It used to be that Compass Minerals International (NYSE:CMP) had a very seasonal business, with its road salt products being popular only in the winter. Yet when the company brought on its plant nutrition business, it diversified Compass' exposure, and that has proven to be very helpful when winters aren't as severe as the company might hope.

Coming into Wednesday's first-quarter financial report, Compass investors knew that a mild winter would hurt earnings, but they still expected strong revenue gains. Compass was able to deliver, in large part due to strength in its recently expanded business areas. Let's take a closer look at Compass Minerals and how the company performed during the first quarter.

Compass mining operation.

Image source: Compass Minerals.

Compass deals with the winter blues

Compass Minerals' first-quarter results reflected some of the difficult conditions that the company faced, but they also showed the company's effectiveness in responding to them. Revenue climbed 12% to $387.8 million, which almost exactly matched the consensus forecast among those following the stock. Net income fell by more than half to $21.5 million, but EPS of $0.63 was well ahead of the $0.50-per-share figure that most investors had expected to see.

Looking more closely at how Compass did, the two businesses under its corporate umbrella had very different experiences. Revenue from the salt segment fell 6%, with lower sales of highway deicing products due to mild winter weather. In addition, selling prices for deicing salt sagged, and even relatively strong demand from consumers and industrial sales wasn't enough to offset the downward pressure for the segment. Operating earnings for the salt business dropped 45% as supply costs weighed on profitability. All told, Compass said that unfavorable weather resulted in a roughly $30 million to $35 million hit to sales and $14 million to $18 million decrease in operating earnings. As bad as that was, it was far better than the terrible winter of 2015-2016, where negative impacts were two to five times as large.

In plant nutrition, sales gains came from the acquisition of Produquimica. The South American plant nutrition segment posted operating earnings of $1.8 million on revenue of $61.3 million. Compass broke out the North American plant nutrition business separately, and there, revenue dropped by a modest 4%. However, operating earnings climbed by nearly half due to reduced operating costs that outweighed the negative impact of lower selling prices. Moreover, the market for potash fertilizers improved, helping to create a rise in sales volume even though falling prices hit dollar-denominated sales.

CEO Fran Malecha celebrated the report. "While mild winter weather and increased salt cost created challenging conditions for our salt business in the first quarter," Malecha said, "I am pleased with the results our plant nutrition business has produced."

Can Compass Minerals get hotter?

Compass Minerals is enthusiastic about its future. As Malecha pointed out, "Our plant nutrition business is poised for growth, and we are laser-focused on driving increased value from our expanded assets in North and South America." Compass also sees greater potential to cut costs in the salt business to help lessen the blow from two mild winters in a row.

Unfortunately, the warm end to winter will probably make deicing product demand weak as highway departments submit bids for next year. Plant nutrition has the ability to offset some of the negative impact on earnings, but Compass nevertheless had to reduce its full-year guidance for 2017 by $0.20 per share, with a new range for earnings of $3 to $3.50 per share. Still, Compass is hopeful that sales volumes and pricing will stay stable or move higher in the second quarter and throughout the remainder of the year.

Compass Minerals shareholders seemed satisfied with the news, and the stock climbed about half a percent in after-hours trading following the announcement. There's little that the company can do about winter weather conditions, but its efforts to diversify and grow other parts of its business should have positive impacts in the long run.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Compass Minerals. The Motley Fool has a disclosure policy.