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CM

COMPASS MINERALS INTERNATIONAL INC (CMP)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 was solid on year-over-year improvements: revenue grew 5.8% to $214.6M, adjusted EBITDA rose 25% to $41.0M, and adjusted EPS improved to $(0.39) from $(1.01) a year ago, driven by lower costs in Salt and a cost-driven turnaround in Plant Nutrition .
  • Results were modest beats vs S&P Global consensus: revenue $214.6M vs $208.6M estimate (+2.9%); adjusted EBITDA $41.0M vs $37.5M estimate (+9.4%); adjusted EPS $(0.39) vs $(0.13) estimate (miss) as non-operating items weighed on EPS despite better operations (consensus values marked with asterisks) .
  • Guidance was refined upward at the midpoint: Total FY25 adjusted EBITDA raised to $185–$201M (prior $173–$202M) on stronger Plant Nutrition and slight uptick in Salt; capex unchanged at $75–$85M .
  • Strategic catalysts: refinancing closed ($650M 8.00% 2030 notes; partial redemption of 2027s) enhancing flexibility, liquidity at $388.7M, and continued deleveraging; bid season indicates +2–4% pricing and +3–5% committed volumes for the coming winter .

What Went Well and What Went Wrong

  • What Went Well

    • Salt cost discipline and per‑ton margin expansion: distribution cost/ton flat YoY, all‑in product costs down 2%, raising operating earnings and adjusted EBITDA per ton (+4% and +6%) .
    • Plant Nutrition operating turnaround: sales +15% YoY, per‑unit costs down 23%, operating income swung to +$5.2M from $(1.4)M; adjusted EBITDA rose to $11.4M from $7.2M .
    • Balance sheet progress and liquidity: liquidity $388.7M (cash $79.4M + revolver $309.3M) and total net debt reduction of $116M YoY; CEO underscored “back‑to‑basics” execution; CFO raised FY25 adjusted EBITDA midpoint to ~$193M .

  • What Went Wrong

    • EPS optics still negative: GAAP EPS $(0.41) with loss on debt extinguishment ($7.6M) and FX loss ($8.4M) diluting bottom line despite better operations .
    • Price mix headwinds: Salt average price down ~1% YoY; Plant Nutrition ASP down 5% YoY on global potash conditions, partly offsetting cost gains .
    • Input cost risk flagged: management highlighted potential KCl price increases into next year, a key Plant Nutrition cost driver .

Financial Results

Consolidated results vs prior quarters (oldest → newest) and estimates:

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$307.2 $494.6 $214.6
Revenue Consensus ($M)$293.9*$414.0*$208.6*
Adjusted EBITDA ($M)$32.1 $84.1 $41.0
EBITDA Consensus ($M)$44.8*$70.2*$37.5*
GAAP EPS$(0.57) $(0.77) $(0.41)
Adjusted EPS$(0.55) $0.63 $(0.39)
EPS Consensus$(0.05)*$0.00*$(0.13)*
Operating Margin % (GAAP)0.2% (0.6)% 7.4%
Adjusted Operating Margin %0.5% 11.1% 8.0%

Notes: Asterisked consensus values are from S&P Global. Values retrieved from S&P Global.

Q3 segment performance:

SegmentSales ($M)Adj. EBITDA ($M)Adj. EBITDA Margin %Volumes (K tons)Avg Price ($/ton)
Salt$166.0 $45.8 27.6% 1,544 total; 1,144 highway; 400 C&I $107.54 total; $77.63 highway; $193.26 C&I
Plant Nutrition$44.8 $11.4 25.4% 68 $658.79

Additional KPIs and costs:

  • Salt cost dynamics: distribution cost/ton flat YoY; all‑in product costs/ton down 2% YoY .
  • Plant Nutrition costs: per‑unit distribution +10% YoY (longer hauls), all‑in product costs/ton down 23% to ~ $484/ton .
  • Net revenue per ton (Salt) decreased ~1% to ~$75 per ton per CFO commentary .

Q3 vs Consensus (beat/miss):

MetricQ3 ActualQ3 ConsensusSurprise
Revenue ($M)$214.6 $208.6*+$6.0M (+2.9%)
Adjusted EBITDA ($M)$41.0 $37.5*+$3.5M (+9.4%)
Adjusted EPS$(0.39) $(0.13)*−$0.26

Notes: Asterisked consensus values are from S&P Global. Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Q2)Current Guidance (Q3)Change
Salt Hwy Deicing Vols (K tons)FY20258,550–8,900 8,800–9,000 Raised
Salt C&I Vols (K tons)FY20251,900–2,000 1,900–2,000 Maintained
Total Salt Vols (K tons)FY202510,450–10,900 10,700–11,000 Raised
Salt Revenue ($M)FY2025$975–$1,050 $1,000–$1,040 Refined (midpoint up)
Salt Adj. EBITDA ($M)FY2025$215–$230 $220–$229 Refined (tightened up)
PN Vols (K tons)FY2025295–315 320–325 Raised
PN Revenue ($M)FY2025$180–$200 $200–$205 Raised
PN Adj. EBITDA ($M)FY2025$17–$24 $24–$27 Raised
Corporate Adj. EBITDA ($M)FY2025($59)–($52) ($59)–($55) Refined
Total Adj. EBITDA ($M)FY2025$173–$202 $185–$201 Raised (midpoint +$10M)
Capex ($M)FY2025$75–$85 $75–$85 Maintained
DDA ($M)FY2025$105–$115 $105–$115 Maintained
Net Interest ($M)FY2025$67–$72 $70–$75 Raised
Effective Tax RateFY202513%–18% 13%–18% Maintained

Bid season (FY2026 winter set-up): average contract price +2–4% and committed volumes +3–5% vs FY2025 to date .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Salt inventories/working capitalQ1: Inventory volumes down 10% YoY; focus on curtailment to avoid excess . Q2: Value and volumes down 47% and 59% YoY; working capital release nearly $150M .Company highway deicing inventories ~50% lower YoY; discipline to avoid overbuild reiterated .Improving balance; disciplined production/inventory.
Bid season pricing/volumeQ1: Disciplined pricing amid high industry inventories . Q2: Well positioned post winter; ramping production .~70% complete; price +2–4%, committed volumes +3–5%; value over volume emphasized .Modest pricing gains; steady commitments.
Plant Nutrition cost structureQ1: Pond restoration and cost improvements underway . Q2: Volumes strong; cost progress .Per‑unit costs down 23%; volume +21% YoY; continued improvements at Ogden .Structural progress; sustained improvement.
Deleveraging/refinancing/liquidityQ1: Liquidity $126.3M . Q2: Liquidity $328.6M; plan to refinance and delever .$650M 8% 2030 notes closed; partial 2027 redemption; liquidity $388.7M; net debt −$116M YoY; target ~2–3x leverage over time .Stronger flexibility; deleveraging continues.
Tariffs/USMCAQ1: Tariff uncertainty; excluded from guidance impacts .USMCA qualification keeps Canadian salt/SOP exports tariff‑exempt currently .Improved clarity; near‑term risk contained.
Input costs (KCl)—Potential KCl cost increases into next year flagged .Watch item for PN margins.

Management Commentary

  • CEO Edward Dowling: “Compass Minerals had a strong third quarter... costs declined which allowed for adjusted EBITDA margin expansion... North American bid season is going well... Plant Nutrition... stronger sales volumes and lower production costs... We further reduced net debt and strengthened our balance sheet... We continue to execute on our back‑to‑basics strategy” .
  • CEO on strategy: Focus is “value over volume… improve cash flow generating capability… optimizing business practices... lowering capital intensity... improving efficiency” .
  • CFO Peter Fjellman: “At quarter end, we had liquidity of $388M... Total net debt... was $746M, down $116M or 13% year over year… we’ve increased our adjusted EBITDA guidance slightly… midpoint now ~$193M… driven by Plant Nutrition and a slight uptick in Salt” .
  • Bid season set‑up: “We expect contracted selling price… up 2% to 4% year over year and committed bid volumes… up 3% to 5%” .

Q&A Highlights

  • Bid season netbacks/competition: Management reiterated “value over volume” and expects net margin improvement as cost work progresses; noted market dynamics returned to “more average weather,” limiting dramatic price resets, with modest price and volume gains .
  • Inventory discipline: Company inventories ~50% lower YoY; intent to avoid past overbuild, manage working capital flexibly .
  • Per‑ton cost cadence: No unusual items in Q3; Plant Nutrition outlook expects similar performance in Q4, with caution that KCl prices could rise into next year; pond health reducing KCl intensity over time .
  • Balance sheet targets: Long‑term leverage goal ~2–3x (investment‑grade type range); plan to use cash flow to pay down remaining 2027 notes stub .

Estimates Context

  • Q3 vs S&P Global consensus: revenue beat by 2.9% ($214.6M vs $208.6M*), adjusted EBITDA beat by 9.4% ($41.0M vs $37.5M*), adjusted EPS missed ($(0.39) vs $(0.13)*) as non-operating items (FX loss, extinguishment) weighed on EPS .
  • Estimate breadth: Q3 had 2 revenue and 2 EPS estimates; Q2 had 3 revenue and 4 EPS estimates; Q1 had 1 each (consensus thin), increasing uncertainty and potential volatility around prints. Values retrieved from S&P Global.
PeriodRevenue Est. ($M)*Revenue Actual ($M)EPS Est.*Adj. EPS ActualEBITDA Est. ($M)*Adj. EBITDA Actual ($M)# Est. (Rev/EPS)
Q1 2025293.9307.2 (0.05)(0.55) 44.832.1 1 / 1
Q2 2025414.0494.6 0.000.63 70.284.1 3 / 4
Q3 2025208.6214.6 (0.13)(0.39) 37.541.0 2 / 2

Notes: Asterisked consensus values are from S&P Global. Values retrieved from S&P Global.

Implications: Street likely raises Plant Nutrition and Salt profitability assumptions modestly, but EPS models may need to reflect higher interest expense (post-refi) and FX sensitivity .

Key Takeaways for Investors

  • Salt cost and per‑ton margin improvements are sticking; modest bid season price/volume gains and disciplined inventory set up a cleaner FY2026 winter comp .
  • Plant Nutrition’s structural cost work (pond restoration, process efficiency) is translating to margin recovery despite lower ASPs; watch KCl input costs into next year .
  • Leverage trending down and liquidity up post‑refinancing; path to ~2–3x leverage hinges on continued free cash flow and winter normalization .
  • FY25 guidance nudged higher at midpoint on PN strength; capex held; interest expense guided up—EPS sensitivity to non-operating/FX remains .
  • Near-term trading catalysts: completion of bid season awards, early-season winter patterns, and any updates on tariff regime (currently exempt via USMCA) .
  • Medium-term: executing “value over volume,” maintaining inventory discipline, and sustaining PN cost gains are central to multiple expansion.

Appendix: Additional Financial/Balance Sheet Details

  • Cash and liquidity at 6/30/25: cash $79.4M; revolver availability $309.3M; total liquidity $388.7M .
  • Capital structure update: $650M 8.00% 2030 notes issued; ~$350M of 2027s redeemed; amended credit agreement fixed commitments at $325M and improved covenant structure .
  • Cash flow YTD: Operating cash flow $204.6M for nine months (inventory drawdown primary driver); capex $53.8M; net financing cash outflow $(111.5)M reflecting net debt paydown .