Compass Minerals(CMP) - 2025 Q1 - Quarterly Results

Overview and Management Commentary This section provides management's strategic commentary, highlighting progress on the 'back-to-basics' strategy, inventory reduction, and cost structure improvements Management Commentary Management highlighted progress on their 'back-to-basics' strategy, focusing on reducing salt inventory, improving Plant Nutrition's cost structure, and enhancing profitability - The company is implementing a "back-to-basics" strategy focused on reducing inventory, improving cost structures, and enhancing profitability to unlock intrinsic value[2][3] - North American salt inventory volumes declined 10% year-over-year through December, despite a slow start to the winter deicing season[3] - Cost management efforts in the Plant Nutrition segment are taking root, enabling an increase in the segment's adjusted EBITDA guidance despite expected price declines[3] Financial Performance This section details the company's first-quarter financial results, including revenue, adjusted EBITDA, and net loss performance First-Quarter Financial Results Q1 FY2025 saw revenue decline to $307.2 million and adjusted EBITDA drop to $32.1 million, resulting in a net loss of $23.6 million Q1 Fiscal 2025 Financial Highlights (vs. Q1 Fiscal 2024) | Metric (in millions, except per share data) | Q1 FY2025 (ended Dec. 31, 2024) | Q1 FY2024 (ended Dec. 31, 2023) | | :--- | :--- | :--- | | Revenue | $307.2 | $341.7 | | Operating earnings (loss) | $0.5 | $(53.6) | | Adjusted EBITDA | $32.1 | $62.2 | | Net loss | $(23.6) | $(75.3) | | Net loss per diluted share | $(0.57) | $(1.83) | | Adjusted net (loss) earnings | $(22.9) | $3.1 | | Adjusted net (loss) earnings per diluted share | $(0.55) | $0.07 | Segment Analysis This section analyzes the performance of the Salt, Plant Nutrition, and Fortress North America segments, detailing revenue, volume, and strategic initiatives Salt Business Salt segment revenue decreased 12% to $242.2 million due to lower sales volume and higher per-ton costs from curtailed production, despite stable pricing - The company is focused on reducing North American highway deicing salt inventory, which led to curtailed production at the Goderich and Cote Blanche mines[5] Salt Segment Q1 Performance | Metric | Q1 FY2025 | Q1 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $242.2M | $274.3M | -12% | | Sales Volume | 2,493k tons | 2,855k tons | -13% | | Operating Earnings | $29.4M | $50.9M | -42% | | Adjusted EBITDA | $47.8M | $66.1M | -28% | | Avg. Highway Deicing Price | $69.50/ton | $70.36/ton | -1% | | Avg. C&I Price | $205.74/ton | $194.94/ton | +6% | - All-in product costs per ton rose 16% year-over-year due to lower fixed cost absorption from curtailed production[10] Plant Nutrition Business Plant Nutrition revenue grew 24% to $61.4 million driven by a 36% volume increase, despite a 9% price decline, with costs per ton decreasing 10% - The company is focused on improving the segment's cost structure, with ongoing restoration of the Ogden pond complex expected to enhance SOP raw material consistency and grade[11] Plant Nutrition Segment Q1 Performance | Metric | Q1 FY2025 | Q1 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $61.4M | $49.7M | +24% | | Sales Volume | 102k tons | 75k tons | +36% | | Average Sales Price | $603/ton | $660/ton | -9% | | All-in Product Costs/ton | N/A | N/A | -10% | | Adjusted EBITDA | $4.4M | $7.2M | -39% | Fortress North America The company is exploring strategic alternatives for Fortress North America and is in discussions with the USFS regarding its Qela fire retardant product - The company is evaluating various alternatives for the future of Fortress North America[14] - Discussions are ongoing with the U.S. Forest Service (USFS) for the evaluation and testing of its fire retardant, Qela[14][15] Cash Flow and Financial Position This section outlines the company's cash flow activities and financial position, highlighting improvements in operating cash flow and current liquidity Cash Flow and Liquidity Net cash used in operating activities improved to $4.1 million due to inventory reduction, with total liquidity at quarter-end reaching $126.3 million Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 FY2025 | Q1 FY2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4.1) | $(52.3) | | Net cash used in investing activities | $(22.2) | $(49.3) | | Net cash provided by financing activities | $53.1 | $108.1 | - The company ended the quarter with $126.3 million of liquidity, comprising $45.8 million in cash and $80.5 million of availability under its revolving credit facility[18] Fiscal 2025 Outlook This section presents the updated fiscal 2025 outlook, including segment-specific and total company adjusted EBITDA guidance and capital expenditure projections Segment and Total Company Outlook Fiscal 2025 outlook projects total adjusted EBITDA between $152 million and $193 million, with Plant Nutrition guidance increased and capital expenditures reduced to $75-$85 million Fiscal 2025 Segment Guidance (in millions, except volumes) | Segment | Metric | 2025 Range | | :--- | :--- | :--- | | Salt | Total Sales Volumes (k tons) | 9,400 - 10,450 | | | Revenue | $900 - $1,000 | | | Adj. EBITDA | $205 - $230 | | Plant Nutrition | Sales Volumes (k tons) | 295 - 315 | | | Revenue | $180 - $200 | | | Adj. EBITDA | $17 - $24 | | Corporate | Adj. EBITDA | ($70) - ($61) | Fiscal 2025 Total Company Guidance (in millions) | Metric | 2025 Range | | :--- | :--- | | Total Adj. EBITDA | $152 - $193 | | Capital Expenditures | $75 - $85 | - Capital expenditure guidance was lowered from a range of $100 million - $110 million to $75 million - $85 million[26][27] - Guidance does not include any potential impacts from tariffs on products imported from the company's Canadian operations[19] Financial Statements and Reconciliations This section provides detailed non-GAAP reconciliations, consolidated financial statements, and segment-specific financial information for the reporting period Non-GAAP Reconciliations This section details reconciliations of non-GAAP financial measures to GAAP, highlighting adjustments for product recall costs in Q1 FY2025 and impairment/restructuring charges in Q1 FY2024 - Q1 FY2025 results were adjusted for $0.9 million in product recall costs[38][43] - Q1 FY2024 results included adjustments for $74.8 million in impairments and $3.6 million in restructuring charges related to the termination of the lithium development project[40][44] Consolidated Reconciliation Summary (in millions) | Metric | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Q1 FY25 Operating Earnings | $0.5 | $0.9 | $1.4 | | Q1 FY24 Operating Earnings | $(53.6) | $78.4 | $24.8 | | Q1 FY25 Net Loss | $(23.6) | $0.7 | $(22.9) | | Q1 FY24 Net Loss | $(75.3) | $78.4 | $3.1 | Consolidated Financial Statements Unaudited consolidated financial statements show a Q1 net loss of $23.6 million, total assets of $1.72 billion, and improved operating cash flow - The Consolidated Statement of Operations reported a gross profit of $34.3 million and a net loss of $23.6 million for the three months ended Dec. 31, 2024[60] - The Condensed Consolidated Balance Sheet shows total assets of $1,720.9 million and total liabilities of $1,457.9 million as of Dec. 31, 2024[62] - The Condensed Consolidated Statement of Cash Flows shows net cash used in operating activities of $4.1 million, a significant improvement from the $52.3 million used in the prior-year period[64] Segment Information This section provides detailed segment financial data for Q1 FY2025, including sales, operating earnings, and assets for Salt, Plant Nutrition, and Corporate & Other Segment Information for Three Months Ended Dec. 31, 2024 (in millions) | Segment | Sales to External Customers | Operating Earnings (Loss) | Total Assets (as of end of period) | | :--- | :--- | :--- | :--- | | Salt | $242.2 | $29.4 | $1,092.4 | | Plant Nutrition | $61.4 | $(3.1) | $388.1 | | Corporate & Other | $3.6 | $(25.8) | $240.4 | | Total | $307.2 | $0.5 | $1,720.9 |