Compass Minerals(CMP) - 2025 Q3 - Quarterly Results

Fiscal 2025 Third-Quarter Financial Highlights The company reported significant year-over-year improvements in key financial metrics, driven by strong performance in both Salt and Plant Nutrition segments Management Commentary Management highlighted strong third-quarter results with improved margins in Salt and increased operating income in Plant Nutrition, alongside enhanced financial flexibility - Salt Business: Costs declined, leading to adjusted EBITDA margin expansion and per-ton growth[2] - Plant Nutrition Business: Benefited from stronger sales volumes and lower production costs, driving improvements in operating income and adjusted EBITDA[2] - Financial Strategy: The company enhanced financial flexibility through refinancing and reduced net debt with the sale of certain Fortress assets[2] Quarterly Financial Results Compass Minerals achieved a significant year-over-year improvement in its third-quarter fiscal 2025 results, narrowing its net loss and increasing adjusted EBITDA Q3 FY2025 Key Financial Metrics (vs. Q3 FY2024) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $214.6M | $202.9M | +5.8% | | Net Loss | $(17.0)M | $(43.6)M | Improved | | Net Loss per Diluted Share | $(0.41) | $(1.05) | Improved | | Adjusted EBITDA | $41.0M | $32.8M | +25.0% | | Adjusted Net Loss per Diluted Share | $(0.39) | $(1.01) | Improved | - Salt business sales volumes increased by 4% year-over-year[3] - Plant Nutrition sales volumes saw a significant 21% increase compared to the prior year period[3] Business Segment Performance Both the Salt and Plant Nutrition segments demonstrated improved profitability, driven by increased sales volumes and reduced production costs Salt Business The Salt segment reported increased revenue and significantly improved profitability, driven by higher sales volumes and a decline in all-in product costs per ton Salt Segment Q3 FY2025 Performance | Metric | Q3 2025 | Q3 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $166.0M | $160.6M | +3% | | Sales Volumes | 1,544k tons | 1,483k tons | +4% | | Operating Earnings | $28.1M | $25.9M | +9% | | Adjusted EBITDA | $45.8M | $41.6M | +10% | | Adjusted EBITDA per ton | $29.66 | $27.98 | +6% | - Highway deicing sales volumes increased 5% year-over-year, while Consumer and Industrial (C&I) sales volumes grew by 2%[5] - All-in product costs per ton declined 2% from the prior-year quarter, contributing to margin expansion[6] Plant Nutrition Business The Plant Nutrition segment achieved strong revenue growth and a dramatic turnaround in profitability, primarily due to a substantial reduction in product costs Plant Nutrition Segment Q3 FY2025 Performance | Metric | Q3 2025 | Q3 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $44.8M | $38.8M | +15% | | Sales Volumes | 68k tons | 56k tons | +21% | | Operating Earnings (Loss) | $5.2M | $(1.4)M | Turnaround | | Adjusted EBITDA | $11.4M | $7.2M | +58% | - The average sales price per ton decreased by 5% year-over-year to approximately $659, reflecting global supply conditions for potassium-based fertilizers[7] - A significant 23% year-over-year decrease in all-in product costs per ton was a key driver of the improved profitability[8] Financial Position and Cash Flow The company demonstrated robust cash flow generation and maintained a strong liquidity position, supported by inventory reduction and strategic asset sales Cash Flow Analysis For the first nine months of fiscal 2025, the company significantly improved cash from operating activities and reduced cash used in investing activities Nine Months Ended June 30 Cash Flow Summary (in millions) | Cash Flow Activity | FY2025 | FY2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $204.6 | $27.1 | | Net Cash used in Investing Activities | $(34.7) | $(95.0) | | Net Cash (used in) provided by Financing Activities | $(111.5) | $42.2 | - The primary driver for the significant improvement in operating cash flow was a reduction in salt inventory levels[9] - The company received net proceeds of $19.6 million from the sale of assets related to its exit from the fire retardant business[10] Liquidity and Financial Position Compass Minerals concluded the third quarter with substantial liquidity, comprising cash and available revolving credit, ensuring strong financial flexibility Liquidity Position as of June 30, 2025 | Component | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $79.4 | | Availability under revolving credit facility | $309.3 | | Total Liquidity | $388.7 | Fiscal 2025 Outlook and Bid Season Update The company has updated its fiscal 2025 guidance, projecting increased adjusted EBITDA, and anticipates positive pricing and volume trends for the upcoming North American bid season Updated Fiscal 2025 Guidance The company has refined its full-year fiscal 2025 guidance, projecting an increased range for total adjusted EBITDA and providing segment-specific contributions FY2025 Adjusted EBITDA Guidance (in millions) | Segment | 2025 Range | | :--- | :--- | | Salt | $220 - $229 | | Plant Nutrition | $24 - $27 | | Corporate | ($59) - ($55) | | Total Compass Minerals | $185 - $201 | FY2025 Other Guidance | Metric | 2025 Range | | :--- | :--- | | Capital Expenditures | $75M - $85M | | Interest Expense, net | $70M - $75M | | Depreciation, depletion and amortization | $105M - $115M | 2025/2026 North American Bid Season Update With approximately 70% of the bidding process complete, the company expects favorable pricing and volume increases for the upcoming North American highway deicing season - Expected average contract selling price for the upcoming season to be 2%-4% higher than fiscal 2025[22] - Committed bid volumes are expected to increase by approximately 3%-5% compared to fiscal 2025[22] Appendix: Financial Statements and Reconciliations This appendix provides comprehensive financial data, including detailed non-GAAP reconciliations and unaudited GAAP financial statements for the reported periods Non-GAAP Reconciliations This section provides detailed reconciliations of non-GAAP financial measures, such as Adjusted EBITDA, to their most directly comparable GAAP counterparts, used by management to assess core business performance Reconciliation of Net Loss to Adjusted EBITDA (Q3 FY2025) | (in millions) | Amount | | :--- | :--- | | Net loss | $(17.0) | | Interest expense | 16.3 | | Income tax expense | 3.4 | | Depreciation, depletion and amortization | 23.2 | | EBITDA | 25.9 | | Adjustments (Loss on debt extinguishment, etc.) | 15.1 | | Adjusted EBITDA | $41.0 | - Special items adjusted in the nine months ended June 30, 2025, totaled $60.0 million before tax, primarily consisting of $53.7 million in impairments related to the exit of the Fortress business[33] Consolidated Financial Statements This section includes the company's unaudited GAAP financial statements, encompassing the Consolidated Statements of Operations, Balance Sheets, Cash Flows, and Segment Information Consolidated Statements of Operations The company reported a narrowed net loss for both the third quarter and the nine-month period of fiscal 2025, indicating improved operational performance Nine Months Ended June 30 Results (in millions) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Sales | $1,016.4 | $908.6 | | Gross Profit | $152.3 | $175.5 | | Operating Income (Loss) | $13.3 | $(87.0) | | Net Loss | $(72.6) | $(157.8) | Condensed Consolidated Balance Sheets As of June 30, 2025, the company's total assets decreased primarily due to reduced inventories, while total long-term debt also saw a notable reduction Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Sept. 30, 2024 | | :--- | :--- | :--- | | Total Assets | $1,537.4 | $1,640.1 | | Inventories, net | $264.7 | $414.1 | | Total Liabilities | $1,287.6 | $1,323.5 | | Long-term debt, net | $825.3 | $910.0 | | Total Stockholders' Equity | $249.8 | $316.6 | Consolidated Statements of Cash Flows For the nine months ended June 30, 2025, the company generated significant cash from operating activities, while managing investing and financing outflows - A significant positive change in inventories contributed $138.0 million to operating cash flow for the nine-month period[65] - Major financing activities included net repayments under the revolving credit facility and debt refinancing, including the issuance of 2030 Notes and repurchase of 2027 Notes[65] Segment Information For the nine months ended June 30, 2025, the Salt segment was the primary revenue and earnings driver, while Plant Nutrition also contributed positively to operating earnings Nine Months Ended June 30, 2025 Segment Results (in millions) | Segment | Sales to External Customers | Operating Earnings (Loss) | | :--- | :--- | :--- | | Salt | $840.9 | $124.4 | | Plant Nutrition | $164.5 | $0.3 | | Corporate & Other | $11.0 | $(111.4) | | Total | $1,016.4 | $13.3 |