Compass Minerals Intl Inc

Today we will discuss our most recent quarterly results and provide an update of our outlook for fiscal 2025. We will begin with prepared remarks from our President and CEO, Edward Dowling, and our CFO, Peter Fellman. Joining in for the question and answer portion of the call will be Pat Maron, our Chief Operations Officer, and Ben Nichols, our Chief Commercial 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, August 12th, 2025. 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. And with that, I will now turn the call over to Ed.

Thank you, Brent. Good morning, everyone, and thank you for joining us today. I'm pleased to report that we had a solid third quarter. I'll begin by commenting on the plant nutrition business. We talked in the past about needing to improve the cost structure at Ogden and a plan to do so. We're making good progress on that front. An added benefit of the work we've been doing in Utah is we're seeing a more consistent and higher productivity at the plant, allowing us to confidently serve businesses beyond our core market in the western U.S. These efforts have resulted in strong sales volumes, complemented by lower production costs this quarter that more than offset lower pricing and higher per unit distribution costs. The net result is we saw improvements in the per unit operating earnings and adjusted EBITDA for the quarter. In the salt business, on a per ton basis, we saw distribution costs hold flat and production costs decrease by 2%. This allowed us to realize improvements in both segment operating earnings and adjusted EBITDA on a per ton basis. Bid season is a big focus for the salt business in the third quarter. Presently, approximately 70% of the company's North American highway de-icing bid process has been completed. We expect the contracted selling price for the coming season to be up 2% to 4% year over year and committed bid volumes to be up 3% to 5%. As a reminder, bid volumes establish service levels for certain customers and sales volumes will ultimately be driven by winter weather. Coming out of this year's de-icing season, we expected to see increases in both price and commitments, so things are playing out generally how we thought they would. An important step we completed in the third quarter was the refinancing that we've discussed over the last couple of quarters. That exercise improves our financial flexibility, enhances our liquidity, extends our maturity profile, all of which helps strengthen our ability to continue executing on our back-to-basics strategy. Our financial position was further augmented in the quarter with the sale of the majority of fortress assets and intellectual property for net proceeds of approximately $20 million. It's worth reiterating what we're fundamentally working to achieve with our back-to-basics strategy. Our focus is to improve cash flow generating capability of the company by optimizing business practices and structures, lowering capital intensity of our assets, and improving the efficiency of our operations. I'm pleased with the progress we are making. With disciplined execution, will continue to unlock intrinsic value of the company. With that, I'll turn the call over to Peter for a review of our third quarter results.

Thanks, Ed. I'll make a few comments about the quarter, and then we'll turn the call over to Q&A. For the third quarter, consolidated revenue was $215 million, up approximately 6% year-over-year. Operating income for the quarter was $15.9 million, which is an improvement from operating income of $5.9 million last year. Consolidated net loss of $17 million compared to a net loss of $43.6 million in the prior year period. Adjusted EBITDA for the quarter increased by 25% to $41 million, which compares to $32.8 million a year ago. In the salt business, revenue in the third quarter was $166 million compared to $160.6 million a year ago. Pricing was down 1% year over year to approximately $108 per ton. with volumes up 4% compared to the prior year period. Net revenue per ton, which accounts for distribution costs, decreased 1% to $75. On a per ton basis, operating earnings came in 4% higher year over year at $18.20 per ton, while adjusted EBITDA per ton increased by 6% to $29.66. The increase in per ton margins reflects the decrease in production costs compared to last year as price and distribution costs were more or less flat year over year. In the plant nutrition business, revenue for the third quarter was $45 million, which is up 15% year over year from $39 million. Sales volume 21% from prior year period, while pricing was down 5% for the same period. Distribution costs per ton increased 10% to around $98 per ton and all-in production cost per ton decreased approximately 23%. Turning to the balance sheet, I'll comment on inventory and our financial position briefly. North American highway de-icing inventory value and volumes increased sequentially by 28% and 27% respectively. This is a normal seasonal build as we prepare for the coming de-icing season. We remain mindful of past challenges with excess inventory and are committed to avoiding similar issues. As of the end of June, North American highway de-icing inventory levels are approximately 50% lower than last year. We are taking a disciplined approach to production planning and inventory management and will continue to refine our strategy as we complete the bid season. Regarding our financial position, at quarter end, we have liquidity of $388 million comprises $79 million of cash and revolver capacity of around $309 million. These amounts reflect the cash from the Fortress asset sale and the refinancing activity that Ed referred to in his remarks. The amendment to our credit facility that occurred contemporaneously with the new note issuance had two important changes. First, it locked in the commitment level of the facility at $325 million through the life of the facility. and eliminated the step downs that were scheduled in the prior agreement. Second, it moved the leveraged covenant from a total net debt calculation to a net first lien debt measure. These changes enhance our liquidity and provide additional financial flexibility. Total net debt as of June 30th, 2025 was $746 million, which is down 116 million or 13% year over year. Reducing leverage is a key component to our back to basics strategy. and we're making solid progress towards that goal. It was a strong quarter for the company from a financial perspective. Despite increasing inventory levels, we were free cash flow positive, and that is before including the proceeds from the fortress divestiture. From a guidance perspective, we've increased our adjusted EBITDA guidance slightly for the year. At the midpoint, we are now showing $193 million for the year, which is an increase from a midpoint of $188 million coming out of 2Q25. The increase is being driven by plant nutrition business, where the stronger sales and effective cost management Ed referred to are translating to better financial performance. We also have a slight uptick in our projection for SALT EBITDA. Our guidance for capital expenditures remains unchanged at a range of $75 to $85 million. I'll now open the floor for questions. Operator?