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Compass Minerals International Inc CMP
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/29/2013

Operator: Good day and welcome to the Compass Minerals' First Quarter Earnings Conference. Today's conference is being recorded.

At this time, I would like to turn the conference over to Ms. Peggy Landon. Please go ahead.

Peggy Landon - Director of IR and Corporate Communications: Thank you, Tim, and thank you all for joining our call this morning. I am pleased to be joined this morning by Fran Malecha, our CEO; and by Rod Underdown, our CFO.

I'll be turning the call over to them in just a minute, but before I do, let me remind you that today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's expectations as of today's date, April 29, 2013 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 identified in Compass Minerals' most recent Forms 10-K and 10-Q. The Company undertakes no obligation to update any forward-looking statements made today to reflect future events or developments.

You can find reconciliations of any non-GAAP financial information that we discuss today in our earnings release, which is available in the Investor Relations section of our website at compassminerals.com.

Now, I'll turn the call over to Fran.

Fran Malecha - President and CEO: Thank you, Peggy. Good morning, and thanks for joining us today. I'm pleased that we can talk to you about our results today. After all the weather challenges the Company has faced over the past couple of years, it was nice to see a rebound in highway deicing demand.

Focusing first on our salt segment performance this quarter, we posted near record quarterly sales as the number of our key deicing markets saw winter return in a very big way. Demand for our highway deicing products was the strongest we've experienced since the first quarter of 2008 and our consumer and industrial sales volume was up 6% year-over-year, primarily because of slightly stronger demand for package deicing products.

The strong highway deicing demand also diminished the high-cost rock salt inventory we produced in 2012 when our operating rates were low. At the end of the season, our inventories were roughly at average levels and well below last year's elevated levels. We're optimistic that late quarter snowfall also lowered customer inventories to more normal levels in many of our key markets. The snow events were uneven though, so there are likely to be some customers in pockets of North America that ended the season with above average inventories.

Still, as we enter the 2013-14 bid season, we believe we are turning the corner away from the issues raised by unusually high customer inventories and inflated per unit production cost of 2012. We won't be able to judge our customers' carryover inventories until the bid season is truly underway, but it's reasonable to expect bid sizes to rebound meaningfully from last year's unusually depressed levels. Based on our analysis of consumer and commercial deicing sales channels, we believe our customers' inventories are significantly lower than at this time last year and are perhaps at levels we would expect to see following an average winter. As we progress through the summer, we'll get a better sense of our customers' lower inventories will impact our sales of packaged deicing products this next season. We expect demand for our non-deicing salt products to remain largely stable throughout 2013.

Read our Earnings Call Transcript disclaimer.
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