Good day, and welcome to the Compass Minerals Second Quarter Earnings Conference. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Theresa Womble. Please go ahead.

Thank you, Noah. Today, our CEO, Fran Malecha; and our newly appointed CFO, Jamie Standen, will review our second quarter results and outlook for the remainder of the year. Before I turn the call over to them, 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, August 8, 2017, 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 Form 10-K and 10-Q. The company undertakes no obligation to update any forward-looking statements made today to reflect future developments. Our remarks may also include non-GAAP financial disclosures, which we feel are important to provide a full understanding of our business and operating conditions. You can find reconciliation of any of these measures in our earnings release or in our earnings presentation, both of which are available on the Investor Relations section of our website. Now, I’ll turn the call over to Fran.

Thank you, all, for joining us today. Before I get started this morning, I would like to welcome our newly appointed CFO, Jamie Standen. Many of you listening today note Jamie has depth of knowledge about the company and our markets. We’re glad to have him join the senior management team, and look forward to the significant contributions we know he will continue to make to the company. Now, turning to our second quarter results. Our earnings this quarter continue to be challenged by the impact of two consecutive mild winters and softness in demand for our Plant Nutrition South America segment. We have been able to offset some of the weakness through better results in our North American plant nutrition business. In addition, we have begun a significant cost reduction plan, which has allowed us to maintain our prior guidance for full-year earnings per share. Looking first at the Salt segment, lower salt sales volumes resulted in an 8% decline in revenue for the segment. Our salt results were also impacted by increased costs related to a couple of factors. First, we lowered our operating rates at our facilities to match supply with expected demand. In this – in addition, we incurred some short-term costs this quarter related to the implementation of continuous mining at our Goderich mine. These cost factors coupled with lower average selling prices pressured profitability. Even given the mild winter we experienced, our outlook for the Salt segment for the rest of the year is improving. The results of the North American highway deicing bid season so far indicate that we expect to sell more tons than last year, and earn a higher operating margin assuming average winter weather. We estimate that we are about 65% complete with the bid season. So far it has…

Thanks, Fran, and good morning, everyone. Before I get started, let me just say how excited I’m to be in the role of CFO and have the opportunity to leverage my long history at Compass Minerals in this position. I look forward to partnering with Fran and our business unit leaders to execute our growth strategy and create sustainable value for shareholders. Now, I would like to touch on a few items related to our current quarter results. As you can see on Page 8, Salt segment revenue declined 8%, driven by year-over-year reductions in sales volumes. Looking more closely at our prices results, you can see that average selling price for highway deicing salt was 6% below prior year, while consumer and industrial average selling prices rose about 2%, as a result of price increases introduces at the end of 2016 for non-deicing products. For the segment in total, average selling prices were flat compared to the second quarter of 2016, due to product sales mix changes in the quarter. Although not a winter weather quarter, our Salt segment results in the second quarter can be impacted in a couple of ways by the strength or weakness of the prior winter. Our average selling prices for deicing products declined year-over-year, due to the prior year’s bid season results. Volumes were also impacted due to the fact that in 2016, we were still selling minimum commitments to our highway deicing customers after a mild winter, and we experienced a few snow events in April. This year those minimum commitments were smaller in size because of reduced bid volumes last year and then fortunately April snow events were minimal. Production costs were the other key factor pressuring our salt results this quarter. In addition to the impact of reduced production rates…

Thank you. [Operator Instructions] We’ll take our first question today from Vincent Anderson with Stifel.

Good morning. Thank you. I just wanted to dig into Brazil quickly. When you talk about the distribution customers, are you seeing – one, is there a significant disparity in geography between where do you have better access with direct-to-farmer sales versus your distribution customers? Is there a significant difference in the product mix as it relates to margin? And then secondly, in your conversations with these distribution customers, how long and how short do they generally get on your products? And is this – if this season shapes up to be even weaker than expected, could it last into next year?

Good morning, Vincent, it’s Fran. We do have some geographical differences in Brazil. I’d say, generally, in the northern regions we do more direct-to-farm selling and the southern regions more through distribution. So we do have a bit of that geography to manage. But as I think Jamie mentioned earlier, the product mix to our direct-to-farm customers is more higher value, better margin products than more than either commodity or lower value products that we sell through our distribution customers. So despite the fact that we’re seeing some pressure there. We’re encouraged by the take-up of our products to direct-to-farm And acreage basis is growing in Brazil. We’re seeing acreage up again this year for the major crops and we expect that to continue, I think, by some of the estimates that our out there into the following year. So we think there will be continued increased take-up of those products, especially direct-to-farm, more acres and deeper penetration on the acres that we are currently doing with customers that gives us confidence heading into the back-half of the year and beyond in the next year. I mean, the channel on the distribution side, maybe a little bit fuller and I think, we ‘re – we saw some of that coming into the season. But we do expect that will bounce back in that, I think, in the back-half. So I don’t – I can’t say at this time that we would expect to see that in the next year. We’ll start to see how the rest of selling season goes.

Great. Thank you. And just to switch gears quickly, if you can review for us just more meaningful debt covenants and any liquidity options you have available, should they become a concern, that would be very helpful? Thank you.

Sure. So we expect to get through the third quarter at about 4.25 from a debt covenant perspective. Our covenants allow for the inclusion of pro forma earnings-related acquisitions, exclude – if we get to exclude acquisition costs and other non-cash charges. So as far as liquidity goes, we have a number of options. We have a significant rail fleet, which we could complete sale leaseback on to get some things of sheet. We’ve also got some non-core property, we could dispose it. But we’re not concerned about our covenant for the rest of this year. We would expect to finish, or like I said around 4 in a quarter leverage with a 4.5 times max coverage limit in the third quarter and would expect assuming average winter to be down below four times by the end of the year. And even if winter is slow to start, we think of it is maybe a 10th of a turn on that for the fourth quarter. So may be ending the year at four times.

That’s very helpful. Thank you.

And we’ll take our next question from Chris Parkinson with Credit Suisse.

Hi, this is Graeme Welds on for Chris. I just had a quick question, if you could – you guys could elaborate a little bit more on the new products from the Brazilian business that are you planning to introduce into North America? Any additional color that would be great there. And also and if you could speak around how you expect those to ramp up into 2018 that would be great as well?

Sure. The products that we’re introducing from Brazil are full-year products. So our like nutrients product line in North America at this point has been all dry products. And so we’re investing out and about half of the sales is, I think, about is the opportunity in North America. And by introducing these products, we’ll now be on the other side of that as well. So it will just be a broader product offering and be able to meet our farm customers needs throughout the growing season, which I think is a benefit and goes well for the future.

Got it. Thank you. And then just a quick follow-up, switching gears over to the Salt segment. You kind of talked about some of the differences that you’re seeing in different geographies kind of looking at the best of the North America. Is there anything kind of in the competitive landscape that’s shaping what you are seeing in those markets, will you think it’s really kind of the key drivers of the differences you’re seeing in different regions? Thanks.

Sure. I think, the bid season has developed and is developing as we expected. In Canada, we are seeing kind of a single-digit price increases and that’s where winter was average maybe slightly above the average in some areas and maybe slightly below in others, but generally average. So we’re seeing price increases when it was average and I think about an average winter ahead of us, which is what we plan off of that should bode well across our markets in the next year if that materializes. The U.S. and especially the U.S. South, where winter was mild and bid volumes are down, inventories are elevated. We’ve seen reduction in price there in kind of the single-digit level down. So I don’t think there is any difference in how the markets reacting than it would to normal conditions while you have average winter or mild winter and we’re seeing the result of that. So it all adds up to us to a down 3 to 4. We obviously have a little more weight in the U.S. and in Canada in terms of the volumes, but it’s kind of gone as expected. And we’re just preparing for – through our production for average winter ahead of us and adjusting our production for the elevated inventories in the South. And that’s elevated some of our costs as we’ve dialed back production, especially at our Louisiana mine.

Got it. Thanks for the color.

You’re welcome.

And our next question is from Joel Jackson with BMO Capital Markets.

Hi, good morning, Fran. Congratulations Jamie. Maybe if you could just give a little more color on your $20 million cost-cutting program. Can you talk a little bit about breaking up $10 million this year and $10 million next year, and breaking it down into where you’re getting this in different segments, or at the corporate level, and give us a little bit idea of how you’re getting here? Thanks.

Yes. Sure, Joel, I’ll take that. I think it’s a – think of it is a mix between kind of headcount and other spending of kind of 60-40 mostly here toward headcount. So there will be some reductions at the corporate level, so you can expect to see that. And then, a lot of the benefit will come out of our sites, particularly in the Salt segment. So I don’t want to get too granular and give you specifics. But think of a good portion of it coming out of salt, and then the remainder, the lesser half coming out of corporate and plant nutrition North America.

Okay, thanks for that. So if I look at your guidance seems to imply a $3 to $4 a ton lower salt costs year-over-year in the second-half. You gave a little bit of color on the call on what’s going on. Can you expand a little bit more, is this a mix shift to more bulk deicing salt less chemical salt, or is it less – higher – from the higher AFP C&I salt, is some of this the headcount reduction like can you just walk us through how you got this $3 or $4 lower costs in the second-half of the year?

Yes. So it’s a large portion is improvement in sales mix shifting in favor of the highway deicing versus non-deicing C&I products. We’ve got cost out initiatives that we just talked about. And then we expect improved operating rates, particularly at Goderich in the second-half of the year. So that’s kind of driving that decrease.

Okay. Thank you very much.

You’re welcome.

[Operator Instructions] We’ll take our next question from Chris Shaw with Monness, Crespi.

Hi. Good morning, everyone. How are you doing?

Good morning. Doing well.

The – you gave us the – your view on what bid volume – what bid the pricing looks like, but I thought you normally give us some indication of how much volume we are doing. I know you’ve mentioned that industry itself in the sectors like probably down 5%. But are you in line with that, or you think you’d be getting more volume than the overall bid demand?

Sure, this is Fran. I don’t – we don’t think that we have had a significant move in our share. It’s generally flattish, I would say, year-over-year. And so some of those volumes shift from year-to-year, given where and when it occurs and where does it occur for us and for our competitors. But I don’t think there has been a significant shift in share for us as we look at the total bid season this year versus last year.

Okay. And then I wanted to clarify South American plant nutrition. I thought you – so the farmers and distributers down there are someway maybe delaying their purchases. Does that mean you’re loosing the business completely. And I think you might have said may be some of that gets pushed back into 2018. But is it – just because the selling season that becomes compressed in the third quarter, did you lose some, or is that – I don’t think the farmer does not buy or the distributor does not buy and they just – they’re going to run a lot less inventory. How does that work?

I think about it more as it’s a delay. So we are probably – I think, if you look at the next few months going into the early part of our fourth quarter where farmers down there will be planning in – really in the late August and early September and early October timeframe, that’s the heart of their planting season. It’s just going to really compress the window to get these products out. And so we are our optimistic that a lot of that is timing. And we’re also cognizant of the fact that just from our logistic standpoint, it gets more and more difficult to deliver all those product in a compressed window. We think we’re well-prepared for that. But that would be the bigger challenge, I think, in the back-half than anything else.

Okay. And then to ask a question – future question on the – how does the benefit of the – when you always start the continuous mining equipment in Goderich. How does just turned it on January 1, and we get prorated piece of that $30 million in cost each quarter, or how do you imagine that sort of playing out across the year?

Yes, I’ll make a comment and Jamie can follow-up on maybe on some of the more detail on the timing. But we’ve actually been implementing the continuous mining starting last fall, and it will culminate in the last miner – in the last mining unit coming online in probably early fourth quarter for us. And by the end of the year, we’ll be fully operating the mine on these continuous mining units and will have discontinued entirely the historical drill and blasting method that we’ve used at the mine for – since it’s inception. So we’re implementing this as we go and some of the costs – additional costs we incurred in the second quarter, I think about that as were maybe paying a little tuition on that as we are putting these units in and working out the commissioning of those, as we are producing for the season ahead of us. And so we’re expecting that rates will continue to improve on those miners as we go through this year and, ultimately, we get to 100% by the end of the year. And, Jamie, you may just want to make a comment on the cost timing.

Yes, I think that the $30 million will start coming out Jan 1, on an annualized basis. So the run rate on a cash cost basis would begin in January. Now remember, in the first quarter, we are selling tons that were produced in the prior year. So there will be some nuances to exactly when the benefit flows through the income statement, but certainly the cash costs are coming out starting Jan 1.

All right. Thanks a lot.

You’re welcome.

And at this time, we have no further questions. I would like to turn the call back over to Theresa and Fran for any additional or closing remarks.

Thank you very much, Noah. We appreciate your interest in Compass Minerals today and we look forward to meeting with many of you at our upcoming Investor Day, which we will host September 29, in New York. Please feel free to contact Investor Relations with any additional follow-up questions. Have a great day.

And that does conclude today’s conference. Thank you for your participation, and you may now disconnect.