Compass Minerals International, Inc. Announces First-Quarter Earnings.OVERLAND PARK Overland Park, city (1990 pop. 111,790), Johnson co., NE Kans., a residential suburb of Kansas City; inc. 1960. There is printing and publishing, and the manufacture of apparel, aircraft parts, cement, prepared foods, salt, chemicals, marine accessories, and signs. , Kan Kan, river, China: see Gan. . -- Compass Minerals Compass Minerals International (NYSE: CMP) is the second-leading salt producer in the United States and largest in the United Kingdom. Most of the salt produced is sold for highway de-icing. International, Inc. (NYSE NYSE See: New York Stock Exchange :CMP CMP (cytidine monophosphate): see cytosine. (1) (CMP Media LLC, Manhasset, NY, www.cmp.com) Part of United Business Media, CMP is a leading integrated media company that offers a wide variety of publications and services in the information ), a leading producer and marketer of salt and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. potash potash: see potassium carbonate. potash Name used for various inorganic compounds of potassium, chiefly the carbonate (K2CO3), a white crystalline material formerly obtained from wood ashes. , reports the following first-quarter results: --Compass posted record quarterly sales of $267.4 million, a seven-percent increase over the first quarter of 2004. This represents the twelfth consecutive quarter of year-over-year revenue increases. --The company sold a record 4.8 million tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. of highway deicing De-icing is the process of removing ice from a surface. Anti-icing is the process of preventing ice from forming on a surface. Deicing can be accomplished by mechanical methods (scraping), through the application of heat, by use of chemicals designed to lower salt in the quarter. --Sulfate of potash sales increased 14 percent over the prior year. --As anticipated, increases in barge barge, large boat, generally flat-bottomed, used for transporting goods. Most barges on inland waterways are towed, but some river barges are self-propelled. There are also sailing barges. , rail and trucking costs partially offset the company's gross revenue gains. --Net income was $22.6 million or $0.70 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share including a $5.4 million charge to tax expense related to the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of funds from the United Kingdom. Excluding the special item, net income was $28.0 million or $0.87 per diluted share. --The company made a $10 million voluntary principal payment on its term loan and repaid the full $11 million outstanding on its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Compass reduced its debt, net of cash, by $72.2 million from December December: see month. 31, 2004. "We expanded our highway deicing customer base this year and, for the second consecutive year, our highway and consumer deicing salt sales have benefited from above-normal winter weather. These factors, combined with strong growth in our sulfate sulfate, chemical compound containing the sulfate (SO4) radical. Sulfates are salts or esters of sulfuric acid, H2SO4, formed by replacing one or both of the hydrogens with a metal (e.g., sodium) or a radical (e.g., ammonium or ethyl). of potash business, helped us once again set new sales records," said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. E. Ducey Ducey is a commune in the Manche département of the Basse-Normandie region of Northern France , Compass Minerals president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. .
Financial Results
(in millions, except for EPS)
Three months
ended
March 31,
-------------
2005 2004
------ ------
Gross sales $267.4 $250.5
Gross sales less shipping and handling (product sales) 181.5 176.1
Net income 22.6 30.3
Net income, excluding special item 28.0 30.3
Diluted EPS 0.70 0.94
Diluted EPS, excluding special item 0.87 0.94
EBITDA 68.3 67.6
Adjusted EBITDA 68.5 68.1
Severe winter weather in the Great Lakes region The Great Lakes region can refer to:
adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted the company's first-quarter sales. First-quarter salt sales of $242.6 million also reflect pricing improvements across all salt product lines, modest gains in the company's highway deicing customer base and a $6.9 million benefit from changes in foreign exchange rates. The increase in North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. highway deicing sales was offset by a slightly milder winter in the U.K., less severe-weather impact on consumer deicing sales and by a decrease in industrial sales volumes in the U.K. Sulfate of potash sales grew 14 percent to $24.8 million due to higher demand for the company's highest quality fertilizer fertilizer, organic or inorganic material containing one or more of the nutrients—mainly nitrogen, phosphorus, and potassium, and other essential elements required for plant growth. products, modest volume gains and price improvements due to previously announced price increases. Increases in transportation costs offset the company's sales improvements, with shipping and handling costs increasing from 30 percent of sales in the first quarter of 2004 to 32 percent of sales in the first quarter of 2005. Compass's general trade salt product lines announced a price increase this quarter to help offset rising transportation costs. The company's natural gas hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. program helped moderate production cost increases, but natural gas costs were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1 million higher this quarter than in 2004. Compass expects year-over-year increases in transportation, energy and production materials costs to continue throughout 2005.
Selected Sales Data
Three months
ended
March 31,
---------------
2005 2004
------- -------
Sales Volumes (in thousands of tons):
Highway deicing 4,861 4,679
General trade 764 785
Specialty potash 104 101
Average Sales Price (per ton):
Highway deicing $34.29 $32.45
General trade 99.35 97.35
Specialty potash 239.32 215.42
Selling, general and administrative expenses increased $1.6 million over the prior year due to increases in fees associated with Sarbanes-Oxley compliance, staffing, variable compensation and promotional costs, and changes in foreign exchange rates. Interest expense increased $0.3 million year-over-year due to higher non-cash accreted interest on the company's senior discount notes and senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. discount notes. Of the company's $15.7 million interest expense this quarter, $6.3 million was non-cash accreted interest. Compass's effective book tax rate, before the special item, increased modestly to 32.5 percent as a result of changes in permanent deductions, such as statutory depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able . The company's U.K. subsidiary made a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. loan repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan to a U.S. subsidiary resulting in a foreign exchange gain for tax purposes and a $5.4 million charge to income tax expense. The foreign exchange gain was recorded in stockholder's equity Stockholder's equity The residual claims that stockholders have against a firm's assets, calculated by subtracting all current liabilities and debt liabilities from total assets. in previous periods and does not appear in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statement of operations See Income statement. . Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $90.6 million compared to $101.7 million for the first quarter of 2004, primarily due to higher income tax payments and the timing of the winter season snowfall. At the end of the quarter, debt stood at $568.2 million, a decline of $14.9 million and $16.8 million from December 31, 2004, and March 31, 2004, respectively. Debt net of cash was $501.2 million at the end of the quarter, a $72.2 million decline from December 31, 2004, and a $12.5 million reduction from March 31, 2004, respectively. Results for the Twelve Months Ended March 31 In order to assess and compare winter seasons, the company also measures results on an April-through-March basis. For the twelve months ended March 31, 2005, gross sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. increased 12 percent and product sales increased 10 percent compared to the twelve months ended March 31, 2004.
Financial Results
(in millions)
Twelve Months
ended
March 31,
-------------
2005 2004
------ ------
Gross sales $712.0 $638.4
Gross sales less shipping and handling (product sales) 510.3 462.8
Net income available for common stock 42.1 43.4
Net income available for common stock, excluding
special items 40.6 32.5
EBITDA 158.3 150.0
Adjusted EBITDA 171.7 156.9
The just-completed 2004-2005 winter season was above average, meaning that the markets that Compass serves received more severe weather than the company and its customers would typically anticipate. The company estimates that this benefited highway and consumer deicing gross sales by approximately $25 to $35 million and benefited the company's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become by approximately $4 to $6 million in the twelve months ended March 31, 2005. This is the second consecutive above-average winter season for the company. In both seasons, most of the unusually severe weather occurred in the first quarter of the fiscal year. In the 2004-2005 season, nearly three-fourths Noun 1. three-fourths - three of four equal parts; "three-fourths of a pound" three-quarters common fraction, simple fraction - the quotient of two integers of the above-average weather occurred in the quarter ended March 31. Earnings Call Compass Minerals International will discuss its first-quarter results on a conference call tomorrow morning, Tuesday Tuesday: see week. , May 3, at 10:00 a.m. ET. To access the conference call, interested parties should visit the company's website at www.CompassMinerals.com or dial 877-228-7138. Outside of the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , callers may dial 706-643-0377. Replays of the call will be available on the company's website for two weeks. The replay can also be accessed by phone for seven days at 800-642-1687, Conference ID 5701998. Outside of the U.S. and Canada, callers may dial 706-645-9291. About Compass Minerals International Based in the Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). metropolitan area, Compass is the second-leading salt producer in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and the largest in the United Kingdom. The company operates nine production facilities, including the largest rock salt mine in the world in Goderich, Ontario Goderich (pronounced either God-rich or God-er-ich) is a town in the Canadian province of Ontario and is the county seat of Huron County. The town was founded by William "Tiger" Dunlop in 1827. . The company's product lines include salt for highway deicing, consumer deicing, water conditioning, consumer and industrial food preparation, agriculture and industrial applications. In addition, Compass is North America's leading producer of sulfate of potash, which is used in the production of specialty fertilizers for high-value crops and turf turf: see lawn. turf In horticulture, the surface layer of soil with its matted, dense vegetation, usually grasses grown for ornamental or recreational use. . Non-GAAP Measures EBITDA (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) and should not be viewed as an alternative to GAAP measures of performance. Furthermore, such measures may not be comparable to the calculation of these measures by other companies. Management believes that these non-GAAP measures can assist investors in understanding our cost structure, cash flows and financial position. Management further believes that it is helpful to provide an analysis of our ability to satisfy our debt service, capital expenditures and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in terms of EBITDA and adjusted EBITDA. The company's financial covenants and ratios in our senior credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities and indentures are also tied to measures that are calculated by adjusting EBITDA as described below. Excluding non-recurring items from net income available for common stock is meaningful to investors because it provides insight with respect to ongoing operating results of the company.
EBITDA and Adjusted EBITDA Reconciliation
(in millions)
Three months Twelve months
ended ended
March 31 March 31
-----------------------------
2005 2004 2005 2004
-----------------------------
Net income $22.6 $30.3 $42.1 $35.8
Income tax expense 18.8 11.4 12.3 11.6
Interest expense 15.7 15.4 61.9 59.8
Depreciation, depletion and
amortization 11.2 10.5 42.0 42.8
-----------------------------
EBITDA $68.3 $67.6 $158.3 $150.0
Adjustments to income from operations:
Other charges (1) --- --- 5.9 2.4
Other expense (2) 0.2 0.5 7.5 4.5
-----------------------------
Adjusted EBITDA $68.5 $68.1 $171.7 $156.9
(1) "Other charges" includes costs for the company's initial public
offering in December 2003, a secondary offering of common stock in
July 2004, a Form S-1 filed with the Securities and Exchange
Commission (SEC) in September 2004, a Form S-3 filed with the SEC
in November 2004, and for Apollo Management LP's termination of a
management consulting agreement in December 2004. The shares sold
in each of the public offerings were previously held by
stockholders and the company did not receive any proceeds from the
sales.
(2) "Other expense" primarily includes $1.1 million of costs related
to amending the senior credit facility (second quarter of 2003), a
$1.9 million gain on the early extinguishment of debt (second
quarter of 2003), interest income, and non-cash foreign exchange
gains and losses in all periods.
Reconciliation for Net Income Available for Common Stock,
Excluding Special Items
(in millions)
Three months Twelve months
ended ended
March 31, March 31,
-----------------------------
2005 2004 2005 2004
-----------------------------
Net income available for common
stock (1) $22.6 $30.3 $42.1 $43.4
Plus (less) special items:
Charge to income tax expense for
one-time repatriation of funds (2) 5.4 --- 5.4 ---
Release of deferred tax asset
valuation allowance (3) --- --- (11.1) (5.1)
Termination of management consulting
agreement, net of tax (4) --- --- 2.8 ---
Public offering costs (5) --- --- 1.4 2.4
Gain on redemption of preferred
stock (6) --- --- --- (8.2)
-----------------------------
Net income available for common stock,
excluding special items $28.0 $30.3 $40.6 $32.5
(1) "Net income available for common stock" differs from "net income"
due to dividends on preferred stock and a gain on the repurchase
of preferred stock in June 2003.
(2) The company recorded a $5.4 million charge to income tax expense
due to a one-time repatriation of funds from the U.K.
(3) The company recorded a non-cash benefit to earnings of $11.1
million in the third quarter of 2004 due to the release of part of
the company's valuation allowance for deferred tax assets. Amounts
for the twelve months ended March 31, 2004, represent non-cash
changes to the valuation allowance for deferred tax assets.
(4) Pretax costs of $4.5 million were incurred when Apollo Management
LP terminated its management consulting agreement with the
company.
(5) The company incurred costs of $2.4 million in December 2003 for
its initial public offering, and costs of $1.4 million in 2004 for
secondary offerings of common stock filed on Forms S-1 and S-3
with the SEC. The shares sold in each public offering were
previously held by stockholders so the company did not receive any
proceeds from the sales.
(6) The company recorded an $8.2 million gain resulting from the
repurchase of 14,704 shares of mandatorily redeemable preferred
stock in June 2003. The gain was recorded as an increase to net
income available for common stock.
COMPASS MINERALS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions, except share data)
Three months ended
March 31,
------------------
2005 2004
---- ----
Sales $267.4 $250.5
Cost of sales -- shipping and handling 85.9 74.4
Cost of sales -- products 108.2 104.1
----- -----
Gross profit 73.3 72.0
Selling, general and administrative expenses 16.0 14.4
----- -----
Operating earnings 57.3 57.6
Other (income) expense:
Interest expense 15.7 15.4
Other, net 0.2 0.5
----- -----
Income before income taxes 41.4 41.7
Income tax expense 18.8 11.4
----- -----
Net income $22.6 $30.3
===== =====
Net income per share, basic $0.73 $1.00
Net income per share, diluted 0.70 0.94
Cash dividends per share, common 0.275 0.1875
Basic weighted-average shares
outstanding 31,140,713 30,241,662
Diluted weighted-average shares
outstanding 32,323,129 32,174,309
COMPASS MINERALS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions)
March 31, Dec. 31,
2005 2004
--------- --------
ASSETS
Cash and cash equivalents $67.0 $9.7
Receivables, net 111.1 143.0
Inventories 58.7 96.3
Other current assets 20.0 17.0
Property, plant and equipment, net 395.5 402.9
Intangible assets, net 23.4 23.6
Other non-current assets 31.6 31.4
----- -----
Total assets $707.3 $723.9
===== =====
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities $117.5 $134.9
Long-term debt, net of current portion 567.9 582.7
Deferred income taxes 45.3 55.1
Other noncurrent liabilities 45.6 39.6
Total stockholders' deficit (69.0) (88.4)
----- -----
Total liabilities and stockholders' deficit $707.3 $723.9
===== =====
COMPASS MINERALS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in millions)
Three months ended
March 31,
------------------
2005 2004
---- ----
Net cash provided by operating activities $90.6 $101.7
Cash flows from investing activities:
Capital expenditures (4.2) (3.9)
Other --- 0.1
----- -----
Net cash used in investing activities (4.2) (3.8)
----- -----
Cash flows from financing activities:
Principal payments on long-term debt (10.1) (10.2)
Revolver activity (11.0) (14.0)
Dividends paid (8.6) (5.7)
Proceeds from stock option exercises 0.7 0.2
Deferred financing costs --- (0.1)
----- -----
Net cash used in financing activities (29.0) (29.8)
----- -----
Effect of exchange rate changes on cash and cash
equivalents (0.1) 0.6
----- -----
Net increase in cash and cash equivalents 57.3 68.7
Cash and cash equivalents, beginning of period 9.7 2.6
----- -----
Cash and cash equivalents, end of period $67.0 $71.3
===== =====
Supplemental cash flow information:
Interest paid $17.0 $17.3
Income taxes paid, net of refunds 11.4 2.7
COMPASS MINERALS INTERNATIONAL, INC.
SEGMENT INFORMATION (unaudited)
(in millions)
Three Months Ended March 31, 2005
---------------------------------
Salt Potash Other(a) Total
---- ------ -------- -----
Sales to external customers $242.6 $24.8 $-- $267.4
Intersegment sales -- 2.0 (2.0) --
Cost of sales -- shipping and
handling costs 81.9 4.0 -- 85.9
Operating earnings (loss) 58.5 5.1 (6.3) 57.3
Depreciation, depletion and
amortization 9.0 2.2 -- 11.2
Three Months Ended March 31, 2004
---------------------------------
Salt Potash Other(a) Total
---- ------ -------- -----
Sales to external customers $228.7 $21.8 $-- $250.5
Intersegment sales -- 2.3 (2.3) --
Cost of sales -- shipping and
handling costs 70.7 3.7 -- 74.4
Operating earnings (loss) 60.2 3.0 (5.6) 57.6
Depreciation, depletion and
amortization 8.5 2.0 -- 10.5
(a) "Other" includes corporate entities and eliminations.
This press release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. 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 those factors identified in Compass Minerals International's annual report on form 10-k Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission on March 16, 2005. The Company will not update any forward-looking statements made in this press release to reflect future events or developments. |
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