Compass Minerals, Overland Park, Kan., reported first-quarter North American fertilizer volumes down 34 percent and those for South America down 15 percent, with both segments reporting operational losses. Salt, on the other hand, put in a better-than-expected performance, helping to keep company-wide net earnings in the plus column at $7.6 million ($0.22 per diluted share) on sales of $403.7 million, down from the year-ago $12.6 million ($0.37 per share) and $437.9 million, respectively. However, adjusted EBITDA was up at $68.1 million from $60.8 million.
“We are very pleased with the performance of the Salt business thus far in 2019,” said Compass interim CEO and Chairman Dick Grant. “Improved production at both of our North American salt mines, as well as favorable logistics and commercial execution throughout the Salt business, enabled us to capitalize on above average winter in North America and generate sales and earnings above our expectations.
“These positive results more than offset the softness experienced in our Plant Nutrition business. Looking forward, we are encouraged by the outlook for the Salt business in North America, and while there are challenging market conditions facing the agriculture sector in North and South America, we believe we’re well-positioned for success as market conditions improve,” added Grant.
Compass said while sales from Plant Nutrition North America are beginning to improve, it is unlikely to fully recover first-quarter volume shortfall due to the shortened planting season. However, it said the full-year market conditions for key crops remain attractive.
Plant Nutrition North America posted a first-quarter operating loss of $1.6 million on revenues of $37.2 million, compared to the year-ago earnings of $4.9 million and revenues of $52.9 million. EBITDA was $10 million down from $16.2 million.
Tons sold dropped to 57,000 st from 87,000 st. However, average selling prices were up 8 percent to $656/st from $610/st, with this attributed to higher-priced micronutrients. Sulfate of potash (SOP) prices did edge up from year-ago levels to $598/st from $583/st.
Compass particularly noted heavy rains in California and the Northwest, as well as high river levels and flooding in the Midwest. In addition, the company reported increased logistics costs due to less favorable geographical product mix. Product that would have been sold in the West was sent to the Eastern market at higher cost.
Luckily, the company said imports are down and its warehouses are fully stocked and ready to serve customers. It expects per unit costs to decline throughout the remainder of the year.
Meanwhile, at Plant Nutrition South America, Compass said farmers have been cautious due to international trade concerns. The segment posted a first-quarter operating loss of $2.6 million on sales of $57.7 million, compared to year-ago income of $800,000 and $66.3 million, respectively. EBITDA was $2.9 million, down from $6.6 million. First-quarter fertilizer sales volumes were 52,000 st, down from 61,000 st. However, average price per ton was up at $681/st from $646/st.
South American chemical solution sales were up slightly at 82,000 st from 79,000 st, though pricing was down at $275/st from $339/st.
The Salt segment posted operating earnings of $52.3 million on sales of $306.4 million, up from $34.1 million and $315.9 million, respectively. EBITDA was $67.6 million, up from $48.8 million.
Going forward, Compass is giving second-quarter Plant Nutrition North America EBITDA guidance of $15-$20 million on revenues of $50-$60 million. Its annual tonnage estimate is 340,000-380,000 st, down from the earlier 350,000-400,000 st.
Second-quarter Plant Nutrition South American EBITDA guidance is $5-$8 million on revenues of $75-$85 million. Full-year tonnage guidance is 800,000-900,000 st.
Second-quarter Salt guidance is $30-$40 million on revenues of $105-$120 million. Full-year tonnage is put at 10.5-11 million st, up from the prior 10-10.5 million st.
Consolidated 2019 EBITDA is projected at $310-$350 million.