Compass Minerals Reports Preliminary Fiscal 2024 Third-Quarter Results
The following financial results and updated 2024 outlook are preliminary estimates and are subject to change until the filing of the company’s Form 10-Q for the quarter ended
MANAGEMENT COMMENTARY
"
FINANCIAL RESTATEMENT UPDATE
As previously disclosed,
The company is actively engaged with its current and predecessor auditors as the company corrects the errors and restates the affected financial statements. As part of that process, additional audit procedures covering fiscal years 2021 through 2023 have been required, thereby prolonging the process to complete the restatements. These amended financial statements must be completed before the company can file its Form 10-Q for the quarter ended
Until the restatements are completed,
PRELIMINARY QUARTERLY FINANCIAL RESULTS
|
|
Three Months Ended
|
||
(in millions, except per share data) |
|
|
2024 |
|
Revenue |
|
$ |
202.9 |
|
Operating earnings |
|
|
5.9 |
|
Adjusted operating earnings* |
|
|
7.4 |
|
Adjusted EBITDA* |
|
|
32.8 |
|
Net loss |
|
|
(43.6 |
) |
Net loss per diluted share |
|
|
(1.05 |
) |
Adjusted net loss* |
|
|
(42.1 |
) |
Adjusted net loss* per diluted share |
|
|
(1.01 |
) |
*Non-GAAP financial measure. Reconciliations to the most directly comparable GAAP financial measure are provided in tables at the end of this press release. |
PRELIMINARY QUARTERLY FINANCIAL HIGHLIGHTS
-
Preliminary adjusted EBITDA of
$32.8 million , which includes a non-cash gain of$0.9 million related to the decrease of the Fortress contingent liability discussed below; -
Strong Salt segment performance with adjusted EBITDA per ton of
$28.05 ; -
Mid-point of Salt business adjusted EBITDA guidance increased
$15 million for 2024; -
Average sales price for sulfate of potash increased for the second consecutive quarter to
$691.27 per ton; and -
Plant Nutrition adjusted EBITDA per ton and adjusted EBITDA margin of$128.57 and 18.6%, respectively.
SALT BUSINESS SUMMARY
Preliminary operating earnings for the quarter were
Preliminary Salt segment revenue totaled
PLANT NUTRITION BUSINESS SUMMARY
In the Plant Nutrition business, preliminary operating loss totaled
FORTRESS
FINANCIAL POSITION AND LIQUIDITY
The company ended the quarter with
At quarter-end, the preliminary consolidated total net leverage ratio was 4.3 times, within the company's net leverage covenant of 6.5 times. The company has amended its credit agreement and receivables financing agreement to accommodate the delay in providing required final compliance certifications related to third quarter of 2024 financial results until
PRELIMINARY UPDATED 2024 OUTLOOK
Preliminary updated guidance and commentary for 2024 is reflected below.
Salt Segment |
|
|
2024 Range |
Highway deicing sales volumes (thousands of tons) |
7,400 - 7,500 |
Consumer and industrial sales volumes (thousands of tons) |
1,800 - 1,900 |
Total salt sales volumes (thousands of tons) |
9,200 - 9,400 |
|
|
Revenue (in millions) |
|
Adj. EBITDA (in millions) |
|
The outlook for adjusted EBITDA from the Salt segment is improved from guidance provided on
The company continues to work toward reducing salt inventory levels in the coming deicing season and accelerating conversion of excess inventory to cash.
2024/2025 North American Bid Season
Approximately 70% of the company's North American highway deicing bidding process for the upcoming winter season has been completed. Based on bid results to date, which include both positive and negative price changes that reflect regional market conditions and competitiveness, the company expects its average contract selling price for the coming season to be approximately 2% lower than prices in fiscal 2024. Market bid volumes are expected to be down approximately 7% to 10% compared to fiscal 2024, which is consistent with expectations given inventory levels across the service market and producer supply positions following two consecutive mild winters. It is important to distinguish between committed bid volumes, which are used to establish minimum and maximum service levels for certain customers, and expected sales volumes, which will be driven ultimately by winter weather activity in the coming year. Sales volumes can be above or below committed volumes in any given deicing season.
Plant Nutrition Segment |
|
|
2024 Range |
Sales volumes (thousands of tons) |
265 - 275 |
Revenue (in millions) |
|
Adj. EBITDA (in millions) |
|
The revised
Corporate |
|||
|
2024 Range |
||
|
Fortress1 |
Other2 |
Total |
Adj. EBITDA (in millions) |
|
( |
( |
(1) |
Fortress contribution includes adjusted EBITDA carried over from its calendar year 2023 USFS take-or-pay contract as well as ongoing overhead costs; no assumptions with respect to 2024 activity with the USFS have been assumed. |
|
(2) |
Other adjusted EBITDA includes i) approximately |
Projected Corporate segment results shown in the table above include corporate expenses in support of the company's core businesses, operating expenses related to the company's terminated lithium project, Fortress financial results, and the results of DeepStore, the company's records and management services business in the
Total |
||||
|
2024 Adjusted EBITDA |
|||
|
Salt |
|
Corporate1 |
Total |
Adj. EBITDA (in millions) |
|
|
( |
|
|
|
|
|
|
|
2024 Capital Expenditures |
|||
|
Sustaining |
Lithium2 |
Fortress |
Total |
Capital expenditures (in millions) |
|
|
|
|
(1) |
Includes financial contribution of Fortress and DeepStore. |
|
(2) |
Lithium capital expenditures principally relate to items committed to or made prior to the suspension of further investment in the lithium project. As a result of the termination of the lithium project and the related impairment in the first quarter of 2024, a portion of these expenditures that related to committed items that had not been received by |
Total capital expenditures for the company in 2024 remain unchanged from the company’s prior guidance and are expected to be within a range of
Other Assumptions |
|
($ in millions) |
2024 Range |
Depreciation, depletion and amortization |
|
Interest expense, net |
|
Effective income tax rate (excl. valuation allowance and impairments) |
(25%) - (20%) |
CONFERENCE CALL
The occurrence and timing of an earnings call to discuss results for the third quarter of 2024 will be dependent on the ultimate completion of the aforementioned restatements.
About
Forward-Looking Statements and Other Disclaimers
This press release may contain forward-looking statements, including, without limitation, statements regarding preliminary results and information, statements about earnings potential and efforts to strengthen the company and improve shareholder returns; management of inventory levels;
Non-GAAP Measures
In addition to using
Management uses EBITDA, EBITDA adjusted for items which management believes are not indicative of the company’s ongoing operating performance (“Adjusted EBITDA”) and EBITDA margin to evaluate the operating performance of the company’s core business operations because its resource allocation, financing methods and cost of capital, and income tax positions are managed at a corporate level, apart from the activities of the operating segments, and the operating facilities are located in different taxing jurisdictions, which can cause considerable variation in net earnings. Management also uses adjusted operating earnings, adjusted operating margin, adjusted net earnings, and adjusted net earnings per diluted share, which eliminate the impact of certain items that management does not consider indicative of underlying operating performance. The presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or non-recurring items. Management believes these non-GAAP financial measures provide management and investors with additional information that is helpful when evaluating underlying performance. EBITDA and Adjusted EBITDA exclude interest expense, income taxes and depreciation, depletion and amortization, each of which are an essential element of the company’s cost structure and cannot be eliminated. In addition, Adjusted EBITDA and Adjusted EBITDA margin exclude certain cash and non-cash items, including stock-based compensation, impairment charges and certain restructuring charges. Consequently, any measure that excludes these elements has material limitations. The non-GAAP financial measures used by management should not be considered in isolation or as a substitute for net earnings, operating earnings, cash flows or other financial data prepared in accordance with GAAP or as a measure of overall profitability or liquidity. These measures are not necessarily comparable to similarly titled measures of other companies due to potential inconsistencies in the method of calculation. The calculation of non-GAAP financial measures as used by management is set forth in the following tables. All margin numbers are defined as the relevant measure divided by sales. The company does not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, as the company is unable to estimate significant non-recurring, unusual items and/or distinct non-core initiatives without unreasonable effort. The amounts and timing of these items are uncertain and could be material to the company’s results.
Adjusted operating earnings, adjusted operating earnings margin, adjusted net earnings (loss), and adjusted net earnings (loss) per diluted share are presented as supplemental measures of the company’s performance. Management believes these measures provide management and investors with additional information that is helpful when evaluating underlying performance and comparing results on a year-over-year normalized basis. These measures eliminate the impact of certain items that management does not consider indicative of underlying operating performance. These adjustments are itemized below. Adjusted net earnings (loss) per diluted share is adjusted net earnings (loss) divided by weighted average diluted shares outstanding. You are encouraged to evaluate the adjustments itemized above and the reasons management considers them appropriate for supplemental analysis. In evaluating these measures, you should be aware that in the future the company may incur expenses that are the same as or similar to some of the adjustments presented below.
Special Items Impacting the Three Months Ended |
||||||||||||||||||||
Item Description |
|
Segment |
|
Line Item |
|
Amount |
|
Tax
|
|
After Tax |
|
EPS Impact |
||||||||
Restructuring charges(2) |
|
Corporate and Other |
|
Other operating expense |
|
$ |
1.5 |
|
$ |
— |
|
$ |
1.5 |
|
$ |
0.04 |
||||
Total |
|
|
|
|
|
$ |
1.5 |
|
|
$ |
— |
|
|
$ |
1.5 |
|
|
$ |
0.04 |
|
(1) |
There were no substantial income tax benefits related to these items given the |
|
(2) |
Restructuring charges do not include certain reductions in stock-based compensation associated with forfeitures stemming from the restructuring activities. |
Reconciliation for Adjusted Operating Earnings
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Operating earnings |
$ |
5.9 |
|
Restructuring charges(1) |
|
1.5 |
|
Adjusted operating earnings |
$ |
7.4 |
|
Sales |
|
202.9 |
|
Operating margin |
|
2.9 |
% |
Adjusted operating margin |
|
3.6 |
% |
(1) |
The company incurred severance and related charges for reductions in workforce and changes to executive leadership and additional restructuring costs related to the termination of the company’s lithium development project. |
Reconciliation for Adjusted Net Loss
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Net loss |
$ |
(43.6 |
) |
Restructuring charges(1) |
|
1.5 |
|
Adjusted net loss |
$ |
(42.1 |
) |
|
|
||
Net loss per diluted share |
$ |
(1.05 |
) |
Adjusted net loss per diluted share |
$ |
(1.01 |
) |
Weighted-average common shares outstanding (in thousands): |
|
||
Diluted |
|
41,342 |
|
(1) |
The company incurred severance and related charges for reductions in workforce and changes to executive leadership and additional restructuring costs related to the termination of the company’s lithium development project. |
Reconciliation for EBITDA and Adjusted EBITDA
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Net loss |
$ |
(43.6 |
) |
Interest expense |
|
17.2 |
|
Income tax expense |
|
32.7 |
|
Depreciation, depletion and amortization |
|
26.1 |
|
EBITDA |
|
32.4 |
|
Adjustments to EBITDA: |
|
||
Stock-based compensation - non-cash |
|
(0.7 |
) |
Interest income |
|
(0.2 |
) |
Gain on foreign exchange |
|
(0.5 |
) |
Restructuring charges(1) |
|
1.5 |
|
Other expense, net |
|
0.3 |
|
Adjusted EBITDA |
$ |
32.8 |
|
(1) |
The company incurred severance and related charges for reductions in workforce and changes to executive leadership and additional restructuring costs related to the termination of the company’s lithium development project. |
Salt Segment Performance
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Sales |
$ |
160.6 |
|
Operating earnings |
$ |
25.9 |
|
Operating margin |
|
16.1 |
% |
EBITDA(1) |
$ |
41.6 |
|
EBITDA(1) margin |
|
25.9 |
% |
Sales volumes (in thousands of tons): |
|
||
Highway deicing |
|
1,090 |
|
Consumer and industrial |
|
393 |
|
Total Salt |
|
1,483 |
|
Average prices (per ton): |
|
||
Highway deicing |
$ |
77.20 |
|
Consumer and industrial |
$ |
194.35 |
|
Total Salt |
$ |
108.27 |
|
(1) |
Non-GAAP financial measure. Reconciliations follow in these tables. |
Reconciliation for Salt Segment EBITDA
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Reported GAAP segment operating earnings |
$ |
25.9 |
|
Depreciation, depletion and amortization |
|
15.7 |
|
Segment EBITDA |
$ |
41.6 |
|
Segment sales |
|
160.6 |
|
Segment EBITDA margin |
|
25.9 |
% |
(1) |
The company incurred severance and related charges related to a reduction of its workforce. |
Plant Nutrition Segment Performance
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Sales |
$ |
38.8 |
|
Operating loss |
$ |
(1.4 |
) |
Operating margin |
|
(3.6 |
)% |
EBITDA(1) |
$ |
7.2 |
|
EBITDA(1) margin |
|
18.6 |
% |
Sales volumes (in thousands of tons) |
|
56 |
|
Average price (per ton) |
$ |
691.27 |
|
(1) |
Non-GAAP financial measure. Reconciliations follow in these tables. |
Reconciliation for Plant Nutrition Segment EBITDA
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Reported GAAP segment operating loss |
$ |
(1.4 |
) |
Depreciation, depletion and amortization |
|
8.6 |
|
Segment EBITDA |
$ |
7.2 |
|
Segment sales |
|
38.8 |
|
Segment EBITDA margin |
|
18.6 |
% |
|
|||
|
Three Months Ended
|
||
|
|
2024 |
|
Sales |
$ |
202.9 |
|
Shipping and handling cost |
|
53.2 |
|
Product cost |
|
117.1 |
|
Gross profit |
|
32.6 |
|
Selling, general and administrative expenses |
|
27.5 |
|
Other operating income |
|
(0.8 |
) |
Operating earnings |
|
5.9 |
|
Other (income) expense: |
|
||
Interest income |
|
(0.2 |
) |
Interest expense |
|
17.2 |
|
Gain on foreign exchange |
|
(0.5 |
) |
Other expense, net |
|
0.3 |
|
Loss before income taxes |
|
(10.9 |
) |
Income tax expense |
|
32.7 |
|
Net loss |
$ |
(43.6 |
) |
|
|
||
Basic net loss per common share |
$ |
(1.05 |
) |
Diluted net loss per common share |
$ |
(1.05 |
) |
Weighted-average common shares outstanding (in thousands):(1) |
|
||
Basic |
|
41,342 |
|
Diluted |
|
41,342 |
|
(1) |
Weighted participating securities include RSUs and PSUs that receive non-forfeitable dividends and consist of 632,000 weighted participating securities for the three months ended |
|
|||
|
|
||
|
|
2024 |
|
ASSETS |
|||
Cash and cash equivalents |
$ |
12.8 |
|
Receivables, net |
|
92.3 |
|
Inventories |
|
407.5 |
|
Other current assets |
|
34.4 |
|
Property, plant and equipment, net |
|
787.9 |
|
Intangible and other noncurrent assets |
|
260.3 |
|
Total assets |
$ |
1,595.2 |
|
|
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current portion of long-term debt |
$ |
6.3 |
|
Other current liabilities |
|
182.1 |
|
Long-term debt, net of current portion |
|
868.8 |
|
Deferred income taxes and other noncurrent liabilities |
|
185.9 |
|
Total stockholders' equity |
|
352.1 |
|
Total liabilities and stockholders' equity |
$ |
1,595.2 |
|
|
||||||||||||||||
Three Months Ended |
|
Salt |
|
Plant
|
|
Corporate
|
|
Total |
||||||||
Sales to external customers |
|
$ |
160.6 |
|
$ |
38.8 |
|
|
$ |
3.5 |
|
|
$ |
202.9 |
||
Intersegment sales |
|
|
— |
|
|
|
2.8 |
|
|
|
(2.8 |
) |
|
|
— |
|
Shipping and handling cost |
|
|
48.2 |
|
|
|
5.0 |
|
|
|
— |
|
|
|
53.2 |
|
Operating earnings (loss)(2)(3) |
|
|
25.9 |
|
|
|
(1.4 |
) |
|
|
(18.6 |
) |
|
|
5.9 |
|
Depreciation, depletion and amortization |
|
|
15.7 |
|
|
|
8.6 |
|
|
|
1.8 |
|
|
|
26.1 |
|
Total assets (as of end of period) |
|
|
1,013.3 |
|
|
|
408.1 |
|
|
|
173.8 |
|
|
|
1,595.2 |
|
(1) |
Corporate and other includes corporate entities, records management operations, the Fortress fire retardant business, equity method investments, lithium costs and other incidental operations and eliminations. Operating earnings (loss) for corporate and other includes indirect corporate overhead, including costs for general corporate governance and oversight, lithium-related expenditures, as well as costs for the human resources, information technology, legal and finance functions. |
|
(2) |
Corporate operating results were impacted by net gains of |
|
(3) |
The company continued to take steps to align its cost structure to its current business needs. These initiatives impacted Corporate operating results and resulted in net severance and related charges for reductions in workforce and changes to executive leadership and additional restructuring costs related to the termination of the company’s lithium development project of |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240917394898/en/
Investor Contact
Vice President, Treasurer & Investor Relations
+1.913.344.9111
InvestorRelations@compassminerals.com
Media Contact
Chief Public Affairs and Sustainability Officer
+1.913.344.9198
MediaRelations@compassminerals.com
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