There's been a lot of uncertainty in the Farm Belt this year. On one hand, flooding has hit large parts of the U.S. Midwest, causing devastation in many areas within the region. On the other, trade tensions have had dramatic impacts on exports of U.S. farm goods. Road-salt specialist Compass Minerals International (CMP 0.36%) might not seem like the most likely company to get hit hard by that uncertainty, but much of its logistical footprint is in areas hit by flooding and its plant-nutrition business has had to overcome headwinds from its agricultural customers.

Coming into Tuesday's second-quarter financial report, Compass investors wanted to see modest gains in revenue and a narrowing of losses from previous periods. Unfortunately, Compass wasn't able to deliver on either front, as those problematic issues weighed more heavily on its results than many had expected.

What held Compass back

Compass Minerals' second-quarter results were disappointing. Sales were down 1%, to $245.2 million, falling short of the 2% growth that most of those following the stock had looked for. Losses widened by more than half from year-ago levels, to $11.8 million. Even after accounting for some extraordinary items, Compass' adjusted loss of $0.29 per share was a lot bigger than the consensus forecast among investors for a loss of just $0.14 per share.

Salt loading and shipment plant, with a ship docked to receive product.

Image source: Compass Minerals.

Two major headwinds showed up in the numbers. First, large non-operating costs hurt Compass Minerals' profits, especially those related to interest expense and negative foreign-currency impacts. At the same time, flooding along the Mississippi River resulted in $2.8 million of additional logistics costs in Compass' salt business. Specifically, the flooding required longer transit times to get products to customers, and that increased the overall expense involved.

More broadly, Compass Minerals saw mixed performance from its two main segments. The salt business saw revenue fall 7%, as lower highway de-icing commitments in North America and reduced restocking demand for de-icing products in the U.K. both contributed to a 19% drop in sales volumes. However, pricing was stronger, helping to offset the volume declines. Operating earnings for the segment climbed 17% despite the additional shipping and handling costs.

Plant nutrition saw some tougher conditions close to home. In North America, revenue was down 7%, as Compass said that sales of both potash and micronutrient products were down due to wet weather in the region. Adjusted pre-tax operating earnings for the segment dropped 10% from year-ago levels. Yet in the South American plant-nutrition market, revenue jumped 15% on strong unit sales volume, as water treatment and agricultural product demand improved. Adjusted pre-tax operating earnings in South America were up 7% year over year.

New CEO Kevin Crutchfield tried to put the news in perspective. "While there is much room for improvement," Crutchfield said, "we made important strides this quarter to drive better operational performance, which is beginning to be reflected in our results." The CEO also pointed to the things Compass has done to put its business in a better place to succeed.

What's next for Compass Minerals?

In particular, Compass has a two-part strategy for growth. First, it has renewed its focus on mining excellence in the salt and potash areas, seeking to be as efficient as possible in production. Also, Compass has streamlined its organizational structure as it looks for ways to take advantage of all the opportunities it has in front of it.

Compass' outlook is largely favorable. For the salt business, Compass sees strong earnings growth in the second half of the year, as rock-salt supplies are more plentiful while pricing is still strong. Second-half revenue for the segment should come in between $475 million and $500 million, with $135 million to $155 million in adjusted pre-tax operating profit.

A late season in North America should boost second-half sales of potash, although micronutrient sales will likely remain weak due to challenging growing conditions. South America looks strong, with the potential uncertainty among Brazilian farmers creating a possible negative wild card for Compass Minerals' results. Combined, the two regions should bring in $400 million to $455 million in sales and $100 million to $125 million in adjusted pre-tax operating profit.

Compass Minerals shareholders weren't pleased with the results, and the stock opened lower by 7% Wednesday morning following the Tuesday afternoon announcement. Flood-related logistical problems will wane in time, but the challenges affecting the agricultural markets in North America could persist a while longer. That'll make it more important than ever for the salt season to go well this winter.