Compass Minerals International, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Plant Nutrition: Made progress on improving cost structure at Ogden, seeing more consistent and higher productivity, strong sales volumes, lower production costs offsetting lower pricing and higher distribution costs, leading to improved per unit operating earnings and adjusted EBITDA.
• Salt: On a per ton basis, distribution costs held flat and production costs decreased by 2%. Approximately 70% of the company's North American highway deicing bid process was completed, with expected contracted selling price up 2% to 4% year-over-year and committed bid volumes up 3% to 5%.
• Refinancing and Other: Completed refinancing to improve financial flexibility, liquidity, and maturity profile. Sold majority of Fortress assets and intellectual property for net proceeds of ~$20 million. Focus of Back-to-Basic strategy on improving cash flow, lowering capital intensity, and operational efficiency.
• Financials: Consolidated revenue $215 million, up ~6% year-over-year. Operating income $15.9 million (improved from $5.9 million y-o-y). Consolidated net loss $17 million (better than $43.6 million y-o-y). Adjusted EBITDA $41 million, up 25% y-o-y. Balance sheet: Liquidity $388 million, total net debt $746 million (down $116 million or 13% y-o-y), free cash flow positive.

Segment Performance

• Plant Nutrition: Revenue for the third quarter was $45 million, up 15% year-over-year from $39 million. Sales volume increased, pricing was down 5% for the period, distribution costs per ton increased 10% to around $98 per ton, and all-in production cost per ton decreased approximately 23%.
• Salt: Revenue in the third quarter was $166 million compared to $160.6 million a year ago. Pricing was down 1% year-over-year to approximately $108 per ton with volumes up 4% compared to the prior year period. Net revenue per ton, which accounts for distribution costs, decreased 1% to $75. On a per ton basis, operating earnings came in 4% higher year-over-year at $18.20 per ton, while adjusted EBITDA per ton increased by 6% to $29.66.

Guidance

• Increased adjusted EBITDA guidance for the year to midpoint $193 million (up from midpoint $188 million coming out of 2Q '25), driven by Plant Nutrition's stronger sales and effective cost management.
• Slight uptick in Salt EBITDA projection.
• Capital expenditures guidance unchanged at a range of $75 million to $85 million.

Risks

• Remarks reflect financial and operational outlooks as of August 12, 2025, involving assumptions and uncertainties that could cause actual results to differ materially. Discussion of these risks can be found in SEC filings at investors.compassminerals.com.

Question and Answer

• Q: Can you help us understand if you get 2% to 4% higher highway deicing pricing, gross pricing and when you factor in inflation, does that suggest your netbacks for next winter or the upcoming winter are going to be the same, higher or lower on this results out of bid season? A: Our focus is on value over volume. We're in the middle of budgeting season; costs are coming down. Guidance will be done once budgets are finalized and through the Board, generally on November call.
• Q: I missed part of the prepared remarks, and I had a question or a clarification question on your comment regarding North American highway deicing inventories down 50% relative to last year. I assume that's your inventory levels or that's industry inventory levels? A: That's our inventory levels. We'll be managing working capital carefully, not going back to excess inventory like last year.
• Q: Do you have a sense as to where broader industry inventory levels are? And then I guess the other question would be just when you think about your balance sheet, where are you trying to get to with regard to leverage on maybe a normalized EBITDA basis going forward? A: On industry inventories, it's speculative; industry inventories would be down y-o-y. Regarding balance sheet, we'd like to work towards investment grade, aiming for debt-to-equity or EBITDA ratio of between 2 and 3, focusing on using cash flow to pay down debt.