Salt is the biggest part of Compass Minerals' business. Image: Compass.

Seasonal businesses all go through their ups and downs, and for Compass Minerals International (CMP -1.24%), an emphasis on selling road salt makes the spring months a historically sluggish time of the year. Yet coming into Compass Minerals' second-quarter financial report Monday afternoon, investors were hoping to see fairly substantial gains on the company's bottom line, despite their accepting that sales would likely fall from year-ago levels. As it turned out, Compass Minerals gave shareholders exactly what they wanted to see, with even better earnings gains than they had expected. Let's take a closer look at how Compass Minerals did and what's next for the mineral specialist.

Big salt sales didn't leave Compass shareholders thirsty
The sales slump that most Compass Minerals investors were expecting did in fact happen, although a 1.5% decline to $183.7 million was less extreme than the 4% revenue drop in the consensus forecast. What was particularly encouraging, though, was a huge turn around in net income, which reversed a year-ago loss to bring in $13.2 million. That worked out to adjusted earnings of $0.39 per share, and even after excluding some one-time items from last year's second quarter, Compass saw its earnings per share triple, topping investors' expectations by almost a dime per share.

In contrast to the weakness we saw last quarter, Compass Minerals' key salt segment played a big role in its turnaround. Revenue fell 2% as volumes declined from year-ago levels, but higher average selling prices helped cushion the blow on a dollar-value basis. More importantly, operating earnings soared more than 80%, as Compass was able to raise prices and persuade customers to buy more profitable products from the company this year than in the past. In particular, the highway segment saw the best performance, with average prices soaring 14% to more than $51 per ton.

Meanwhile, the plant nutrition segment largely treaded water this quarter. Sales were down just over 2%, and slight weakness in margins led to a 6% drop in operating earnings. Compass said that average selling prices rose by double-digit percentages from last year, but greater competition from imported materials and slightly reduced demand resulting from poor weather pushed sales volumes down by a nearly identical amount.

CEO Fran Malecha was pleased with the results, noting Compass Minerals' record earnings from its salt business. "I am pleased with the strong commercial and operational performance across both businesses," Malecha said, "which should ensure we can serve more customers effectively and efficiently through the fall growing season and the coming winter."

Can Compass Minerals keep up its positive momentum?
Compass Minerals also reiterated its full-year guidance for 2015, letting its prior calls for earnings of $5.10 to $5.60 per share stand. For the second half of 2015, Compass thinks that with salt costs having fallen, average winter weather would help the company produce operating earnings that will be higher than in the same period of 2014. The company also sees reasonable demand for its potash plant-nutrition products, and it left its sales volume guidance for both segments unchanged.

Moreover, Compass doesn't appear to be concerned with what some would think of as a poor bid season for highway deicing materials. The company said that it is 80% finished with getting bids, and awarded bid prices are down around 6% so far compared to last year. However, with 2014 having sported a 25% increase, Compass seems to have expected a potential reversal, and it expects committed volumes under contracts to rise from 2014.

Compass Minerals has seen its stock slump in recent months as seasonal awareness of the road-salt specialist has faded. Yet with the stock near its lowest levels since early 2014, any further decline in Compass Minerals looks like it could be a bargain if the company's prospects are as good as its management would lead investors to believe.