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CM

COMPASS MINERALS INTERNATIONAL INC (CMP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY25 was seasonally soft due to a late start to winter; revenue fell 10.1% YoY to $307.2M, adjusted EBITDA was $32.1M, and diluted EPS was -$0.57. Salt volumes fell 13% YoY, while Plant Nutrition volumes rose 36% YoY despite lower pricing .
  • Management lowered FY25 Salt guidance (revenue to $900–$1,000M; adj. EBITDA to $205–$230M) and cut total company capex to $75–$85M, but raised Plant Nutrition guidance (volumes, revenue, and adj. EBITDA) as Ogden pond restoration starts to improve costs; total company adj. EBITDA now $152–$193M (down from $169–$209M) .
  • Key callouts: inventory reduction remains a core focus (NA highway deicing inventories down ~10% YoY through Dec), Goderich curtailment increases cost per ton near term, and potential Canadian import tariffs are excluded from guidance; management also plans a 2025 debt stack refinancing to gain covenant flexibility .
  • Stock reaction catalysts ahead: tariff decision path, pace of winter activity through March, execution on capex cuts and cost actions, and milestones on refinancing; management subsequently announced corporate cost reductions and winding down the Fortress fire retardant business (Mar 25) to boost free cash flow and deleverage .

What Went Well and What Went Wrong

  • What Went Well

    • Plant Nutrition volumes +36% YoY (102k tons), supporting a 24% revenue increase to $61.4M; per-unit distribution costs -2% and all-in product costs per ton -10% YoY as Ogden pond restoration shows early benefits .
    • Salt pricing resilient: total Salt ASP +1% YoY to $97.16/ton; C&I pricing +6% to ~$206/ton despite elevated industry inventories, reflecting disciplined bidding .
    • Liquidity improved to $126.3M at quarter end (cash $45.8M, revolver availability $80.5M); net cash used in operations improved sharply YoY (-$4.1M vs. -$52.3M) on working capital progress .

  • What Went Wrong

    • Late winter (minimal Oct–Nov snowfall) and full customer inventories led to Salt volumes -13% YoY; Salt adjusted EBITDA declined 28% YoY to $47.8M, with adjusted EBITDA/ton down 17% to $19.17 .
    • Goderich curtailment lifted production cost per ton (lower fixed-cost absorption), raising all‑in product costs/ton +16% YoY and weighing on Salt margins .
    • Consolidated profitability remained weak: operating margin 0.2%, adjusted operating margin 0.5%, and net loss of $23.6M; adjusted EBITDA down ~48% YoY to $32.1M .

Financial Results

Consolidated results (oldest → newest):

MetricQ1 2024 (Dec 31, 2023)Q3 2024 (Jun 30, 2024)Q4 2024 (Sep 30, 2024)Q1 2025 (Dec 31, 2024)
Revenue ($M)$341.7 $202.9 $208.8 $307.2
Operating Earnings ($M)$(53.6) $5.9 $(29.8) $0.5
Adjusted Operating Earnings ($M)$24.8 $7.4 $(12.8) $1.4
Adjusted EBITDA ($M)$62.2 $32.8 $15.6 $32.1
Net (Loss) ($M)$(75.3) $(43.6) $(48.3) $(23.6)
Diluted EPS ($)$(1.83) $(1.05) $(1.17) $(0.57)
Operating Margin %(15.7)% 2.9% (14.3)% 0.2%
Adjusted Operating Margin %7.3% 3.6% (6.1)% 0.5%

Segment breakdown (key items; oldest → newest):

Segment MetricQ1 2024Q4 2024Q1 2025
Salt Sales ($M)$274.3 $162.5 $242.2
Salt Operating Earnings ($M)$50.9 $21.0 $29.4
Salt Adjusted EBITDA ($M)$66.1 $38.1 $47.8
Salt Total Volumes (k tons)2,855 1,510 2,493
Salt Total ASP ($/ton)$96.08 $107.66 $97.16
Plant Nutrition Sales ($M)$49.7 $42.4 $61.4
Plant Nutrition Operating (Loss) ($M)$(2.3) $(29.7) $(3.1)
Plant Nutrition Adjusted EBITDA ($M)$7.2 $(3.7) $4.4
Plant Nutrition Volumes (k tons)75 68 102
Plant Nutrition ASP ($/ton)$660.41 $623.00 $602.86

KPIs and operating metrics:

KPIQ1 2025YoY/Seq Context
Liquidity ($M)$126.3 (Cash $45.8; RCF availability $80.5) Up from $38.3 cash in Q1’24; on call, “last week” liquidity ≈ $195M (cash ~$65M; RCF ~$130M) for updated context .
Cash from Operations ($M)$(4.1) Improved from $(52.3) in Q1’24 on inventory reductions .
Capex ($M)$21.8 for the quarter FY25 capex guide cut to $75–$85M (from $100–$110M) .
Salt adj. EBITDA/ton$19.17 Down 17% YoY; all-in product costs/ton +16% YoY (Goderich curtailment) .
Distribution costs/tonSalt: -2% YoY; Plant Nutrition: -2% YoY Efficiency and higher volumes helped Plant Nutrition distribution cost absorption .
Product recall charge$0.9M in Q1’25; EPS impact ~$0.02 Related A/R gross‑up for insurance claim ~$35M per Q&A .

Guidance Changes

MetricPeriodPrevious Guidance (Dec 16, 2024)Current Guidance (Feb 10, 2025)Change
Salt Highway Deicing Volumes (k tons)FY257,800–8,700 7,600–8,500 Lowered
Salt C&I Volumes (k tons)FY251,850–2,000 1,800–1,950 Lowered
Salt Total Volumes (k tons)FY259,650–10,700 9,400–10,450 Lowered
Salt Revenue ($M)FY25$940–$1,040 $900–$1,000 Lowered
Salt Adj. EBITDA ($M)FY25$225–$250 $205–$230 Lowered
Plant Nutrition Volumes (k tons)FY25285–305 295–315 Raised
Plant Nutrition Revenue ($M)FY25$175–$195 $180–$200 Raised
Plant Nutrition Adj. EBITDA ($M)FY25$14–$20 $17–$24 Raised
Corporate Adj. EBITDA ($M)FY25$(70)–$(61) $(70)–$(61) Maintained
Total Adj. EBITDA ($M)FY25$169–$209 $152–$193 Lowered
Capital Expenditures ($M)FY25$100–$110 $75–$85 Lowered
DD&A ($M)FY25$105–$115 $105–$115 Maintained
Interest Expense, net ($M)FY25$67–$72 $67–$72 Maintained
Effective Tax Rate (ex-VA)FY25(295%)–(290%) 0%–5% Methodology clarified/updated

Note: Guidance excludes potential impacts from any U.S. tariffs on products imported from Canada; highway deicing impact seen as negligible for FY25 given inventory already deployed. Tariff impacts under evaluation for C&I and Plant Nutrition .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 = Q3’24; Q-1 = Q4’24)Current Period (Q1’25)Trend
Inventory reduction; Goderich curtailmentQ3’24: press release only; company focused on resetting after restatements . Q4’24: curtailment at Goderich to address inventory following mild winter; flexible production planning .Inventory down ~10% YoY through Dec; Goderich curtailment raised cost/ton; continue to run curtailed until inventories normalize .Continuing; working capital improvement underway.
Potential tariffs on Canadian importsNot discussed in Q3/Q4 materials.New risk; excluded from guidance; minimal impact on FY25 highway deicing; C&I and SOP could be affected .Emerging risk to monitor.
Capex flexibilityFY25 plan initially $100–$110M with ability to scale back if mild winter .Cut to $75–$85M; deferring lower‑priority projects; safety/critical work preserved .More conservative capital spend.
Fortress fire retardantFY25 guidance included no revenue; discussions with USFS ongoing .Evaluating alternatives; ongoing USFS discussions . Post-quarter: fire retardant business to be wound down (Mar 25) .Negative; exit accelerates focus on core.
Ogden pond restoration (SOP)Plan to use KCl, restore ponds; expect lower all‑in costs .Early positive results; volumes up; Plant Nutrition guidance raised .Improving execution.
Debt refinancingIntent to refinance to more flexible, covenant‑light structure .Reiterated intention in 2025; liquidity update provided on call .Ongoing priority.
SG&A/cost actionsCost alignment initiatives discussed .SG&A progress offset by legal costs; subsequent corporate cost cuts announced Mar 25 .Accelerating cost discipline.

Management Commentary

  • “This quarter we began to see results from our back‑to‑basics strategy and initiatives to reduce inventory volumes, improve our cost structure, and enhance profitability.” — Edward C. Dowling Jr., CEO .
  • “We made good progress… Salt inventory volumes decline 10% year over year… In Plant Nutrition, the efforts… are taking root, which is enabling us to increase adjusted EBITDA guidance… despite a decline in expected pricing due to softness in the MOP market.” — CEO .
  • “In the Plant Nutrition business… ongoing restoration of the pond complex at Ogden… having a positive impact on the ponds… additional opportunities to improve productivity… beginning to take effect.” — press release commentary .
  • “In the Salt business… pricing was up 1% YoY… volumes down 13%… decrease in margin reflects the increase in production cost per ton due to the curtailment of production at Goderich last year.” — Peter Fjellman, CFO .
  • “We are moving the range for total adjusted EBITDA down by roughly $15 million… main driver… lighter start in sales… [but] January came in better than forecast… We are reducing the range of capital guidance by approximately $25 million.” — CEO on guidance .

Q&A Highlights

  • Why reduce full‑year volume guidance amid strong January weather? Management cited a conservative approach after a light Oct–Nov and said guidance could be adjusted if Feb–Mar weather significantly outperforms .
  • SG&A progress vs. headwinds: Headcount lower, but legal costs (e.g., class action) offset reductions; cost remains a focus (later reinforced by Mar 25 cuts) .
  • Working capital and inventories: Continued drawdown targeted; Goderich to remain curtailed until inventories normalize .
  • Capex cut detail: ~$25M reduction comes from deferring lower‑risk projects; EHS and emergency needs protected; projects could reappear in 2026 .
  • Tariffs: Minimal impact on current season (inventory forward‑deployed); potential scenarios for C&I and SOP; flexibility via Cote Blanche discussed .
  • Product recall accounting: ~$35M accounts receivable gross‑up tied to insurance claim noted by IR .

Estimates Context

  • Wall Street consensus from S&P Global was unavailable at the time of analysis due to an API request limit, so we cannot provide vs‑consensus comparisons for Q1 FY25 revenue/EPS or forward periods. We attempted to retrieve “Revenue Consensus Mean” and “Primary EPS Consensus Mean” for Q1 and Q2 FY25 but were rate‑limited by SPGI. As a result, the report anchors to company results and guidance and notes estimate comparison as unavailable [functions.GetEstimates error].

Key Takeaways for Investors

  • Salt remains volume‑sensitive; late winter depressed Q1 volumes and margins, compounded by higher cost inventory from 2024 curtailments. Focus remains on inventory drawdown and disciplined pricing to protect ASPs .
  • Plant Nutrition shows early operational traction (pond restoration, efficiency), lifting guidance despite softer global potash pricing; sustained volume execution and cost relief are the watch‑items .
  • Guidance reset: Salt down, Plant Nutrition up; total adj. EBITDA cut and capex reduced to align with cash generation—improving FCF resilience if execution holds .
  • Tariffs on Canadian imports are excluded from guidance; FY25 highway deicing impact seen as negligible, but C&I/SOP exposure is a swing factor to monitor .
  • Balance sheet/liquidity manageable near‑term; refinancing in 2025 is a key milestone to reduce covenant constraints and improve flexibility .
  • Cost actions accelerating: beyond capex cuts, the Mar 25 SG&A reductions and Fortress wind‑down sharpen focus on core and support deleveraging/FCF objectives .
  • Near‑term trading setup centers on weather through March, tariff headlines, and cadence of inventory normalization and capex discipline; medium‑term thesis hinges on structural cost improvements at Goderich and Ogden and successful refinancing .

Additional Detail (Salt and Plant Nutrition Narratives)

  • Salt: Revenue $242.2M (-12% YoY); operating earnings $29.4M (down 42% YoY), adjusted EBITDA $47.8M (down 28% YoY); volumes 2.49Mt (-13% YoY), total ASP +1% YoY; distribution costs/ton -2% YoY; all‑in product costs/ton +16% YoY from curtailed production cost absorption. C&I pricing +6% to ~$206/ton .
  • Plant Nutrition: Revenue $61.4M (+24% YoY); volumes 102k tons (+36% YoY); ASP ~$603/ton (-9% YoY); adjusted EBITDA $4.4M (down from $7.2M YoY) as per‑unit EBITDA was lower given DD&A dynamics despite cost improvements .

Notes:

  • Q1 special items included a $0.9M product recall cost (EPS impact ~$0.02) .
  • Liquidity at quarter end was $126.3M; management cited approximately $195M “last week” (post‑quarter) .
  • Forward‑looking commentary excludes tariff effects; “negligible” impact expected on FY25 highway deicing given inventory positioning .