Compass Minerals Announces Cost Cuts to Align With Business Needs

Compass Minerals International, Inc. CMP has announced steps to cut selling, general, and administrative (SG&A) expenses and other costs to boost free cash flow and reduce debt. These actions are part of a broader strategy to enhance the profitability of the company’s core Salt and Plant Nutrition businesses. As part of its cost-saving measures, CMP reduced its corporate cost structure by cutting more than 10% of its corporate workforce. 

In addition, the company decided to phase out its fire retardant business, Fortress North America, which will result in the termination of all Fortress-related employees. In total, these changes affect nearly 50 positions. To further manage expenses, the company will not fill certain open or budgeted roles moving forward. Compass Minerals is assisting affected employees with severance packages and outplacement services. The company expects these initiatives to deliver ongoing cash savings.

Going forward, the company will operate with a streamlined structure, concentrating more closely on the fundamentals of its core Salt and Plant Nutrition businesses to strengthen and increase profitability. It plans to closely examine costs across its operations to uncover further opportunities for cost reductions, including reviewing contracts, operational expenses and semi-variable costs.

Shares of Compass Minerals have lost 39.5% over the past year compared with the 16.1% decline of its industry.

CMP’s Rank & Key Picks

CMP currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS, CSW Industrials Inc. CSWI and Axalta Coating Systems Ltd. AXTA

Carpenter Technology currently carries a Zacks Rank #2 (Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.7%. The company's shares have soared 169.6% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for CSW Industrials’ current fiscal-year earnings is pegged at $8.50 per share. CSWI, carrying a Zacks Rank of 2 at present, surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 10.1%. The company's shares have rallied 28.4% in the past year.

Axalta Coating Systems, which currently sports a Zacks Rank of 1, beat the consensus estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 16.3%, on average. AXTA’s shares have gained 1.2% over the past year. 

 

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This article originally published on Zacks Investment Research (zacks.com).

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