Executives: Theresa L. Womble - Director of IR Fran Malecha - President and CEO Jamie Standen -

CFO
Analysts: Vincent Anderson - Stifel Joel Jackson - BMO Capital Markets Christopher Shaw - Monness, Crespi, Hardt & Co. Christopher Parkinson - Credit Suisse Dylan Campbell - Goldman Sachs Garo Norian - Palisade Capital

Management
Operator: Good day and welcome to the Compass Minerals Fourth Quarter Earnings Conference. Today's conference is being recorded. At this time, I would like to turn the conference over to Theresa Womble.

Please go ahead. Theresa L. Womble: Thank you, Cynthia. This morning, our CEO, Fran Malecha; and our CFO, Jamie Standen, will review Compass Minerals' fourth quarter and full year 2017 results. We will also be discussing our 2018 outlook.

Before I turn the call over to them, let me remind you that today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements we make today are based on the Company's expectations as of today's date, February 14, 2018, and involve risks and uncertainties that could cause the Company's actual results to differ materially. Please refer to our Company's most recent forms 10-K and 10-Q for a full disclosure of these risks. The Company undertakes no obligation to update any forward-looking statements that we make today. Our remarks also may include non-GAAP financial disclosures that we feel are important to provide a full understanding of our business and operating conditions.

You can find reconciliations of these measures in our earnings release, our earnings presentation, or on our Web-site at the Investor Relations section. Now I'll turn the call over to Fran.

Fran Malecha: Thank you, Theresa, and good morning everyone. Today I'll begin with a recap of some of the 2017 financial and operational highlights and challenges before discussing the factors impacting our 2018 outlook. Our results for the fourth quarter and the full year are demonstrating the value of having our Salt business balanced by our growing Plant Nutrition business.

While we faced a challenging environment, particularly for our deicing salt sales, the addition of full-year results from our Plant Nutrition South America segment and growth in our Plant Nutrition North America earnings provided a significant offset to that weakness. Looking first at our consolidated fourth quarter 2017 results, adjusted operating earnings increased 5% and adjusted EBITDA increased 9% from prior year on a 3% increase in total revenue. Earnings per share, excluding the impact of special items which mainly related to tax law changes, rose 22% from prior year to $1.66 per diluted share. The increase resulted from a lower tax rate and the improved earnings from our Plant Nutrition South America business. For the full year, our adjusted operating earnings declined 12%, which was primarily due to mild winter weather and the follow-on effects of that on our Salt segment results.

The first half of the year was very mild in our deicing markets, which reduced sales volumes in the first quarter and reduced both contracted bid volumes and average selling prices for the current winter season. Our production costs were also negatively impacted as we reduced operating rates across all of our salt mines. In the fourth quarter, snow and cold temperatures arrived in late December in North America and were fairly concentrated in the eastern portions of our served markets where we have less of a presence. We were able to offset some of the weakness in North America with stronger sales in the U.K. where winter weather has been slightly above average.

Of course, winter weather is only part of the story for our salt business. Our strategy for growth in the business relies on increasing our efficiencies and maximizing the value of every ton of salt we produce. One of the keys to this is the completion of our major capital investment at the Goderich mine. As many of you listening know, there are two projects of importance, the shaft relining to ensure the long-term integrity of the asset, and conversion of the mine to a new production method, a continuous mining and continuous haulage system. Both of these are major undertakings.

The shaft relining project remains on budget and the spending is expected to be complete in 2018. The continuous mining continuous haulage project has made important progress as well. All the systems are now installed and operating below ground, and as of November we are no longer using any drill and blast to mine salt in our operations there. As Jamie will discuss in more detail, we have already achieved some 2017 cost savings from the continuous miners. In addition to reduced costs, this transition is also improving the air quality underground and creating a safer workplace for our employees.

There have been some delays however in ramping up to full design rates due to a couple of factors. First, we were slowed down when the ground-fall happened in September. Second, we've encountered some inconsistency in the salt quality in the area where we are mining. We expect to address these quality issues during our normal maintenance shutdown in March. Our ramp-up with the new equipment will continue after the shutdown.

Assuming average winter continues and normal production rates at Goderich after the shutdown, we expect to achieve a $30 million run rate of savings by the end of 2018. This means that we expect the full $30 million of savings to come through in 2019 when this lower-cost salt is sold. Our Plant Nutrition business has helped us offset weak Salt segment results in 2017, and is expected to produce additional growth in 2018. In North America, our full-year plant nutrition sales volumes improved and our production cost declined. We have commissioned all of our new equipment at Ogden.

We have also reoriented our commercial teams to focus on our broadened product portfolio and more deeply engage our distribution partners and end users. We have also made measured investments in research and development, including opening a new research center in Kansas City. With the resources we have in both North and South America, we are well-positioned to drive additional product innovation to serve our customer needs. We introduced our first Brazil-developed product line into North America as well, and the business was able to execute all of this while still reducing overall SG&A spending. Our plant nutrition business in South America has also performed well with full-year revenue up 5%, adjusted operating earnings up 4%, and adjusted EBITDA up 8%, compared to 2016.

Those results were not quite what we had originally anticipated, mainly due to the delayed planting season in Brazil this year and some shortfall in sales to distributors. We did experience continued strength in our high-value products sold directly to farmers. We believe this strength further validates the efficacy and attractiveness of our innovative specialty product lines. Specialty micronutrients are critical for farmers seeking to achieve the maximum value of each acre they farm, each seed they plant, and each pound of other fertilizers they use. So we remain committed to being a leader in this business with the best selection, the best quality, and the best customer support for growers throughout the Western hemisphere.

All in all, there have been some challenges for Compass Minerals this year given the effects of two consecutive mild winters, production issues at Goderich, and some slowness in demand in Brazil earlier in the year. Yet we have made significant progress in key strategic areas which we expect to drive future growth and profitability. Some of the benefits of these efforts have already positively impacted results. We've stayed the course with our strategic investments despite headwinds and returned almost 100 million to our shareholders through our dividend this past year. Our dividend yield is about 4% at current stock prices and is an attractive part of our value proposition for investors.

We will continue to feature the dividend in our disciplined approach to capital allocation. This year we look forward to reducing our capital spending and focusing on driving value from the investments we've made. So our focus in 2018 will be on operating safely through all of our facilities, driving operational improvements through all of our mines and our manufacturing plants to optimize efficiencies and ensure quality products are available for our customers when and where they need them, and innovating to meet evolving customer needs. Our success will be driven by our employees and the high-performance culture we're building, which will enable us to be more responsive to customer needs, be more innovative in how we produce and the solutions we offer customers, and ultimately, to deliver more value-creating and higher returns for shareholders. So now, Jamie will provide greater detail on our financial results and outlook.

Jamie Standen: Thanks Fran. Today I'd like to start by discussing the tax items which we reported this quarter, and then I'll move to our segment results and 2018 outlook. We had two significant tax charges during the fourth quarter, the first related to U.S. tax reform and the second to a settlement reach between the Company, the U.S., and Canada, that impacts tax positions for a 10-year period. The new U.S.

tax law generated a net charge of $46.8 million in the quarter. This charge has two components. First, we estimate that the one-time tax on our unremitted foreign earnings under the new law to be approximately $55.2 million. Offsetting this tax was an $8.4 million revaluation of our deferred tax liabilities. The second tax charge involved a settlement regarding cross-border inter-company transfer pricing that was reached between the Company, the IRS, and Canada Revenue.

This settlement addressed uncertain tax positions for several tax years and resulted in a one-time tax expense of $13.8 million. This is the second tax resolution reached with the Canadian government this year. Between this settlement and the Canadian Tax Court victory earlier in the year, previously disclosed reassessments totaling about $125 million have been resolved. Now, let's turn to our Salt segment results, which can be found on Slide 8 for those of you looking at our presentation. For the fourth quarter, revenue declined 2% on 3% lower sales volumes, partially offset by a modest increase in average selling prices.

The largest contributor to lower volume was weakness in consumer deicing sales. Deicing sales for both highway and consumer products were negatively impacted by the late start to winter and the Eastern U.S. concentration of snow activity. Just to follow up on how winter is developing, as the chart on Slide 4 shows, strong snow activity in the 11 cities we track has continued, and through January our snow event data was tracking 10% above the 10-year average. Salt operating earnings for the fourth quarter were 8% below prior year and pressured by lower sales volumes as well as increased logistics costs.

Our costs also include a step-up in depreciation due to continuous mining and continuous haulage equipment being placed into service. Logistics cost increases were driven by a combination of increased freight rates, geographic sales mix, and some fuel costs. Before turning to the full-year Salt results, let me discuss the winter weather impact estimate we included in our press release. We estimate the financial impact due to variations from average winter weather each winter quarter. This quarter we have estimated a negative $20 million to $25 million impact on sales and a $6 million to $10 million impact on operating earnings.

The primary driver for the negative impact relates to our consumer deicing business. Our winter weather estimate contemplates that typical consumer deicing sales should – what typical consumer deicing sales should be in average winter weather given our commercial relationships. Because of the late start to the winter and the concentration of winter activity in the Eastern U.S., these metrics were below average for the fourth quarter. In addition, our actual highway deicing sales to commitments ratio was also below historical average for the third quarter. For the full year, our Salt earnings declined 30% from prior year.

We estimate that approximately 50 million to 60 million of the decline was related to the impact of mild winter weather in the first and fourth quarters. The operating and EBITDA margin for the Salt segment also declined when compared to 2016 full-year results due to an increase in per-unit costs driven by lower operating rates and increased logistics expense. Plant Nutrition North America revenue in the quarter grew about 12% from fourth quarter 2016 results on 11% higher sales volumes and 1% higher average selling prices. Adjusted operating earnings however declined 8% due to a combination of increased logistics costs and depreciation expense related to commissioning our new SOP production equipment at our Ogden location. For the full year, this segment reported strong year-over-year adjusted earnings growth of 19% due to lower per-unit cash cost.

This was driven by some efficiency gains in our SOP production as well as careful management of SG&A. In the Plant Nutrition South America segment, revenue increased 10% from the fourth quarter 2016 results on 6% volume growth and a 3% improvement in average selling price. These results were driven by the increase in sales of our high-value products sold directly to growers that Fran discussed as well as some FX benefit in the translated sales price. This growth provided a lift to our average selling price and benefited our operating margins. These mix benefits more than offset weakness in our distribution sales channel.

The chemical solutions business in Brazil modestly improved sales volume, but this business is more tied to the broader economic environment in Brazil which is still somewhat challenged, particularly in the oil and gas industry. For the full year, sales volumes declined 9% from 2016 results. However, the product mix improved for both agriculture and chemical solutions sales, which drove a 4% increase in total average selling price in local currency. Our focus on high-value innovative plant nutrients and our strong direct-to-grower sales channel improved operating earnings and provided margin growth. We are pleased with this performance, given the weaker than expected Brazilian economics in 2017.

With the chemical solutions business, while sales to some industrial customers lagged expectations, we had stronger sales of highly concentrated chlorine products, which also improved operating margins for that business. So, overall this was a solid year for the South America segment, given the broader agriculture and economic environment there. Let's now move to our outlook, starting with Salt. Looking forward to the first half of 2018, we expect about $25 million in short-term product cost and logistics expense. About half of that $25 million is related to high-cost inventory from 2017.

Most of this cost is due to the ground-fall incident at Goderich mine last September. We also had lower-than-expected operating rates at that mine. The other half of the $25 million relates to shipping and handling. We expect to use salt from Cote Blanche to supplement the Goderich mine shortfall to fully serve the market. That is expected to increase our first half Salt distribution costs by about $2.50 per ton.

Fortunately, these costs are short-term in nature and we expect a healthy rebound in operating margins in the second half of 2018. Second-half 2018 margins will also benefit from continuous mining savings at Goderich. We already achieved about $5 million of savings in 2017 when we finished installing the fourth mining system and completely stopped drilling and blasting in the fourth quarter. Given the challenging geology we've been mining through and some additional ground control precautions, we have decided to pull back on our continuous mining ramp-up. However, as Fran mentioned, we expect to have these issues resolved following the March shutdown.

We have already started taking action to reduce our workforce at the mine, and as a result we are expecting an incremental $10 million in savings from our new mining technology in 2018. These savings are expected to impact the P&L in the second half of the year, due to our first-in first-out accounting methodology. By the end of 2018, we expect to reach our $30 million savings run rate, with 2019 being the first full year of savings. So, to sum up the Salt outlook, we expect revenue to be up year-over-year for the first half of 2018, while operating margins are expected to compress. Given what we've sold through January and expectations for average winter for the remainder of the year, we expect an increase in full-year sales volumes as well.

In Plant Nutrition North America, we expect steady volume growth at stable prices. Operating margins are expected to be somewhat compressed due to a step-up in depreciation expense, continued investment in innovation and commercialization, and further pressure on logistics costs. In Plant Nutrition South America, indications are positive for a strong agriculture season with improving farmer economics, which should be supportive of increased sales through our distribution channel. This business tends to be more sensitive to ups and downs of farmer economics because it serves smaller growers who have fewer resources and tend to move down the value chain for inputs when commodity prices decline. There is however increasing interest from these customers to have access to our more innovative products, which will be something we pursue in 2018.

Given these factors, we expect an increase in Plant Nutrition South America sales volumes for the year and a year-over-year increase in revenue for the first half of 2018. Our margin guidance is indicative of the seasonal performance for the overall segment. Remember that sales of higher-margin products typically increase during the second half of the year. As far as corporate items go, our depreciation expense will increase due to the factors I've outlined for each business segment. Our capital expenditure level will continue to decline as we focus on delivering value on the major investments we've already made.

And last, our effective tax rate is expected to be about 26% as a result of the new U.S. tax law. This compares to our previously expected longer-term tax rate of 28%. Before beginning our Q&A session, let me recap the key points of the quarter. Salt business fundamentals are improving, although we are facing near-term cost headwinds.

Our Goderich mine transition is already delivering benefits and is expected to deliver $30 million in run rate savings by the end of 2018, assuming average winter weather demand. Our Plant Nutrition businesses are expected to continue steady growth. And last, our Corporate-wide $20 million cost savings plan remains on track. It has delivered $12 million in savings to date with the balance expected in 2018. Operator, can we please begin the Q&A session?

Operator: [Operator Instructions] We'll hear first from Vincent Anderson with Stifel.

Vincent Anderson: Just going back to guidance briefly, would you be willing or able to quantify the commercialization expense on the Plant Nutrition North America segment, and then what kind of sales, if any, you're also including in guidance as a result of that commercialization effort?

Jamie Standen: Vincent, I think that I won't quantify it specifically, but we do continue to invest in it. We started that in 2017. It was a little bit slower than we expected on the spin side. And so, as we get that full-year rate in 2018, there is a ramp-up there, but we're not really ready to talk specifically about what that is. It includes commercialization and the continued investment in innovation.

And then on the results in terms of what we expect from that investment, there is some built into our plan, but a lot of that value will come even down the road in 2019.

Vincent Anderson: Okay, that's helpful. Thank you. And staying on North American Plant Nutrition, I know it's early, but you have these 17 products, you have your SOP, and you have your own internal pipeline. In your initial conversations and efforts in this commercialization process, are there any products that really stand out as missing from your current portfolio, particularly products that are not in your own development pipeline?

Fran Malecha: Vincent, it's Fran.

We have a much broader pipeline to the point today than we had a year or two ago, and we're seeing strong growth in the specialty fertilizer products. So, we're going to continue to build on that through innovation, as Jamie mentioned, and where we may have some gaps, we are working to find those collaboration partners to bring those products to market. So it won't be everything invented here. I think it will be a combination and we hope to talk about those things more in the future as they come to fruition and we bring those products to market.

Vincent Anderson: Thanks.

If I could sneak a third quick one in, should we not be seeing some kind of business disruption insurance payout this year, is it in the guidance, and what kind of number should we expect?

Jamie Standen: So, I think that we continue to evaluate that situation. We're not ready to take position on whether we would have a recovery or not. We have to get through the season, see what the actual tons that we didn't have, we need to find out exactly what those are in order to start developing a claim. We have one year to file a claim. So, it would be premature at this point to decide how much it is because we would have logistics costs related to illogical shipping and actual lost business, which we just don't know until winter is complete.

Vincent Anderson: That's very helpful. Thank you.

Fran Malecha: And there's nothing in the guidance, nothing in the guidance for that, Vincent, just to add to Jamie's comments.

Vincent Anderson: Right. Great, thank you, guys.

Operator: We'll hear next from Joel Jackson with BMO Capital Markets.

Joel Jackson: My first question is, thinking about some of your mix on your contracts for deicing salt this year, so it looks like you don't have as much exposure to the Eastern Great Lakes which are seeing better snowfall, is there something, Fran, you go back and look at maybe what your strategy was for mid-season and think about if maybe from a risk mitigation perspective you were covered for the full extent of your region and how you might look at this going forward? And second part of that is, you're taking some down-time at Goderich, but if the entire region is seeing good snowfall, good salt shipments, would you not think that there is a destocking going on and there will be opportunities to sell more salt next year? Thanks.

Fran Malecha: Sure, Joel. First off, I mean I think if you look at our approach to the bid season last year, we felt like we maintained our share across the geography that we serve, and the pricing was disappointing but that was a function of oversupply and the market inventories being elevated due to the mild season, and we're just bearing the brunt of that through 2017 and the pricing early 2018. But I think the timing and the geography of the snow this year maybe hurt us a bit early in the year, and I think if you look at the recent snowfall, probably helps us a bit on the back end of the year.

So, we're expecting, I guess I'm optimistic about how the season will end here if it continues as we have seen through January. That will have a better environment come the bid season ahead, both in terms of volume and hopefully on price. So, I think that's really the Salt business for us, and our approach to the market will continue to be consistent with that. And just on, you mentioned this slowdown at Goderich, we aren't slowing production down there. It's just a matter of ramping it up and dealing with some of the issues that we've had to deal with.

So, we believe that inventories will be less kind of North to South and we're going to produce for that. But in addition, we're also going to be producing more tons in our Cote Blanche mine, quite a bit more tons over the last year just even looking at how we see demand in the South and to cover some of the production shortfall that we incurred in the North this past year. So, I'd expect production at all of our mines to be up in the year ahead to meet the demand that we think will be out there.

Jamie Standen: And just to add on regarding the shutdown, I think we've got required maintenance that has to occur. So we shut down in March typically and at the same time we're going to address those quality issues that we've encountered in the geology.

Joel Jackson: Okay, appreciate that. And then my second question is on SOP. So you did a very large expansion at Ogden. It's been completed for some time. Your 2018 volume guidance for SOP for Plant Nutrition North America is pretty flat with 2017.

So, is this a question of the volume out there isn't really there to push SOP further at risk of price erosion?

Fran Malecha: I think if you go back a couple of years when we – the assumptions that we used to drive the project, I would say that our demand estimates have been curbed from that. But as we've talked kind of consistently over the last maybe 18 months with the lower ag pricing in North America and a bit lower demand that we would build production, build production based on demand consistently but at a slower pace going forward. And so we're kind of looking at that I would say 3% to 5% type demand increase in SOP and we plan to meet that demand by selling to those chloride sensitive crops wherever we can and then competing mainly by using KCl to augment the production as we use up our pond-based production capacity in some of the other crops and markets that we continue to look for growth in.

Joel Jackson: Thank you very much.

Operator: Next we'll hear from Chris Shaw with Monness, Crespi.

Christopher Shaw: Can you talk about the quality issues in the salt mine at Goderich? I guess it's – having visited that one time, everything – when I looked around, everything I saw was salt. So, is it just that it's impure or what does that mean when you're saying 'quality issues'?

Fran Malecha: Yes, there's a lot – it is solid salt. I think as you look at it, it's not always that discernible. So we're in the area of the mine that we're mining today there is a small amount of other impurities, I guess is what I would call them, in salt that we are mining at this time. It's hard for us to predict kind of what that looks like ahead of us because we can't drill down kind of vertically, because we are under the lake, to kind of determine the exact geology as we go forward.

It's just we just can't be that precise with it. But I would say for the 40 or 50 years that we've operated the mine, we haven't experienced anything quite like this in terms of that level of impurities. So, what we've done is find the mechanical solutions to deal with these levels of impurities. We'll install them through our normal shutdown period, which will be in March. Then when we come out of that, we should be able to separate that out effectively and deliver the quality that we need to our chemical customers and our highway customers.

So, it's just I think the geology that we're dealing with. We have a handle on it and we have a solution as we go forward.

Christopher Shaw: The impurity is more important to the chemical customer I assume than the road salt guys?

Fran Malecha: They are. I mean the quality specs are higher on the chemical customers than the highway customers.

Christopher Shaw: Okay.

Then back on the third quarter call, you guys discussed the roof collapse at Goderich a bit, and it seemed like everything was going to be back on track. Maybe, I guess maybe the question [indiscernible], it was more so in terms of production versus – I guess what happened, was anything different that happened that now is delaying the cost savings from the continuous mining outside of I guess both the – I guess you cited the impurities and also the roof collapse, but is there anything else that's really just putting that off to 2019 to get the full run rate?

Fran Malecha: I'll make a comment and maybe Jamie can add on to that in more detail. The only thing I would say is that with the challenge that we had with the roof collapse and kind of maintaining the mine through that, we probably have – we have not reduced our labor force there as quickly as we maybe would have anticipated prior to that by roughly a quarter. So, as Jamie mentioned earlier, we've initiated that process at the mine and that is delaying some of the savings in the early part here of 2018. Jamie, I'm not sure if you…

Jamie Standen: No, I think that as we went through September and experienced the ground-fall, we really focused in on ground control for a little while, and that really slowed down the timing of the ramp-up.

And because this equipment is so important to us, we just want to make sure that we've got the right focus on it. So, as we got through that ground control issue, now we're taking out the labor and we've just basically got a delayed ramp-up. That's why it's pushing it out about six months.

Christopher Shaw: Okay, great. Thank you.

Operator: Next we'll hear from Chris Parkinson with Credit Suisse.

Christopher Parkinson: You hit on this a little but can you just further breakout the first half impact from higher transportation costs and then just run through the selling of the high-cost inventories? I think Jamie mentioned that a little bit. And then also just do you have any preliminary thoughts for long-term freight expense, given the shifts in your overall geographic mix? Thank you.

Jamie Standen: So going back to the $25 million in the first half and I talked about it being half high-cost carryover, which is higher cost inventory carryover from 2017, so think of that as $12.5 million, and then also just generally lower operating rates, but the logistics cost comes from – a big portion of it is really shipping salt from our Southern mine and Cote Blanche North. So, that is premium freight.

So, as on balance, it's best off for the Company to utilize our own mine and pay incremental freight expense to move some salt North up the river system and otherwise versus finding other salt, import salt, transporting it here and bringing it up through. So, it's basically 12.5 and 12.5 related to carryover and logistics. We do expect that high-cost inventory to be gone likely by the end of first quarter. Some of it may drag into second quarter.

Fran Malecha: And if I just might add, I think the difference I think as we look ahead in terms of what our book of business can be on Salt as we go through the bidding season next year, with stronger weather in the East, that should occupy those Eastern mines to a greater degree and I would expect that we would swing back maybe a bit more to our more normal territory for salt and our best-margin business with lowest freight to the customer.

So, there's always those differences that can happen year-to-year driven by the weather that can impact the freight as you had mentioned.

Jamie Standen: And then from a longer-term logistics perspective, we're seeing 3% to 5% freight rate increases. You've got fuel, you've got oil at $65 a barrel, earlier this year it was much lower than that. So, depending on oil and we've got a very tight truck market across the U.S., so it's difficult to recapture these costs in season, particularly in our highway business. So, as we go through our bid season, to Fran's point, and look at our netbacks and optimize, we'll do whatever we can to recapture some of these rising logistics cost.

But in the short to medium-term, we are seeing inflated logistics.

Christopher Parkinson: Great. And just a quick follow-up, could you just kindly breakdown or parse out some of the key factors in the pricing improvements in Brazil, and how you see those evolving in 2018 given that market still seems to be a little bit volatile? And then just also a quick comment on your direct to grower sales strategy would also be appreciated. Thank you.

Jamie Standen: Sure.

So let me talk about the pricing, kind of what has happened. I think what we've seen a lot of the pricing benefit in the fourth quarter year-over-year particularly is related to lower sales through distribution and higher sales to direct-to-grower, and our margins are better, our prices are higher, and there's a lot more full-year products. So, we've got high-value full-year products that are growing rapidly and we're selling more of those, and what we sold less that was lower-price lower-value products that went through distribution. So, that's the real mix that's been driving the benefit year-over-year. I would also say, as we go into next year, we will continue to grow the higher value products at very rapid rates, but we're also looking at pushing some of our older products that we used to sell to B2C, which have been now replaced, we're looking to push some of those in through distribution.

I mentioned in my script that we've got some interest by some of those smaller growers in those products. So, those are a little bit lower priced. So, it won't be as much of a price play in 2018 as much as a volume growth play. So, we'll be adding more high-value stuff but we will pick up some of the lower value too as farm incomes are now stabilized and we expect some of that distribution sales channel volume to improve.

Fran Malecha: And then I just might add to Jamie's comments, we have a very significant sales force on the ground in Brazil and with the management team down there we continue to work to see more customers, get on more hectares, increase fee, the amount of sales per salesperson, and I expect that to continue to increase over time.

I think there's just a lot of potential for us down there because we have more feet on the ground and better penetration in these markets than any of our competitors in this space.

Christopher Parkinson: Thank you very much.

Operator: And next we'll hear from Jeff Zekauskas with J.P. Morgan.

Unidentified Analyst: This is [indiscernible] on for Jeff Zekauskas.

I just had two quick questions on taxes. First, what was your cash tax rate in 2017 and what do you expect it to be in 2018? And then secondly, of your $61 million in one-time tax charges, how much of that was cash?

Jamie Standen: So, let me answer the last one first. The $61 million is net of the – of the total $61 million, all of it will ultimately be cash. However, a large portion of it will be deferred. So, the unremitted foreign earnings will be paid over eight years, so think of $4 million or $5 million related to about $55 million of that amount will be paid at that period.

So, of the $13 million, the other portion, that will be paid – that's a net number, so we will be paying significant cash taxes to the Canadian government in 2018 and then we will be getting a large refund from the IRS in 2019. So, we would expect cash taxes in the U.S. in 2018 to be quite high. Think of our effective tax rate plus about $65 million of additional cash taxes in 2018. And then in 2019 we would get about $50 million back from the IRS.

So, that's a net $15 million on this transfer price finalization and a big part of that comes in 2018 and then we get the lower cash taxes in 2019. And then as for the big repatriation, like I said, it's about $55 million and you should think of that as $4 million or $5 million a year going forward.

Unidentified Analyst: Very helpful. Thank you.

Operator: We'll hear next from Robert Koort with Goldman Sachs.

Dylan Campbell: This is Dylan Campbell on for Bob. Quick question, on the capital expenditures, what proportion of that is maintenance CapEx? And I guess secondly, as these capital expenditures wane or decline, could you talk a little bit about your priorities for cash flow utilization?

Fran Malecha: Sure. The vast majority, nearly all of that CapEx spend is maintenance capital. A portion of that maintenance capital is to finish, as we mentioned earlier, the Goderich shaft relining. That spend will be complete in 2018.

And the rest is I would say getting pretty close to kind of what our normal maintenance and business capital would be, in that $75 million range is what we have talked about, and we'd be getting close to that once you take out the balance of the shaft relining. And in terms of our capital priorities, we've continued to look at the dividend as kind of the base of that along with investing in our business and improving our balance sheet as the three areas of focus going forward. And I think the year – two years ahead of us are really around executing our current business plan, maintaining our assets, generating increased cash flow, and really focus probably more on the balance sheet, I would guess in the shorter-term than on what may be the next acquisition or a significant investment in the business. So, that's generally how we're thinking about it over the shorter-term.

Dylan Campbell: Got it.

Thank you.

Operator: We'll hear next from Garo Norian with Palisade Capital Management.

Garo Norian: I wanted to make sure I understood correctly the situation at Goderich regarding the lower purity. It seems you guys are going to have kind of a mechanical separation solution installed in March. But I'm curious, how long do you expect to be kind of in this part of the mine or how long do you think this is going to last that you're going to be needing to have this extra separation?

Fran Malecha: I mean we're going to be in this part of the mine for the next probably several years, but it doesn't mean that geology will consistently be like this.

As I mentioned earlier, that's difficult to predict. So, we'll be able to deal with those impurities with, as you mentioned, it's a mechanical separation and sorting equipment that we're putting in, but we will be operating in this area of the mine for a number of years to come.

Garo Norian: Okay. And then separately, can you give a sense of expected free cash flow for the year and where you expect leverage to end at the end of this year?

Jamie Standen: Sure. So, given the tax payment that we expect, given our interest expense, we view cash flow as flat to negative in 2018.

And what's really driving that, we would've generally thought of generating about $50 million of free cash flow in 2018, but for this settlement that I described a few minutes ago, that's really pulling about $60 million to $65 million of cash flow in cash taxes out of 2018 and it's pushing it out into 2019. So, we would now expect a dramatic improvement in free cash flow in 2019 as $60 million basically moves from 2018 to 2019.

Garo Norian: And the leverage at the end of 2018 as a result?

Jamie Standen: I think approximately 4x.

Garo Norian: Thank you.

Operator: That concludes today's question-and-answer session.

Ms. Womble, at this time I will turn the conference back to you for any additional or closing remarks. Theresa L. Womble: Thank you, Cynthia. Once again, we appreciate your interest in Compass Minerals, and if you have any follow-up questions, please contact Investor Relations.

Thanks.

Operator: Ladies and gentlemen, that does conclude today's call. Thank you all for your participation. You may now disconnect.