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TheStreet Open House

Compass Minerals Reports Fourth-Quarter 2012 Earnings

Stocks in this article: CMP

Operating earnings in the salt segment were $47.9 million compared to $53.4 million in the prior-year quarter primarily due to reduced deicing sales and the effect of lower sales volumes on per-unit product costs, partially offset by lower estimated losses from the effects of the 2011 tornado in Goderich, Ontario. Excluding tornado-related losses from both years, the company estimates that salt segment operating earnings in the 2012 quarter would have been approximately $51.0 million compared to $69.8 million in the 2011 period.

The company estimates that tornado-related losses totaled approximately $21.4 million for the full 2012 year and $16.4 million in 2011. The company does not expect to report any material estimated losses related to the effects of the tornado in 2013.

 
Salt Segment Performance

(in millions except for sales volumes and prices per short ton)

  Three months ended

December 31,

  Twelve months ended

December 31,

2012   2011 2012   2011
Sales $ 206.7 $ 250.1 $ 703.4 $ 885.3
Sales less shipping and handling (product sales) $ 152.5 $ 177.1 $ 491.5 $ 616.8
Operating earnings $ 47.9 $ 53.4 $ 126.0 $ 184.7
Operating margin 23 % 21 % 18 % 21 %
Sales volumes (in thousands of tons):
Highway deicing 2,255 2,724 7,530 10,235
Consumer and industrial   585     675     2,095     2,285  
Total salt 2,840 3,399 9,625 12,520
Average sales price (per ton):
Highway deicing $ 52.56 $ 52.86 $ 53.11 $ 52.30
Consumer and industrial $ 150.95 $ 156.97 $ 144.87 $ 153.12
Total salt   $ 72.81     $ 73.56     $ 73.08     $ 70.71  
 

Winter Weather Effect

Weather in the fourth quarter of 2012 was very mild in Compass Minerals’ North American service area until the final two weeks of the quarter, and the company estimates this milder-than-average weather reduced the company’s fourth-quarter salt sales by $60 million to $70 million and its salt operating earnings by $15 million to $20 million. Variations from average winter weather reduced full-year salt sales by an estimated $145 million to $155 million and salt operating earnings by $45 million to $50 million.

 

Estimated Effect of Weather on Salt Segment Performance (in millions)

  Three months ended

December 31,

  Calendar year,*

Favorable (unfavorable) to average weather:

2012   2011 2012   2011
 

Sales

($60) to ($70) ($55) to ($65) ($145) to ($155) ($55) to ($65)
 

Operating earnings

  ($15) to ($20)   ($15) to ($20)   ($45) to ($50)   ($15) to ($20)

* The three months ended March 31, plus the three months ended December 31.

The full-year winter weather effect reflects the impact of exceptionally mild winter weather throughout the company’s primary North American service area. Based on data from eleven representative cities, the company’s core North American service regions posted the third fewest snowfall events in recent history. Only the calendar years of 1998 and 2006 recorded fewer snow events.

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