Compass Minerals (NYSE: CMP), a leading global provider of
essential minerals, today reported fiscal 2023 third-quarter
results.
MANAGEMENT COMMENTARY
"The third quarter demonstrates tangible progress toward
executing upon several strategic priorities that we believe over
time will accelerate our growth and enhance the value of the
enterprise," said Kevin S. Crutchfield, president and CEO. "We are
pleased with the results across our businesses, most notably the
continued improvement in profitability per ton in our Salt
business. In addition, we are forging ahead on important elements
of our lithium project, including the completion of a binding
supply agreement with Ford and the advancement of the
commercial-scale demonstration DLE unit in Ogden. This quarter we
also saw Fortress release its first commercial product, with
outstanding feedback regarding efficacy and delivery
performance."
QUARTERLY HIGHLIGHTS
- Total company operating loss improved to $0.6 million for the
quarter compared to a loss of $3.5 million in the prior-year
quarter;
- Quarterly net income from continuing operations of $39.9
million versus a net loss of $10.7 million over the corresponding
period last year, driven by a $42.7 million tax benefit in the
current quarter reflecting the impact of the recent acquisition of
Fortress North America (Fortress) and recent changes in Canadian
tax law;
- Adjusted EBITDA from continuing operations essentially flat
year over year at $28.6 million on improved adjusted EBITDA
margins;
- Reported year-over-year increases in Salt operating earnings
and adjusted EBITDA of 75% and 31%, respectively, with a nearly 50%
improvement in adjusted EBITDA per ton to $24.41 compared to the
corresponding period last year; year-over-year increases in highway
deicing and consumer and industrial average pricing allowed the
company to recoup substantial inflationary cost increases incurred
over the last year;
- Acquired remaining 55% not previously owned of Fortress, a
next-generation fire-retardant company, and achieved its first
commercial sales during the quarter;
- Announced binding, multiyear supply agreement with Ford Motor
Company (Ford) to deliver up to 40% of planned phase-one
battery-grade lithium carbonate from Compass Minerals' Ogden, Utah,
lithium brine development for an initial five-year term; and
- Extended debt maturity profile via refinancing of outstanding
$250 million 4.875% Senior Notes due July 2024 with $75 million
expansion of revolver to $375 million and a $200 million Term Loan
A issuance.
FINANCIAL RESULTS1
(in millions, except per share
data)
Three Months Ended
June 30, 2023
Nine Months Ended
June 30, 2023
Revenue
$
207.6
$
971.1
Operating (loss) earnings
(0.6
)
75.2
Adjusted operating earnings
1.6
80.6
Adjusted EBITDA*
28.6
167.8
Net earnings
39.9
18.0
Net earnings per diluted share
0.96
0.44
Adjusted net earnings*
42.0
23.3
Adjusted net earnings* per diluted
share
1.01
0.57
*Non-GAAP financial measure.
Reconciliations to the most directly comparable GAAP financial
measure are provided in tables at the end of this press
release.
Consolidated operating loss of $0.6 million improved from a
consolidated operating loss of $3.5 million in the corresponding
quarter in fiscal 2022. Net income from continuing operations was
$39.9 million in the third fiscal quarter, benefiting from an
income tax benefit of $42.7 million reflecting the impact of the
recent acquisition of Fortress and recent changes in Canadian tax
law. In the corresponding period last year the company posted a net
loss from continuing operations of $10.7 million. Consolidated
adjusted EBITDA in the quarter was essentially flat to last year at
$28.6 million, while consolidated adjusted EBITDA margin improved
slightly to 13.8% from 13.5% last fiscal year.
_______________
1
All amounts in this press release
represent results from continuing operations unless otherwise
noted, except for amounts pertaining to the fiscal 2022 condensed
consolidated statements of cash flows, which include results from
discontinued operations.
SALT BUSINESS SUMMARY
Driven by price increases, operating earnings rose 75% year over
year to $21.7 million despite lower sales volumes. Adjusted EBITDA
increased to $36.4 million, up 31% from the prior-year period, with
adjusted EBITDA per ton improving 48% to $24.41.
Salt fiscal 2023 third-quarter revenue totaled $155.5 million
and was essentially flat year over year. Consistent with prior
years, the back half of the fiscal year reflects a seasonal change
in sales mix with sales of highway deicing products representing a
lower percentage of total sales for the business. Segment sales
volumes declined 11% year over year but were offset by a 12%
increase in average sales price. In the highway deicing business,
the company's value-over-volume commercial strategy during the 2023
deicing season resulted in improved customer mix, a 16% increase in
average highway deicing selling prices and 13% lower sales volumes
- all comparable to the corresponding period last year. The
consumer and industrial (C&I) business continued its positive
momentum in pricing across all product groups, with the average
selling price increasing 5% year over year to $181.66 per ton.
Sales volumes within the C&I business were down 7% due
primarily to the timing of non-deicing demand.
Distribution costs and all-in product costs (defined at the
segment level as sales to external customers less distribution
costs less operating earnings) per ton both increased slightly year
over year. These costs reflect the cost structure of salt produced
and inventoried in fiscal 2022 amid a period of substantial
inflationary pressure and current period inflation.
PLANT NUTRITION BUSINESS
SUMMARY
Operating earnings in the Plant Nutrition business totaled $2.5
million for the quarter, down from $10.6 million in the prior-year
period. Adjusted EBITDA declined to $11.7 million versus $19.4
million in the comparable period of fiscal 2022.
Plant Nutrition third-quarter revenue totaled $47.5 million,
down 15% year over year. The average segment sales price for the
quarter was down 9% year over year to $751.58 per ton, reflecting
improved availability of potassium-based fertilizers around the
world. Lingering effects from extraordinary weather events in key
markets earlier in the year adversely impacted sales volumes in the
quarter, which were down 6% year over year. Per-unit distribution
costs for the quarter decreased 8% year over year due to changes in
sales mix. All-in product costs per ton increased 6% year over year
and include the impact of operational measures taken to mitigate
the impact of the below-average 2022 evaporation season and the
impact of higher natural gas costs experienced earlier in the year
on average inventory costs.
FORTRESS NORTH AMERICA
UPDATE
As previously disclosed, Compass Minerals completed the
acquisition of the remaining 55% of Fortress that it did not own on
May 5, 2023. Prior to the acquisition, Fortress entered into an
agreement with the U.S. Forest Service (USFS) to supply product and
provide associated services in the 2023 fire season for up to five
mobile bases. In June it achieved a commercial milestone by
dropping its first product supporting fire suppression efforts in
Arizona. Subsequent to quarter-end, the USFS deployed an aircraft
out of a base in San Bernardino, California, to drop Fortress
products on the Rabbit fire in Riverside County.
Fortress is expected to generate between $20 million and $25
million of revenue in fiscal 2023, assuming a typical cadence of
fire activity in the western United States. Operating profit and
adjusted EBITDA are expected in the low double-digit millions of
dollars for the fiscal year. The vast majority of the financial
impact is expected to be recognized in the fourth quarter of the
fiscal year.
LITHIUM PROJECT UPDATE
In the third quarter, Compass Minerals continued to advance its
lithium project on the Great Salt Lake, signing a binding multiyear
agreement with Ford to provide up to 40% of its planned, phase-one
battery-grade lithium carbonate for a five-year term once
production begins. Combined with the agreement with LG Energy
Solution, the company now has up to 80% of production from its
phase-one development committed to binding supply agreements.
Additionally, construction on the commercial-scale direct lithium
extraction (DLE) demonstration unit (also referred to as the
DustGard™ or DG unit) has proceeded on schedule, with earthworks
and construction permitting related to broader phase-one activity
continuing to progress.
Compass Minerals has been actively engaged with political and
regulatory leaders in Utah following the passage of Utah H.B. 513
in March of 2023 that altered certain aspects of the regulatory
regime that will govern the development of lithium at the Great
Salt Lake.
The company continues to refine capital, operating, and
engineering assumptions related to its lithium project. As
previously communicated, the company will update its
project-related financial disclosures once the rulemaking process
governing lithium development at the Great Salt Lake is
finalized.
CASH FLOW AND FINANCIAL
POSITION
Net cash provided by operating activities amounted to $121.3
million for the nine months ended June 30, 2023, compared to $148.9
million in the prior year.
Net cash used in investing activities was $100.3 million for the
nine months ended June 30, 2023, compared to $53.1 million in the
comparable prior-year period. The increase was principally driven
by a faster pace of capital spending and the company’s acquisition
of the remaining 55% of Fortress. Total capital spending for the
nine months ended June 30, 2023, was $78.9 million, which included
approximately $21.7 million in capital spending related to the
company's lithium growth opportunity.
Net cash used in financing activities was $10.1 million for the
nine months ended June 30, 2023, compared to $69.8 million in the
comparable prior-year period. The significant items affecting
year-to-date results include debt reduction of $225.7 million and
dividends paid on our common stock of $18.7 million, partially
offset by the $252 million gross ($240.7 million, net of fees)
strategic equity investment by Koch Minerals & Trading
(KM&T).
The company ended the quarter with $417.9 million of liquidity,
comprised of $58.0 million in cash and cash equivalents and $359.9
million of availability under its $375 million revolving credit
facility. As previously disclosed, during the quarter the company
issued $200 million of Term Loan A notes due 2028 and expanded its
credit facility by $75 million to fund the early redemption during
the quarter of the outstanding $250 million 4.875% Senior Notes due
July 2024.
UPDATED FISCAL OUTLOOK
The company has provided updated commentary regarding its fiscal
2023 financial outlook as well as initial commentary regarding the
North American highway deicing bidding process for fiscal 2024.
Salt Segment
2023 Range
Highway deicing sales volumes (thousands
of tons)
9,000 - 9,400
Consumer and industrial sales volumes
(thousands of tons)
2,000 - 2,150
Total salt sales volumes (thousands of
tons)
11,000 - 11,550
Revenue (in millions)
$985 - $1,025
Adjusted EBITDA (in millions)
$220 - $235
The performance guidance for the Salt segment for fiscal 2023
has been narrowed to reflect the conclusion of the winter deicing
season and the fact that the fiscal year is largely complete. The
company's original guidance for the year assumed average winter
activity for the year. Despite below-average winter deicing
activity within the company's core North American markets this
year, the midpoint of its full-year adjusted EBITDA guidance is
just slightly below the midpoint of its original guidance, largely
reflecting favorable mix in highway deicing sales and strong
C&I pricing throughout the year.
2023/2024 North American Bid Season
Approximately 65% of the company's North American highway
deicing bidding process for the upcoming winter season has been
completed. Based on results to date, the company expects its
average contract selling price for the coming season to be
approximately 3% higher than prices in fiscal 2023. Committed bid
volumes are expected to be down approximately 5% compared to fiscal
2023, which is better than typical results following a
below-average winter.
Plant Nutrition
Segment
2023 Range
Sales volumes (thousands of tons)
200 – 225
Revenue (in millions)
$160 - $175
Adjusted EBITDA (in millions)
$40 - $50
The performance guidance for the Plant Nutrition segment for
fiscal 2023 has been narrowed to reflect the fact that the fiscal
year is nearly complete. Despite demand challenges due to
extraordinary weather in key markets during the year, the company
is maintaining the midpoint of its adjusted EBITDA guidance largely
due to the adherence to a disciplined approach to pricing
throughout the year that allowed it to maintain a strong premium to
alternative products.
Other Assumptions
($ in millions)
2023 Range
Corporate and other expense, net*
$65 - $70
Depreciation, depletion and
amortization
$95 - $105
Interest expense
$55 - $60
Effective income tax rate (excl. valuation
allowance)
33% - 38%
Capital expenditures:
Sustaining
$90 - $100
Lithium
$40 - $50
Total
$130 - $150
* Corporate and other expense, net
includes Fortress financial results and lithium-related development
operating expenses of $10 to $12 million; it excludes items used in
the calculation of adjusted EBITDA as described below
Corporate and other expense, net is expected to be within a
range of $65 million to $70 million. This line item includes the
contribution from Fortress of operating profit and EBITDA in the
low double-digit millions of dollars in fiscal 2023 - unchanged
from prior guidance. The company expects essentially all
Fortress-related profitability to be recognized in the fourth
fiscal quarter, assuming normal wildfire seasonal dynamics.
Projected total capital expenditures for fiscal 2023 are now
expected to be in a range of $130 million to $150 million,
comprising lithium development capital spending in the range of $40
million to $50 million (funded by proceeds from the recent KM&T
transaction) and unchanged sustaining capital in the range of $90
million to $100 million for the fiscal year. Lithium development
capital spending was reduced to reflect shifts in timing from
fiscal fourth quarter of 2023 into fiscal first quarter of
2024.
CONFERENCE CALL
Compass Minerals will discuss its results on a conference call
tomorrow morning, Wednesday, Aug. 9, at 9:30 a.m. ET (8:30 a.m.
CT). To access the conference call, please visit the company’s
website at investors.compassminerals.com or dial 888-550-5768.
Callers must provide the conference ID number 3632674. Outside of
the U.S. and Canada, callers may dial 646-960-0469. Replays of the
call will be available on the company’s website.
A supporting corporate presentation with fiscal 2023
third-quarter results is available at
investors.compassminerals.com.
About Compass Minerals
Compass Minerals (NYSE: CMP) is a leading global provider of
essential minerals focused on safely delivering where and when it
matters to help solve nature’s challenges for customers and
communities. The company’s salt products help keep roadways safe
during winter weather and are used in numerous other consumer,
industrial, chemical and agricultural applications. Its plant
nutrition products help improve the quality and yield of crops,
while supporting sustainable agriculture. Additionally, the company
is pursuing development of a sustainable lithium brine resource to
support the North American battery market and is owner of Fortress
North America, a next-generation fire retardant company. Compass
Minerals operates 12 production and packaging facilities with
nearly 2,000 employees throughout the U.S., Canada and the U.K.
Visit compassminerals.com for more information about the company
and its products.
Forward-Looking Statements and Other
Disclaimers
This press release may contain forward-looking statements,
including, without limitation, statements about expected efforts to
accelerate growth and enhance value; Fortress North America's
expected revenue, operating profit, and adjusted EBITDA; the
company's lithium brine development project, including the
advancement of a commercial-scale demonstration DLE unit, planned
lithium carbonate production, engagement with political and
regulatory leaders, and refinement of capital, operating, and
engineering assumptions related to the project; expectations for
highway deicing pricing and volumes for the upcoming winter, and
the company's outlook for fiscal 2023, including its expectations
regarding sales volumes, revenue, Adjusted EBITDA, corporate and
other expense, depreciation, depletion and amortization, interest
expense, tax rates, and capital expenditures. Forward-looking
statements are those that predict or describe future events or
trends and that do not relate solely to historical matters. The
company uses words such as “may,” “would,” “could,” “should,”
“will,” “likely,” “expect,” “anticipate,” “believe,” “intend,”
“plan,” “forecast,” “outlook,” “project,” “estimate” and similar
expressions suggesting future outcomes or events to identify
forward-looking statements or forward-looking information. These
statements are based on the company’s current expectations and
involve risks and uncertainties that could cause the company’s
actual results to differ materially. The differences could be
caused by a number of factors, including without limitation (i)
weather conditions, (ii) inflation, the cost and availability of
transportation for the distribution of the company’s products and
foreign exchange rates, (iii) pressure on prices and impact from
competitive products, (iv) any inability by the company to
successfully implement its strategic priorities or its cost-saving
or enterprise optimization initiatives, and (v) the risk that the
company may not realize the expected financial or other benefits
from the proposed development of its lithium mineral resource or
its investment in Fortress North America. For further information
on these and other risks and uncertainties that may affect the
company’s business, see the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of the company’s Annual Report on Form 10-K
for the period ended Sept. 30, 2022 and its Quarterly Reports on
Form 10-Q for the quarters ended Dec. 31, 2022, March 31, 2023 and
June 30, 2023 filed or to be filed with the SEC, as well as the
company's other SEC filings. The company undertakes no obligation
to update any forward-looking statements made in this press release
to reflect future events or developments, except as required by
law. Because it is not possible to predict or identify all such
factors, this list cannot be considered a complete set of all
potential risks or uncertainties.
The company has completed an initial assessment to define the
lithium resource at Compass Minerals’ existing operations in
accordance with applicable SEC regulations, including Subpart 1300.
Pursuant to Subpart 1300, mineral resources are not mineral
reserves and do not have demonstrated economic viability. The
company’s mineral resource estimates, including estimates of the
lithium resource, are based on many factors, including assumptions
regarding extraction rates and duration of mining operations, and
the quality of in-place resources. For example, the process
technology for commercial extraction of lithium from brines with
low lithium and high impurity (primarily magnesium) is still
developing. Accordingly, there is no certainty that all or any part
of the lithium mineral resource identified by the company’s initial
assessment will be converted into an economically extractable
mineral reserve.
Non-GAAP Measures
In addition to using U.S. generally accepted accounting
principles (“GAAP”) financial measures, management uses a variety
of non-GAAP financial measures described below to evaluate the
company’s and its operating segments’ performance. While the
consolidated financial statements provide an understanding of the
company’s overall results of operations, financial condition and
cash flows, management analyzes components of the consolidated
financial statements to identify certain trends and evaluate
specific performance areas.
Management uses EBITDA, EBITDA adjusted for items which
management believes are not indicative of the company’s ongoing
operating performance (“Adjusted EBITDA”) and EBITDA margin to
evaluate the operating performance of the company’s core business
operations because its resource allocation, financing methods and
cost of capital, and income tax positions are managed at a
corporate level, apart from the activities of the operating
segments, and the operating facilities are located in different
taxing jurisdictions, which can cause considerable variation in net
earnings. Management also uses adjusted operating earnings,
adjusted operating margin, adjusted net earnings, and adjusted net
earnings per diluted share, which eliminate the impact of certain
items that management does not consider indicative of underlying
operating performance. The presentation of these measures should
not be construed as an inference that future results will be
unaffected by unusual or non-recurring items. Management believes
these non-GAAP financial measures provide management and investors
with additional information that is helpful when evaluating
underlying performance. EBITDA and Adjusted EBITDA exclude interest
expense, income taxes and depreciation, depletion and amortization,
each of which are an essential element of the company’s cost
structure and cannot be eliminated. In addition, Adjusted EBITDA
and Adjusted EBITDA margin exclude certain cash and non-cash items,
including stock-based compensation. Consequently, any measure that
excludes these elements has material limitations. The non-GAAP
financial measures used by management should not be considered in
isolation or as a substitute for net earnings, operating earnings,
cash flows or other financial data prepared in accordance with GAAP
or as a measure of overall profitability or liquidity. These
measures are not necessarily comparable to similarly titled
measures of other companies due to potential inconsistencies in the
method of calculation. The calculation of non-GAAP financial
measures as used by management is set forth in the following
tables. All margin numbers are defined as the relevant measure
divided by sales. The company does not provide a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable financial measures calculated and reported in accordance
with GAAP, as the company is unable to estimate significant
non-recurring or unusual items without unreasonable effort. The
amounts and timing of these items are uncertain and could be
material to the company’s results.
Adjusted operating earnings, adjusted operating earnings margin,
adjusted net earnings, and adjusted net earnings (loss) per diluted
share are presented as supplemental measures of the company’s
performance. Management believes these measures provide management
and investors with additional information that is helpful when
evaluating underlying performance and comparing results on a
year-over-year normalized basis. These measures eliminate the
impact of certain items that management does not consider
indicative of underlying operating performance. These adjustments
are itemized below. Adjusted net earnings (loss) per diluted share
is adjusted net earnings (loss) divided by weighted average diluted
shares outstanding. You are encouraged to evaluate the adjustments
itemized above and the reasons management considers them
appropriate for supplemental analysis. In evaluating these measures
you should be aware that in the future the company may incur
expenses that are the same as or similar to some of the adjustments
presented below.
Special Items Impacting the
Three Months Ended June 30, 2023
(unaudited, in millions, except
per share data)
Item Description
Segment
Line Item
Amount
Tax
Effect(1)
After Tax
EPS Impact
Restructuring charges
Corporate and Other
SG&A
$
0.7
$
—
$
0.7
$
0.02
Restructuring charges
Salt
COGS and SG&A
0.5
(0.1
)
0.4
0.01
Restructuring charges
Plant Nutrition
COGS and SG&A
1.0
—
1.0
0.02
Total
$
2.2
$
(0.1
)
$
2.1
$
0.05
Special Items Impacting the
Nine Months Ended June 30, 2023
(unaudited, in millions, except
per share data)
Item Description
Segment
Line Item
Amount
Tax
Effect(1)
After Tax
EPS Impact
Restructuring charges
Corporate and Other
SG&A
$
2.6
$
—
$
2.6
$
0.06
Restructuring charges
Salt
COGS and SG&A
1.5
(0.1
)
1.4
0.04
Restructuring charges
Plant Nutrition
COGS and SG&A
1.4
—
1.4
0.03
Accrued legal costs related to SEC
investigation
Corporate and Other
SG&A
(0.1
)
—
(0.1
)
—
Total
$
5.4
$
(0.1
)
$
5.3
$
0.13
(1)
There were no substantial income tax
benefits related to these items given the U.S. valuation allowances
on deferred tax assets.
Reconciliation for Adjusted
Operating Earnings (Loss)
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Operating (loss) earnings
$
(0.6
)
$
(3.5
)
$
75.2
$
36.9
Executive transition costs(1)
—
—
—
3.8
Restructuring charges(2)
2.2
—
5.5
—
Accrued loss and legal costs related to
SEC investigation(3)
—
2.8
(0.1
)
19.5
Adjusted operating earnings (loss)
$
1.6
$
(0.7
)
$
80.6
$
60.2
Sales
207.6
214.7
971.1
994.7
Operating margin
(0.3
)%
(1.6
)%
7.7
%
3.7
%
Adjusted operating margin
0.8
%
(0.3
)%
8.3
%
6.1
%
(1)
The company incurred severance and other
costs related to executive transition.
(2)
The company incurred severance and related
charges related to a reduction of its workforce.
(3)
The company recognized costs, net of
reimbursements, related to the settled SEC investigation.
Reconciliation for Adjusted
Net Earnings (Loss)
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Net earnings (loss) from continuing
operations
$
39.9
$
(10.7
)
$
18.0
$
(31.8
)
Executive transition costs, net of
tax(1)
—
—
—
3.2
Restructuring charges, net of tax(2)
2.1
—
5.4
—
Accrued loss and legal costs related to
SEC investigation, net of tax(3)
—
3.1
(0.1
)
17.6
Deferred tax valuation allowance(4)
—
2.4
—
30.4
Adjusted net earnings (loss) from
continuing operations
$
42.0
$
(5.2
)
$
23.3
$
19.4
Net earnings (loss) from continuing
operations per diluted share
$
0.96
$
(0.32
)
$
0.44
$
(0.94
)
Adjusted net earnings (loss) from
continuing operations per diluted share
$
1.01
$
(0.16
)
$
0.57
$
0.56
Weighted-average common shares outstanding
(in thousands):
Diluted
41,142
34,154
40,663
34,110
(1)
The company incurred severance and other
costs related to executive transition of $3.8 million ($3.2 million
net of tax) for the nine months ended June 30, 2022.
(2)
The company incurred severance and related
charges related to a reduction of its workforce. Charges for the
three and nine months ended June 30, 2023 were $2.2 million and
$5.5 million ($2.1 million and $5.4 million net of tax),
respectively.
(3)
The company recognized costs, net of
reimbursements, related to the settled SEC investigation of $2.8
million ($3.1 million net of tax) in the three months ended June
30, 2022. The company recorded a contingent loss accrual and
incurred net costs related to the settled SEC investigation of
$(0.1) million and $19.5 million ($(0.1) million and $17.6 million
net of tax) for the nine months ended June 30, 2023 and 2022,
respectively.
(4)
The company recognized a valuation
allowance for certain deferred tax assets in the prior year period
due to their uncertainty of being realized.
Reconciliation for EBITDA and
Adjusted EBITDA
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Net earnings (loss) from continuing
operations
$
39.9
$
(10.7
)
$
18.0
$
(31.8
)
Interest expense
14.3
13.4
42.4
41.2
Income tax (benefit) expense
(42.7
)
(1.1
)
24.3
28.1
Depreciation, depletion and
amortization
24.3
27.0
72.7
83.2
EBITDA from continuing operations
35.8
28.6
157.4
120.7
Adjustments to EBITDA from continuing
operations:
Stock-based compensation - non cash
3.5
3.9
17.2
11.6
Interest income
(1.7
)
(0.2
)
(4.7
)
(0.5
)
Loss (gain) on foreign exchange
2.3
(6.1
)
4.6
(3.5
)
Gain from remeasurement of equity method
investment
(16.2
)
—
(16.2
)
—
Executive transition costs(1)
—
—
—
4.3
Restructuring charges(2)
2.2
—
5.9
—
Accrued loss and legal costs related to
SEC investigation(3)
—
2.8
(0.1
)
19.5
Other expense (income), net
2.7
(0.1
)
3.7
—
Adjusted EBITDA from continuing
operations
28.6
28.9
167.8
152.1
Adjusted EBITDA from discontinued
operations
—
3.1
—
19.0
Adjusted EBITDA including discontinued
operations
$
28.6
$
32.0
$
167.8
$
171.1
(1)
The company incurred severance and other
costs related to executive transition.
(2)
The company incurred severance and related
charges related to a reduction of its workforce.
(3)
The company recognized costs, net of
reimbursements, related to the settled SEC investigation.
Salt Segment
Performance
(unaudited, in millions, except
for sales volumes and prices per short ton)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Sales
$
155.5
$
156.2
$
824.1
$
821.4
Operating earnings
$
21.7
$
12.4
$
141.9
$
101.1
Operating margin
14.0
%
7.9
%
17.2
%
12.3
%
Adjusted operating earnings(1)
$
22.2
$
12.4
$
143.4
$
101.1
Adjusted operating margin(1)
14.3
%
7.9
%
17.4
%
12.3
%
EBITDA(1)
$
35.9
$
27.7
$
184.8
$
148.8
EBITDA(1) margin
23.1
%
17.7
%
22.4
%
18.1
%
Adjusted EBITDA(1)
$
36.4
$
27.7
$
186.3
$
148.8
Adjusted EBITDA(1) margin
23.4
%
17.7
%
22.6
%
18.1
%
Sales volumes (in thousands of tons):
Highway deicing
1,070
1,232
7,886
8,854
Consumer and industrial
421
451
1,529
1,600
Total Salt
1,491
1,683
9,415
10,454
Average prices (per ton):
Highway deicing
$
73.86
$
63.73
$
68.86
$
61.25
Consumer and industrial
$
181.66
$
172.41
$
183.81
$
174.47
Total Salt
$
104.28
$
92.83
$
87.53
$
78.58
(1)
Non-GAAP financial measure.
Reconciliations follow in these tables.
Reconciliation for Salt
Segment Adjusted Operating Earnings
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
21.7
$
12.4
$
141.9
$
101.1
Restructuring charges(1)
0.5
—
1.5
—
Segment adjusted operating earnings
$
22.2
$
12.4
$
143.4
$
101.1
Segment sales
155.5
156.2
824.1
821.4
Segment adjusted operating margin
14.3
%
7.9
%
17.4
%
12.3
%
(1)
The company incurred severance and related
charges related to a reduction of its workforce.
Reconciliation for Salt
Segment EBITDA and Adjusted EBITDA
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
21.7
$
12.4
$
141.9
$
101.1
Depreciation, depletion and
amortization
14.2
15.3
42.9
47.7
Segment EBITDA
$
35.9
$
27.7
$
184.8
$
148.8
Restructuring charges(1)
0.5
—
1.5
—
Segment adjusted EBITDA
$
36.4
$
27.7
$
186.3
$
148.8
Segment sales
155.5
156.2
824.1
821.4
Segment adjusted EBITDA margin
23.4
%
17.7
%
22.6
%
18.1
%
(1)
The company incurred severance and related
charges related to a reduction of its workforce.
Plant Nutrition Segment
Performance
(unaudited, dollars in millions,
except for sales volumes and prices per short ton)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Sales
$
47.5
$
55.6
$
136.8
$
164.5
Operating earnings
$
2.5
$
10.6
$
12.8
$
24.5
Operating margin
5.3
%
19.1
%
9.4
%
14.9
%
Adjusted operating earnings(1)
$
3.5
$
10.6
$
14.2
$
24.5
Adjusted operating margin(1)
7.4
%
19.1
%
10.4
%
14.9
%
EBITDA(1)
$
10.7
$
19.4
$
37.4
$
50.9
EBITDA(1) margin
22.5
%
34.9
%
27.3
%
30.9
%
Adjusted EBITDA(1)
$
11.7
$
19.4
$
38.8
$
50.9
Adjusted EBITDA(1) margin
24.6
%
34.9
%
28.4
%
30.9
%
Sales volumes (in thousands of tons)
63
67
168
224
Average price (per ton)
$
752
$
827
$
814
$
735
(1)
Non-GAAP financial measure.
Reconciliations follow in these tables.
Reconciliation for Plant
Nutrition Segment Adjusted Operating Earnings
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
2.5
$
10.6
$
12.8
$
24.5
Restructuring charges(1)
1.0
—
1.4
—
Segment adjusted operating earnings
$
3.5
$
10.6
$
14.2
$
24.5
Segment sales
47.5
55.6
136.8
164.5
Segment adjusted operating margin
7.4
%
19.1
%
10.4
%
14.9
%
(1)
The company incurred severance and related
charges related to a reduction of its workforce.
Reconciliation for Plant
Nutrition Segment EBITDA and Adjusted EBITDA
(unaudited, in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
2.5
$
10.6
$
12.8
$
24.5
Depreciation, depletion and
amortization
8.2
8.8
24.6
26.4
Segment EBITDA
$
10.7
$
19.4
$
37.4
$
50.9
Restructuring charges(1)
1.0
—
1.4
—
Segment adjusted EBITDA
$
11.7
$
19.4
$
38.8
$
50.9
Segment sales
47.5
55.6
136.8
164.5
Segment adjusted EBITDA margin
24.6
%
34.9
%
28.4
%
30.9
%
(1)
The company incurred severance and related
charges related to a reduction of its workforce.
COMPASS MINERALS
INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited, in millions,
except share and per-share data)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023
2022
2023
2022
Sales
$
207.6
$
214.7
$
971.1
$
994.7
Shipping and handling cost
53.8
58.7
291.3
314.5
Product cost
119.2
122.1
490.0
521.8
Gross profit
34.6
33.9
189.8
158.4
Selling, general and administrative
expenses
35.2
37.4
114.6
121.5
Operating (loss) earnings
(0.6
)
(3.5
)
75.2
36.9
Other (income) expense:
Interest income
(1.7
)
(0.2
)
(4.7
)
(0.5
)
Interest expense
14.3
13.4
42.4
41.2
Loss (gain) on foreign exchange
2.3
(6.1
)
4.6
(3.5
)
Net loss in equity investee
0.8
1.3
3.1
3.4
Gain from remeasurement of equity method
investment
(16.2
)
—
(16.2
)
—
Other expense (income), net
2.7
(0.1
)
3.7
—
(Loss) earnings from continuing operations
before income taxes
(2.8
)
(11.8
)
42.3
(3.7
)
Income tax (benefit) expense from
continuing operations
(42.7
)
(1.1
)
24.3
28.1
Net earnings (loss) from continuing
operations
39.9
(10.7
)
$
18.0
$
(31.8
)
Net earnings from discontinued
operations
—
2.8
—
14.2
Net earnings (loss)
$
39.9
$
(7.9
)
$
18.0
$
(17.6
)
Basic net earnings (loss) from continuing
operations per common share
$
0.96
$
(0.32
)
$
0.44
$
(0.94
)
Basic net earnings from discontinued
operations per common share
—
0.08
—
0.42
Basic net earnings (loss) per common
share
$
0.96
$
(0.23
)
$
0.44
$
(0.52
)
Diluted net earnings (loss) from
continuing operations per common share
$
0.96
$
(0.32
)
$
0.44
$
(0.94
)
Diluted net earnings from discontinued
operations per common share
—
0.08
—
0.42
Diluted net earnings (loss) per common
share
$
0.96
$
(0.23
)
$
0.44
$
(0.52
)
Weighted-average common shares outstanding
(in thousands):(1)
Basic
41,142
34,154
40,663
34,105
Diluted
41,142
34,154
40,663
34,110
(1)
Weighted participating securities include
RSUs and PSUs that receive non-forfeitable dividends and consist of
453,000 and 469,000 weighted participating securities for the three
and nine months ended June 30, 2023, respectively and 372,000 and
423,000 weighted participating securities for the three and nine
months ended June 30, 2022, respectively.
COMPASS MINERALS
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited, in
millions)
June 30,
Sept. 30,
2023
2022
ASSETS
Cash and cash equivalents
$
58.0
$
46.1
Receivables, net
95.8
167.2
Inventories
340.1
304.4
Other current assets
38.2
44.3
Property, plant and equipment, net
817.1
776.6
Equity method investments
—
46.6
Intangible and other noncurrent assets
383.4
258.3
Total assets
$
1,732.6
$
1,643.5
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of long-term debt
$
5.0
$
—
Other current liabilities
241.0
233.1
Long-term debt, net of current portion
716.0
947.6
Deferred income taxes and other noncurrent
liabilities
233.9
206.4
Total stockholders' equity
536.7
256.4
Total liabilities and stockholders'
equity
$
1,732.6
$
1,643.5
COMPASS MINERALS
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited, in
millions)
Nine Months Ended June
30,
2023
2022
Net cash provided by operating
activities(1)
$
121.3
$
148.9
Cash flows from investing activities:
Capital expenditures(2)
(78.9
)
(68.9
)
Proceeds from sale of business
—
61.2
Acquisition of business, net of cash
acquired
(18.9
)
—
Investments in equity method investees
—
(46.3
)
Other, net
(2.5
)
0.9
Net cash used in investing activities
(100.3
)
(53.1
)
Cash flows from financing activities:
Proceeds from revolving credit facility
borrowings
66.7
346.3
Principal payments on revolving credit
facility borrowings
(218.2
)
(341.7
)
Proceeds from issuance of long-term
debt
237.5
50.8
Principal payments on long-term debt
(311.7
)
(106.6
)
Net proceeds from private placement of
common stock
240.7
—
Dividends paid
(18.7
)
(15.7
)
Deferred financing costs
(3.9
)
(0.4
)
Proceeds from stock options exercised
—
0.3
Shares withheld to satisfy employee tax
obligations
(1.6
)
(1.9
)
Other, net
(0.9
)
(0.9
)
Net cash used in financing activities
(10.1
)
(69.8
)
Effect of exchange rate changes on cash
and cash equivalents
1.0
0.2
Net change in cash and cash
equivalents
11.9
26.2
Cash and cash equivalents, beginning of
the year
46.1
21.0
Cash and cash equivalents, end of
period
58.0
47.2
Less: cash and cash equivalents
included in current assets held for sale
—
—
Cash and cash equivalents of continuing
operations, end of period
$
58.0
$
47.2
(1)
Includes cash flows provided by
discontinued operations of $9.4 million in 2022.
(2)
Includes capital expenditures of $1.6
million related to discontinued operations in 2022.
COMPASS MINERALS
INTERNATIONAL, INC.
SEGMENT INFORMATION
(unaudited, in
millions)
Three Months Ended June 30,
2023
Salt
Plant
Nutrition
Corporate
& Other(1)
Total
Sales to external customers
$
155.5
$
47.5
$
4.6
$
207.6
Intersegment sales
—
2.8
(2.8
)
—
Shipping and handling cost
48.2
5.6
—
53.8
Operating earnings (loss)(2)(3)
21.7
2.5
(24.8
)
(0.6
)
Depreciation, depletion and
amortization
14.2
8.2
1.9
24.3
Total assets (as of end of period)
995.7
468.2
268.7
1,732.6
Three Months Ended June 30,
2022
Salt
Plant
Nutrition
Corporate
& Other(1)
Total
Sales to external customers
$
156.2
$
55.6
$
2.9
$
214.7
Intersegment sales
—
1.9
(1.9
)
—
Shipping and handling cost
52.2
6.5
—
58.7
Operating earnings (loss)(2)
12.4
10.6
(26.5
)
(3.5
)
Depreciation, depletion and
amortization
15.3
8.8
2.9
27.0
Total assets (as of end of period)
980.6
441.2
155.2
1,577.0
Nine Months Ended June 30, 2023
Salt
Plant
Nutrition
Corporate
& Other(1)
Total
Sales to external customers
$
824.1
$
136.8
$
10.2
$
971.1
Intersegment sales
—
7.1
(7.1
)
—
Shipping and handling cost
274.9
16.4
—
291.3
Operating earnings (loss)(2)(3)
141.9
12.8
(79.5
)
75.2
Depreciation, depletion and
amortization
42.9
24.6
5.2
72.7
Nine Months Ended June 30, 2022
Salt
Plant
Nutrition
Corporate
& Other(1)
Total
Sales to external customers
$
821.4
$
164.5
$
8.8
$
994.7
Intersegment sales
—
5.0
(5.0
)
—
Shipping and handling cost
294.0
20.5
—
314.5
Operating earnings (loss)(2)
101.1
24.5
(88.7
)
36.9
Depreciation, depletion and
amortization
47.7
26.4
9.1
83.2
(1)
Corporate and other includes corporate
entities, records management operations, the Fortress fire
retardant business, equity method investments and other incidental
operations and eliminations. Operating earnings (loss) for
corporate and other includes indirect corporate overhead including
costs for general corporate governance and oversight,
lithium-related expenditures, as well as costs for the human
resources, information technology, legal and finance functions.
(2)
Corporate operating results include net
reimbursements related to the settled SEC investigation of $0.1
million for the nine months ended June 30, 2023 and executive
transition costs of $3.8 million for the nine months ended June 30,
2022. Corporate operating results for the three and nine months
ended June 30, 2022 include a contingent loss accrual and costs
related to the SEC investigation of $2.8 million and $19.5 million,
respectively.
(3)
In April 2023, the Company took steps to
align its cost structure to its current business needs. These
initiatives resulted in restructuring charges of $2.2 million and
$5.5 million, which impacted Corporate operating results for the
three and nine months ended June 30, 2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808517579/en/
Investor Contact Brent Collins Vice President, Investor
Relations +1.913.344.9111 InvestorRelations@compassminerals.com
Media Contact Rick Axthelm Chief Public Affairs and
Sustainability Officer +1.913.344.9198
MediaRelations@compassminerals.com
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