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 Theresa Womble. Please go ahead Ma’am.

Thank you, Anny. Good morning to all on the call. Today our CEO, Fran Malecha; and our CFO, Jamie Standen, will review our first 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. The statements are based on our expectations as of today's date, May 2, 2018, and involve risks and uncertainties that could cause our actual results to differ materially. The differences to be caused by a number of factors including those we identify and 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. Lastly our remarks also may contain non-GAAP financial disclosures which we feel are important to provide a full understanding of our business and operating conditions. We provide reconciliations of these measures in our earnings release and in our earnings presentation both of which are average on Investor Relations section of our website at Compassminerals.com. Now, I will turn the call over to Fran.

Thank you, Theresa, and good morning. Revenue growth across each of our business segments drove over 13% year-over-year increase in first quarter of 2018 consolidated revenue. Stronger sales in our salt business resulting from better winter weather activity in our deicing markets. Increased demand for special specialty nutrients in both Brazil and North America support sales growth in our plant nutrition business as well. However, increased costs, particularly in our salt segment and our plant nutrition North America segment producer operating margins and resulted in a 36% decline in operating earnings compared to prior year results. Despite the weakness in our operating and net earnings, we did generate strong growth in our cash flow from operations this quarter. As underlying fundamentals improve throughout our markets, we expect to be able to deliver more cash flow, given many of the strategic initiatives, we have undertaken. Looking specifically at our salt segment, we believe market fundamentals and highly deicing portion of the salt business are improving. After two mild winters, we are pleased to see a return to more typical winter in North America. Our sales in the first quarter also benefited from a strong contribution from the UK where demand was robust in the replenishment orders are expected to be strong throughout the summer for our customers. While we don't typically discuss April snow activity, the snow events continue in the spring in many of our North American markets. In fact, our data indicate April winter events were more than four times the 10 year average in cities we track. Overall we been pleased with the increase in sales volume throughout the first quarter and into April, but that’s balance a bit by the fact that we have been production constrained at our Goderich mine due to the ceiling fall last…

Thanks Fran. Before I jump into the segment discussions, I would like to discuss our free cash flow from operations and our leverage ratio as of the end of the first quarter. We generated cash flow from operations of the $173 million, which was up 37% increase from prior-year results. We used approximately $125 million in trade working capital improvements during the quarter to pay down more than $110 million of debt. This allows us to reduce our leverage ratio as measured by our lenders to 4.1 times EBITDA. Overall, this quarter was a good reminder of our cash generation capability under more normal market conditions. Now let's turn to Slide 8 and discuss the salt segment, which was the main driver behind our stronger cash flow generation. As Fran noted, winter weather was certainly more active this season compared to the prior two seasons and that boosted our Highway deicing sales. In total salt segment revenue increased 15% year-over-year on a 22% increase in Highway deicing volumes, partially offset by a 7% decline in consumer and industrial sales volumes. Average selling prices for the segment declined 3% primarily due to our sales mix shifting in favor of Highway deicing sales, which have a lower average selling price. Looking at the pricing for our two primary salt categories, Highway deicing pricing was essentially unchanged from prior year while consumer and industrial selling prices were up 6% year-over-year, due to price increases introduced throughout 2017. Operating earnings for the quarter declined 25% compared to the 2017 first quarter as a result of two primary factors. First, as we discussed on our fourth quarter call we are experiencing inflationary pressures on our logistics costs stemming from higher freight rates and increased fuel costs. The good news on this front is that we…

Thank you sir. [Operator Instructions] And will take our first question from Vincent Anderson with Stifel. Please go ahead, sir.

So you are able to maintain the guidance despite the strike was the possibility of the strike already anticipated at your full-year guidance range or has your outlook improved enough elsewhere in the business to offset the strike impact.

Vincent this is Fran. As we mentioned in our remarks, we have been negotiating the agreement with the union for the last roughly a month. So coming into the year as we established our plans and our guidance, we weren’t anticipating a strike at that time, but I think there we are expecting improvements in other parts of the business and we expect to produce tons as Jamie mentioned as we go through the strike situation using management and third-party contractors. So this has been a good winter, so that's helpful, but I think we are tempering our enthusiasm by the improvement on the production side in terms of our forecasting.

Okay that makes sense. And if you could clarify quickly you said earlier and I missed it. You would have otherwise captured additional tons in the following bid season if it not for the ramp-up of the continues mining units or the strike.

I think our production is as I mentioned, we are been prudent in our forecasting as we look forward here, because we are in this strike situation and we would expect that in normal circumstances our ability to ramp-up would have been greater.

Right. So given the strike circumstances we are being conservative and we don't feel like depending on how the bid season goes and those commitment levels. We don't feel like we can ramp up beyond what we had already planned to produce.

And is there a point of no return on the strike or if it doesn't break you are held to the high-end of guidance for this year or if you are back in business by June for instance, you can participate. Is there any kind of timing that works accordingly.

That will just depend on the timing as you mentioned, because our bid season has begun and that will go through usually through July, and may be August. We end up with a few stragglers bid. So it would all be based on the timing of that bid season and keep in mind then it gets down to what the winter actually is and our ability when we are in season to meet our commitments and/or make some additional sales at that time. So we are managing the business, kind of with all those factors in front of us and hopeful that we will reach an agreement with our union employees and be back to more normal working conditions as soon as possible.

Great thanks. If I could ask one more quick one on North American Ag. just in terms of the progress on commercializing your new product platform, do you have all the necessary people hired and trained at this point. Are there still some upfront costs associated with those products rollout work through this year?

I think we have pretty much the team in place both on the R&D side and on the sales and marketing side. So I wouldn't expect any additional cost or significant change in our cost to create and produce and deliver these products to the marketplace.

Great. Thank you.

Thank you.

[Operator Instructions] And we will take our next question from [Mark Connoli] (Ph) with Stevens. Please go ahead.

Thank you. Fran can you give us a sense of the regulatory process and the cost and the other issues involved in bringing the [photochemical] (Ph) product into the U.S. and help us understand sort of how that processes is going to rollout.

Yes I mean most of those products I mean they have been approved and they have gone through that the registration process to initiate that business in North America. So I think now…

Is that finished?

Yes, I think we brought in about 19 product that we mentioned and so those products are in the market and our ability to sell them in North America, we have run through kind of those requirements to get them registered and be able to do that on an ongoing basis. So that really just get down to managing the production and logistics to meet our customer demands and that’s what we will continue to do going forward?

Okay. Second question, how much of your current North America Ag sales are California versus the rest of the market and is that mix going to change significantly as you integrate photochemical.

We don’t break our sales out by state or region or geography. We are heavier weight to California, especially in our SOP business and crops like almonds are the drivers there. So as the more specialty products grows, I would expect we would get continue diversity geographically across North America, both in terms of geography as I mentioned, but also crops and that’s really been part of our strategy from the onset.

Okay. And that’s really what I was looking for. Thank you.

Thank you.

We will hear next from Joel Jackson with BMO Capital Markets. Please go ahead Mr. Jackson. [Operator Instructions]. And we will move to our next question that is from Goldman Sachs we have Bob Koort.

Hi this is Dylan Campbell on for Bob. Going back to the salt segment, I notice you guys delivered pretty strong revenue growth of 15% during the first quarter, but then in the second quarter it seems like at the midpoint of your guidance only it assumes mid-single digit type of growth despite saying that April was very strong snow season. Can you help me to bridge that kind of quarter-over-quarter or that growth rate implied in your guidance for second quarter?

Sure. So considering the change is interesting, because typically are operating margins are better in the first and fourth quarters than in the second and third because of the natural profitability of Highway versus C&I and so C&I makes a heavier weighting in the second and third quarter. So the fact that it's going up is actually unusual in and of itself and it's primarily driven by mix impact of C&I versus Highway. So we are selling more Highway tons, which is more profitable, which is helping drive that quarter higher and that's how I would help you kind of bridge that.

Got it, thank you and were the higher freight cost from the Goderich mine any at all magnified by the [tightness] (Ph) risk currently seen in the freight markets?

Not really, are you talking about the illogical freight that we had to move?

Yes, just the average logistics cost.

Yes, so there is natural rate inflation occurring across all modes of transportation. So it was kind of indirectly impacted, but the bulk of the cost of it is purely related to the illogical nature, not the actual freight rate.

Got it. Thank you.

Thank you.

And we do have Mr. Jackson again from BMO capital markets. Mr. Jackson, your line is open.

So just think some concern that maybe what is going on in Goderich in the interest of continuous minors that some of the products that you are selling aren’t meetings spec. So are there any products right now that you are currently not able to spec on. How are you dealing with it, has it been fixed with the optical orders, what are those products and how might it get resolved?

Well I think, this is Fran. As we have been communicating over the past couple of quarters here we have had the quality issues at the mine, but not driven by truck or caused by the continuous minors, but more of the area of the mine that we are mining in and the geology that we are incurring is just including more off spec product than we have ever experienced there you know in the past. So to deal with that, we have put screening and sorting equipment into operations at the mine, and we initiated and finish that projects as we did our annual shutdown which occurred in March. So now we are confidence going forward that we can deal with those quality issues and effectively meet our customer specs and some of those would be mainly into our chemical customers and in some cases to highways depending on the location just we are able to outer screen more refines underground and deliver those products to different spec that our customers demand and depending on - in Canada or the U.S. or different regions within those countries.

Okay. So some of the competitors are also talking about how the government customers are maxing it their optional tonnage is kind of the [81/20 or 81/30] (Ph), contract setups this quarter and just been higher pricing. So - bid seasons where produced inventories are low, but channel inventories are average or high. So would you expect bid volumes to be similar year-over-year or down, because it’s been a interesting dynamic, can you elaborate on that?

I can speak for us, not for our competitors. I think that we don't see our inventories above average and I think we have talked about the reason for that. Some of that being our production constraints at Goderich, but also simply good winter. So if you think about the last couple of years being mild and this winter being slightly above average, stronger certainly in the last two years and I think also more consistent from East to West in our geography and the eastern geography, that's a bit outside of the area that we serve. I would expect that levels to go up.

Just one more question. You talked about the screening the optical sorting at Goderich completed in March. In some of the stuff we see the union talk about [indiscernible] optical sorting only went in a few days before the strike hit. Is that true, have you been able to ramp up the optical sorting and screen to see what the issues, or is that something that have to wait to do after the full labor team is back.

As I mentioned, we put that equipment in during our annual shutdown which basically covered the month of March, it’s in line and operating.

Thank you.

You are welcome.

We will next hear form Chris Shaw with Monness, Crespi. Please go ahead.

Good morning everybody. I just wanted to I guess ask questions or clarification from something earlier. I might have missed part of an answer. In regards to strike in the upcoming bid season and I guess volumes and I know you adjusted the - sort of 2018 levels, but I mean is the strike going to impact how you bid. I wasn’t sure if you are answering that you can only sort of have more, I guess the limited volume bidding ability if the strike persists. Did I hear that correctly?

I mean the way I would think about the upcoming bid season, which we are just beginning. So we are just starting to see bids and running through our normal process of how we assess the market and certainly our supply and that’s the heart of our strategy so that includes both production in the year plus inventory levels. We are just beginning that process and as I mentioned on the call I expect that you would seem, given the winter that we have incurred, especially in the north that was either at or above average kind of across our region and into the east that we should see higher bid commitments and I would say just a more normal kind of distribution given the low patience of the mine. That would be our expectation and we will continue to proceed through the bidding process and we always make kind of end season adjustments based on what is happening.

You don’t really foresee any real constraint on your bidding based on you know the strike.

I think as Jamie mentioned in his remarks, given the fact that we are in this strike situation and producing through it, our ability to ramp up our production if the demand is there. We are being prudent on our guidance here and don’t think that we will be able to do that or do what we would normally do if the demand was there given that situation. So if the demand is stronger that might limit our ability on some of the bids and then as I mentioned also later in the Q&A that it depends on winter and our production ultimately will be what it will be and that will determine our ability to maybe capture some end season demand if there is more that as we go through the winter.

And is there any I mean like you did I guess in this past, is there any chance to sort of offset some of that with Louisiana production.

I think we will always layer into the line if you will North and South, we have increased our production in our Louisiana mine this year compared to last year. Most of that’s because the winter was stronger this year than last year in the markets that we serve, but I would expect that we might see that line move further North for us given the situation that we are in.

Great. Thanks for the answer.

Thank you.

And from Credit Suisse we have Chris Parkinson. Please go ahead.

Hi good morning everyone. This is [indiscernible] on for Chris. I just had a quick question again kind of earlier we think at Goderich, in terms of the outline that you guys have previously put out for the cost savings you expected to achieve there as you ramped up I think if memory serves I think you are expecting something along the lines of kind of the incremental $10 million of savings in 2018 versus 2017. I'm wondering if recent development there have caused you to kind of reconsider this outlook or whether that's still consistent with what you are planning for in your guidance for this year?

Yes, so within our guidance as mentioned in the prepared remarks, we do continue to ramp up the CMCH equipment. So as we continue to go through that process, you know, we expect to see those savings materialize. It's difficult to say right now. It is a dynamic situation. If the union comes back that’s a different circumstance and than a current plan to have management run it and then bring in contract workers, but as those volumes increase and we ramp-up that equipment we do expect to see those savings, most of which would occur in the second half of the year, the $10 million I'm preferring to.

Right. Okay got it that makes sense. And then just another good question on the plant nutrition business, just wondering in terms of the margin outlook there, I know 2Q you are expecting still to have some of those kinds of lagging higher cost inventory in addition to the impact the higher DNA is having on margins there. I’m just wondering kind of when should we be through kind of the bulk of the higher cost inventory in that business and as you think about kind of the back half relative to what your guidance implies for the first half. Are you thinking about margins in the plant nutrition business or what should be the kind of the key drivers for you guys there.

Yes, sure. So it will deteriorate the costs rather will decline overtime here. That being said, as we continue to grow that business and start utilizing our incremental capacity which requires KCL, there is an impact from that as well. So on an EBITDA margin basis, we feel very good about ultimately getting this business up into the mid-30s EBITDA margins which is significantly higher than where we finished last year and 25. So this year feels similar to that area and then out into 2019 and forward, we can utilize the operating leverage as we continue to grow our sales volumes and drive that EBITDA margin into the mid 30s.

Got it. thanks Jamie. I appreciate that.

And from KeyBanc Capital Markets we will hear from [indiscernible]. Please go ahead.

Good morning. Can you remind us you know or maybe talk about how much higher you think pricing will be in the Highway deicing this bid season, given the cost pressures that you talked about just sort of how pricing should compared to maybe a normal year.

As I mentioned earlier, we just dig on the bidding seasons here and we aren’t talking about pricing at this time, our expectations around pricing. I think we have talked about winter and our view on inventories, but we won't actually be talking to the market about the pricing in the bid season until our next call, which consistent with past practice.

Okay, but it’s fair to assume then because of the pull forward you talked about in 2Q or the higher volumes that in the marketplace anyway there is expectations that pricing would be meaningfully higher, is that a…

We have made remarks that we like the supply and demand dynamics that are set up for the season. I mentioned in my remarks that core inflation in freight was up about 6% and that's not unique to us. So those are the data points that we have given you, we really don't making remarks on price specifically. We will give that on our second quarter earnings call, a status update on pricing, but we just don't have any more color to add this time.

Okay. Fair enough. And then just one plant nutrition South America, would you expect similar levels of profitability in the second half as you saw last year with typical seasonal benefit that you normally get and can you talk about the increased competition that you called out in your slide deck that you are seeing in the distribution channel and just a little more color around that if you expect that to weigh on profitability at all this year.

I think on that point we tend to see more of that volume, more of those sales in the first half than the last half of the year in Brazil, and in last half more of the sales are higher value products that go direct to farmers. So I think that's a positive and the environment in Brazil year-over-year I think is much more positive, because of commodity pricing, because of the currency and how that reflects in the pricing to growers. And we expect a strong rest of the year in South America, we are growing sales there, we are growing sales in the areas that are important to us, so we expect that to continue throughout the year and I think it's really a sign and a reflection of our products and our people down there that are making that happen.

Great. That’s helpful. Thank you.

Thank you.

Follow-up question from Mark Connoli with Stephens.

Thank you just one more Fran. You mentioned more direct sales in Brazil, do you expect that proportion to move up or are the two sides sort of growing more or less the same?

The growth in the direct side is higher and it's really the growth in those higher value products which are more - a higher percentage goes direct to growers and through distribution, but we do utilize both channels as well. But I think that will pick-up certainly overtime.

Superb. Thank you.

Thank you.

That concludes today's question-and-answer session. At this time, I would like to turn the conference back to our speakers for additional or closing remarks.

Thank you, Amy, and thank you all for joining us today. Once again, we appreciate your interest in Compass Minerals. Feel free to the contact the Investor Relations department with any follow-up question. Thank you.

This concludes today's conference. Thank you for your participation. You may now disconnect.