Compass Minerals International Inc. (CMP, Financial) filed Quarterly Report for the period ended 2009-03-31.
Compass Minerals is the largest producer of rock or highway deicing salt in North America and the United Kingdom and operates the largest highway deicing salt mines in these regions. The company is also the third largest producer of general trade salt in North America and the second largest in the United Kingdom serving major retailers agricultural cooperatives and food producers. In addition Compass is the largest producer of sulfate of potash in North America which is used in the production of specialty fertilizers. Compass Minerals International Inc. has a market cap of $1.62 billion; its shares were traded at around $49.6 with a P/E ratio of 10.1 and P/S ratio of 1.3. The dividend yield of Compass Minerals International Inc. stocks is 2.9%.
Salt product sales for the first quarter of 2009 of $180.4 million decreased $24.5 million, or 12% compared to $204.9 million for the same period in 2008. The milder than normal winter weather in our North American markets during the first quarter of 2009 compared to the more severe weather in the first quarter of 2008 led to lower sales volumes for highway deicing and consumer and industrial deicing products. Modestly lower sales volumes of non-seasonal consumer and industrial products due to recent weakness in the broader economy also contributed to the sales decline. In the U.K., we experienced more severe than normal winter weather which resulted in higher U.K. sales volumes for the first quarter of 2009 when compared to the same period in 2008. Salt sales volumes in 2009 declined 1.5 million tons from 2008 levels which decreased sales by approximately $37 million. Price improvements contributed approximately $32 million to product sales. In addition, the strengthening of the U.S. dollar in the first quarter of 2009 when compared to the prior year exchange rate for the Canadian dollar and British pound sterling, negatively impacted product sales by approximately $19 million.
Gross profit for the first quarter of 2009 of $115.3 million increased $18.3 million or 19% compared to $97.0 million in 2008. As a percent of total sales, 2009 gross margin increased by 11% to 37%. These improvements primarily reflect the higher average salt and SOP product sales prices totaling approximately $55 million, which were partially offset by lower sales volumes as discussed above totaling approximately $41 million.
Cash and cash equivalents of $117.4 million as of March 31, 2009 increased $82.8 million over December 31, 2008 resulting principally from operating cash flows of $112.0 million generated in the first quarter of 2009. We used a portion of those cash flows to fund capital expenditures of $9.4 million, to pay dividends on our common stock of $11.8 million, and to repay the December 31, 2008 balance of our revolving credit facility of $8.6 million.
As of March 31, 2009, we had $486.0 million of principal indebtedness including $89.8 million of senior subordinated discount notes and $396.2 million of term loan borrowings under our senior secured credit agreement. Our senior secured credit agreement also includes a revolving credit facility which provides borrowing capacity up to an aggregate amount of $125.0 million. No amounts were borrowed under our revolving credit facility as of March 31, 2009. We had $9.0 million of outstanding letters of credit as of March 31, 2009 which reduced our borrowing availability to $116.0 million.
Financing activities during the 2009 three-month period used $18.3 million of cash flows, primarily to make $8.6 million of payments to reduce our outstanding debt and $11.8 million of dividend payments. During 2008, we used $43.3 million in financing activities primarily to repay $34.0 million of borrowings and pay dividends of $11.0 million.
Read the The complete ReportCMP is in the portfolios of John Keeley of Keeley Fund Management.
Compass Minerals is the largest producer of rock or highway deicing salt in North America and the United Kingdom and operates the largest highway deicing salt mines in these regions. The company is also the third largest producer of general trade salt in North America and the second largest in the United Kingdom serving major retailers agricultural cooperatives and food producers. In addition Compass is the largest producer of sulfate of potash in North America which is used in the production of specialty fertilizers. Compass Minerals International Inc. has a market cap of $1.62 billion; its shares were traded at around $49.6 with a P/E ratio of 10.1 and P/S ratio of 1.3. The dividend yield of Compass Minerals International Inc. stocks is 2.9%.
Highlight of Business Operations:
Sales for the first quarter of 2009 of $309.1 million decreased $70.9 million, or 19% compared to $380.0 million for the same quarter of 2008. Sales include revenues from the sale of our products, or “product sales,” revenues from our records management business, and shipping and handling costs incurred to deliver salt and specialty fertilizer products to the customer. Shipping and handling costs were $91.0 million during the first quarter of 2009, a decrease of $40.2 million or 31% compared to $131.2 million for the same quarter of 2008. The decrease in shipping and handling costs is primarily due to the lower sales volumes in the first quarter of 2009 when compared to same period of 2008. In addition, the lower price of fuel and transportation services in 2009 have decreased our per unit cost of shipping products to our customers.Salt product sales for the first quarter of 2009 of $180.4 million decreased $24.5 million, or 12% compared to $204.9 million for the same period in 2008. The milder than normal winter weather in our North American markets during the first quarter of 2009 compared to the more severe weather in the first quarter of 2008 led to lower sales volumes for highway deicing and consumer and industrial deicing products. Modestly lower sales volumes of non-seasonal consumer and industrial products due to recent weakness in the broader economy also contributed to the sales decline. In the U.K., we experienced more severe than normal winter weather which resulted in higher U.K. sales volumes for the first quarter of 2009 when compared to the same period in 2008. Salt sales volumes in 2009 declined 1.5 million tons from 2008 levels which decreased sales by approximately $37 million. Price improvements contributed approximately $32 million to product sales. In addition, the strengthening of the U.S. dollar in the first quarter of 2009 when compared to the prior year exchange rate for the Canadian dollar and British pound sterling, negatively impacted product sales by approximately $19 million.
Gross profit for the first quarter of 2009 of $115.3 million increased $18.3 million or 19% compared to $97.0 million in 2008. As a percent of total sales, 2009 gross margin increased by 11% to 37%. These improvements primarily reflect the higher average salt and SOP product sales prices totaling approximately $55 million, which were partially offset by lower sales volumes as discussed above totaling approximately $41 million.
Cash and cash equivalents of $117.4 million as of March 31, 2009 increased $82.8 million over December 31, 2008 resulting principally from operating cash flows of $112.0 million generated in the first quarter of 2009. We used a portion of those cash flows to fund capital expenditures of $9.4 million, to pay dividends on our common stock of $11.8 million, and to repay the December 31, 2008 balance of our revolving credit facility of $8.6 million.
As of March 31, 2009, we had $486.0 million of principal indebtedness including $89.8 million of senior subordinated discount notes and $396.2 million of term loan borrowings under our senior secured credit agreement. Our senior secured credit agreement also includes a revolving credit facility which provides borrowing capacity up to an aggregate amount of $125.0 million. No amounts were borrowed under our revolving credit facility as of March 31, 2009. We had $9.0 million of outstanding letters of credit as of March 31, 2009 which reduced our borrowing availability to $116.0 million.
Financing activities during the 2009 three-month period used $18.3 million of cash flows, primarily to make $8.6 million of payments to reduce our outstanding debt and $11.8 million of dividend payments. During 2008, we used $43.3 million in financing activities primarily to repay $34.0 million of borrowings and pay dividends of $11.0 million.
Read the The complete ReportCMP is in the portfolios of John Keeley of Keeley Fund Management.
