Good day, everyone. And welcome today's Compass Minerals' Four Quarter Earnings Conference. Today's conference is being recorded. At this time for opening remarks, I'd like to turn things over to Theresa Womble. Please go ahead, ma'am.

Thank you and good morning. Today, our Interim CEO, Dick Grand our CFO, Jamie Standen will review Compass Minerals' Fourth Quarter and Full Year 2018 Results. We will also be discussion our outlook for 2019. 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, February 12, 2019, and they involve risks and uncertainties that could cause the company's actual results to differ materially. Please refer to the company's most recent Forms 10-K and 10-Q for a full disclosure of these risks. The company undertakes no obligation to update any forward-looking statements made today to reflect future events or developments. Our remarks also include non-GAAP financial disclosures, which we feel are important to provide a full understanding of our business and our operating conditions. You can find reconciliations of any of these measures in our earnings release or in our earnings presentation, both of which are available at the Investor Relations section of our website at compassminerals.com. Now, I'll turn the call over to Dick.

Good morning. I am very please to have my first opportunity since becoming Interim CEO to share with you the progress I believe we are making in improving the performance of Compass Minerals. My comments today will focus more on our full year results and their strategic development. Beginning on Slide 3 of our earnings presentation, while Jamie will provide greater detail on our quarterly results and the various inputs throughout 2019 financial outlook. As you've seen in our earnings release, we reported healthy full year revenue growth of 9% as a result of increased sales in each our businesses compared to 2017. While consolidated earnings did decline from 2017 levels, largely due to salt production cost increases and currency translation, there are many areas of improvement that I'd like to highlight today. Additionally, even with the challenges we faced in 2018, we delivered almost a $191 million in cash flow from operations, which was a 30% increase from 2017. First, our Plant Nutrition business performed well in 2018. In North America, our SOP business ended the year very strongly as our customers began their inventories for the spring planting season. In total, the segment delivered full year revenue growth of 11% and EBITDA growth of 14%. This performance was underpinned by better operating outcomes at our Ogden, Utah facility, where we had a record year for our low-cost home-based SOP production. The investments we've made over the last few years in enhancing our ponds and upgrading our processes are now starting to deliver the outcomes we planned. We also achieved near maximum production at our Canadian SOP production site. I believe these achievements bode well for future margin enhancement as we move into 2019. They also demonstrate to our customers our commitment to be the supplier of choice for…

Thanks, Dick. Before discussing our segment results, I would like to recap our quarterly consolidated results. For the fourth quarter, we generated revenue growth of 6% due to increases in Salt and Plant Nutrition North America revenue offset by a 13% FX headwind mainly impacting our Plant Nutrition South America results. Consolidated operating earnings and EBITDA were both lower primarily due to CEO transition costs of $5.1 million and negative FX impacts of $4 million. In addition, our fourth quarter results included several tax items. First, we had two tax benefit items related to the release of deferred tax asset valuation allowances and the finalization of the impact of US Tax Reform on our 2017 income tax expense. We also had a tax expense item related to the repatriation of approximately $150 million of foreign earnings. Our 2018 full year tax rate ended up higher than expected due to the finalization of US Tax Reform impacts on our 2018 earnings as well as some FX losses on inter-company transfer price settlements that aren't tax-deductible. Turning to our salt segment results which we discussed on slide 7 of the business update presentation, fourth quarter Salt revenue increased 9% compared to the prior year quarter due to a 12% increase in average selling prices partially offset by a 3% decline in sales volumes. Average price results were significantly improved due to the better pricing achieved on highway deicing contracts in North America for the 2018-2019 season. We've also been able to achieve price improvements in our consumer and industrial business through our focus on being a reliable supplier when and where it matters. These strong price results were an important offset to modestly lower sales volumes and increased product costs. Fourth quarter Salt segment EBITDA declined to 6% to $71 million. This…

[Operator Instructions] W will hear first today from Christopher Parkinson with Credit Suisse.

Hi, good morning, everyone. This is Graham Welds on for Chris. Just had a question about the evolution of op rates at Goderich and where --what the timeline that you guys expect to be able to achieve kind of your target rates there? I believe previously through your documentation have suggested that by mid year 2019 we would see that. And along with that question on what the op rates at Goderich go. I am curious if you could give us your thoughts on how operating margins within the salt segment will trend as we get that improvement because obviously our 1Q results here look like they're still being impacted by the lower operates from last year. Thanks.

This is Dick. Basically we have a plan for incremental monthly improvement throughout this year, which will put us in a great position as we get into the second half of the year and move on into 2020. We are taking a very measured approach to this process in order that we have sustainable consistent production over the long term. This is more about being consistent and delivering months after month than a particular rate in at a certain time. So that's where we're headed. We are on track with that. As I said, in my opening remarks, things were better in Q4 and in January we hit new targets and produced more in those months than we have in any previous months on the continuous mining. So those -- that progress is underway and I think it's encouraging that we are getting through to seeing production rates which will sustain us through the second half of the year and beyond.

And I'll just, yes, answer the second part of the question there, Graham. So, yes, the EBITDA margins which we were really focused on going forward will be depressed in the first half of the year because of what we described in the prepared remarks there. And then as we get into the second half of the year, you'll start to see those -- the higher production levels and that consistent increase in production come through the financials as we would expect to be 30% EBITDA margins plus and as we get into the second half. And then you'll really see the value of the investment as we move forward beyond 2019 as we move into mid -30s EBITDA margin results.

We'll go next to Vincent Anderson with Stifel.

Yes, good morning. Thanks for taking my question. I want to stick with Goderich for a second may be squeeze little bit more detail out of where we are today. So, one, how many of the continuous mining units are running and running can continuously as they are designed to be? Have you begun reducing contracted labor yet or they are still necessary? And what are your goals for the March turn around this year at the mine?

Vincent, I mean basically all of the mining units are operating. We have a schedule of how we operate those units. And one of the things that we have moved forward on recently is improving our plant maintenance of those units. So what that means is that we have deliberately taking the machines down on certain days in order to get planned maintenance because as we all know, six hours down because of planned maintenance is better than 12 hours down because of unplanned maintenance. And so as we work through these production rates, what we're seeing is consistent production coming out of the combined fleet of units that we got an operation. And so that is beginning to hit right now in back in November and December we were having good days and poor days. What we are beginning to see now is strings of good days being put together. So I think we're encouraged that that planned maintenance is beginning to show through and get us all into a much more consistent production rates with the units.

Thanks, it's helpful. And I move over to SOP then. SOP prices of kind of stayed a little bit below the ceiling here despite the strength in MOP, despite the strength in fruit, vegetable and nut prices. But you managed to grow volumes quite rapidly. Is it safe to say that you're taking a volume approach to your go to market strategy right now rather than maybe maximizing price at this level?

I think how I put it is more with --we've we started to get much better yields out of our pond -based production which is our low cost source. And I think that is allowed us to serve them our customers well this quarter. Now we've had --there was a fair amount of pre stocking went on in the -- at end of that 2018 in preparation for the spring season. And at the moment there is little bit too much rain in California which is halting the use of some of that product. But as it comes through, I think and if MOP continues to go up in price there should be opportunities for us to move our prices well.

Yes and I'll just add on to that. I think regarding price certainly higher volumes have to find a home and we're extracting all the value we can on the highest value crops and customers. And we're finding other opportunities to place tons and functionally getting the conversion from MOP to SOP and sometimes those can have a little bit lower price, which on balance in total SOP can limit the upside there. So your point is correct in that as we find some new customers and place additional tons, those aren't all necessarily in the highest value markets.

And from BMO Capital Markets will hear from Joel Jackson.

Hi, good morning. Thanks for doing the call. I had a couple questions. So first question, I want to understand a little more about your salt volume guidance for the year. You did give a bit of color. It is --you are guiding to the lowest salt volume. If you get to the midpoint the lower salt volume that Compass ever had as a public company, let's call it 20 years. So are you embedding into that --like I understand you have low commitments for this winter, but are you embedding into this also the belief that you'll have below average commitments after that for the -- for Q4 I guess the next winter because of Goderich not fully running as you would like.

Joel, this is Dick. Yes, basically the short term issue in salt volumes and if you look at our predictions for this year, most of the shortfall in volume compared with previous years is actually coming in the first quarter, And as you correctly said that really relates to our decision last summer to bid lower salt volumes, which affects both the second half 2018 but also Unfortunately first half of 2019. In fact, that's the main driver behind those their volumes. And so the shortfall volume is less about Goderich production rates which we've said is improving. And more about that lower commitment rates which gives us lower volumes in the first quarter based on a normal winter. But as we look at our production rates that we're predicting through the second half of the year, we see our sales returning much to a more normal situation as in the second half of this year and of course the first half of 2020 when it comes along. So that's one of the reasons because of this shortfall in commitments from last year is why we are so confident that we can make up and be a much more normal sort of production rate and sales rate in the second half of the year and in 2020.

And I have just add that, Joel, I think that on an actual basis we were less than 10 million tons back in 2012, there were some a number of reasons that drove that. But don't forget that so as I mentioned on the third quarter call, we expected commitments to be down the 15%. So round numbers that could be a million tons right in the grand scheme of things as it relates to highway. Also what exacerbating it in the first quarter is the year-over-year comparison to when I talk about first quarter 2019 is that the U. K. was particularly strong last year. So that's about a 0.5 million tons. So the first quarter looks particularly weak because of that. So then in the fourth quarter as we go through our bid season next summer, and if we produce as expected through the summer we will be able to recapture a good portion of this lost --this lower commitment levels, which will be spread over Q4, 2019 and Q1, 2020.

That was very good, helpful. That was helpful guidance, guys. One more question. I'm going to go back to Goderich. The actual continuous mining machine that you're bringing on a year end or later this year, is that going to be the same -- one of the same machines you have currently? And then when you are working with your machine now and you are taking time down, you are doing more maintenance. Are you --have you also been adjusting the machine in terms of cutting services or how you're attacking the upper part of the seam versus the lower part of the seam? Like have you had to go back and now redo how you're attacking the face and with a new continuous miner machine coming into the exact same thing.

Joel, we've been learning as over the period about how the right way to operate the machines. And I think that they're working pretty consistently, but we are fundamentally operating them in a similar way that we have been doing just as we've gained experience with our operators and our management were able to get this better out up time on these machines. With respect to the actual machine, we are thinking about whether we want to have a larger capacity machine and whether we operate to a larger size or whether we just stay with the current size we work. And we're working through that at the moment with the supplier and trying to finalize exactly what we are going to get delivered. But we see this the way of really improving the up time of the whole fleet of miners and ensuring that that we get the production we are looking for, plus giving us an upside if we get a particular heavy winter come along that we can actually turn off and get some extra production in order to meet customer demands. Does that give you feel for -- [Multi speakers]

Yes, well, is it possible we could end up where you will decide down the road to get a new fleet of continuous miners, the larger machines maybe to overcome some of the challenges you had? Is that a possibility here?

I think that would be a very progressive change if we made it. I mean these machines should last ten years in operation including a major rebuild. And so we will certainly-- wouldn't want to scrap the machine before its time. But if we decide that moving to a larger machine gives us better consistent output then I think it what you would see is as those machines come up for replacement, we would replace them with upgraded machines rather than just a straight one for one replacement. So that's the sort of thought pattern that the local management and mine specialist teams have been working through.

We will hear next from Robert Koort with Goldman Sachs.

Good morning. This is Dylan Campbell on for Bob. I guess my first question again on Goderich. How much does Goderich represent of its regional market? And then I guess now when we can move towards more of a fuller production levels? You anticipate any type of pricing headwinds from the strength that you saw in this last pricing season?

So we look at things as a North American market which is the combination of our Cote Blanche mine which we serve through the river system and. And the Great Lakes out of Goderich. So I don't have a specific comment on what it is in terms of their share up in the Great Lakes, but it is significant. However, that being said as it relates to pricing pressure, we --as we went through the seasoning contained our bidding based on the strike and our ramp up expectations last -- through the summer and last fall, we passed on quite a few bidding opportunities particularly late in the season. A lot of that business either win and served or is being served at very high prices that are not sustainable. So as we bring our production back up to normalize raids and start to recapture that business, we think there's plenty of room for us to not have significant pricing --price pressure, downward pressure as we go through that process next fall.

Got it, that's helpful. And on CapEx, I remember you guys referencing I guess past year going into 2019 that you'd start to see some type of decline in CapEx spending, but looking at slides it appears more flattish for 2019. Is there something that changed in your capital spending forecast or did you pull forward any type of investment or is it more of Goderich impact there?

So yes, the $100 million is a bit higher than we had been previously thinking, but as Dick mentioned, procuring another machine is a significant impact there. We're also really focused on scheduled maintenance which can include capital spending to make sure that these miners and our equipment out Ogden to be sure and include that as well that we maintain reliable assets. So it might mean that CapEx is a little bit higher than our sort of $75 million range for MOB. So is it 100 the new number? Absolutely not, but it's probably somewhere in between the 75 and the 100.

And from Stephens Inc we will hear from Mark Connelly.

Thank you. Sorry to ask more questions on salt but just one more. With the lower commitments that you've got at this part of the season, if we do have a normal winter from here on, what does that imply about where your inventories might fall out and how much you're going to be able to manage where your inventories end?

Basically so far this year we've pretty much met all of the demand from our customers. And we've been a little bit lucky in that. The ice build up in the Great Lakes is a bit slower this year despite the so called polar vertex and we've been able to get a normal number of ships out of our Goderich plant so far. And at the moment, we've got a couple of ships coming in this week and it looks like we're going to be able to keep shipping and replenishing our stocking points around the Great Lakes for a few weeks yet. So I think that put us in a reasonable position as far as our stocks go. And so I think with a normal winter for the rest of this quarter, I think we're going to able to meet the demands of our customers. And if it carries on at the right of the last couple of weeks, there could even be an upside to what we can supply. But we don't in any of our projections building weather forecasts. I mean which -- all our comments are about a normal winter. Right now we've got the -- right now we have salt at Goderich and the issue is we're obviously shipping out as much by road for the Canadian market as we can. But it's --we're optimistic that we're going to get a more ships out than we had originally planned for February, and get our distribution points replenished.

Right. So as we -- so the ending inventories would then be depending on whether if they are normal we will have some at the end of the season, and our plant production rates will enable us to recapture some of those lost commitment that we had last summer, and that's built into our second half guidance.

Very helpful. And just quickly on South America, your volume guide looks quite confident relative to good numbers this year. Can you give us a sense of where that confidence is coming from?

Yes. I think that -- Dick mentioned in his prepared remarks, direct-to-grower is a major area of focus. And we saw north of 30% growth in earnings in that segment. We continue to see that we continue to reinvest in SG&A and sales and marketing resources to continue that growth rate. I guided full year in the low single digits in US Dollars, we would --that based on translation rates that translates into mid -teens EBITDA growth in South America. So we expect to see stronger volumes on the chemical side year-over-year as we've seen improvements on the water treatment side, and then just the continued growth in micronutrient demand in South America. We're adding sales people. We are driving higher adoption and covering new acres.

We will move next to Jeff Zekauskas with J.P. Morgan.

Hi, good morning. This is Katie Zhang on for Jeff. Thanks for taking my question. So I think previously your target for free cash flow generation in 2018 was about $80 million and you delivered $94 million, but it looks like you took your 2019 outlook down by a touch. Could you just talk a little bit about what drove the delta in 2018? And what changed in your 2019 outlook? And then I have a follow-up on for Goderich, if I may?

Yes sure. We -- when I think about 2018, we had some working capital improvements that we were able to take advantage of particularly in the fourth quarter. And the difference in 2019 is really there some tax noise in there. As I mentioned, we've got some, remember the transfer pricing settlement that we reached in 2017 and kind of got finalized documentation wise in 2018 and now these payments are going to come due or additional payments are going to come due, which is $35 million of payout in the second quarter and then we're expecting a $50 million refund in the fourth quarter. The $50 million refund is uncertain. We're going to do everything we can to pull that end of the year. So if we don't get that probably working or probably free cash flow comes in the $70 million range, but if we get it. it'll be up well over a $100 million. So that's one of the major drivers in free cash flow for 2019.

Okay. That's really helpful. And then you previously talked about 2019 possibly having a $15 million to $20 million negative impact from the production shortfall at Goderich. Is it still your expectation?

Yes, so we've got, when you consider lower commitments and higher cost inventory that we are carrying into the year, we're very --we're carrying in about $12 million or so of cost. It's a combination of lower production and purchase solvents in their logical shipping that occurred, plus the lower commitments that Dick talked about earlier, all up all in together that close to $20 million of impacting Q1that is embedded in that first quarter guidance.

So if I'm thinking about the 2019 impact, it's probably something higher than the $20 million then?

No, it's right at the $20 million, that kind of carries --that carries in and then we're producing at our current rates and as we ramp up our production rates through the year, I don't see any other --I don't see in any other cost implication other than the $20 million that its first quarter.

We'll hear next from David Begleiter from Deutsche Bank.

Thank you. Jamie you reference a mid-30s EBITDA margin for salt longer term. I won't be there I know in 2020, but in 2020 could that be the year that we do achieve that mid-30s type EBITDA margin for salt?

Yes. I think that --we will creep up above 30 in 2020 certainly and beyond that that's when we would expect to be hitting the mid-30s.

Very good and just when does this continuous mining operation become fully optimized? Maybe it's never fully optimize, when you get through all the learnings and I know your production was very high in January but when do we get to a level that we think is steady state?

This is Dick. I mean basically I think that as we get through the --as we get into the second half of 2019, we should be --we should probably stop talking about the ramp up and more talking about how plant production rates. So I think we should in my mind, we should be a normalized position by the time we get in to 2019, 2020 season. So I think that's how we are looking at it. But we've got to make this progress. We've got to get ourselves on top of the situation through this through the shutdown. And I see the second half of 2019 and on into 2020 us talking less about Goderich build up and more about our progress overall and driving the salt business forward. End of Q&A

And at this time, I would like to turn it back to you all for closing remarks.

Thank you, everybody. This is Theresa and thank you for joining. And if you have any follow up questions, please contact the investor relations department using the contact information on our website. Have a great day.

Again that will conclude today's conference. Thank you all for joining us.