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Dec 31, 2020
Compass Minerals Q4 2020 Earnings Report
Reported fourth-quarter and full-year results, with salt margins and safety performance improved, offset by mild winter weather impact and higher short-term costs in Plant Nutrition North America segment.
Key Takeaways
Compass Minerals reported lower fourth-quarter revenue and operating earnings compared to the prior year, driven primarily by weaker winter weather, the continued devaluation of the Brazilian real, higher costs in the company's Plant Nutrition North America segment and revenue and expense impacts associated with the COVID-19 pandemic. However, the company improved year-over-year operating and EBITDA margins in its Salt segment, and the Goderich mine achieved its highest monthly production level during the fourth quarter since its full conversion to continuous mining and haulage.
The company estimates the combination of weaker winter weather, devaluation of the Brazilian real and COVID-19 impacts had a negative effect on full-year 2020 operating income of approximately $67 million.
Full-year 2020 capital spending was $84.9 million, below the low end of the previously announced guidance range.
Goderich mine production demonstrated continued efficiency gains with a 23% increase in December and 17% increase for the full year, both versus 2019 respectively.
The company has initiated a strategic separation of its South American assets into two businesses, chemicals and specialty plant nutrition, with the intention of enabling a targeted and efficient sales process to unlock maximum value for each set of assets; both processes are currently underway.
Compass Minerals
Compass Minerals
Compass Minerals Revenue by Segment
Revenue by Segment
Plant Nutrition Revenue
CapyFin.com Forward Guidance
Strong production performance at the Goderich and Cote Blanche mines and normalized winter weather activity, combined with improving agriculture fundamentals in North and South America, are expected to produce a substantial increase in full-year 2021 Adjusted EBITDA from 2020 results to the range of $330 million to $360 million.
Positive Outlook
- Assuming average winter weather activity, the company expects modest Salt segment revenue growth for the first half of 2021 compared to 2020.
- Sales volume improvements and lower unit costs are expected to drive an increase in Salt segment EBITDA for the full-year 2021.
- In the Plant Nutrition North America business, the company expects flat to lower sales volumes for full-year 2021 as the company continues to monitor the growing season and balance customer needs, with a gradual ramp-up in demand during the first half of 2021 as well as modest price improvements across the segment for the full-year 2021.
- The company expects the Plant Nutrition South America business to deliver strong full-year 2021 sales volume growth compared to 2020 with continued growth in its direct-to-grower agriculture sales as well as more normalized demand from its agriculture distribution customers.
- First-half 2021 expectations are up modestly compared to the 2020 period based on a strong start to the year and the robust agriculture fundamentals that the company continues to see in South America.