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Compass Minerals Reports Third-Quarter Results

Compass Minerals (NYSE: CMP) reports the following results of its third-quarter 2012 operations:
  • Net earnings totaled $9.4 million, or $0.28 per diluted share, compared to $34.6 million, or $1.03 per diluted share, in the third quarter of 2011.
  • These results included losses from a tornado that struck the company’s salt operations in Goderich, ON, in August 2011. When excluding the estimated effects of the tornado, net earnings were $10.3 million, or $0.31 per diluted share.
  • Sales were $181.0 million, down from $229.1 million in the third quarter of 2011. A 7 percent increase in specialty fertilizer sales was more than offset by a 30 percent decline in salt segment sales resulting from significantly lower pre-season demand for deicing products following the historically mild 2011-2012 winter season.
  • Operating income was $14.1 million, a decline of $34.5 million from prior-year results, principally driven by the lower salt sales volumes and short-term increases on per-unit production costs.
  • Cash flow from operations for the nine months ended September 30, 2012, was $132.2 million compared to $200.8 million in the year-ago period.

“All in all, this quarter unfolded much as we anticipated. These results reflect the continued impact of the unusual, weather-related challenges we faced in 2011 and early 2012. A return of typical winter weather should result in more-normal sales of deicing products, and we expect sulfate of potash demand to remain stable at attractive prices for the remainder of the year,” said Angelo Brisimitzakis, Compass Minerals president and CEO. “We have also taken steps this quarter to further strengthen our existing salt business for the long term. At our Goderich mine we have begun installing more-efficient continuous mining technology, improved our labor agreement there, and we entered an agreement with the town of Goderich to expand and enhance the Goderich port. All of these serve to maximize the value of our most strategically advantaged asset.”
 

Compass Minerals Financial Results

(in millions, except for earnings per share)
 

Three months ended September 30,
 

Nine months ended September 30,
2012   2011 2012   2011
Sales $ 181.0 $ 229.1 $ 674.8 $ 799.6
Sales less shipping and handling costs(product sales) 140.1 173.0 497.5 584.7
Operating earnings 14.1 48.6 91.0 155.3
Operating margin 8 % 21 % 13 % 19 %
Net earnings 9.4 34.6 58.8 105.1
Net earnings, excluding special items* 10.3 34.6 70.1 105.1
Diluted earnings per share 0.28 1.03 1.75 3.14
Diluted earnings per share, excluding special items* 0.31 1.03 2.09 3.14
EBITDA* 30.1 66.3 133.8 205.6
Adjusted EBITDA*     29.8       64.6       138.2       204.1  

*These are non-GAAP financial measures. Reconciliations to GAAP measures of performance are provided in tables at the end of this release.

SALT SEGMENT

The effects of the historically mild 2011-2012 winter season continued to pressure salt segment results this quarter as the company’s highway, consumer and professional deicing customers required significantly less salt than normal to build their initial inventories for the upcoming winter season. Highway deicing sales volumes were down 45 percent from the prior-year period, and the average selling price declined 2 percent due to the increased proportion of lower-priced sales to chemical customers compared to the year-ago quarter. Consumer and industrial sales volumes and average selling price both declined 6 percent, primarily driven by lower sales of higher-priced, packaged deicing products.

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