COMPASS MINERALS INTERNATIONAL INC Q2 FY2025 earnings call

• Last year, the company pivoted to focus on core business to improve cash flow, optimize practices, lower capital intensity, and improve operations. Progress on Back-to-Basic strategy continues.
• Reduced North American highway deicing inventory levels: value down 47% y-o-y, volumes down 59% y-o-y, which released working capital and helped pay down debt.
• Salt and fertilizer products produced in Canada are USMCA exempt, allowing ramping up production to favor per unit cost.
• In March, eliminated over 10% of corporate workforce to align cost structure. Began winding down Fortress North American business to simplify operations and accelerate deleveraging.

In the salt business, second quarter revenue was $433 million compared to $310 million a year ago. Pricing was down 5% y-o-y to ~$85 per ton with volumes up 47%. Net revenue per ton (including distribution costs) decreased 4% to $57. Operating earnings per ton were $13.10, down 31%, and adjusted EBITDA per ton decreased ~30% to $16.75. The decrease in margins was due to higher production costs from curtailment of Goderich mine production and software pricing. For the Plant Nutrition business, second quarter revenue was $58 million, up 16% y-o-y from $50 million. Sales volumes were up 26%, but pricing was down 8%. Distribution costs per ton increased 13% to ~$102 per ton. North American highway deicing inventory value declined 47% y-o-y and volumes associated with it were down almost 60%. Revenue contribution: Salt segment likely contributed a significant portion given its larger revenue compared to Plant Nutrition.

• Increased adjusted EBITDA guidance for the year to a midpoint of $188 million, up from Q1 2025 midpoint of $173 million. Includes ~$8 million gain from write-off of fortress contingent consideration liability. Even adjusting for that, improvements in Salt and Corporate segments.
• Capital expenditures guidance unchanged at $75 million to $85 million range.

• Remarks include assumptions and expectations with risks and uncertainties that could cause actual results to differ materially. Discussion of these risks can be found in SEC filings online at investors.compassminerals.com.

Q: Why did accounts receivable level rise from December to March relative to sales/historical season-ending levels?

A: There are insurance settlement matters in AR and AP balances. AR balances will continue to come down slightly with natural inventory sell-through.

Q: How are early requests for bids looking for the upcoming season?

A: Tender sizes for municipal and state levels are ranging to slightly up, significantly up in some regions. The market is more constructive than past several years.

Q: What's the plan to restore cash cost/production cost performance in SOP business?

A: It's a multiyear effort. Starts with better controlling brine chemistries in evaporation ponds to restore ponds. Early indications are good with increased volumes in Utah. Engineering work on dryer/compaction plant for SOP production is advanced. Efforts to reduce SOP production costs will continue via these initiatives.