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Compass Minerals International Inc. Message Board

jrad52 237 posts  |  Last Activity: 5 hours ago Member since: Jul 25, 1999
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  • Reply to

    Next earnings report should be good(again)

    by dy2 Apr 4, 2014 11:42 AM

    Of course, no one "knows", but I would think the earnings releases so far don't tell us much about ARLP's quarter.

    So far, I have seen releases from ACI and BTU, and a production report from CNX. ACI and BTU had bad quarters; both blamed a lot of their problems on met coal pricing and demand (ARLP does not mine met coal any more). BTU commented that seaborne (export) coal markets were weak (BTU has a lot of mines in Australia that export to China); this should not affect ARLP, which doesn't rely much on exports. BTU and ACI both commented on the strengthening US demand for thermal coal; BTU particularly mentioned basin shifting that should benefit PRB and Illinois Basin (where ARLP mostly is). ACI has 1 mine in the IB, but it's a very small portion of the company's production.

    CNX hasn’t released earnings but it did announce Q1 and projected 2014 coal production, and it was up from original forecasts. Since everyone says met coal is weak, I assume CNX's increases are thermal coal. I’m not real good at geography, but I think CNX’s thermal coal mines are in NAPP, where ARLP has a small operation.

    The point is this: ARLP has said that its 2014 production should be up a few million tons from 2013. The expected production is almost all contracted and priced already; on the Q4 call, ARLP mentioned requests for spot price sales were above normal. It has low cost production, so the profits should be pretty steady. Barring any disasters, I think 2014's core operations should be very good, with a question mark for the progress at Gibson South and White Oak. Q1 weather might have dinged production a little, but I don't recall ARLP saying much about that on the Q4 call in January. So I'm thinking Q1 will be fine, and I'm looking forward to guidance on the new mines.

    FWIW.

  • Reply to

    RNO distribution payable May 15th

    by sgthoov Apr 22, 2014 8:32 AM

    The most interesting part is that RNO is still not paying a distribution on the subordinated units. Since the sub units' rights to distributions is not cumulative, this is a permanent give up. RNO has not publicly said that the oil & gas deal has closed, so I guess it hasn't. But they seem close enough to closing that I thought the sub units would get a distribution. I'm not sure if I should be happy or worried.

  • Q1 pretty much as expected - weather-related disappointing Q, but underlying business still good. The weather seemed to affect SXC much more than SXCP. And SXCP is doing a secondary to fund the acquisition of the 33% additional interests in the 2 mills from SXC. Depending on the hit the price takes, I may buy some more.

  • Reply to

    Brinks, Venezuela and VOXX

    by jrad52 Apr 20, 2014 8:03 PM
    jrad52 jrad52 Apr 23, 2014 10:21 AM Flag

    I own VOXX so I hope you're right. But keep in mind tangible book value is only $ 5/share, and the company is not amortizing goodwill (obviously) and the majority of its other intangible assets (trademarks), so I think the market is taking BV with a grain of salt, to say the least.

    And VOXX went almost in a straight line from $ 6 in late 2012 to $ 18 in late 2013, so yes, I think it got ahead of itself. It's dropped 30% since then, and the only hard news I saw was a decent, not great, Q3. Kahn announced that they had sold 600,000 shares during 2013 and Wellington announced they had become a 5% shareholder with 1.6 million shares. So not much news to account for the fairly large drop in a decent overall market. I can't see Venezuela as the cause, so I assume someone knows, or thinks they know, VOXX had a bad Q4.

    We'll see soon enough.

  • Reply to

    Brinks, Venezuela and VOXX

    by jrad52 Apr 20, 2014 8:03 PM
    jrad52 jrad52 Apr 22, 2014 3:43 PM Flag

    VOXX doesn't give out much financial news at any time. The stock obviously got ahead of itself late last year, but I can't see any reason for the drop since December 31. What is certainly true is that VOXX's operating results vary greatly from Q to Q. It's margins are small enough that any unusual item (up or down) can distort a given Q's EPS. So my guess is that consumer electronics hasn't been great overall in recent months, and someone thinks that VOXX's Q4 results are bad.

    I hope I'm wrong. But I can't figure out another possible reason.

  • UBS supposedly issued a note last week saying that 93% of the U.S. coal fired capacity lacks at
    least one major equipment to control air emissions, implying significant capital
    investments will need to occur in order to comply (with MATS).

    Earlier this month, the EIA issued a report that said "At the end of 2012, 70% of the U.S. coal generating capacity already had the appropriate environmental control equipment to comply with the MATS and allow their operation past 2016. Another 6% plan to add control equipment, while 8% have announced plans to retire. Owners of the remaining 16% are faced with the decision of upgrading or retiring their plants."

    It's getting hard to know who to believe. But if UBS were right, I think you'd see a lot more announcements of closings of coal-fired plants. The announced closings don't jibe with the 93% number.

    I don't think any of this helps NRP because the coal mining industry is leaving CAPP no matter what happens.

  • jrad52 jrad52 Apr 21, 2014 3:29 PM Flag

    Sorry, I read your original post too quickly. I thought you were saying $ 9 for 2014. Again, sorry. I should learn to read slower and type faster (and better).

  • jrad52 jrad52 Apr 21, 2014 12:55 PM Flag

    I think $ 9 is optimistic for 2014. White Oak doesn't start longwall production until late in Q3 and South Gibson is also schedule to start production in Q3. The company said that White Oak would cost between 70 and 90 cents per share this year. So while I think operations will be better than last year, I don't think the improvements will raise GAAP EPS that high (yet).

    ARLP siad that 87% of 2014 production had been contracted as of the Q4 earnings call in late January. Last week, they sent out the 2013 Annual Report (I didn't save my electronic copy and the company's website doesn't show it yet). I think they said they were at 94% contracted for 2014, but I could be wrong.

    Other than possible weather-related issues in Q1, I can't see what they could say on the call that would be bad. They have never commented on the status of contracting at White Oak, but I hope they can say something good about it. I would love it if they spoke about whether any of their customers are affected by the MATS-related 2015 closings or the recent Appeals Court decision. I know they will lose some business with TVA in 2016, and it would be nice if they explained where the demand is coming from for the new production.

  • Reply to

    Dividend

    by nymetz48 Apr 21, 2014 8:34 AM
    jrad52 jrad52 Apr 21, 2014 9:21 AM Flag

    Last year's announcement was Tuesday April 23. In 2012 the announcement date was April 19. 2011 announcement was April 21. They aren't way overdue; an announcement in the next day or 3 would be right in-line with their historical announcements.

  • VOXX has an operation in Venezuela; the company does not disclose exactly how big the operation is – it just says that sales in Latin America in total were $ 27 MM in fiscal 2013. I guess that Venezuela is all of this, or maybe almost all, because the company does not talk about South American operations anywhere except Venezuela.

    In March, Venezuela announced a new exchange rate for the bolivar. The official exchange rate apparently went from 6.3 bolivars to the dollar to the new exchange rate of 50 bolivars to the dollar. That’s a devaluation of 88% versus the dollar. I think the new rate is basically the same as the old black market rate, and the new rate is not exactly the official exchange rate, but it’s the real one.

    Brinks announced last week the impact of the new exchange rate. More than 10% of Brink’s sales are in Venezuela, and the company said that if the new rate had been in effect last year, its Venezuelan sales would have been recorded at $ 56 MM, not the $ 447 MM it showed last year. In addition, Brinks will have to write down its Bolivar-denominated cash from $ 94 MM down to $ 12 MM.

    Which brings me to VOXX. First, the devaluation happened after the close of VOXX’s fiscal year, so I assume this is a Q1 event, with disclosure in the upcoming Q4 earnings release. If Brink’s numbers are valid comparables, VOXX should lose about $ 25 MM in future recorded sales. Fortunately, this isn’t a big percentage for VOXX. Also, the last time Venezuela had a devaluation, VOXX actually recorded a gain. I won’t pretend to understand that, but the company has said repeatedly that it won’t extend credit to the Venezuelan operation unless it is guaranteed repayment in US dollars.

    Anyway, I’m thinking/guessing that this is not a large event. Which leaves me with the idea that someone knows/thinks that Q4 was pretty bad, which accounts for the price drop.

    We’ll see soon enough, I guess.

  • Reply to

    No Audited financials??

    by buritoloco Apr 17, 2014 11:54 AM
    jrad52 jrad52 Apr 17, 2014 9:10 PM Flag

    The financials were audited, and the company got a clean opinion on its financials, as ugly as those financials are. Just look at the opinion. The opinion, which is from a CPA firm I never heard of, is on page 27 of the 10-K.

    What you quoted from was not from Item 9; it was from Item 9A, and was not under the heading of Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. It was under the heading of Management's Report on Internal Control. MSN did not get any attestation as to internal controls, apparently because it wasn't required to get such an attestation.

    And the company is still a piece of garbage.

  • Reply to

    VOXX/Emerson Rumor

    by jj1000003 Apr 17, 2014 9:17 AM
    jrad52 jrad52 Apr 17, 2014 3:32 PM Flag

    Of course you've heard the same rumor. You've been reading his posts on the MSN board for months now. Now do you remember where you heard the rumor? :)

  • Reply to

    More bad coal news!

    by ayscuew Apr 16, 2014 5:40 PM
    jrad52 jrad52 Apr 16, 2014 6:10 PM Flag

    Why is that bad news? You might recall someone on this board saying the problem with coal was that the coal miners were keeping mines open, even if they were unprofitable, hoping for better times. Less supply should be good news, shouldn't it?

  • jrad52 jrad52 Apr 15, 2014 10:16 PM Flag

    You have been posting nonsense like this on MSN's board for months now. MSN is toxic. They show 3 or 4 pages of related party transactions with the bankrupt majority parent company. No one would buy MSN without getting out of those deals, and I doubt the parent company will give up those deals without getting paid quite a bit for them. Throw in the IRS exam, which is likely to use up quite a bit of the cash on the balance sheet, and you have a remarkably unattractive target. Throw in the parent company's bankruptcy proceeding and things are even muddier. Then there's the issue of MSN's basic business tanking. Sales down 40% year-to-date, operating profit down even more. But it's all the dealings with Grande that make a sale of MSN to anyone extremely unlikely. Boy, is MSN ugly.

  • Reply to

    Trading 4/15/2014

    by ayscuew Apr 15, 2014 10:06 AM
    jrad52 jrad52 Apr 15, 2014 7:50 PM Flag

    I haven't paid enough attention to the Ct of Appeals decision, but my understanding is that its biggest effect is on CAPP coal (another nail in the coffin?), which certainly hurts NRP. It is surprising to me, but something like 30% of coal-fired power plants still don't use scrubbers. They can get away with this by using CAPP coal (and PRB, I guess, but the energy differential makes comparisons difficult). CAPP coal is lower-sulfur and cleaner, so utilities could avoid the expense of installing scrubbers by using CAPP coal. My understanding of the EPA rules that were upheld by the Appeals Court is that the only way to achieve the lower pollution caps imposed by the EPA is to install scrubbers. So if you're a utility, you have 2 choices - don't install the scrubbers and replace the coal-fired plants with nat gas-fired ones, or install the scrubbers and switch to cheaper IB coal. Neither choice is good news for CAPP miners, and 40% of 2013 production at NRP's mines and 50% of NRP's 2013 royalties still come from CAPP. Of course, a lot of the CAPP production at NRP's mines is met coal, not thermal, and that isn't affected by the decision. On the other hand, the met coal production has its own set of problems, starting with price.

    FWIW.

  • Reply to

    Coal market

    by jbcguy Apr 15, 2014 12:32 PM
    jrad52 jrad52 Apr 15, 2014 7:37 PM Flag

    I don't think that PRB prices affect most midwest coal, and they don't affect CAPP or NAPP prices at all. Per the DOE, since 1/1/2013, weekly spot prices for PRB coal have increased 28.3% (from $ 10.15 to $ 13.02 per ton). During the same time period, CAPP spot prices have actually dropped 8.9%. IB prices are flat, and NAPP prices are up 11%. Not a whole lot of correlation. I went back into 2012, and I still don't see any correlation. The problem is that even with PRB coal going up 28% in price, CAPP coal is still 4 or 5 times as expensive ($ $60.58/ton versus $ 13.02/ton at April 7 2014). CAPP coal has a lot more energy per ton, but even adjusting for that, CAPP coal is more than twice as expensive as PRB coal. If you throw in any transportation costs, CAPP simply doesn't compete with PRB. My understanding is that the only coal that competes with PRB is IB, and that is only competitive in areas close to the IB where the transportation costs favor IB.

    I guess if you look at this from the perspective of PRB coal, the rise in price and the transportation problems make it harder for PRB to take even more market share from eastern coal. So that should help IB, CAPP and NAPP to some extent, but this hasn't shown up in the prices yet.

    I could be wrong; it wouldn't be the first time, or the last.

  • Reply to

    Coal market

    by jbcguy Apr 15, 2014 12:32 PM
    jrad52 jrad52 Apr 15, 2014 3:47 PM Flag

    NRP has very little exposure to western coal, so it isn't directly affected by PRB problems.

    If anyone benefits from western coal problems, it would seem to be Illinois Basin coal more than CAPP coal, because of geography. There are some areas where geography says that no one can replace western coal (like the western states, esp Texas); and there are other areas that might be up for grabs (in the midwest). I was surprised to learn how much western coal is shipped to Illinois utilities, for example. Chris Cline, one of NRP's major owners, and the controlling owner of Foresight coal, has been in the press over the last 2 years, trying to get Illinois utilities to switch to his IB coal, without any notable success. But maybe if PRB coal prices rise or the supply becomes less reliable, IB coal will benefit. But western coal prices are extremely low, even compared to IB, which in turn is far lower than CAPP. BTW, western coal's energy content is also far lower than IB or CAPP coal. I don't know how to compare the different coals on a practical basis. But I don't think any of this affects NRP much.

    FWIW.

  • Reply to

    From the Foresight Energy S-1

    by jrad52 Apr 14, 2014 12:16 PM
    jrad52 jrad52 Apr 14, 2014 2:15 PM Flag

    I have no access to the report and my experience is that they charge a fortune for mostly re-packaged information, so I'm not likely to ever see it.

  • Foresight and NRP already have a significant business relationship, and Foresight is obligated to offer certain business opportunities to NRP. The S-1 states "We expect to consummate additioanl deals under the Restricted Business Contribution Agreement in the future, including an offer to NRP to purchase certain infrastructure assets at Hillsboro and a dock servicing mining projects in Southern Illinois."

    So NRP will presumably invest more in coal handling assets.

    FWIW.

  • Neutral rating, TP $ 26. Summary: The subordinated non-Agency and DTAs have AI as 1 of the most levered to continued credit improvement, which could drive higher book value. The migration into more Agency, however, is likely to limit any price to book multiple expansion.

    FWIW

CMP
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