Business acquisition-related items(1) Plant Nutrition
South America Product cost (8.4 ) 2.8 (5.6 ) (0.16 )
Indefinite-lived intangible asset impairment Plant
Nutrition North America SG&A (3.1 )
0.9 (2.2 ) (0.07 )
Totals $ 47.8 $ 3.7
$ 51.5 $ 1.52 (1)
Primarily includes additional expense recognized from the sale of
finished goods inventory, which had its cost basis increased to
fair value as a result of the acquisition of Produquímica.
Reconciliation for Adjusted Operating Earnings
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Operating earnings $ 80.4 $ 65.3 $ 159.2 $ 174.6 Restructuring
charges — — 4.3 — Business acquisition-related items(1) — 8.4 — 8.4
Indefinite-lived intangible asset impairment — 3.1 —
3.1 Adjusted operating earnings $ 80.4 $ 76.8 $ 163.5
$ 186.1 Sales 457.9 443.2 1,364.4 1,138.0 Adjusted operating margin
17.6 % 17.3 % 12.0 %
16.4 % (1) Primarily includes additional
expense recognized from the sale of finished goods inventory, which
had its cost basis increased to fair value as a result of the
acquisition of Produquímica.
Reconciliation for Net
Earnings, Excluding Special Items
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016 Net
(loss) earnings $ (4.4 ) $ 97.6 $ 42.7 $ 162.7 One-time expense
from U.S. & Canadian tax settlement 13.8 — 13.8 — Net estimated
impact of new U.S. tax law(1) 46.8 — 46.8 — Tax benefit of
releasing certain deferred tax asset valuation allowances — — (13.0
) — Restructuring charges, net of tax — — 3.0 — Gain from
remeasurement of equity method investment — (59.3 ) — (59.3 )
Business acquisition-related items, net of tax(2) — 5.6 — 5.6
Indefinite-lived intangible asset impairment, net of tax —
2.2 — 2.2 Net earnings, excluding special
items $ 56.2 $ 46.1
$ 93.3 $ 111.2 (1)
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act,
which significantly changes U.S. corporate income tax laws by
reducing the U.S. corporate income tax rate to 21% beginning in
2018 and imposes a one-time mandatory tax on previously deferred
foreign earnings. As a result of this new tax legislation, the
company recorded a provisional net charge of $46.8 million during
the fourth quarter of 2017. (2) Primarily includes additional
expense recognized from the sale of finished goods inventory, which
had its cost basis increased to fair value as a result of the
acquisition of Produquímica.
Reconciliation for EBITDA
and Adjusted EBITDA
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016 Net
(loss) earnings $ (4.4 ) $ 97.6 $ 42.7 $ 162.7 Interest expense
13.4 17.3 52.9 34.1 Income tax expense 67.7 10.5 60.0 34.6
Depreciation, depletion and amortization 33.1 27.6
122.2 90.3 EBITDA $ 109.8 $ 153.0 $ 277.8 $ 321.7
Adjustments to EBITDA: Restructuring charges — — 4.3 — Gain from
remeasurement of equity method investment — (59.3 ) — (59.3 )
Business acquisition-related items(1) — 8.4 — 8.4 Indefinite-lived
intangible asset impairment — 3.1 — 3.1 Other expense (income), net
(2) 3.9 (0.5 ) 4.4 1.1 Adjusted EBITDA
$ 113.7 $ 104.7 $
286.5 $ 275.0 (1) Primarily
includes additional expense recognized from the sale of finished
goods inventory, which had its cost basis increased to fair value
as a result of the acquisition of Produquímica. (2) Primarily
includes interest income and foreign exchange gains and losses. The
12 months ended December 31, 2016, include a charge of $3.0 million
related to the refinancing of the company's debt.
Reconciliation for Salt Segment Adjusted Operating Earnings
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Reported GAAP segment operating earnings $ 59.4 $ 64.6 $ 138.0 $
200.6 Restructuring charges — — 2.0 —
Segment adjusted operating earnings $ 59.4 $ 64.6 $ 140.0 $ 200.6
Segment sales 260.7 265.0 769.2 811.9 Segment adjusted operating
margin 22.8 % 24.4 % 18.2
% 24.7 %
Reconciliation for Salt Segment
EBITDA and Adjusted EBITDA
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Reported GAAP segment operating earnings $ 59.4 $ 64.6 $ 138.0 $
200.6 Depreciation, depletion and amortization 15.9 12.5
55.0 46.7 Segment EBITDA $ 75.3 $ 77.1 $ 193.0
$ 247.3 Restructuring charges — — 2.0 —
Segment adjusted EBITDA $ 75.3 $ 77.1 $ 195.0 $ 247.3 Segment sales
260.7 265.0 769.2 811.9 Segment adjusted EBITDA margin
28.9 % 29.1 % 25.4 %
30.5 %
Reconciliation for Plant Nutrition North
America Segment Adjusted Operating Earnings
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Reported GAAP segment operating earnings $ 10.2 $ 8.0 $ 27.7 $ 21.1
Restructuring charges — — 1.2 — Indefinite-lived intangible asset
impairment — 3.1 — 3.1 Segment adjusted
operating earnings $ 10.2 $ 11.1 $ 28.9 $ 24.2 Segment sales 70.0
62.6 210.0 203.0 Segment adjusted operating margin
14.6 % 17.7 % 13.8 % 11.9
%
Reconciliation for Plant Nutrition North America
Segment EBITDA and Adjusted EBITDA
(unaudited, in millions)
Three months endedDecember 31,
Twelve months endedDecember 31, 2017
2016 2017 2016
Reported GAAP segment operating earnings $ 10.2 $ 8.0 $ 27.7 $ 21.1
Depreciation, depletion and amortization 10.2 8.8
36.9 33.4 Segment EBITDA $ 20.4 $ 16.8 $ 64.6 $ 54.5
Restructuring charges — — 1.2 — Indefinite-lived intangible asset
impairment — 3.1 — 3.1 Segment adjusted
EBITDA $ 20.4 $ 19.9 $ 65.8 $ 57.6 Segment sales 70.0 62.6 210.0
203.0 Segment adjusted EBITDA margin 29.1 %
31.8 % 31.3 % 28.4 %
Reconciliation for Plant Nutrition South America Segment
Adjusted Operating Earnings
(unaudited, in millions)
Three months endedDecember 31,
Full Year 2017 2016
2017 Reported GAAP segment operating earnings $ 25.1 $ 8.0 $
49.1 Business acquisition-related items(1) — 8.4 —
Segment adjusted operating earnings $ 25.1 $ 16.4 $ 49.1
Segment sales 124.4 113.5 375.0 Segment adjusted operating margin
20.2 % 14.4 % 13.1 % (1)
Primarily includes additional expense recognized from the
sale of finished goods inventory, which had its cost basis
increased to fair value as a result of the acquisition of
Produquímica.
Reconciliation for Plant Nutrition South
America Segment EBITDA and Adjusted EBITDA
(unaudited, in millions)
Three months endedDecember 31,
Full Year 2017 2016
2017 Reported GAAP segment operating earnings $ 25.1 $ 8.0 $
49.1 Depreciation, depletion and amortization 4.4 5.0 22.6 Earnings
in equity method investee 0.2 0.3 0.8 Segment
EBITDA $ 29.7 $ 13.3 $ 72.5 Business acquisition-related items(1) —
8.4 — Adjusted segment EBITDA $ 29.7 $ 21.7 $
72.5 Segment sales 124.4 113.5 375.0 Adjusted segment EBITDA margin
23.9 % 19.1 % 19.3 % (1)
Primarily includes additional expense recognized from the
sale of finished goods inventory, which had its cost basis
increased to fair value as a result of the acquisition of
Produquímica.
COMPASS MINERALS INTERNATIONAL,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except share
and per-share data)
Three Months Ended
Twelve Months Ended December 31, December 31,
2017 2016 2017
2016 Sales $ 457.9 $ 443.2 $ 1,364.4 $ 1,138.0 Shipping and
handling cost 87.7 80.0 267.5 244.9 Product cost 246.2 252.8
770.3 593.6 Gross profit 124.0 110.4 326.6
299.5 Selling, general and administrative expenses 43.6 45.1
167.4 124.9 Operating earnings 80.4 65.3 159.2
174.6 Other expense/(income): Interest expense 13.4 17.3 52.9 34.1
Net (earnings) loss from equity investee (0.2 ) (0.3 ) (0.8 ) 1.4
Gain from remeasurement of equity method investment — (59.3 ) —
(59.3 ) Other, net 3.9 (0.5 ) 4.4 1.1 Earnings
before income taxes 63.3 108.1 102.7 197.3 Income tax expense 67.7
10.5 60.0 34.6 Net (loss) earnings $
(4.4 ) $ 97.6 $ 42.7 $ 162.7 Basic net (loss)
earnings per common share $ (0.13 ) $ 2.88 $ 1.25 $ 4.79 Diluted
net (loss) earnings per common share $ (0.13 ) $ 2.87 $ 1.25 $ 4.79
Cash dividends per share $ 0.720 $ 0.695 $ 2.88 $ 2.78
Weighted-average common shares outstanding (in thousands):(1) Basic
33,828 33,788 33,819 33,776 Diluted 33,828 33,793 33,820 33,780 (1)
Excludes weighted participating securities such as RSUs and
PSUs that receive non-forfeitable dividends, which consist of
168,000 and 166,000 weighted participating securities for the three
and 12 months ended December 31, 2017, respectively, and 165,000
and 164,000 weighted participating securities for the three and 12
months ended December 31, 2016, respectively.
COMPASS MINERALS INTERNATIONAL, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS
(unaudited, in millions)
December 31,
December 31, 2017 2016 ASSETS Cash and
cash equivalents $ 36.6 $ 77.4 Receivables, net 344.5 320.9
Inventories 289.9 280.6 Other current assets 66.5 36.1 Property,
plant and equipment, net 1,138.1 1,092.3 Intangible and other
noncurrent assets 695.4 659.2 Total assets $ 2,571.0
$ 2,466.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 32.1 $ 130.2 Other current
liabilities 235.9 241.8 Long-term debt, net of current portion
1,330.4 1,194.8 Deferred income taxes and other noncurrent
liabilities 278.0 182.6 Total stockholders' equity 694.6
717.1 Total liabilities and stockholders' equity $ 2,571.0 $
2,466.5
COMPASS MINERALS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Twelve Months Ended December 31, 2017
2016 Net cash provided by operating activities $
146.9 $ 167.3 Cash flows from investing
activities: Capital expenditures (114.1 ) (182.2 ) Investment in
equity method investee — (4.7 ) Acquisition of a business — (277.7
) Other, net (4.9 ) (3.2 ) Net cash used in investing
activities (119.0 ) (467.8 ) Cash flows from financing
activities: Proceeds from revolving credit facility borrowings
295.8 384.3 Principal payments on revolving credit facility
borrowings (232.0 ) (283.4 ) Proceeds from the issuance of
long-term debt 98.7 850.9 Principal payments on long-term debt
(123.8 ) (535.1 ) Dividends paid (97.5 ) (94.1 )
Acquisition-related contingent consideration payment (14.7 ) —
Premium and other payments to refinance debt (0.2 ) (2.8 ) Deferred
financing costs (0.7 ) (5.7 ) Proceeds received from stock option
exercises 0.3 0.7 Excess tax deficiencies from equity compensation
awards — (0.2 ) Other 0.7 — Net cash (used in)
provided by financing activities (73.4 ) 314.6 Effect of
exchange rate changes on cash and cash equivalents 4.7 4.9
Net change in cash and cash equivalents (40.8 ) 19.0 Cash
and cash equivalents, beginning of the year 77.4 58.4
Cash and cash equivalents, end of period $ 36.6 $
77.4
COMPASS MINERALS INTERNATIONAL,
INC. SEGMENT INFORMATION
(unaudited, in millions)
Three months ended December 31, 2017
Salt
Plant NutritionNorth
America
Plant NutritionSouth
America
Corporateand
Other(1)
Total
Sales to external customers $ 260.7 $
70.0 $ 124.4 $ 2.8 $
457.9 Intersegment sales — 2.1 — (2.1 ) — Shipping and handling
cost 73.0 9.7 5.0 — 87.7 Operating earnings (loss) 59.4 10.2 25.1
(14.3 ) 80.4 Depreciation, depletion and amortization 15.9 10.2 4.4
2.6 33.1 Total assets 1,030.6 601.1 808.0 131.3 2,571.0
Three months ended December 31, 2016
Salt
Plant NutritionNorth
America
Plant NutritionSouth America
Corporateand
Other(1)
Total
Sales to external customers $ 265.0 $ 62.6 $ 113.5 $ 2.1 $ 443.2
Intersegment sales — 2.5 — (2.5 ) — Shipping and handling cost 66.8
7.8 5.4 — 80.0 Operating earnings (loss) 64.6 8.0 8.0 (15.3 ) 65.3
Depreciation, depletion and amortization 12.5 8.8 5.0 1.3 27.6
Total assets 980.3 592.3 844.9 49.0 2,466.5
Twelve months
ended December 31, 2017 Salt
Plant NutritionNorth
America
Plant NutritionSouth
America
Corporateand
Other(1)
Total Sales to external customers $ 769.2 $
210.0 $ 375.0 $ 10.2 $ 1,364.4 Intersegment sales — 6.5 — (6.5 ) —
Shipping and handling cost 220.6 28.1 18.8 — 267.5 Operating
earnings (loss)(2) 138.0 27.7 49.1 (55.6 ) 159.2 Depreciation,
depletion and amortization 55.0 36.9 22.6 7.7 122.2
Twelve months ended December 31, 2016
Salt
Plant NutritionNorth
America
Plant NutritionSouth America
Corporateand
Other(1)
Total Sales to external customers $ 811.9 $
203.0 $ 113.5 $ 9.6 $ 1,138.0 Intersegment sales — 5.2 — (5.2 ) —
Shipping and handling cost 214.5 25.0 5.4 — 244.9 Operating
earnings (loss) 200.6 21.1 7.4 (54.5 ) 174.6 Depreciation,
depletion and amortization 46.7 33.4 5.0 5.2 90.3 (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, legal and finance functions. (2) Operating
results for the 12 months ended December 31, 2017, include $4.3
million of restructuring charges.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180213006593/en/
Compass MineralsInvestor
ContactTheresa L. Womble, +1-913-344-9362Director of Investor
Relationswomblet@compassminerals.comorMedia ContactTara
Hefner, +1-913-344-9319Manager of Corporate
AffairsMediaRelations@compassminerals.com
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