Compass Minerals Exits Fire Retardant Business, Trims Workforce: Stock Gains, But Retail's Divided

The company said it will continue to evaluate further cost-cutting opportunities. It estimates savings due to these actions to be in the range of $11 million to $13 million.

Shares of Compass Minerals International Inc. (CMP) gained over 1% in Wednesday’s regular trading session after the company announced cost-cutting measures to pare its debt.

Compass said it has laid off 10% of its corporate workforce as it looks to improve its free cash flow position.

The company also announced that it is shutting down its fire retardant business, Fortress North America – this has resulted in the termination of 50 positions, effective immediately.

“Decisions such as these are never easy, but our board of directors and senior leadership team took a hard look at our cost structure and determined these actions were necessary to enable us to generate additional cash flow and accelerate our deleveraging,” said Compass CEO Edward C. Dowling Jr.

The company said it will continue to evaluate further cost-cutting opportunities.

It estimates savings due to these actions to be in the range of $11 million to $13 million.

Earlier in February, analysts at JPMorgan upgraded Compass to ‘Overweight’ from ‘Neutral’ and hiked the price target to $15 from $13, according to The Fly.

The brokerage noted that Compass’ balance sheet and cash flow seems to be improving, resulting in the ratings upgrade.

Data from Koyfin shows the average price target for Compass is $16.40, implying an upside of 70% from Wednesday’s closing price.

Of the five brokerage calls, four either have a ‘Strong Buy’ or ‘Buy’ rating, while one rates it ‘Hold.’

Retail sentiment on Stocktwits around Compass hovering in the ‘neutral’ territory, showing skepticism among investors.

Compass Minerals’ stock has declined 14% year-to-date.

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