Compass Minerals International (NYSE:CMP) is one of many companies whose business has a seasonal component. For those on the East Coast of the U.S., an unusually tough winter seemed to bode well for this road salt and plant nutrition specialist. Despite Compass' decision to move more aggressively into the plant nutrition business, the company still gets a substantial amount of its revenue and profit from its sales of road salt to state and local governments to help them handle tough road conditions during the winter in many parts of the nation.

Coming into Tuesday's first-quarter financial report, Compass investors didn't expect that the company would see the impact of harsh winter weather over the past several months show up immediately in its quarterly earnings, but they hoped for good signs for the future. Earnings at Compass did in fact fall substantially from year-ago levels, but as customers look to replenish their depleted supplies of de-icing products, the company hopes to see improving financials throughout 2018.

Blue and white logo for natural salt.

Compass prides itself on its road salt and de-icing products. Image source: Compass Minerals.

How Compass fared

Compass Minerals' first-quarter results were consistent with what the company has experienced recently. Sales growth accelerated sharply to 13%, with revenue clocking in at $437.9 million. That was faster than the 10% growth rate that most of those following the stock were looking to see. As expected, net income was down more than 40% to $12.6 million, but the resulting earnings of $0.37 per share were actually $0.01 better than the consensus forecast among investors.

The salt segment clearly benefited from weather conditions that were more favorable for the business. Segment revenue was higher by 15%, with a 22% jump in highway de-icing sales. Compass said that a particularly strong winter in its U.K. market combined with more typical winter weather throughout North America to produce the gain. However, weakness in sales of consumer and industrial products held back the unit slightly. Moreover, with the sale of high-cost inventory and some logistics challenges associated with problems at its Goderich, Ontario, mine last year, operating profit for the segment was down by more than 20% despite the strong demand. Overall, Compass assessed the 2017-2018 winter season as having had a negligible impact on its sales and earnings, with the first quarter making up for weakness early in the season.

Plant nutrition also put in mixed performance. Sales volumes in North America were higher by 10%, offsetting slight declines in pricing levels due to a shift toward a less expensive product mix. Yet operating income for the unit fell by more than a third, with higher production costs coming from a mix of inventory management and the use of newly commissioned equipment. In South America, revenue rose 8% based largely on strength in the agricultural sector, but the first quarter is typically the weakest from an earnings standpoint for the region. That bore out this year as well, with operating income of just $800,000.

CEO Fran Malecha was happy about the weather. "We are encouraged by the return of winter weather both in the U.K. and North America," Malecha said, "as well as stable conditions in our agriculture markets, which have resulted in revenue growth for the company."

Can Compass Minerals do better?

Compass' CEO was also optimistic about how the company could fare better for the remainder of the year. In Malecha's words, "With better de-icing fundamentals expected in the salt business, as well as our strengthened portfolio of specialty plant nutrients and strong commercialization platform, we are poised to drive continued top-line growth for the rest of the year."

Yet Compass didn't make any revisions to its guidance for 2018, keeping its projection for a range of $2.75 to $3.25 per share. Full-year volume expectations remained unchanged across the company's segments. In the short run, Compass said that second-quarter salt revenue should rise from 2017 performance, and better mining rates should help to boost margin levels. The key will be what happens in the highway de-icing bid season, and Compass thinks that the tough winter will put it in a better position to profit as customers seek to stock up. That said, in the plant nutrition business, the late spring could have an adverse impact in North America, offsetting some of the benefits in the salt segment.

Compass Minerals shareholders shouldn't have been particularly surprised at what the company said in its release, and the stock didn't make any abrupt moves in pre-market trading Wednesday following the Tuesday afternoon announcement. Investors will want to see Compass take full advantage of more favorable weather conditions in order to make up for some of the weakness that it has seen in warm winters over the past couple of years, but if it does, then there's little need for any worry about the normal ups and downs that the business encounters.

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