Few people look forward to winter more than investors in seasonal businesses that do a lot of business during the cold-weather months, and Compass Minerals International (CMP 2.35%) falls squarely into that category. With so much of its business coming from state and municipal governments treating roads and other surfaces with salt and anti-icing products, Compass often sees a lot of its success come during this part of the year.

Coming into Monday's fourth-quarter financial report, Compass investors hoped that the company would be able to overcome the production slowdown that it faced following a strike at its salt plant in Ontario. Compass' numbers weren't quite as strong as many had hoped, but the company was still optimistic about how things are going and what the future holds.

Salt manufacturing facility with plant and lakeside cargo loading terminal.

Image source: Compass Minerals.

Compass deals with a cold start to winter

Compass Minerals' fourth-quarter results showed signs of a recovery. Revenue picked up 6% to $486.5 million, although that was still less than the 10% growth rate that most of those following the stock had wanted from the company. Similarly, although Compass was able to post adjusted net income of $48 million, that figure was considerably lower than the year-earlier period, and adjusted earnings of $1.41 per share fell well short of the $1.73-per-share consensus forecast among investors.

Compass saw mixed results in its key salt business. The segment's revenue looked strong, with growth of 9% reflecting improving prices that Compass negotiated during the highway deicing bid season in North America. However, the segment's profitability wasn't as good, as operating earnings were down 4% from year-ago levels. Compass explained that despite higher prices, increased raw material costs for salt products as well as lower sales volumes weighed on profits. In particular, lower production at the Goderich mine created substantial cost pressures, as it took longer for the mine to ramp back up following a summer strike than company executives had anticipated.

Compass did say that winter weather returned to more typical patterns at the end of 2018. The company cited 45 winter weather events in the quarter, which was in line with the 10-year average. However, most of the events happened in areas where less salt is necessary, and so overall Compass estimated that the weather had about a $16 million-to-$18 million negative impact on revenue and caused a $6 million-to-$8 million hit to earnings.

Meanwhile, Compass' plant nutrition business had disparate performance geographically. In North America, segment revenue was higher by 24% as strong demand for potash products helped push up overall sales. Operating earnings climbed 36% on expansion in operating margin. However, in South America, revenue was down 9% during the period, and operating earnings fell by more than 35% as the mix of product sales was less favorable. Weakness in local currencies was problematic for the segment, as when you take out the impact of the strong U.S. dollar, average selling prices and sales volumes looked strong.

Interim CEO Dick Grant put things in perspective. "Despite lower than expected production at the Goderich mine since the end of the strike in July," Grant said, "we have largely met our customers' demand for highway deicing salt, and we continue to drive solid results throughout our plant nutrition business." The interim CEO also pointed to the improvements Compass has made to get Goderich back up to maximum operational efficiency.

Check out the latest Compass earnings call transcript.

What's ahead for Compass Minerals?

Compass has high hopes for 2019. In Grant's words, "Our company is poised to benefit from good market conditions for both our salt and plant nutrition businesses."

Compass' 2019 outlook showed the specific expectations for those areas. Salt segment volume is expected to come in at 10 million to 10.5 million tons, with revenue during the first half of the year of $350 million to $380 million. In North America, production of 350,000 to 400,000 tons of plant nutrition materials should generate another $100 million to $115 million in segment revenue, and South American sales should come in at $150 million to $170 million on volume of 800,000 to 900,000 tons. Compass warned that it will no longer provide earnings guidance directly, but it did project overall adjusted pre-tax operating earnings of $310 million to $350 million for the full year.

Compass Minerals shareholders didn't seem all that happy with the news, and although the stock oscillated wildly during after-hours trading, it was down roughly 7% a couple hours after the announcement. Investors want to see more concrete signs of improvement, and they can only hope that continued winter conditions to start 2019 will result in strong performance when Compass reports its current-quarter results in early May.