Compass Minerals(CMP) - 2023 Q3 - Quarterly Report

Revenue and Sales Performance - Total revenue for the three months ended June 30, 2023 was $207.6 million, compared to$214.7 million for the same period in 2022[2] - Revenue from the United States for the three months ended June 30, 2023 was $164.4 million, a slight decrease from$167.8 million in the same period in 2022[2] - Plant Nutrition sales for Q2 2023 were $47.5 million, down from$55.6 million in Q2 2022, with sales volumes decreasing from 67,000 tons to 63,000 tons[43] Debt and Financial Position - The company had $730.2 million of outstanding indebtedness as of June 30, 2023, including$500.0 million in 6.75% Senior Notes due 2027 and $200.0 million in term loans[49] - The company's available borrowing capacity under its revolving credit facility was reduced to$359.9 million as of June 30, 2023, due to outstanding letters of credit totaling $15.1 million[49] - Consolidated total net leverage ratio was approximately 3.10x as of June 30, 2023, below the maximum allowed ratio of 5.0x[52] Investments and Acquisitions - The company invested$50 million in Fortress, acquiring a 45% ownership interest, as part of its strategy to strengthen its essential minerals businesses[66] - Recognized a gain of $16.2 million for the three months ended June 30, 2023 related to the previously held equity investment in Fortress, which was remeasured to fair value upon full acquisition of the business in May 2023[32] - Received$240.7 million in net proceeds from Koch Minerals & Trading, LLC, with $200 million allocated to advance the lithium project and$40.7 million used to reduce debt[65] Hedging and Derivatives - The company had natural gas derivative instruments in place to hedge 2.9 million MMBtus of forecasted natural gas purchases as of June 30, 2023[11] - The company's natural gas derivative instruments resulted in a $2.4 million loss on cash flow hedges for the three months ended June 30, 2023[9] Dividends and Shareholder Returns - The company paid a cash dividend of$0.15 per share on December 20, 2022, March 20, 2023, and June 20, 2023, with KM&T receiving $1.0 million and$3.0 million for the three and nine months ended June 30, 2023, respectively[19] Restructuring and Cost Management - The company recognized restructuring charges of $2.2 million and$5.5 million for the three and nine months ended June 30, 2023, respectively, as part of cost structure alignment initiatives[1] - Inflation increased logistics costs by $5 million to$7 million and product costs by $7 million to$9 million for the nine months ended June 30, 2023[73] Tax and Earnings Impact - Effective tax rate of 1,525% for the three months ended June 30, 2023, driven by the impact of the Fortress acquisition and a change in Canadian tax law[33] - Effective tax rate of 57% for the nine months ended June 30, 2023, influenced by income mix by country and a change in Canadian tax law[37] - The company's net earnings from discontinued operations for the prior period included a $1.6 million gain related to the South America chemicals business[62] Interest and Financial Expenses - Interest expense increased by$0.9 million to $14.3 million for the three months ended June 30, 2023, primarily due to higher interest rates[31] - Interest income increased by$4.2 million to $4.7 million for the three months ended June 30, 2023, driven by higher interest rates and cash balance from private placement proceeds[35] Strategic Initiatives and Future Projects - Pursuing development of a sustainable lithium brine resource near Ogden, UT to support the North American battery market[56]