Compass Minerals (NYSE: CMP), a leading global provider of
essential minerals, today reported fiscal 2023 second-quarter
results.
MANAGEMENT COMMENTARY
“We entered the year focused on executing across several
strategic priorities aimed at accelerating growth by expanding into
adjacent markets while maximizing the profitability of our core
businesses. We continue to make meaningful progress on these
priorities, including restoring historic levels of profitability
within our Salt business, helping to enable Fortress' advance
toward full commercialization, taking targeted actions to reduce
our costs and enhancing our debt maturity profile by closing on a
successful refinancing," said Kevin S. Crutchfield, president and
CEO. "As I reflect on where the company stands halfway through the
year, I'm pleased with the strides we have made to date while we
remain acutely focused on the important work left to do. We will
continue to work diligently on the parts of our business that we
can control in order to maximize our value creation for all
stakeholders."
QUARTERLY AND RECENT
HIGHLIGHTS
- Total company operating earnings improved 140% year over year
to $47.9 million, with net loss narrowing to $21.6 million versus
$29.0 million over the corresponding period;
- Adjusted EBITDA from continuing operations increased to $77.4
million from $64.8 million last year;
- Recaptured historic levels of Salt segment profitability per
ton during the second quarter;
- Acquisition of remaining 55% of Fortress North America
(Fortress), a next-generation fire-retardant company, expected to
be immediately accretive in fiscal 2023 with prospects for
considerable upside thereafter; transaction further advances
strategy to accelerate growth and reduce weather dependency by
expanding into adjacent markets;
- Took initial steps to align the company's cost structure to
current business needs through the elimination of approximately 49
full-time positions and other consulting and overhead costs,
resulting in an expected improvement in operating expenses of $17
million to $18 million annually beginning in fiscal 2024;
- Extending 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
- Deepened the board's financial, extractive industry and
corporate governance expertise with the appointment of Jill V.
Gardiner to the company's board of directors.
FINANCIAL RESULTS1
(in millions, except per share
data)
Three Months Ended
March 31, 2023
Six Months Ended March
31, 2023
Revenue
$
411.1
$
763.5
Operating earnings
47.9
75.8
Adjusted operating earnings
50.8
79.0
Adjusted EBITDA*
77.4
139.2
Net loss
(21.6
)
(21.9
)
Net loss per diluted share
(0.53
)
(0.55
)
Adjusted net loss*
(18.7
)
(18.7
)
Adjusted net loss* per diluted share
(0.46
)
(0.47
)
*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 earnings of $47.9 million were up 140%
from $20.0 million in the corresponding quarter in fiscal 2022,
with operating margins improving to 11.7% from 4.5%. Net loss from
continuing operations and the associated net margin improved to
$21.6 million and (5.3)%, respectively, in the second fiscal
quarter, from a net loss of $29.0 million and net margin of (6.5)%
in the corresponding period last year. Consolidated adjusted EBITDA
improved to $77.4 million in the quarter, up 19% year over year.
Consolidated adjusted EBITDA margin improved to 18.8% compared to
14.4% last fiscal year. Despite lower sales volumes in both the
Salt and Plant Nutrition segments, strong pricing drove improved
financial performance year over year.
1
All amounts in this press release
represent results from continuing operations, except for amounts
pertaining to the fiscal 2022 condensed consolidated statements of
cash flows which include results from discontinued operations,
unless otherwise noted.
SALT BUSINESS SUMMARY
The commercial focus for the Salt business has been to improve
profitability to levels in line with the company's historic
performance. Led by a higher average sales price, operating
earnings increased 48% year over year to $73.1 million. Adjusted
EBITDA increased to $88.9 million, up 36% from the prior-year
period, with adjusted EBITDA per ton improving 64% to $20.19.
Salt fiscal 2023 second-quarter revenue totaled $360.5 million,
down 8% year over year, driven by a 17% decrease in segment sales
volumes offset by a 12% increase in average sales price. Highway
deicing average selling price for the period increased 12% year
over year to $69.90 per ton, consistent with the company's strategy
to focus on value over volume in the fiscal 2023 highway deicing
season. Below average winter weather overall, combined with the
company's decision to concentrate sales commitments for the 2023
deicing season to more select geographies, resulted in the
second-quarter highway deicing sales volumes being down 19% year
over year. Consumer and industrial average selling price saw a 1%
increase year over year as a lower mix of deicing product sales
mostly offset price increases across all product groups. Sales
volumes were down 5% due to below average winter weather activity
partially offset by increased sales in non-deicing product
lines.
PLANT NUTRITION BUSINESS
SUMMARY
The year-over-year performance of the Plant Nutrition business
continues to be impacted by the less favorable 2022 evaporation
season, resulting in lower potassium deposits heading into 2023,
and by extraordinary weather events fiscal year to date in select
key markets, including California. Operating loss totaled $0.7
million for the quarter, down from operating earnings of $4.4
million in the prior-year period. Adjusted EBITDA declined to $7.8
million versus $13.2 million in the comparable period of fiscal
2022.
Plant Nutrition second-quarter revenue totaled $47.7 million,
down 12% year over year. While the average segment sales price for
the quarter was up 8% year over year, segment sales volumes were
down 19% over the same period. Year over year, per-unit
distribution costs increased 12% due primarily to changes in
regional sales mix. All-in product costs (defined at the segment
level as sales to external customers less distribution costs less
operating earnings) per ton increased 20% over the comparable
quarter in the prior year primarily due to operational measures
taken to mitigate the impact of the below average 2022 evaporation
season and the impact of the temporary spike in natural gas costs
in the quarter. A small fire on a belt line at the Ogden facility
during the quarter added approximately $1.6 million of unplanned
operating expense in the quarter. There were no associated injuries
and temporary measures were implemented that resulted in minimal
downtime.
FORTRESS NORTH AMERICA
ACQUISITION
On May 5, 2023, Compass Minerals completed the acquisition of
the remaining 55% of Fortress for upfront consideration of
approximately $26 million in cash, contingent consideration valued
at approximately $28 million and an earn-out of $0.30 per gallon on
Fortress product sold over a 10-year timeframe. 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. Fortress is the first new aerial
fire-retardant company in over 20 years to supply fully approved
retardants to the USFS in its fire-fighting activities. Fortress is
expected to generate between $20 million and $25 million of revenue
and operating profit and EBITDA in the low double-digit millions of
dollars in fiscal 2023.
LITHIUM PROJECT UPDATE
In the second quarter, Compass Minerals continued to progress on
all milestones with its lithium project on the Great Salt Lake.
Recent legislative actions in Utah, however, have altered certain
aspects of the regulatory regime that will govern lithium
development on the lake, some of which will require rulemaking in
the coming months. Accordingly, the company is deferring the
disclosure of any project-related economic and engineering
estimates, including FEL-2 and FEL-3 project estimates, until the
impact of these actions can be better assessed.
"The prospect of lithium development at the Great Salt Lake is
not new, but it is only recently that such development has become
commercially viable," commented Crutchfield. "The State of Utah is
working to develop a framework that enables it to receive what the
state considers 'full and fair value' for the responsible
development of this asset. We have been and will continue to be
engaged in discussions with the state and believe there continues
to be common interest that provides for the value creation this
project presents for our many stakeholders, the State of Utah
included."
Crutchfield continued, "However, recent legislative actions in
Utah have introduced new regulatory and cost impacts that must be
considered as we progress with the next milestones of our lithium
project at Ogden, including the construction of our announced
11,000 MT, battery-grade lithium carbonate facility. We need
clarity and resolution on those potential impacts before we provide
the updated economic and capital outlooks that we had previously
discussed. Compass Minerals has been an important contributor to
the Utah economy for decades and we are proud of our record as a
responsible operator on the Great Salt Lake. As we have in the
past, I am optimistic that we will be able to collaborate with the
state and advance this important project."
CASH FLOW AND FINANCIAL
POSITION
Net cash provided by operating activities amounted to $143.9
million for the six months ended March 31, 2023, compared to $145.9
million in the prior year.
Net cash used in investing activities was $44.0 million for the
six months ended March 31, 2023 compared to $88.4 million in the
comparable prior-year period, which included approximately $46.3
million related to the company’s investment in Fortress. Total
capital spending for the six months ended March 31, 2023 was $43.7
million, which included approximately $8 million in capital
spending related to the company's lithium growth opportunity.
Net cash provided by financing activities was $102.9 million for
the six months ended March 31, 2023, compared to net cash used in
financing activities of $25.9 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 Koch Minerals & Trading
(KM&T), partially offset by debt reduction of $123.1
million.
The company ended the quarter with $536.1 million of liquidity,
comprised of $249.7 million in cash and cash equivalents and $286.4
million of availability under its $300 million revolving credit
facility.
As previously disclosed, subsequent to quarter-end the company
issued $200 million of Term Loan A notes due 2028 and expanded its
credit facility by $75 million to fund the redemption of the
outstanding $250 million 4.875% Senior Notes due July 2024.
UPDATED FISCAL 2023
OUTLOOK
The company has provided updated commentary regarding its fiscal
2023 financial outlook.
Salt Segment
Mild Winter1
2023 Range2
Strong Winter1
Highway deicing sales volumes (thousands
of tons)
8,000
9,350 - 10,050
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
11,350 - 12,200
13,200
Revenue (in millions)
$895
$990 - $1,065
$1,125
Adjusted EBITDA (in millions)
$175
$215 - $255
$275
(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 2023 Range to estimate these amounts.
(2) Range for fiscal 2023 reflects the company's estimated book
of business for the period and assumes normalized weather
conditions and average historical sales-to-commitment outcomes.
The performance guidance for the Salt segment across various
weather scenarios remains unchanged from the company's prior
guidance. Specifically, the company's expectation is that results
are likely to come in within the 2023 Range of adjusted EBITDA of
$215 million to $255 million. The strategic focus for the Salt
segment for the balance of 2023 and beyond will center on managing
costs and optimizing Compass Minerals' customer and geographic
sales mix to maximize profitability and achieve full value for the
company's salt products in all of its served markets.
Plant Nutrition
Segment
2023 Range
Sales volumes (thousands of tons)
205 – 270
Revenue (in millions)
$155 - $225
Adjusted EBITDA (in millions)
$30 - $60
The company’s full-year outlook for Plant Nutrition remains
unchanged from its prior guidance range, which reflected the
unfavorable year-over-year volume impact of a suboptimal 2022
evaporation season, the heightened uncertainty regarding sulfate of
potash (SOP) fertilizer pricing, higher production costs and
extraordinary weather impacts in several core markets, primarily
California.
Other Assumptions
($ in millions)
2023 Range
Corporate and other expense*
$65 - $70
Depreciation, depletion and
amortization
$95 - $105
Interest expense
$55 - $60
Effective income tax rate (excl. valuation
allowance)
53% - 58%
Capital expenditures:
Sustaining
$90 - $100
Lithium
$60 - $75
Total
$150 - $175
* Corporate and other expense includes operating expenses of $10
to 12 million related to lithium development; it excludes
depreciation, amortization and stock-based compensation.
As the company continues to invest in developing its lithium
resource, related operating expenses in the range of $10 million to
$12 million are projected for fiscal 2023, unchanged from its prior
forecast.
The contribution of Fortress' financial results is reflected in
Corporate and other expense. The company's previous expectation was
that Fortress would have operating losses in 2023, and that was
reflected in its prior guidance. In light of the company's
acquisition of Fortress, Corporate and other expense is now
expected to be within a range of $65 million to $70 million, down
from $75 million to $80 million, reflecting the company’s
expectation that Fortress will generate operating profit and EBITDA
in the low double-digit millions of dollars in fiscal 2023.
Projected total capital expenditures for fiscal 2023 have been
lowered to a range of $150 million to $175 million, comprising
lithium development capital spending in the range of $60 million to
$75 million (funded by proceeds from the recent KM&T
transaction) and sustaining capital in the range of $90 million to
$100 million for the fiscal year. The reduction in lithium capex by
$30 million at the midpoint of guidance reflects further refinement
in the project's engineering, resulting in lower expected project
costs for the demonstration unit, as well as adjustments in the
timing of select long lead time phase-one items. Expected
sustaining capital spending remains unchanged from the company's
prior estimate for the fiscal year.
CONFERENCE CALL
Compass Minerals will discuss its results on a conference call
tomorrow morning, Wednesday, May 10, 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
second-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 costs and
pricing; efforts to create value, accelerate growth, expand our
minerals portfolio, and enhance profitability; earnings potential;
the company's lithium brine development project, including its
expected milestones and potential for value creation; the company's
investment in Fortress, including commercialization and expected
earnings and contribution to EBITDA; and the company's outlook for
fiscal 2023, including its expectations regarding sales volumes,
revenue, 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. 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 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 and March
31, 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 March 31, 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
$
1.9
$
—
$
1.9
$
0.05
Restructuring charges
Salt
COGS and SG&A
1.0
—
1.0
0.02
Restructuring charges
Plant Nutrition
COGS and SG&A
0.4
—
0.4
0.01
Accrued legal costs related to SEC
investigation
Corporate and Other
SG&A
(0.4
)
—
(0.4
)
(0.01
)
Total
$
2.9
$
—
$
2.9
$
0.07
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Operating earnings
$
47.9
$
20.0
$
75.8
$
40.4
Executive transition costs(1)
—
0.5
—
3.8
Restructuring charges(2)
3.3
—
3.3
—
Accrued loss and legal costs related to
SEC investigation(3)
(0.4
)
13.6
(0.1
)
16.7
Adjusted operating earnings
$
50.8
$
34.1
$
79.0
$
60.9
Sales
411.1
448.5
763.5
780.0
Operating margin
11.7
%
4.5
%
9.9
%
5.2
%
Adjusted operating margin
12.4
%
7.6
%
10.3
%
7.8
%
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Net loss from continuing operations
$
(21.6
)
$
(29.0
)
$
(21.9
)
$
(21.1
)
Executive transition costs, net of
tax(1)
—
0.4
—
3.2
Restructuring charges, net of tax(2)
3.3
—
3.3
—
Accrued loss and legal costs related to
SEC investigation, net of tax(3)
(0.4
)
12.2
(0.1
)
14.5
Deferred tax valuation allowance(4)
—
28.0
—
28.0
Adjusted net (loss) earnings from
continuing operations
$
(18.7
)
$
11.6
$
(18.7
)
$
24.6
Net loss from continuing operations per
diluted share
$
(0.53
)
$
(0.85
)
$
(0.55
)
$
(0.62
)
Adjusted net (loss) earnings from
continuing operations per diluted share
$
(0.46
)
$
0.33
$
(0.47
)
$
0.71
Weighted-average common shares outstanding
(in thousands):
Diluted
41,110
34,113
40,423
34,100
(1)
The company incurred severance and other
costs, net of tax, 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 of $(0.4)
million and $13.6 million ($(0.4) million and $12.2 million net of
tax) in the three months ended March 31, 2023 and 2022,
respectively. The company recorded a contingent loss accrual and
incurred net costs related to the settled SEC investigation of
$(0.1) million and $16.7 million ($(0.1) million and $14.5 million
net of tax) for the six months ended March 31, 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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Net loss from continuing operations
$
(21.6
)
$
(29.0
)
$
(21.9
)
$
(21.1
)
Interest expense
14.2
13.9
28.1
27.8
Income tax expense
55.1
30.4
67.0
29.2
Depreciation, depletion and
amortization
24.5
27.9
48.4
56.2
EBITDA from continuing operations
72.2
43.2
121.6
92.1
Adjustments to EBITDA from continuing
operations:
Stock-based compensation - non cash
3.1
4.5
13.7
7.7
Interest income
(1.9
)
—
(3.0
)
(0.3
)
(Gain) loss on foreign exchange
(0.2
)
3.0
2.3
2.6
Executive transition costs(1)
—
0.5
—
4.3
Restructuring charges(2)
3.7
—
3.7
—
Accrued loss and legal costs related to
SEC investigation(3)
(0.4
)
13.6
(0.1
)
16.7
Other expense, net
0.9
—
1.0
0.1
Adjusted EBITDA from continuing
operations
77.4
64.8
139.2
123.2
Adjusted EBITDA from discontinued
operations
—
7.3
—
15.9
Adjusted EBITDA including discontinued
operations
$
77.4
$
72.1
$
139.2
$
139.1
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Sales
$
360.5
$
391.3
$
668.6
$
665.2
Operating earnings
$
73.1
$
49.3
$
120.2
$
88.7
Operating margin
20.3
%
12.6
%
18.0
%
13.3
%
Adjusted operating earnings(1)
$
74.1
$
49.3
$
121.2
$
88.7
Adjusted operating margin(1)
20.6
%
12.6
%
18.1
%
13.3
%
EBITDA(1)
$
87.9
$
65.5
$
148.9
$
121.1
EBITDA(1) margin
24.4
%
16.7
%
22.3
%
18.2
%
Adjusted EBITDA(1)
$
88.9
$
65.5
$
149.9
$
121.1
Adjusted EBITDA(1) margin
24.7
%
16.7
%
22.4
%
18.2
%
Sales volumes (in thousands of tons):
Highway deicing
3,915
4,815
6,816
7,622
Consumer and industrial
488
516
1,108
1,149
Total Salt
4,403
5,331
7,924
8,771
Average prices (per ton):
Highway deicing
$
69.90
$
62.31
$
68.07
$
60.85
Consumer and industrial
$
177.77
$
176.86
$
184.63
$
175.28
Total Salt
$
81.87
$
73.39
$
84.37
$
75.84
(1)
Non-GAAP financial measure.
Reconciliations follow in these tables.
Reconciliation for Salt
Segment Adjusted Operating Earnings
(unaudited, in millions)
Three Months Ended March
31,
Six Months Ended
March 31,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
73.1
$
49.3
$
120.2
$
88.7
Restructuring charges(1)
1.0
—
1.0
—
Segment adjusted operating earnings
$
74.1
$
49.3
$
121.2
$
88.7
Segment sales
360.5
391.3
668.6
665.2
Segment adjusted operating margin
20.6
%
12.6
%
18.1
%
13.3
%
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Reported GAAP segment operating
earnings
$
73.1
$
49.3
$
120.2
$
88.7
Depreciation, depletion and
amortization
14.8
16.2
28.7
32.4
Segment EBITDA
$
87.9
$
65.5
$
148.9
$
121.1
Restructuring charges(1)
1.0
—
1.0
—
Segment adjusted EBITDA
$
88.9
$
65.5
$
149.9
$
121.1
Segment sales
360.5
391.3
668.6
665.2
Segment adjusted EBITDA margin
24.7
%
16.7
%
22.4
%
18.2
%
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Sales
$
47.7
$
54.3
$
89.3
$
108.9
Operating (loss) earnings
$
(0.7
)
$
4.4
$
10.3
$
13.9
Operating margin
(1.5
)%
8.1
%
11.5
%
12.8
%
Adjusted operating (loss) earnings(1)
$
(0.3
)
$
4.4
$
10.7
$
13.9
Adjusted operating margin(1)
(0.6
)%
8.1
%
12.0
%
12.8
%
EBITDA(1)
$
7.4
$
13.2
$
26.7
$
31.5
EBITDA(1) margin
15.5
%
24.3
%
29.9
%
28.9
%
Adjusted EBITDA(1)
$
7.8
$
13.2
$
27.1
$
31.5
Adjusted EBITDA(1) margin
16.4
%
24.3
%
30.3
%
28.9
%
Sales volumes (in thousands of tons)
60
74
105
157
Average price (per ton)
$
796
$
736
$
851
$
696
(1)
Non-GAAP financial measure.
Reconciliations follow in these tables.
Reconciliation for Plant
Nutrition Segment Adjusted Operating (Loss) Earnings
(unaudited, in millions)
Three Months Ended March
31,
Six Months Ended
March 31,
2023
2022
2023
2022
Reported GAAP segment operating (loss)
earnings
$
(0.7
)
$
4.4
$
10.3
$
13.9
Restructuring charges(1)
0.4
—
0.4
—
Segment adjusted operating (loss)
earnings
$
(0.3
)
$
4.4
$
10.7
$
13.9
Segment sales
47.7
54.3
89.3
108.9
Segment adjusted operating margin
(0.6
)%
8.1
%
12.0
%
12.8
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Reported GAAP segment operating (loss)
earnings
$
(0.7
)
$
4.4
$
10.3
$
13.9
Depreciation, depletion and
amortization
8.1
8.8
16.4
17.6
Segment EBITDA
$
7.4
$
13.2
$
26.7
$
31.5
Restructuring charges(1)
0.4
—
0.4
—
Segment adjusted EBITDA
$
7.8
$
13.2
$
27.1
$
31.5
Segment sales
47.7
54.3
89.3
108.9
Segment adjusted EBITDA margin
16.4
%
24.3
%
30.3
%
28.9
%
(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
March 31,
Six Months Ended
March 31,
2023
2022
2023
2022
Sales
$
411.1
$
448.5
$
763.5
$
780.0
Shipping and handling cost
130.1
160.1
237.5
255.8
Product cost
195.8
223.8
370.8
399.7
Gross profit
85.2
64.6
155.2
124.5
Selling, general and administrative
expenses
37.3
44.6
79.4
84.1
Operating earnings
47.9
20.0
75.8
40.4
Other (income) expense:
Interest income
(1.9
)
—
(3.0
)
(0.3
)
Interest expense
14.2
13.9
28.1
27.8
(Gain) loss on foreign exchange
(0.2
)
3.0
2.3
2.6
Net loss in equity investee
1.4
1.7
2.3
2.1
Other expense, net
0.9
—
1.0
0.1
Earnings from continuing operations before
income taxes
33.5
1.4
45.1
8.1
Income tax expense from continuing
operations
55.1
30.4
67.0
29.2
Net loss from continuing operations
(21.6
)
(29.0
)
$
(21.9
)
$
(21.1
)
Net earnings from discontinued
operations
—
16.9
—
11.4
Net loss
$
(21.6
)
$
(12.1
)
$
(21.9
)
$
(9.7
)
Basic net loss from continuing operations
per common share
$
(0.53
)
$
(0.85
)
$
(0.55
)
$
(0.62
)
Basic net earnings from discontinued
operations per common share
—
0.49
—
0.33
Basic net loss per common share
$
(0.53
)
$
(0.36
)
$
(0.55
)
$
(0.29
)
Diluted net loss from continuing
operations per common share
$
(0.53
)
$
(0.85
)
$
(0.55
)
$
(0.62
)
Diluted net earnings from discontinued
operations per common share
—
0.49
—
0.33
Diluted net loss per common share
$
(0.53
)
$
(0.36
)
$
(0.55
)
$
(0.29
)
Weighted-average common shares outstanding
(in thousands):(1)
Basic
41,110
34,103
40,423
34,081
Diluted
41,110
34,113
40,423
34,100
(1)
Weighted participating securities include
RSUs and PSUs that receive non-forfeitable dividends and consist of
439,000 and 477,000 weighted participating securities for the three
and six months ended March 31, 2023, respectively and 407,000 and
419,000 weighted participating securities for the three and six
months ended March 31, 2022, respectively.
COMPASS MINERALS
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited, in
millions)
March 31,
Sept. 30,
2023
2022
ASSETS
Cash and cash equivalents
$
249.7
$
46.1
Receivables, net
159.7
167.2
Inventories
261.7
304.4
Other current assets
29.7
44.3
Property, plant and equipment, net
782.6
776.6
Equity method investments
44.3
46.6
Intangible and other noncurrent assets
257.0
258.3
Total assets
$
1,784.7
$
1,643.5
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of long-term debt
$
—
$
—
Other current liabilities
276.0
233.1
Long-term debt, net of current portion
825.7
947.6
Deferred income taxes and other noncurrent
liabilities
197.6
206.4
Total stockholders' equity
485.4
256.4
Total liabilities and stockholders'
equity
$
1,784.7
$
1,643.5
COMPASS MINERALS
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited, in
millions)
Six Months Ended March
31,
2023
2022
Net cash provided by operating
activities(1)
$
143.9
$
145.9
Cash flows from investing activities:
Capital expenditures(2)
(43.7
)
(43.5
)
Investments in equity method investees
—
(46.3
)
Other, net
(0.3
)
1.4
Net cash used in investing activities
(44.0
)
(88.4
)
Cash flows from financing activities:
Proceeds from revolving credit facility
borrowings
16.7
221.3
Principal payments on revolving credit
facility borrowings
(168.2
)
(280.7
)
Proceeds from issuance of long-term
debt
37.5
50.8
Principal payments on long-term debt
(9.1
)
(5.9
)
Net proceeds from private placement of
common stock
240.7
—
Dividends paid
(12.6
)
(10.5
)
Proceeds from stock options exercised
—
0.2
Shares withheld to satisfy employee tax
obligations
(1.6
)
(0.5
)
Other, net
(0.5
)
(0.6
)
Net cash provided by (used in) financing
activities
102.9
(25.9
)
Effect of exchange rate changes on cash
and cash equivalents
0.8
2.4
Net change in cash and cash
equivalents
203.6
34.0
Cash and cash equivalents, beginning of
the year
46.1
21.0
Cash and cash equivalents, end of
period
249.7
55.0
Less: cash and cash equivalents
included in current assets held for sale
—
(10.1
)
Cash and cash equivalents of continuing
operations, end of period
$
249.7
$
44.9
(1)
Includes cash flows provided by
discontinued operations of $5.3 million in 2022.
(2)
Includes capital expenditures of $1.2
million related to discontinued operations in 2022.
COMPASS MINERALS
INTERNATIONAL, INC.
SEGMENT INFORMATION
(unaudited, in
millions)
Three Months Ended March 31,
2023
Salt
Plant
Nutrition
Corporate &
Other(1)
Total
Sales to external customers
$
360.5
$
47.7
$
2.9
$
411.1
Intersegment sales
—
1.4
(1.4
)
—
Shipping and handling cost
124.0
6.1
—
130.1
Operating earnings (loss)(2)(3)
73.1
(0.7
)
(24.5
)
47.9
Depreciation, depletion and
amortization
14.8
8.1
1.6
24.5
Total assets (as of end of period)
924.1
472.7
387.9
1,784.7
Three Months Ended March 31,
2022
Salt
Plant
Nutrition
Corporate &
Other(1)
Total
Sales to external customers
$
391.3
$
54.3
$
2.9
$
448.5
Intersegment sales
—
0.7
(0.7
)
—
Shipping and handling cost
153.4
6.7
—
160.1
Operating earnings (loss)(2)
49.3
4.4
(33.7
)
20.0
Depreciation, depletion and
amortization
16.2
8.8
2.9
27.9
Total assets (as of end of period)
925.4
444.4
266.4
1,636.2
Six Months Ended March 31, 2023
Salt
Plant
Nutrition
Corporate &
Other(1)
Total
Sales to external customers
$
668.6
$
89.3
$
5.6
$
763.5
Intersegment sales
—
4.3
(4.3
)
—
Shipping and handling cost
226.7
10.8
—
237.5
Operating earnings (loss)(2)(3)
120.2
10.3
(54.7
)
75.8
Depreciation, depletion and
amortization
28.7
16.4
3.3
48.4
Six Months Ended March 31, 2022
Salt
Plant
Nutrition
Corporate &
Other(1)
Total
Sales to external customers
$
665.2
$
108.9
$
5.9
$
780.0
Intersegment sales
—
3.1
(3.1
)
—
Shipping and handling cost
241.8
14.0
—
255.8
Operating earnings (loss)(2)
88.7
13.9
(62.2
)
40.4
Depreciation, depletion and
amortization
32.4
17.6
6.2
56.2
(1)
Corporate and other includes corporate
entities, records management operations, 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 for the three
and six months ended March 31, 2023 include $3.3 million
restructuring charges and reimbursements related to the settled SEC
investigation of $0.4 million and $0.1 million, respectively.
Corporate operating results for the three and six months ended
March 31, 2022 include executive transition costs of $0.5 million
and $3.8 million, respectively, and a contingent loss accrual and
costs related to the SEC investigation of $13.6 million and $16.7
million, respectively.
(3)
In April 2023, the Company took initial
steps to align its cost structure to its current business needs.
These initiatives resulted in restructuring charges of $3.3
million, which impacted Corporate operating results for the three
and six months ended March 31, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005993/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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