Company Provides Financial Outlook for
Fiscal Full-Year 2024
Compass Minerals (NYSE: CMP), a leading global provider of
essential minerals, today reported fiscal fourth-quarter and
full-year 2023 results.
MANAGEMENT COMMENTARY
“Compass Minerals realized a number of positive strategic
accomplishments in fiscal 2023, including the restoration of Salt
profitability and the achievement of several key milestones by
Fortress in its first commercial fire season," said Kevin S.
Crutchfield, president and CEO. "While recent external challenges
impacting our lithium project have arisen, we have made progress
across much of our platform this year. In the year ahead we will
focus on strong execution within our core Salt and Plant Nutrition
businesses and growing the emerging Fire Retardant business, while
also pursuing a satisfactory path forward with the State of Utah
for lithium development. Compass Minerals operates several unique,
high-quality assets that are irreplaceable in their served markets
and have tremendous intrinsic value. Continuing our efforts to
maximize the value of these assets for our shareholders remains a
core priority for our board and leadership team."
FISCAL 2023 HIGHLIGHTS
- Generated net income of $15.5 million for fiscal 2023 versus
net loss of $37.3 million in prior year;
- Total company adjusted EBITDA up 7% year over year despite
lower sales volumes in both Salt and Plant Nutrition
businesses;
- Restored full-year fiscal 2023 profitability to adjusted EBITDA
per ton in excess of $20 for Salt business;
- Acquired remaining 55% ownership of Fortress North America
(Fortress) and realized first commercial sales during the 2023 fire
season;
- Closed strategic equity partnership with Koch Minerals &
Trading LLC (KM&T);
- 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; and
- Continued excellence in safety performance with total
recordable injury rate and lost time injury rate down 8% and 9%,
respectively, building on strong performance year in fiscal
2022.
2023 FINANCIAL RESULTS1
(in millions, except per share
data)
Three Months Ended
Sept. 30, 2023
Twelve Months Ended
Sept. 30, 2023
Revenue
$
233.6
$
1,204.7
Operating earnings
3.9
79.1
Adjusted operating earnings*
3.7
84.3
Adjusted EBITDA*
33.0
200.8
Net (loss) earnings
(2.5
)
15.5
Net (loss) earnings per diluted share
(0.06
)
0.37
Adjusted net (loss) earnings*
(2.7
)
20.6
Adjusted net (loss) earnings* per diluted
share
$
(0.06
)
$
0.50
* Non-GAAP financial measure.
Reconciliations to the most directly comparable GAAP financial
measure are provided in tables at the end of this press
release.
Fiscal 2023 fourth-quarter results primarily reflect weaker
Plant Nutrition segment sales offset by improved profitability in
the Salt business versus the comparable year-ago period. More
detailed discussion of the performance of the Salt and Plant
Nutrition businesses is provided below. Consolidated revenue
declined 6% year over year to $233.6 million. Consolidated
operating earnings declined to $3.9 million while adjusted EBITDA
was 9% lower year over year at $33.0 million.
On a fiscal full-year basis, a below-average 2022-2023 deicing
season and the impact of adverse weather conditions in California
on the Plant Nutrition business negatively impacted the company's
total revenue. However, improved profitability in the Salt business
reflecting the effective execution of a value-over-volume
commercial strategy drove gains in consolidated operating earnings
and adjusted EBITDA. Consolidated revenue was 3% lower year over
year at $1.2 billion. Consolidated operating earnings for fiscal
2023 were $79.1 million, up $36.2 million year over year, and
adjusted EBITDA of $200.8 million rose $12.3 million year over
year. Additional segment-level discussion is provided below.
_______________________
(1)
All amounts in this press release
represent results from continuing operations, except for amounts
pertaining to the condensed consolidated statements of cash flows
which include results from discontinued operations, unless
otherwise noted.
SALT BUSINESS SUMMARY
Salt segment fiscal 2023 fourth-quarter revenue totaled $186.7
million, down 1% year over year, due to a 9% increase in price
offset by a 9% decrease in total sales volumes. Fourth-quarter
sales volumes declined for both the highway deicing and consumer
and industrial (C&I) salt businesses from the prior year.
Highway deicing price increased 11% year over year. C&I price
increased 8% from the prior year reflecting continued pricing power
across most product lines. Quarterly distribution costs per ton
decreased year over year due to improved freight rates within the
C&I business, while all-in product costs (defined at the
segment level as sales to external customers less distribution
costs less operating earnings) per ton increased slightly from the
same period in 2022 due to unplanned downtime. Operating earnings
increased 91% to $28.8 million, while adjusted EBITDA improved 29%
to $44.4 million from the prior-year period. Improved pricing drove
enhanced profitability.
For the fiscal full-year 2023, Salt segment revenue was flat
year over year at $1.0 billion. A below-average highway deicing
season was the leading cause of a 10% decrease in total sales
volumes, with highway deicing sales volumes down 11% and C&I
sales volumes down 6%. Higher prices for highway deicing salt (up
12%) and C&I salt (up 6%) led to an overall increase in Salt
pricing of 11% year over year. On a per-ton basis, both
distribution and all-in product costs saw modest increases year
over year. Distribution costs increased year over year as a result
of changes in sales mix. All-in product costs were driven higher
year over year by inflationary effects and changes in sales mix.
The Salt segment generated $170.7 million in operating earnings and
adjusted EBITDA of $230.7 million, up 47% and 26%, respectively,
year over year. Importantly, the company saw adjusted EBITDA
margins improve by over 400 basis points year over year and
adjusted EBITDA per ton recovered to over $20 per ton in fiscal
2023.
PLANT NUTRITION BUSINESS
SUMMARY
Plant Nutrition segment fourth-quarter revenue totaled $35.3
million, down 39% year over year, driven by a combination of a 26%
decrease in price and an 18% decrease in sales volumes. The
decrease in price year over year reflected the deterioration of
global fertilizer prices throughout the year as broader concerns
about availability of fertilizer abated. This dynamic also affected
purchaser behavior, as buyers chose to operate with lower inventory
levels and adopted a just-in-time purchasing pattern amid declining
prices. Distribution costs per ton increased due to timing of
market demand and associated rail car storage fees versus prior
year, while all-in product costs per ton declined slightly over the
same period. The segment had an operating loss of $1.6 million for
the quarter, down $14.2 million from the year prior. Adjusted
EBITDA declined $15.1 million to $6.7 million.
For the fiscal full year, the segment generated $172.1 million
in revenue, 23% below the comparable prior-period results,
primarily due to a 23% decrease in sales volumes. As has been noted
by the company throughout the year, highly unusual weather in
California was the primary driver of the decrease in sales volumes
year over year. Distribution costs per ton increased due to the
impact of lower sales volumes on fixed distribution costs compared
to the corresponding period in the prior year, while all-in product
costs per ton were up due to higher input costs. Operating earnings
for the full fiscal year totaled $11.2 million and adjusted EBITDA
totaled $45.5 million, down $25.9 million and $27.2 million,
respectively, from the comparable prior-year period.
FIRE RETARDANT BUSINESS
UPDATE
During the year, Compass Minerals completed the acquisition of
the remaining 55% of Fortress, bringing the company to full
ownership. Prior to the acquisition, Fortress entered into its
initial 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 and in June it achieved its first
commercial sales. Feedback received regarding the performance of
Fortress products and the operational execution by company
personnel was positive.
The calendar year contract with USFS was largely structured as
take-or-pay, and while the ultimate value of the initial contract
is unchanged, the timing of the recognition of the associated
revenue will differ from original expectations. The company had
expected to recognize the vast majority of the value of the
contract in fiscal 2023 based on historic patterns of wildfire
activity. However, as a result of unusually mild wildfire activity
in the fourth quarter of fiscal 2023, due in part to Tropical Storm
Hilary battering the western U.S. with heavy rains during the
period, recognition of the majority of the take-or-pay portion of
the contract will be deferred until the first quarter of fiscal
2024. Accordingly, approximately $12 million in operating earnings
and adjusted EBITDA that the company had expected to recognize in
the fiscal fourth quarter ending September 30, 2023 will instead be
recognized in the fiscal first quarter ending December 31,
2023.
LITHIUM PROJECT UPDATE
The passage of Utah H.B. 513 in March of 2023 and the subsequent
rulemaking process altered certain aspects of the regulatory
landscape that will govern the development of lithium at the Great
Salt Lake, introducing uncertainty into how development will
proceed. As previously disclosed, due to this uncertainty, the
company has indefinitely paused new investment on its lithium salt
project, with current efforts focused on an orderly and safe
suspension of activity.
Compass Minerals has also determined that, if resumption of
activity occurs, it can best optimize the value of the project by
bringing in a partner to share capital costs and help lower
execution risk. In addition, if resumption of activity occurs, the
company is fully committed to developing this resource to maximize
shareholder value without the issuance of common equity at the
enterprise level.
CASH FLOW AND FINANCIAL
POSITION
Net cash provided by operating activities amounted to $101.1
million for fiscal 2023, down $19.4 million year over year.
Net cash used in investing activities was $173.0 million for
fiscal 2023 compared to $80.0 million in fiscal 2022, which
included the receipt of $61.2 million in proceeds from the sale of
the company's South American chemicals business. The current year
saw higher capital investment driven in part by advancing its
lithium salt development as well as the company’s investment to
obtain the remaining 55% of Fortress it did not previously own.
Capital expenditures for fiscal 2023 were $149.4 million, including
approximately $47.8 million in lithium-related capital
investment.
Net cash provided by financing activities was $64.0 million for
fiscal 2023 compared to net cash used in financing activities of
$14.3 million in the comparable prior-year period. The significant
items affecting year-to-date results include the $252 million gross
($240.7 million, net of fees) strategic equity investment by
KM&T, partially offset by debt reduction of $144.7 million and
dividends paid on common stock of $24.9 million.
The company ended the fiscal year with $317.0 million of
liquidity, comprised of $38.7 million in cash and cash equivalents
and $278.3 million of availability under its $375 million revolving
credit facility. As previously disclosed, during the fiscal year
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.
FISCAL 2024 OUTLOOK
- Salt sales volumes expected to increase 3% to 5% in fiscal
2024, assuming average winter weather, despite lower committed
volumes;
- Despite below average 2022-2023 deicing season, company
completed a better-than-expected 2023-2024 bid season with North
American highway deicing prices up 3% and committed volumes down
5%; and
- Lower Plant Nutrition profitability expected, year over year,
driven by lower sulfate of potash (SOP) pricing despite strong
sales volume rebound as applications by California growers
normalize.
Salt Segment Range of
Outcomes
Mild Winter1
2024 Range2
Strong Winter1
Highway deicing sales volumes (thousands
of tons)
8,000
9,300 - 10,000
11,050
Consumer and industrial sales volumes
(thousands of tons)
2,000
2,000 - 2,150
2,150
Total salt sales volumes (thousands of
tons)
10,000
11,300 - 12,150
13,200
Revenue (in millions)
$935
$1,030 - $1,110
$1,200
Adj. EBITDA (in millions)
$205
$230 - $270
$290
(1)
Mild and Strong Winter scenarios reflect
management estimates of the potential impact to the presented line
items assuming mild or strong winter weather. The company utilizes
an array of information, including historical weather data and
sales-to-commitment outcomes, to develop measures that are then
applied to its 2024 Range to estimate these amounts.
(2)
Range for fiscal 2024 reflects the
company's estimated book of business for the period and assumes
normalized weather conditions and average historical
sales-to-commitment outcomes.
While demand for deicing salt is stable over time, the nature of
winter weather and the manner in which customers respond to weather
events make forecasting deicing sales volumes difficult during any
single year. Therefore, the company has provided a range of
estimated potential earnings outcomes for fiscal 2024 that consider
various winter weather scenarios rather than a single estimate.
The company’s focus for the Salt segment in fiscal 2024 is to
build on recently achieved profitability levels through optimizing
its price and actively managing its sales mix. The North American
highway deicing bidding process for the 2023-2024 winter season has
been completed. Consistent with the results disclosed in the
company's third-quarter fiscal 2023 results, the average contract
price for the upcoming North American winter season is expected to
be approximately 3% above the prior year's bid season results while
total committed bid volumes will decrease by approximately 5%
compared to prior-year bid season. Despite the 5% decrease in
committed volumes, total Salt sales volumes are expected to
increase between 3% to 5% year over year, assuming normal winter
weather, as the 2022 winter season saw below average winter weather
activity in the company's served markets.
Compass Minerals expects that approximately 75% of its highway
deicing sales will be achieved in the first half of the fiscal
year.
Plant Nutrition
Segment
2024 Range
Sales volumes (thousands of tons)
290 - 320
Revenue (in millions)
$180 - $215
Adj. EBITDA (in millions)
$20 - $40
Within the Plant Nutrition segment, the company expects sales
volumes to increase meaningfully for the full year as demand in
California reverts to normal levels. However, profitability is
projected to be below historical levels due to lower pricing and
elevated cash costs. Pricing is projected to decline year over year
as global potassium prices have normalized below the elevated
levels in calendar 2022 and early 2023. Cash unit costs are
projected to decline year over year but remain above historical
levels due to fewer low-cost, pond-based tons as a percentage of
the Ogden production mix and the use of higher-cost inputs to
enhance yields.
Corporate
2024 Range
Fortress1
Other2
Total
Adj. EBITDA (in millions)
~$12
($77) - ($72)
($65) - ($60)
(1)
Fortress contribution only includes
approximately $12 million of adjusted EBITDA carried over from its
calendar year 2023 USFS take-or-pay contract; no assumptions with
respect to 2024 have been made pending finalization of the 2024
USFS contract.
(2)
Other adjusted EBITDA includes $5 to $10
million of lithium-related period expenses.
Projected Corporate segment results shown in the table above
include corporate expenses in support of our core businesses,
lithium-related development operating expenses, Fortress financial
results, and the results of DeepStore, the company's records and
management services business in the United Kingdom.
Regarding Fortress, Compass Minerals is working closely with
USFS to establish a contract for calendar 2024. The final agreement
with the USFS is not expected to be finalized until late December
2023 or early January 2024. Accordingly, the company's initial
guidance for Fortress includes only the approximately $12 million
of adjusted EBITDA related to its initial 2023 USFS contract. When
negotiations with the USFS have been completed, Compass Minerals
intends to update guidance for fiscal 2024.
Lithium-related period expenses, included in Other within the
table above, are projected to be in the range of $5 million and $10
million for fiscal 2024. These costs will be heavily influenced by
whether adequate regulatory clarity in Utah is achieved to resume
lithium development.
Total Compass Minerals
2024 Adjusted EBITDA
Salt
Plant Nutrition
Corporate1
Total
Adj. EBITDA (in millions)
$230 - $270
$20 - $40
($65) - ($60)
$185 - $250
2024 Capital
Expenditures
Sustaining
Lithium2
Fortress
Total
Capital expenditures (in millions)
$90 - $100
$25 - $30
~ $10
$125 - $140
(1)
Includes Fortress contribution of
approximately $12 million in adjusted EBITDA related to the 2023
USFS contract that will now be recognized in fiscal 2024. Also
includes financial contribution from DeepStore.
(2)
Lithium capital expenditures principally
relate to items committed to or made prior to the suspension of
further investment in the lithium program pending resolution with
the State of Utah on a satisfactory regulatory framework.
Total capital expenditures for the company in fiscal 2024 are
expected to be within a range of $125 million to $140 million. This
includes between $90 million and $100 million in sustaining capital
expenditures related to the core Salt and Plant Nutrition
businesses. In addition, $25 million to $30 million of
lithium-associated capital, principally related to "in flight"
items ordered prior to the recently announced project suspension
and scheduled to be delivered and installed in 2024, is expected to
be deployed in 2024. The company's projections also include
approximately $10 million of capital investment for equipment to
support the continued growth of Fortress.
Other Assumptions
($ in millions)
2024 Range
Depreciation, depletion and
amortization
$100 - $110
Interest expense, net
$65 - $70
Effective income tax rate (excl. valuation
allowance)
45% - 50%
CONFERENCE CALL
Compass Minerals will discuss its results on a conference call
tomorrow morning, Friday, Nov. 17, at 9:30 a.m. ET. 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 corporate presentation with fiscal 2023 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 value creation;
eventual resolution of Utah state regulatory questions; the
company's lithium brine development project, including its value,
projected expenses; potential for resumption of investment, and
potential partnerships; expectations for Fortress, including any
increase in awarded bases; the company's outlook for 2024,
including its expectations regarding pricing, sales volumes,
revenue, EBITDA, corporate and other expense, depreciation,
depletion and amortization, interest expense, tax rates, capital
expenditures, operating expenses, and Adjusted EBITDA.
Forward-looking statements are those that predict or describe
future events or trends and that do not relate solely to historical
matters. We use 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 intended financial or other benefits
from, or that it may incur unexpected costs in connection with, the
proposed development of its lithium mineral resource or its
ownership of 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, 2023 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. Additionally, as previously announced, the company has
indefinitely suspended the proposed development of its lithium
mineral resources until it has further clarity on the evolving
regulatory climate in the State of Utah. 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 (loss) earnings, and adjusted net (loss) earnings 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 (loss) earnings per
diluted share is adjusted net (loss) earnings 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 September 30, 2023
(unaudited, in millions, except
per share data)
Item Description
Segment
Line Item
Amount
Tax Effect(1)
After Tax
EPS Impact
Accrued legal costs related to SEC
investigation
Corporate and Other
SG&A
$
(0.2
)
$
—
$
(0.2
)
$
—
Special Items Impacting the
Twelve Months Ended September 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
$
0.07
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
(0.3
)
—
(0.3
)
(0.01
)
Total
$
5.2
$
(0.1
)
$
5.1
$
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
(unaudited, in millions)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Operating earnings
$
3.9
$
6.0
$
79.1
$
42.9
Executive transition costs(1)
—
—
—
3.8
Restructuring charges(2)
—
—
5.5
—
Accrued loss and legal costs related to
SEC investigation(3)
(0.2
)
(2.4
)
(0.3
)
17.1
Adjusted operating earnings
$
3.7
$
3.6
$
84.3
$
63.8
Sales
233.6
249.4
1,204.7
1,244.1
Operating margin
1.7
%
2.4
%
6.6
%
3.4
%
Adjusted operating margin
1.6
%
1.4
%
7.0
%
5.1
%
(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 (Loss) Earnings
(unaudited, in millions)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Net (loss) earnings
$
(2.5
)
$
(5.5
)
$
15.5
$
(37.3
)
Executive transition costs(1)
—
—
—
3.8
Restructuring charges(2)
—
—
5.5
—
Accrued loss and legal costs related to
SEC investigation(3)
(0.2
)
(2.4
)
(0.3
)
17.1
Deferred tax valuation allowance(4)
—
7.1
—
37.5
Income tax effect
—
0.7
(0.1
)
(1.8
)
Adjusted net (loss) earnings
$
(2.7
)
$
(0.1
)
$
20.6
$
19.3
Diluted net (loss) earnings per common
share
$
(0.06
)
$
(0.16
)
$
0.37
$
(1.10
)
Adjusted net (loss) earnings per diluted
share
$
(0.06
)
$
(0.01
)
$
0.50
$
0.55
Weighted-average common shares outstanding
(in thousands):
Diluted
41,152
34,164
40,786
34,120
(1)
The company incurred severance and other
costs related to executive transition of $3.8 million ($3.2 million
net of tax) for the twelve months ended Sept. 30, 2022.
(2)
The company incurred severance and related
charges related to a reduction of its workforce. Charges for the
twelve months ended Sept. 30, 2023 were $5.5 million ($5.4 million
net of tax).
(3)
The company recognized costs, net of
reimbursements, related to the settled SEC investigation of $(0.2)
million and $(2.4) million ($(0.2) million and $(1.7) million net
of tax) in the three months ended Sept. 30, 2023 and 2022,
respectively. The company recorded a loss accrual and incurred net
costs, net of reimbursements, related to the settled SEC
investigation of $(0.3) million and $17.1 million ($(0.3) million
and $15.9 million net of tax) for the twelve months ended Sept. 30,
2023 and 2022, respectively.
(4)
The company recognized a valuation
allowance for certain deferred tax assets due to their uncertainty
of being realized.
Reconciliation for EBITDA and
Adjusted EBITDA
(unaudited, in millions)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Net (loss) earnings
$
(2.5
)
$
(5.5
)
$
15.5
$
(37.3
)
Interest expense
13.1
14.0
55.5
55.2
Income tax (benefit) expense
(6.9
)
6.9
17.4
35.0
Depreciation, depletion and
amortization
25.9
30.5
98.6
113.7
EBITDA from continuing operations
29.6
45.9
187.0
166.6
Adjustments to EBITDA:
Stock-based compensation - non cash
3.4
4.1
20.6
15.7
Interest income
(0.6
)
(0.3
)
(5.3
)
(0.8
)
(Gain) loss on foreign exchange
(2.3
)
(11.4
)
2.3
(14.9
)
Loss (gain) from remeasurement of equity
method investment
2.5
—
(13.7
)
—
Executive transition costs(1)
—
—
—
4.3
Restructuring charges(2)
—
—
5.9
—
Accrued loss and legal costs related to
SEC investigation(3)
(0.2
)
(2.4
)
(0.3
)
17.1
Other, net
0.6
0.5
4.3
0.5
Adjusted EBITDA from continuing
operations
33.0
36.4
200.8
188.5
Adjusted EBITDA from discontinued
operations
—
—
—
19.0
Adjusted EBITDA including discontinued
operations
$
33.0
$
36.4
$
200.8
$
207.5
(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
(in millions, except for sales volumes and prices per short
ton)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Sales
$
186.7
$
188.9
$
1,010.8
$
1,010.3
Operating earnings
$
28.8
$
15.1
$
170.7
$
116.2
Operating margin
15.4
%
8.0
%
16.9
%
11.5
%
Adjusted operating earnings(1)
$
28.8
$
15.1
$
172.2
$
116.2
Adjusted operating margin(1)
15.4
%
8.0
%
17.0
%
11.5
%
EBITDA(1)
$
44.4
$
34.4
$
229.2
$
183.2
EBITDA(1) margin
23.8
%
18.2
%
22.7
%
18.1
%
Adjusted EBITDA(1)
$
44.4
$
34.4
$
230.7
$
183.2
Adjusted EBITDA(1) margin
23.8
%
18.2
%
22.8
%
18.1
%
Sales volumes (in thousands of tons):
Highway deicing
1,435
1,581
9,321
10,435
Consumer and industrial
470
522
1,999
2,122
Total Salt
1,905
2,103
11,320
12,557
Average sales prices (per ton):
Highway deicing
$
68.78
$
61.89
$
68.85
$
61.34
Consumer and industrial
$
187.44
$
174.36
$
184.67
$
174.45
Total Salt
$
98.03
$
89.79
$
89.29
$
80.45
(1)
Non-GAAP financial measure. Reconciliations follow in these
tables.
Reconciliation for Salt
Segment Adjusted Operating Earnings
(unaudited, in millions)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
28.8
$
15.1
$
170.7
$
116.2
Restructuring charges(1)
—
—
1.5
—
Segment adjusted operating earnings
$
28.8
$
15.1
$
172.2
$
116.2
Segment sales
186.7
188.9
1,010.8
1,010.3
Segment adjusted operating margin
15.4
%
8.0
%
17.0
%
11.5
%
(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
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
28.8
$
15.1
$
170.7
$
116.2
Depreciation, depletion and
amortization
15.6
19.3
58.5
67.0
Segment EBITDA
$
44.4
$
34.4
$
229.2
$
183.2
Restructuring charges(1)
—
—
1.5
—
Segment adjusted EBITDA
$
44.4
$
34.4
$
230.7
$
183.2
Segment sales
186.7
188.9
1,010.8
1,010.3
Segment adjusted EBITDA margin
23.8
%
18.2
%
22.8
%
18.1
%
Plant Nutrition Segment
Performance
(in millions, except for prices
per short ton)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Sales
$
35.3
$
57.8
$
172.1
$
222.3
Operating (loss) earnings
$
(1.6
)
$
12.6
$
11.2
$
37.1
Operating margin
(4.5
)%
21.8
%
6.5
%
16.7
%
Adjusted operating (loss) earnings(1)
$
(1.6
)
$
12.6
$
12.6
$
37.1
Adjusted operating margin(1)
(4.5
)%
21.8
%
7.3
%
16.7
%
EBITDA(1)
$
6.7
$
21.8
$
44.1
$
72.7
EBITDA(1) margin
19.0
%
37.7
%
25.6
%
32.7
%
Adjusted EBITDA(1)
$
6.7
$
21.8
$
45.5
$
72.7
Adjusted EBITDA(1) margin
19.0
%
37.7
%
26.4
%
32.7
%
Sales volumes (in thousands of tons)
51
62
219
286
Average sales price (per ton)
$
691
$
929
$
785
$
777
(1)
Non-GAAP financial measure.
Reconciliations follow in these tables.
Reconciliation for Plant
Nutrition Segment Adjusted Operating Earnings
(unaudited, in millions)
Three months ended
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Reported GAAP segment operating (loss)
earnings
$
(1.6
)
$
12.6
$
11.2
$
37.1
Restructuring charges(1)
—
—
1.4
—
Segment adjusted operating (loss)
earnings
$
(1.6
)
$
12.6
$
12.6
$
37.1
Segment sales
35.3
57.8
172.1
222.3
Segment adjusted operating margin
(4.5
)%
21.8
%
7.3
%
16.7
%
(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
Sept. 30,
Twelve months ended
Sept. 30,
2023
2022
2023
2022
Reported GAAP segment operating (loss)
earnings
$
(1.6
)
$
12.6
$
11.2
$
37.1
Depreciation, depletion and
amortization
8.3
9.2
32.9
35.6
Segment EBITDA
$
6.7
$
21.8
$
44.1
$
72.7
Restructuring charges(1)
—
—
1.4
—
Segment Adjusted EBITDA
$
6.7
$
21.8
$
45.5
$
72.7
Segment sales
35.3
57.8
172.1
222.3
Segment adjusted EBITDA margin
19.0
%
37.7
%
26.4
%
32.7
%
(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
Twelve Months Ended
Sept. 30,
Sept. 30,
2023
2022
2023
2022
Sales
$
233.6
$
249.4
$
1,204.7
$
1,244.1
Shipping and handling cost
54.8
65.0
346.1
379.5
Product cost
134.7
146.0
624.7
667.8
Gross profit
44.1
38.4
233.9
196.8
Selling, general and administrative
expenses
40.2
32.4
154.8
153.9
Operating earnings
3.9
6.0
79.1
42.9
Other expense (income):
Interest income
(0.6
)
(0.3
)
(5.3
)
(0.8
)
Interest expense
13.1
14.0
55.5
55.2
(Gain) loss on foreign exchange
(2.3
)
(11.4
)
2.3
(14.9
)
Net loss in equity investees
—
1.8
3.1
5.2
Loss (gain) from remeasurement of equity
method investment
2.5
—
(13.7
)
—
Other, net
0.6
0.5
4.3
0.5
(Loss) earnings before income taxes from
continuing operations
(9.4
)
1.4
32.9
(2.3
)
Income tax (benefit) expense from
continuing operations
(6.9
)
6.9
17.4
35.0
Net (loss) earnings from continuing
operations
(2.5
)
(5.5
)
15.5
(37.3
)
Net earnings (loss) from discontinued
operations
—
(2.0
)
—
12.2
Net (loss) earnings
$
(2.5
)
$
(7.5
)
$
15.5
$
(25.1
)
Basic net (loss) earnings from continuing
operations per common share
$
(0.06
)
$
(0.16
)
$
0.37
$
(1.10
)
Basic net earnings (loss) from
discontinued operations per common share
—
(0.06
)
—
0.36
Basic net (loss) earnings per common
share
$
(0.06
)
$
(0.22
)
$
0.37
$
(0.74
)
Diluted net (loss) earnings from
continuing operations per common share
$
(0.06
)
$
(0.16
)
$
0.37
$
(1.10
)
Diluted net earnings (loss) from
discontinued operations per common share
—
(0.06
)
—
0.36
Diluted net (loss) earnings per common
share
$
(0.06
)
$
(0.22
)
$
0.37
$
(0.74
)
Cash dividends per share
$
0.15
$
0.15
$
0.60
$
0.60
Weighted-average common shares outstanding
(in thousands):(1)
Basic
41,152
34,164
40,786
34,120
Diluted
41,152
34,164
40,786
34,120
(1)
Excludes weighted participating securities
such as RSUs and PSUs that receive non-forfeitable dividends, which
consist of 495,000 and 476,000 weighted participating securities
for the three and twelve months ended Sept. 30, 2023, respectively,
and 360,000 and 407,000 weighted participating securities for the
three and twelve months ended Sept. 30, 2022, respectively.
COMPASS MINERALS
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited, in
millions)
Sept. 30,
Sept. 30,
2023
2022
ASSETS
Cash and cash equivalents
$
38.7
$
46.1
Receivables, net
129.5
167.2
Inventories
392.2
304.4
Other current assets
33.4
44.3
Property, plant and equipment, net
852.2
776.6
Equity method investments
—
46.6
Intangible and other noncurrent assets
372.0
258.3
Total assets
$
1,818.0
$
1,643.5
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of long-term debt
$
5.0
$
—
Other current liabilities
270.8
233.1
Long-term debt, net of current portion
800.3
947.6
Deferred income taxes and other noncurrent
liabilities
224.7
206.4
Total stockholders' equity
517.2
256.4
Total liabilities and stockholders'
equity
$
1,818.0
$
1,643.5
COMPASS MINERALS
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited, in
millions)
Twelve Months Ended
Sept. 30,
2023
2022
Net cash provided by operating
activities(1)
$
101.1
$
120.5
Cash flows from investing activities:
Capital expenditures(2)
(149.4
)
(96.7
)
Proceeds from sale of businesses
—
61.2
Acquisition of business, net of cash
acquired
(18.9
)
—
Investments in equity method investees
—
(46.3
)
Other, net
(4.7
)
1.8
Net cash used in investing activities
(173.0
)
(80.0
)
Cash flows from financing activities:
Proceeds from revolving credit facility
borrowings
150.0
466.2
Principal payments on revolving credit
facility borrowings
(220.0
)
(403.1
)
Proceeds from the issuance of long-term
debt
239.9
55.9
Principal payments on long-term debt
(314.6
)
(109.1
)
Net proceeds from private placement of
common stock
240.7
—
Dividends paid
(24.9
)
(20.8
)
Deferred financing costs
(3.9
)
(0.4
)
Proceeds from stock option exercised
—
0.3
Shares withheld to satisfy employee tax
obligations
(1.7
)
(2.0
)
Other, net
(1.5
)
(1.3
)
Net cash provided by (used in) financing
activities
64.0
(14.3
)
Effect of exchange rate changes on cash
and cash equivalents
0.5
(1.1
)
Net change in cash and cash
equivalents
(7.4
)
25.1
Cash and cash equivalents, beginning of
the year
46.1
21.0
Cash and cash equivalents of continuing
operations, end of period
$
38.7
$
46.1
(1)
Includes cash flows provided by
discontinued operations of $9.4 million for the twelve months ended
Sept. 30, 2022.
(2)
Includes capital expenditures of $1.6
million related to discontinued operations for the twelve months
ended Sept. 30, 2022. Capital expenditures related to continuing
operations were $95.1 million for the twelve months ended Sept. 30,
2022.
COMPASS MINERALS
INTERNATIONAL, INC.
SEGMENT INFORMATION
(unaudited, in
millions)
Three Months Ended Sept. 30,
2023
Salt
Plant Nutrition
Corporate and Other(1)
Total
Sales to external customers
$
186.7
$
35.3
$
11.6
$
233.6
Intersegment sales
—
2.6
(2.6
)
—
Shipping and handling cost
49.6
5.0
0.2
54.8
Operating earnings (loss)(2)
28.8
(1.6
)
(23.3
)
3.9
Depreciation, depletion and
amortization
15.6
8.3
2.0
25.9
Total assets
1,099.7
473.4
244.9
1,818.0
Three Months Ended Sept. 30,
2022
Salt
Plant Nutrition
Corporate and Other(1)
Total
Sales to external customers
$
188.9
$
57.8
$
2.7
$
249.4
Intersegment sales
—
1.4
(1.4
)
—
Shipping and handling cost
59.3
5.7
—
65.0
Operating earnings (loss)(2)
15.1
12.6
(21.7
)
6.0
Depreciation, depletion and
amortization
19.3
9.2
2.0
30.5
Total assets
1,020.6
475.1
147.8
1,643.5
Twelve Months Ended Sept. 30,
2023
Salt
Plant Nutrition
Corporate and Other(1)
Total
Sales to external customers
$
1,010.8
$
172.1
$
21.8
$
1,204.7
Intersegment sales
—
9.7
(9.7
)
—
Shipping and handling cost
324.5
21.4
0.2
346.1
Operating earnings (loss)(2)(3)
170.7
11.2
(102.8
)
79.1
Depreciation, depletion and
amortization
58.5
32.9
7.2
98.6
Twelve Months Ended Sept. 30,
2022
Salt
Plant Nutrition
Corporate and Other(1)
Total
Sales to external customers
$
1,010.3
$
222.3
$
11.5
$
1,244.1
Intersegment sales
—
6.4
(6.4
)
—
Shipping and handling cost
353.3
26.2
—
379.5
Operating earnings (loss)(2)
116.2
37.1
(110.4
)
42.9
Depreciation, depletion and
amortization
67.0
35.6
11.1
113.7
(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 $(0.2)
million and $(0.3) million for the three and twelve months ended
Sept. 30, 2023, respectively, and executive transition costs of
$3.8 million for the twelve months ended Sept. 30, 2022. Corporate
operating results for the three and twelve months ended Sept. 30,
2022 include a contingent loss accrual and costs, net of
reimbursements, related to the settled SEC investigation of $(2.4)
million and $17.1 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 $5.5 million,
which impacted operating results for the twelve months ended Sept.
30, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231116338468/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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