Compass Minerals Intl Inc

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals fiscal fourth quarter and full year 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. We do ask that you please limit your questions to one and one follow-up, then re-enter the queue for any additional questions that you might have. I would now like to turn the conference over to Brent Collins, Vice President, Treasurer, and Investor Relations. Please go ahead.

Thank you, Operator. Good morning and welcome to the Compass Minerals fourth quarter and full year 2024 earnings conference call. Today, we will discuss our recent results and provide our outlook for fiscal 2025. We will begin with prepared remarks from our President and CEO, Edward Dowling, and our CFO, Jeffrey Caffey. Joining in for the question and answer portion of the call will be Ben Nichols, our Chief Sales Officer, and Jenny Hood, Chief Supply Chain Officer. Before we get started, I will remind everyone that the remarks we make today reflect financial and operational outlooks as of today's date, December 17, 2024. These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially. The discussion of these risks can be found in our SEC filings located online at investors.compassminerals.com. Our remarks today also include certain non-GAAP financial measures. You can find reconciliations of these items in our earnings release or in our presentation, both of which are available online. I'll now turn the call over to Ed.

Thank you, Brent. Good morning, everyone, and thank you for joining us on our call today. It's good to be speaking to you again after we've had to take a pause as we went through our restatements. I want to begin my remarks today by providing a brief recap of the year. To say fiscal 2024 was an eventful and transitional year for the company would be a major understatement. The transition began in November 23, when we announced the suspension of our lithium project in Utah, which was formally terminated a few months later in February. This was a significant pivot for the company that aligned with the renewed strategy commitment to focus efforts on improving performance in our core salt and plant nutrition businesses. We all know that different jobs require different skill sets, and it's only amplified when it involves a shift in strategy. As the company reordered towards the back-to-basics strategy, changes were made in our senior leadership team, including my appointment in January as president and CEO, and across the organization to ensure they had the right team in place to execute effectively. In the midst of these changes in directions of leadership, we experienced within our served markets one of the weakest North American highway de-icing seasons of the last quarter century. there were very clearly financial and operations ramifications that arose from that, which led us to discontinue our dividend, curtail production at Godrich Mine and other mines, and to take a hard look at and take actions to improve our cost structure. There was also a pause that we had to take in the development of Fortress, our fire requirements business, as well as financial reporting restatement issue we had to work our way through in the recent months. Clearly we had our fair share of challenges in fiscal 24 and it's a year we'll be happy to have behind us. However, I'm reminded of saying it's darkest before the dawn. And I think it's applicable here at Compass Metals. The fact remains unchanged that we have the privilege of operating high quality advantage salt plant nutrition assets with longstanding established markets. Certain of those assets are quite frankly irreplaceable and could not be replicated today. For example, in Godrich, Ontario, we operate the world's largest underground salt line located 1,800 feet below Lake Huron. The geological attributes of this mine and the fact that it has access to a deepwater port positions Godrich to be a low-cost producer for much of the Great Lakes region. In Ogden, Utah, we operate the largest sulfate potash facility of its kind in the Western Hemisphere. When done correctly, Our use of naturally occurring processes to extract essential minerals from the Great Salt Lake allows us to produce SOP at a lower cost and more environmentally friendly manner than other production processes. The location of our Ogden facility is also beneficial given its relative close proximity to major producing areas on the west coast of high-value, chloride-sensitive crops such as fruits and nuts. Our back-to-the-basics strategy is focused on maximizing the potential of these and our other assets. Through this renewed focus, I'm confident that we can do a better job managing these assets to improve operations efficiency and reduce capital intensity. These efforts are already underway. As an example, at the Godrich Mine, the East Mains project, which is part of our mill relocation effort, will allow for a reconfiguration of the mine's operations we expect to provide a number of benefits over time. Those benefits will include improved access to development areas, improved ventilation, abandonment of higher ground cost control areas of the mine, and added flexibility in the production of operations. All of those have potential to improve the profitability of the mine, all things being equal. These and similar efforts across the platform should ultimately lower the cost structure of the company and improve the profitability of our operations, resulting in higher levels of cash generation for the company that can be used to reduce the absolute levels of debt of the company. Despite the challenging year, there are also some positives we should not lose sight of. First, we continue to build on and reinforce our culture and zero harm across the operations. Safety is a top priority for us, because it's the right thing to do for our people and it's the right thing to do for our business. Safety is also a leading indicator of operational performance. The past three years have been the safest in Compass Minerals history. We've seen a significant reduction in high potential incidents. We have a number of complex operating environments here at Compass Minerals, and I'm incredibly proud of our people for the focus and care they give to work every day. The fact that we've been able to drive our reportable and lost time accidents to these levels demonstrates the commitment of our employees to safety. In early September, the company also executed a binding voluntary agreement with the state of Utah that outlines water and conservation commitments we are making to benefit the sustainability of the Great Salt Lake. We work collaboratively with the state to arrive at an agreement that meaningful supports efforts by policymakers and other diverse stakeholders in Utah to ensure the long-term health of the lake. In that environment, this agreement is also an important step towards the company and it provides better predictability of our future water use allotment at Ogden and enables the avoidance of increased tax burden on mineral extraction enacted by the recent legislation in the state. Moving to our plans in fiscal 2025, I'll make a few comments on priorities for the year. In the salt business, consistent with prior comments we've made, our goal will be to reduce inventory levels and harvest cash that is hung up in working capital following last year's weak winter. As I mentioned earlier, last year we curtailed production in Godrich Mine to address this inventory overhang. We'll revisit production levels for the mine in the coming months after we've had a chance to gauge the highway de-icing activity. and plant nutrition business, our effort will be focused on advancing restoration of the pond complex at Ogden. This has been discussed in the past. This is a multi-year process that we've engaged with for a couple of years. The team at Ogden is working on developing and implementing processes to improve consistent grade of SOP raw materials going in the plant. This should allow for more efficient, less costly operations. Our plan to supplement our produced tons with purchased potash, or KCL, this year will provide a couple of benefits. First, it will ease the harvest demands on our ponds and provide them more time to recover and regenerate. Our early efforts in implementing this are going well. Second, it will improve the quality of the feedstock for the plant. We have several efficiency initiatives underway that we think will allow us to see all-in product costs decline this year. At Fortress, our plan is to finalize discussions with the U.S. Forest Service regarding the potential for a 2025 contract for our non-magnesium chloride-based aerial fire and retardant product. Regarding our capital allocation process, after environmental health and safety, dollars will be directed to the highest-ranked projects. We've organized a capital plan to flex up and down, like our operations, depending on how the highway de-icing season progresses. This process was implemented last year and has proven helpful. Other new improvement initiatives are underway. We'll increasingly highlight them as they progress. With respect to the balance sheet, we expect to refinance the debt stack this year with the intention of structuring in a way that better aligns with our current strategy. We believe that we will be able to move into a structure that provides more flexibility around covenants. Jeff will comment on this more in detail in a moment. Back to our second quarter call, I shared my vision for the company over the coming years. My goal, which is shared by our board and the senior leadership team, is to gear the company such that it generates free cash flow, even in mild winners, strong free cash flow in normal winners, and outstanding free cash flow in strong winners. That vision has not changed, and we are aggressively taking steps to achieve that goal. With that, I'll turn the call over to Jeff.