Compass Minerals Reports 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. -- 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. (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 ) reports the following highlights of its first quarter ended March 31, 2007: * Sales increased 21 percent to $264.2 million through volume and price improvements across all product lines, partially offset by particularly mild winter weather in the U.K. * Operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before were $49.0 million compared with $50.8 million in the first quarter of 2006, with the year-over-year decline primarily reflecting a $4.1 million business interruption insurance Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril receipt in the first quarter of 2006, weather-related reductions in rock salt production in the 2007 quarter and the nonrecurring effects of a strike last year at the company's 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. mine. * First-quarter net earnings were $26.1 million, or $0.80 per diluted share, compared to $28.6 million, or $0.88 per diluted share, in the 2006 quarter. * The company made a $10 million principal payment on its term loan. [TABLE OMITTED] "Sales for the quarter clearly improved over the prior year, as unseasonably mild weather in January was followed by more normal weather during February and March 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. ," said Angelo Brisimitzakis, 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. . "Proactive inventory management offset the positive effects of our first-quarter sales growth and one-time events in both periods made for a challenging comparison to first-quarter 2006 results. However, underlying volumes and prices improved in each of our product lines, and we are particularly encouraged by strength in our non-winter mineral products. We continue to build a strong, balanced foundation for profitable growth." Salt Segment [TABLE OMITTED] Sales in our salt segment improved 21 percent over the prior-year quarter and product sales, which exclude shipping and handling costs, improved 24 percent. The year-over-year sales growth reflects volume gains, particularly in highway and consumer 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 products. These gains were tempered by lower 2006-2007 season deicing bid volumes of 300,000 to 400,000 tons following reduced production at the company's mine in Ontario due to a strike in the second quarter of 2006. Prices for highway deicing products increased an average of seven percent over the 2006 quarter. Average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for consumer and industrial products improved an average of 10 percent, primarily from previously announced price increases on non-winter mineral products. Operating earnings declined two percent from the prior-year quarter. In the first quarter of 2007, unit costs rose as the company reduced its rock salt mining and consumer deicing production to adjust its deicing salt inventories following the unusually mild prior quarter. In the year-ago quarter, rock salt production volumes were higher than normal in order to replenish depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d inventory and to build safety supply in anticipation of collective bargaining collective bargaining, in labor relations, procedure whereby an employer or employers agree to discuss the conditions of work by bargaining with representatives of the employees, usually a labor union. negotiations at the company's Ontario mine. These year-over-year production differences contributed approximately $6 million to the decline in salt operating earnings. Higher beginning inventory unit costs, a concentration of sales in regions where gross margins are below the company's averages and a $4.1 million insurance recovery in the 2006 quarter also contributed to the year-over-year decrease in operating margins for the salt segment. [TABLE OMITTED] Although salt-segment sales improved year over year, winter weather was significantly milder than normal in the company's U.K. market and mild in several key North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. deicing regions. The company estimates that first-quarter 2007 salt sales were $18 million to $22 million lower than would be expected in normal weather conditions and salt operating earnings were $8 million to $12 million lower than in a normal-weather quarter. Specialty Fertilizer Segment [TABLE OMITTED] Specialty fertilizer sales increased 16 percent year-over-year and specialty fertilizer product sales increased 17 percent through a 10 percent improvement in sales volumes and a five percent improvement in prices. Specialty fertilizer operating earnings were similar to the 2006 quarter as price and volume gains were essentially offset by a significant increase in the cost of potassium chloride potassium chloride, chemical compound, KCl, a colorless or white, cubic, crystalline compound that closely resembles common salt (sodium chloride). It is soluble in water, alcohol, and alkalies. , a raw material used in the production of some of Compass Minerals' 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 fertilizer. The company began implementing a previously announced $10 per ton price increase on sulfate of potash on March 1, 2007. Records Management DeepStore revenues increased from $0.6 million in the first quarter of 2006 to $2.2 million in the 2007 quarter. Compass Minerals acquired a London-based records management firm in January 2007 for $7.6 million which contributed $1.1 million of the year-over-year revenue growth. The remaining $0.5 million sales improvement was generated organically through strategic sales and marketing initiatives. The results of DeepStore's operations and its assets are in "Corporate and Other" segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four . "DeepStore, our emerging records management business, more than doubled its revenues through the acquisition of a complementary London-based firm this quarter. This accretive acquisition Accretive Acquisition An acquisition that will increase the acquiring company's EPS. Notes: As they are expected to increase the acquiring company's future earnings, these acquisitions tend to be favorable for the company's market price. provides an excellent example of our strategy of pursuing profitable and sustainable non-seasonal growth," said Dr. Brisimitzakis. Other Financial Highlights Selling, general and administrative expenses of $15.6 million for the first quarter of 2007 increased $1.4 million compared to the same period in 2006. Expenses in the 2007 quarter include a $1.6 million charge for the year due to a change in the company's earned-vacation policy; and the selling, general and administrative expenses of the newly consolidated records management business added $0.6 million in the quarter. These cost increases were partially offset by a first-quarter reduction in our variable compensation in response to milder-than-expected weather. Inventories declined by $53.2 million from December 31, 2006 levels as a result of seasonal sales of deicing products and proactive deicing salt inventory management. Total debt declined from $585.5 million at December 31, 2006 to $567.2 million at March 31, 2007. During the quarter, the company repaid the $16.3 million that was 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 and made a $10 million principal payment on its term loan. These reductions were partially offset by accretion on the company's discount notes. Cash flows from operations were $80.4 million in the 2007 quarter compared to $112.6 million in the prior-year quarter primarily reflecting the difference between cash collected in the prior-year quarter from receivables generated by robust sales in the December 2005 quarter compared to cash collected in the March 2007 quarter from receivables generated during the unusually mild December 2006 quarter. This effect was partially offset by reductions in inventory. Results for the Twelve Months Ended March 31 [TABLE OMITTED] Compass Minerals also evaluates its results on an April-through-March basis in order to compare its full-winter highway and consumer deicing sales to its purchase commitments and historical norms. Highway and consumer deicing sales volumes and revenues in the 2006-2007 winter season were substantially below what Compass Minerals would expect in a normal-weather year. For the 2005-2006 period, the company estimates that deicing volumes and revenues were essentially normal because severe weather in the fourth quarter of 2005 offset mild weather in the first quarter of 2006. Revenues for the twelve-month period ended March 31, 2007 were even with the prior period because pricing improvements across all product lines offset significant deicing volume declines. [TABLE OMITTED] Conference Call Compass Minerals will discuss its results on a conference call tomorrow, Tuesday, May 1, at 11:00 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. Callers must provide the conference ID number 6247203. Outside of the U.S. and Canada, 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 6247203. Outside of the U.S. and Canada, callers may dial 706-645-9291. About Compass Minerals 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 Minerals is a leading producer of inorganic minerals, including salt, sulfate of potash specialty fertilizer and magnesium chloride magnesium chloride Warning - High-alert drug! Chloromag, Mag 64, Mag Delay, Slo-Mag Pharmacologic class: Mineral Therapeutic class: . The company provides highway deicing salt to customers in North America and the United Kingdom, and produces and distributes consumer deicing and water conditioning products, ingredients used in consumer and commercial foods, specialty fertilizers, and products used in agriculture and other consumer and industrial applications. Compass Minerals also provides records management services to businesses throughout the U.K. Non-GAAP Measures Management uses a variety of measures to evaluate the company's performance. In addition to using GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures, such as gross profit, net earnings and cash flows generated by operating activities, management uses 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 , a non-GAAP financial measure, to evaluate the performance of our core business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . To effectively manage our resource allocation resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs , cost of capital and income tax positions, we evaluate the operating units on the basis of EBITDA. EBITDA is not calculated under GAAP and should not be considered in isolation or as a substitute for net earnings, cash flows or other financial data prepared in accordance with GAAP or as a measure of our overall profitability or liquidity. EBITDA excludes interest expense, income taxes and depreciation and amortization, each of which is an essential element of our cost structure and cannot be eliminated. Our borrowings are a significant component of our capital structure and interest expense is a continuing cost of debt. We are also required to pay income taxes. We have a significant investment in capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) , and depreciation and amortization reflects the utilization of those assets in order to generate revenues. Consequently, any measure that excludes these elements has material limitations. EBITDA does, however, include other cash and non-cash items which management believes are not indicative of the ongoing operating performance of our core business operations. Management excludes these items to calculate adjusted EBITDA. While EBITDA and adjusted EBITDA are frequently used as measures of operating performance, these terms are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Excluding special items from net earnings is meaningful to investors because it provides insight with respect to the ongoing operating results of the company. Special items include costs to tender for our high-yield bonds net of tax as well as charges to income tax expense for repatriating funds and the partial release of a tax reserve. Management's calculations of these measures are set forth in the tables below. This press release may contain forward-looking statements 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 February 22, 2007. The Company will not update any forward-looking statements made in this press release to reflect future events or developments. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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