Compass Posts 4Q Loss on One-Time Items

Compass Minerals, Overland Park, Kan., reported a fourth-quarter loss of $4.4 million ($0.13 per diluted share) on sales of $457.9 million, down from the year-ago positive $97.6 million ($2.87 per share) and $443.2 million, respectively. Net earnings excluding special items were $56.2 million ($1.66 per share), up from the year-ago $46.1 million ($1.35 per share). EBITDA was $109.8 million, down from the year-ago $153 million.

The new tax law resulted in a one-time tax on un-remitted foreign earnings. Based on current company estimates, this one-time tax totals about $55.2 million. Compass also recorded a net tax expense of $13.8 million in the 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.

The company said that improved Plant Nutrient South America results were more than offset by weather-driven weakness in the company’s Salt unit.

“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 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.”

The company announced that its board has approved a dividend for the first quarter of 2018 of $0.72 per share.

Fourth-quarter Plant Nutrient North America operating earnings were up 28 percent, to $10.2 million on sales of $70 million from the year-ago $8 million and $62.6 million, respectively. The average sales price was $666/st on volumes of 105,000 st, up from the year-ago $657/st and 95,000 st, respectively. Compass said the SOP-only price remains stable versus the prior year at about $560/st. It said micronutrient sales were stronger than during the prior year.

Compass said all-new equipment is now in service at the Ogden, Utah, SOP plant.

Company-wide full-year results were down at $42.7 million ($1.25 per share) on sales of $1.36 billion, from $162.7 million ($4.79 per share) and $1.14 billion, respectively. Net earnings excluding special items were $93.3 million ($2.75 per share), versus the year-ago $111.2 million ($3.27 per share). EBITDA was $277.8 million down from $321.7 million.

Full-year 2018 EPS guidance is $2.75-$3.25.

Going forward, for its Plant Nutrition North America business, the company expects steady volume growth at stable prices, with SOP demand to grow 3-5 percent. Overall, 2018 fertilizer volumes are expected to be up from 2017. Compass expects a modest year-over-year increase in first-half revenue. The segment’s operating margin is expected to decline during the half as a result of increased logistics costs and depreciation expense. Full-year volumes are put at 320,000-350,000 st, while first-half revenues are seen as $90-$110 million.

Compass expects momentum in its Plant Nutrition South America business will push 2018 volumes and first-half revenues ahead of those for 2017. Full-year volumes of 700,000-900,000 st are expected, with first-half revenues of $125-$150 million.

First-half Salt margins are expected to be pressured due to high-cost carryover and increased shipping and handling costs. However, for the full-year, the company expects volumes to be up at 11.8-12.6 million st, exceeding 2017 and the company’s 10-year average. First-half revenues are seen as $400-$440 million.

 *Price $/st; volumes 000 st; others $ million