Compass Minerals International Earnings Call Insights: Spot Business and Bid Season Outlook

Compass Minerals International (NYSE:CMP) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Spot Business

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?

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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.

Bid Season Outlook

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.

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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.

A Closer Look: Compass Minerals International Earnings Cheat Sheet>>