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.
Based on our current expectation of more typical demand for both highway deicing and consumer and commercial deicing, we plan to increase production at our three underground rock salt mines and in our deicing packaging plants this year. This should improve our 2013 per unit salt costs by about 10% on a year-over-year basis as operating efficiencies improve. We expect this to give us an expansion in salt operating margin and operating earnings this year.
Now turning to specialty fertilizer, average selling prices held steady but our sales volume was lower, generating an 8% year-over-year decline in segment sales. Though customer demand was healthy, production constraints limited our ability to fully meet it. The strong demand was driven by an earlier than normal planning season in some of our core markets and by the marketing programs our team has implemented over the past few years which educate growers about the ways SOP influences yield and quality. In response to the supply-demand imbalance, we focused on maximizing operating earnings by carefully managing our sales mix. This in turn yielded a strong average selling price in the first quarter.
Looking ahead, 2013 will continue to be a transition period for specialty fertilizer. We are continuing our focus on eliminating production bottlenecks that are holding production below full design rates. I want to assure you that these issues have our full attention.
Our cost per ton for the remainder of the year will be higher than previously projected, although well below last year's because we have ample low-cost feedstock from our own solar ponds this year. The current supply-demand imbalance isn't ideal, but it does lead us to believe there will be – continue to be a strong spread between our average selling price for SOP and the average selling price for MOP as we continue to manage our sales mix carefully to generate the greatest overall value from our 2013 production. We especially want to ensure that we can supply our high-value regions during the spring and fall application seasons.
With declining costs and good price dynamics, we expect to expand our specialty fertilizer operating margin in 2013. I have had the chance to talk with a few of our key fertilizer customers recently and based on those conversations I believe sulfate of potash has a bright future. I believe it will increase in importance to growers because of the yield and quality improvements it provides to a wide range of high-value specialty crops.
On a consolidated basis, we generated $128.8 million in cash flow from the operations this quarter, which is a 33% improvement over the depressed 2012 quarter. And as we announced in February, we raised our quarterly dividend another 10%, which is the Company's 10th consecutive year of quarterly dividend increases.
The improved salt sales and the margin expansion we're expecting in both segments in 2013 should increase cash flow from operations this year. Our strategy for using cash hasn't changed materially. We anticipate capital investment to about $130 million. We continue to run the ruler over our options for increasing SOP production capacity at the Great Salt Lake. We'll use cash for any short-term opportunistic investments, and we will consider financial transactions if there are no other better ways to return value to shareholders.
Now, I'll turn the call over to Rod, who will provide details about our financial performance in Q1 2013, and our outlook for the rest of the year. Rod?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Thanks Fran. I'll take us through the financial details of the quarter, beginning with our specialty fertilizer segment. Sales of specialty fertilizer were $4.5 million lower than the prior year sales due to an 8% decline in sales volumes. Prices in the quarter held steady at $615 per ton compared to $613 per ton in the first quarter of 2012. The decline in sales volume partially contributed to specialty fertilizer operating earnings falling to $15.4 million from $20.7 million in the first quarter of 2012. Higher per unit costs were also a key contributor to lower operating earnings. Per unit costs in the 2013 first quarter were approximately $368 per ton compared to $315 per ton in the first quarter of 2012.
Now as a reminder, the poor 2011 solar evaporation season did not begin impacting our results until the second quarter of 2012. That poor solar evaporation season reduced our harvest of mineral feedstock for SOP production in 2012. So, to supplement our harvest, we purchased additional potassium feedstock thus increasing our costs in 2012 including for the product we sold this quarter.
In the first quarter of 2013, we sold all of our carryover SOP inventories, as well as some lower cost 2013 production. So, on a sequential basis, our per unit cost declined about $70 per ton from the cost we reported in the fourth quarter of 2012.
For 2013, production constraints have limited sales volumes from sulfate of potash. We expected to be ramped up to near full 350,000 ton capacity run rate by April 1. As Fran mentioned, as we move through the final stages of our plant yield improvement project, the bottlenecks have taking longer to fix than expected and there were several days of unexpected downtime related to plant maintenance. All in all though, we believe that our efforts are producing more consistent production rates our Ogden, Utah facility.
The lower than expected rate thus far in 2013 will generate higher per unit cost than we had previously anticipated due to the fixed cost absorption. Still, these costs are expected to be much lower than the per unit costs of 2012, but not as low as we had previously guided. We now expect our per unit cost to remain just below the first quarter results or an average of approximately $360 per ton for the rest of the year.
As Fran mentioned, we can focus our limited SOP supply on those markets with the highest value to us. This was likely the result in a strong spread of our SOP price to North American MOP prices during 2013, similar to what we saw or have seen in the first quarter.
Factoring in the expectation of lower year-over-year per unit production cost, together with a robust sales mix, we anticipate that our specialty fertilizer operating margin for the full year 2013 should expand to about 30% from the 26% we reported for 2012 full year.
As for our salt business, salt segment sales this quarter totaled $327.8 million, which was 29% above our first quarter in the prior year. The increase was principally a result of higher demand for highway deicing products when compared to last year when winter weather was extremely wild. In fact, we sold 4.4 million tons of highway deicing salt products, which was 40% greater than last year and about 5% higher than the 10-year average for first quarter sales tons. When we analyze full winter season, our total sales tons of highway deicing was 6.6 million tons versus our earlier guidance on the Company's normal weather expectation of 7 million tons. That guidance took into consideration the reduced highway deicing bid volumes our customers requested during last year's summer bid season.
This season's winter weather impacted our consumer and industrial business a bit differently than highway deicing, because the winter was late to arrive, we had a very small amount of pull-through from our package deicing products in the first quarter of 2013. By mid-February those retail customers are really looking to buy seasonal spring merchandise for their lawn and garden departments. Importantly, however, we believe that the strong late winter this past February and March has helped clear out inventories in our customer stores and distribution centers. So, we anticipate this will mean strong sales in the fall and early winter, particularly when compared to last year and much more similar to historical averages before the mild winter of 2012.
These winter weather effects on consumer and industrial sales as well as on our highway deicing sales have led us to conclude that the full winter which includes the fourth quarter of 2012 and the first quarter 2013 was mild. As a reminder we calculate how winter weather impacts our results based on a consistent methodology that uses recent but longer term data to analyze deviations of our sales volume from contract commitment volumes. We also factor in variances to average U.K. highway deicing demand and our consumer packaged deicing volumes adjusted for known changes in our distribution base.
In summary for our salt segment, operating earnings were $65.4 million, up 25% from the prior year results. However last year's first quarter was unfavorably impacted by the estimated effects of the 2011 Goderich tornado, which depressed operating earnings by approximately $14.2 million in the first quarter and exceptionally mild winter weather last year also had an unfavorable impact of between $25 million and $30 million on the first quarter of 2012 salt operating earnings.
As we explained at the end of last summer's bid season, our highway deicing customers had unusually high inventories and as a result requested 15% to 20% lower volumes for this past 2012-2013 winter. This temporarily lowered our expectation for an average winter when combined with the per-unit effects from sharply reduced production in 2012, our normal winter earnings were notably compressed.
So, we now turn our eyes to the upcoming bid season. We expect to see a significant rebound in volume levels. But it's just too soon for us to have a clear indication of how much that rebound will be or where price will end. So we're pleased with the sales uplift from the late winter surge and that we have sold substantially all of our high-cost 2012 carryover salt inventories.
These factors all support an expectation for improved operating conditions in our salt segment for the rest of 2013. Because we've sold through the carryover inventory more quickly than anticipated, we expect to produce at more typical rates for the remainder of the year and therefore per unit salt cost should fall. As a result, we anticipate average full year 2013 per unit cost to be about $34 per ton, which would be at the low end of our prior guidance. Of course, our cost varied by quarter due to the seasonal nature of the salt segment, so we expect a roughly 10% drop on a year-over-year basis.
We also expect shipping and handling cost to be similar to our prior year results for the rest of 2013. So, while we can't know the specifics about the actual bid volumes or pricing for the upcoming season, we are comfortable discussing some targets around operating margin expansion for the rest of 2013. Better production rates at our rock salt mine and deicing facility – packaging facilities should help secure a full year operating margin for the salt segment in the 22% range.
Let me finish with some items related to consolidated results. We reported a tax rate of 27% in the quarter, consistent with the tax rate in the prior year quarter. That is also consistent with our expectation for the full year of 2013. Interest expense was $600,000 lower this quarter compared to the prior year and we continue to expect about $4.5 million in interest expense per quarter for the remainder of 2013.
Net earnings in the quarter were $46.4 million or $1.38 per diluted share compared to $39.9 million or $1.19 per diluted share in the first quarter 2012. The 2012 quarter included $9.6 million in estimated tornado related losses, net of taxes and insurance recoveries in the prior year, or $0.29 per diluted share.
We continue to expect to receive the final settlement of our insurance claims related to the Goderich tornado sometime in the second half of 2013, which, of course, we would call out as a special item at that time.
So, with that, I'll turn the call back over to our operator for questions.
Operator: Ivan Marcuse, KeyBanc Capital Markets.
Ivan Marcuse - KeyBanc Capital Markets: I know in the Midwest there's still – through April there is a lot of winter weather, so will that – will you be able to gain any sort of spot business, and spot business has historically been at a higher price? Will that benefit the second quarter or is that sort of nominal at this point?
Fran Malecha - President and CEO: I think it'd be nominal at this point. Ivan, its Fran. I think it's a bit delayed in terms of the spring in the Midwest, but we've seen probably an early spring in the Pacific Northwest and I think California has been pretty normal if you look at our key markets. And most of our tons for the spring are committed. So I think it'll have a nominal effect.
Ivan Marcuse - KeyBanc Capital Markets: And then on SOP business, you said you're focusing on targeted market. So, will this – should we see an overall increase in the spread between SOP and MOP; fundamental change, where it'll be wider than it's been historically going forward since you're focusing on these bidder markets and there is a supply constraint? Or do you think over time that mix will change and you should continue to see the trend of $100 to $150 per ton?
Fran Malecha - President and CEO: We're at the kind of the wide end of that range today, and I would expect us to – with the margin management; that we will continue to perform ongoing to kind of – I would anticipate stayed at that higher end of the range and it will fluctuate from time to time depending on the prices of our underlying key crops as much as what's driving the MOP pricing which is mainly corn and soybeans. But I'd anticipate we'd stay at the high end of the range.
Operator: David Begleiter, Deutsche Bank.
David Begleiter - Deutsche Bank: Fran, just looking at pricing for the upcoming bid season, would you at least expect pricing to be at the long-term average or perhaps 3% and upside from there?
Fran Malecha - President and CEO: It's just too early for us to comment on pricing at this time. We're just getting started on the bid season, and we will have, I think, a better indication of that here over the next couple of months, but it's just too early to comment at this time.
David Begleiter - Deutsche Bank: And just on the SOP production bottlenecks, what exactly were they and any longer term lasting impacts from them beyond this year?
Fran Malecha - President and CEO: We just completed our recent debottlenecking part of that operation, so it's ongoing capital that's being invested; maintenance capital, primarily going forward, that I think will continue to stabilize our production and get us at or near our design rates; so nothing other than that.
Operator: Mark Gulley, BGC Financial.
Mark Gulley - BGC Partners: I've got some SOP questions as well. Fran, we've been hearing about the intensive marketing efforts to try to get more crops, for example, potatoes, to use more SOP and less MOP over the years. Is there something you're doing differently than before, because we've heard about this and it's taken a while to kind of play out?
Fran Malecha - President and CEO: I think there's anything that we're doing particularly different, you have to keep in mind that we're talking with growers, we're talking with our channel partners and in this case also with the end users, the ultimate end users of potatoes and that does take time to go through the chain and we think create the demand pull that will service well, now and into the future. So, I think it's nothing significant that we're doing other than just continuing to focus on those key supply chain partners and I think we'll continue to see positive results.
Mark Gulley - BGC Partners: Okay, and then with respect to SOP production and cost thereof, the Company seems to have kind of gone back and forth on whether or not it wants to use purchased potassium to supplement the harvest. Sometimes you have done, sometimes you haven't. Can you talk about your philosophy on that going forward?
Fran Malecha - President and CEO: I think it really boils down to – there is an economic component, so at a certain spread and in our pricing to MLP, it would make sense to utilize potassium and create more products, especially at times when we are constrained a bit on production or demand spikes for some reason and we might see an opportunity in the months ahead to create more product. But I would say, generally, we want to produce our own high quality products and deliver that to our customers effectively.
Operator: Edward Yang, Oppenheimer.
Edward Yang - Oppenheimer: Just wanted to circle back onto the salt business. Because of the stronger than expected volumes that you saw and you did mention that some customers met the max on their contracts, did you already have some spot sales in the first quarter that helped the results?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: There wasn't any significant spot sales that were differently priced.
Edward Yang - Oppenheimer: And your cost per ton guidance for the year, $34, what's your level of confidence around that? That seems like a conservative estimate. I think for the first quarter you were guiding to $34 as well and came in closer to $31.
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, Ed, as you probably heard, the first quarter includes the higher cost inventory from 2012, and as you'll remember from looking at our quarterly results, the per unit cost varies fairly greatly between the first and fourth quarters versus the second and third. So, I would say, when you look at the $34 per ton, it includes a big chunk of the year that has higher than typical costs in it, but we tend to guide or forecast in calendar years rather than kind of winter seasons here. So, as we've talked in the past, our cost goal is somewhere around $33 and that's really based on kind of normal production on a 12-month basis. But that the calendar year at $34 is our best estimate right now.
Operator: Jeff Zekauskas, JPMorgan.
Jeffrey Zekauskas - JPMorgan: So, why is forecast of SOP demand 75,000 tons – I'm sorry, 75,000 tons in the second quarter instead of the usual 90,000 tons?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, I think as we noted, the production has been a little bit lower than we anticipated and not wanting to be sure and not miss our fall and next spring early, our high high-value regions. We'll be careful about not overselling our production as we enter the summer months.
Jeffrey Zekauskas - JPMorgan: So does this mean you expect things to go back up to 90.000 tons in the third quarter and to have your production resume? And did your, I guess, production shortfall tighten up the SOP market or do you expect it to tighten up the SOP market?
Fran Malecha - President and CEO: I think we've – as I mentioned earlier, we've made some recent debottlenecks at our plant and are getting more comfortable and consistent with the production there. So, I think we would see the last half being at least equal to our sales in the first half. And in terms of the market, I think, certainly we're the largest player in North America, and the little bit lower production that came off of our facility would have an impact on the supply-demand in the market and potentially could have impacted pricing.
Jeffrey Zekauskas - JPMorgan: And then lastly on the highway deicing, I realize that the second quarter is a tiny quarter in the scheme of things, but if you compared your volumes thus far, you know this quarter too your volumes in the second quarter of 2011, how would they compare? Are they up, are they down, are they the same?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: We normally don't give that kind of micro current guidance, but I will say that our expectation for the second quarter is similar to long-term second quarter numbers which would kind of be in the 1.2 million ton, maybe 1.3 million ton range for highway deicing. So, it's pretty consistent.
Operator: Robert Koort, Goldman Sachs & Co.
Robert Koort - Goldman Sachs & Co.: Just wondering, would you characterize any, I guess, going back to the early days of Compass, there was always an expectation that if you did have a harsher winter that you'd get a little bit more opportunistic pricing and I think Rod, you mentioned that the bid volumes going into the year were compromised by their carryover inventories. So, was it a function of that just wasn't available or maybe you had a more conciliatory tone to your customers after the tough year last year. I guess I'm just curious we wouldn't have seen more of that sort of asymmetric upside to pricing?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Bob, of course the winter, it is of course a combination of the December quarter and the March quarter, and you probably remember our December quarter being characterized as very mild, and we had guided for a normal winter volume to be about 7 million tons this year, which would be below any even long-term averages or certainly recent performance. And so, when we look at the highway deicing volumes for the two quarters combined, it was 6.6 million tons. We were thrilled with ending the season strong and that bodes well for us. But overall, it was a slightly below average full winter season, and so the opportunity for significant amount of spot sales just didn't really play out. Having said that, there is nothing different about the dynamics; so, to the extent we would have a severe winter and would expect to have enough inventory on hand to meet that severe winter, we would be able to fully capture any upside there.
Robert Koort - Goldman Sachs & Co.: And if you've been able to look historically, I would assume that many of your customers are really depleting their inventories here with the late storms. So, have you been able to discern some correlation between their ending inventory levels and what that historically meant to bid volumes or bid prices in the subsequent season?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, I think as we've stated in the past, when we have a mild or a severe winter that generally manifests itself in the bid season by modest amounts of increases or decreases in bid volumes. When we look at what happened last bid season, we never really experienced such a winter and the bid volumes fell between 15% and 20%. So we would expect a significant bump on that this year. So that's kind of what we would expect. But until we get into the bid season, we really won't know whether to think about that as getting all the way back to the prior bid levels or if it will just be a significant move up in that way. So that's kind of general expectation. Those minor bid changes would also, in terms of volumes historically; when it would 1% to 2% or 3% total bid volume changes, would generally provide a direction on prices as well. So when the bid volumes would go down 2% or 3% or 4%, we tend to be at the lower end of pricing, very low single-digits and when bid volumes were much higher, we'd be – we tended to be above the 3% to 4% average. I don't think you can look at a significant pop this year in bid volumes, though and conclude the same thing. I think we will be anxious to see what the bid volumes are based on our customer inventory levels, but we wouldn’t know anyway to guide you other than just kind of typical average price changes year-over-year at this point.
Robert Koort - Goldman Sachs & Co.: How do you prioritize seeking bid volumes versus seeking more aggressive pricing as you go into that season?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, I think without getting too granular and not getting too far ahead of ourselves and disclosing anything that our competitors certainly – wouldn't be required to disclose, we understand the importance of price and the benefits and the driver that it provides to profitability, and I think just as a general rule, that's always been our bias.
Operator: Elizabeth Collins, Morningstar.
Elizabeth Collins - Morningstar: On the SOP volumes in the first quarter, what was the split between international versus domestic, I'm trying to get a sense for any of your traditional North American customers might have needed to get volumes from overseas, because you guys were constrained?
Fran Malecha - President and CEO: Elizabeth, it was definitely a higher mix of domestic than typical. We did have export sales, but it was order of magnitude. It was 80% to 85% domestic, which would be a higher percentage than typical.
Elizabeth Collins - Morningstar: My other question is on the consumer industrial salt business, your operating margin expectations for 2013 seemed to indicate that you have a pretty decent expectation for – as you mentioned that increase in volumes and prices in consumer and industrial in the back half of the year. Could you maybe give us more color on that, specifically what products you expect to have a strong increase in demand?
Fran Malecha - President and CEO: Elizabeth, other than the consumer deicing, we would expect our remaining consumer and industrial products to be stable to slightly better than last year in terms of volume. So, the volumes expectation and the second half expected increase would all be related to the consumer packaged products. And, I think you could look back at longer-term history for us to see what we might expect following a normal winter, where our retail customers would want early fall business and go ahead and fill up their distribution system. So, when you look at years like 2011, for example, that would have followed a somewhat normal order pattern for that group of customers.
Operator: Joel Jackson, BMO Capital Markets.
Joel Jackson - BMO Capital Markets: Maybe I'll start on the salt side. You spoke about having a cost goal of about $32 a ton. Is that a goal for '13 if things – if you were at a normal situation, or is that sort of something we can think of for next year with normal inflation?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: I'm sorry, Joel, what was the $32?
Joel Jackson - BMO Capital Markets: Oh, so you'd said that your cost goal was around $32 a ton for the salt business for costs. So just trying to get a sense, is that something we can think of as a goal for this year, or is that something you can possibly achieve next year if everything was normal or is there some inflation we need to add to $33?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, I think when I was commenting on the $34 this year, I was just noting that the first quarter included, I'll call it a cost penalty, from 2012 production that we would not expect in the first quarter of 2014. So, I think as we are play things out here for the rest of 2013, if they work the way we expect because of the seasonal nature of production and inventory building et cetera, we'd expect something lower in the first quarter of 2014 and that could provide that kind of trailing $33 kind of number.
Joel Jackson - BMO Capital Markets: So, C&I average pricing was up a little bit this quarter year-over-year for the first time in a little while. Could you tell us how deicing versus non-deicing pricing faired in the quarter year-over-year?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, our non-deicing pricing was essentially flat and our deicing pricing, again the volume lift that we got there because of the way the season unfolded, just wasn't enough to really move the needle on the average price for consumer and industrial.
Joel Jackson - BMO Capital Markets: When you talk about bid volumes, for 2011, bid season, were bid volumes about average back then?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: Yeah, it of course varies year-over-year, but yeah, the 2010-11 winter, I'm going from memory right now, but it wasn't particularly, the whole winter wasn't extremely mild or extremely severe, and so, whatever volume adjustments there would've been to the bid season that year would've been within the typical ranges.
Joel Jackson - BMO Capital Markets: Switching to SOP, there was some commentary on this call, but we know that your competitor K+S raised SOP prices in North America earlier this month. We know that they cited a production constraint from a competitor, presumably that's Compass. So, when looking at SOP over MOP margin spreads here, could we – I know there is some commentary, but is it reasonable to assume that as your production constraints ease that that premium would come off because it's sort of us, you had lower volume, which then increased the spread, do you know what I'm getting at?
Fran Malecha - President and CEO: Yeah, I think as we mentioned earlier, obviously we're the major producer in North America. So, our supply will impact supply demand and pricing. But at same time, we continue to migrate business away from lower margin areas to better margin areas, and I think the we expect to stay at or near the high end of the range going forward.
Joel Jackson - BMO Capital Markets: Finally, you mentioned that you expected with all the debottlenecking that Ogden will be at (250,000) tons by April 1. We're a month into that – month now; are you running right now at full capacity?
Rodney Underdown - CFO, Secretary and VP, Compass Minerals U.K.: We have not been running at that full capacity, but we certainly have experienced some good results since we've completed the most recent debottleneck that Fran mentioned earlier, and so we feel good about the direction that we're headed.
Operator: Ivan Marcuse, KeyBanc Capital Markets.
Ivan Marcuse - KeyBanc Capital Markets: Real quick, you're looking at – you are constrained on the SOP side, and how are you looking at phase two of increasing capacity, and when would you expect to start investing in that or have some sort of clarity on when, how much, or if, you're going to follow through on that expansion?
Fran Malecha - President and CEO: Ivan, we can send you – I think as I mentioned in my remarks to analyze that, I believe we've said before that that's probably a late 2013 decision and I don't think anything has changed for us from our last update on that.
Operator: Jeff Zekauskas, JPMorgan.
Jeffrey Zekauskas - JPMorgan: In SOP, are your production constraints gone as of the end of the second quarter?
Fran Malecha - President and CEO: Can you repeat that, Jeff? I'm sorry; I didn't quite catch the whole question.
Jeffrey Zekauskas - JPMorgan: Sorry about that. In SOP, by the end of the second quarter, are the constraints in your production gone and you're back operating at full capacity, all things being equal?
Fran Malecha - President and CEO: We would expect to be at or near those design rates coming out of the second quarter. I mean there may be small additional debottlenecking that we need to do, but we should be at or near.
Operator: That concludes our question-and-answer session. I will turn it back over to Fran Malecha for any closing remarks.
Fran Malecha - President and CEO: I just want to thank everybody for joining the call today, and appreciate your participating.
Operator: That concludes today's conference call. We appreciate your participation.