UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

(Amendment No. 1)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to __________________________

Commission File Number 001-31921

Compass Minerals International, Inc.

(Exact name of registrant as specified in its charter)


Delaware			36-3972986
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

9900 West 109th Street

Suite 100

Overland Park, KS 66210

(913) 344-9200

(Address of principal executive offices, zip code and telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, $0.01 par value

CMP

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such

reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that

the registrant was required to submit such files)

Yes

☑

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☑

The number of shares outstanding of the registrant’s common stock, $0.01 par value per share, as of May 3, 2021, was 34,001,181 shares.

EXPLANATORY NOTE

Compass Minerals International, Inc. (collectively with its subsidiaries, the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Form 10-Q/A” or this “report”) to amend its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on May 7, 2021 (the “Original Report”). The Company’s quarterly financial results have been restated to correct an error in its interim inventory valuation methodology related to the capitalization of inventory variances at its Salt production mines, which resulted in a historical understatement of its first-quarter consolidated and Salt segment operating income that is completely offset in subsequent quarters with no impact to full-year operating results. This correction resulted in shifting previously reported Salt segment product costs from the first quarter of 2021 and 2020, respectively, to subsequent quarters.

The Company filed Amendment No. 1 on Form 10-K/A (“Form 10-K/A”) to amend its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 26, 2021 ( “Form 10-K” or “2020 Form 10-K”). This Form 10-Q/A should be read in conjunction with the Form 10-K/A, as filed with the SEC on September 2, 2021. The historical periods presented in this Form 10-Q/A reflect adjustments to the information presented in the Company’s previously-filed Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, the Form 10-K and the Original Report.

The Company's consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 have been revised to correct certain immaterial items, for which the accumulated effect was considered to be too material to correct through fiscal 2021 earnings; however, the errors were not material to any annual historical periods. The Company's consolidated financial statements as of December 31, 2020 have been revised to correct certain immaterial items, the cumulative effect of which were considered to be too material to correct through fiscal 2021 earnings. These adjustments primarily relate to understatement of the Canadian other post-employment benefit obligations and the overstatement of bulk sulfate of potash (“SOP’) stockpile inventory at the Company's Ogden facility. The Company is also revising its disclosures in Part I, Item 4, “Controls and Procedures” to discuss the material weakness in internal controls that resulted in filing this Form 10-Q/A.

For the convenience of the reader, this Form 10-Q/A sets forth the Original Report, in its entirety, as amended to reflect the corrections and adjustments described above. The Company has presented information that occurred subsequent to the filing date of the Original Report throughout this filing and in its Subsequent Events footnote. Information not affected by the corrections and adjustments referred to above is unchanged and reflects disclosures made at the time of the filing of the Original Report.

In accordance with applicable SEC rules, this Form 10-Q/A includes new certifications required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, from the Company’s Chief Executive Officer and Chief Financial Officer dated as of the date of filing of this Form 10-Q/A.


						COMPASS MINERALS INTERNATIONAL, INC.

TABLE OF CONTENTS


	PART I. FINANCIAL INFORMATION	Page

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2021 ~~(unaudited)~~ and December 31, 2020 (unaudited)	2

	Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)	3

	Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2021 and 2020 (unaudited)	4

	Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (unaudited)	5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)	6

	Notes to Consolidated Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2229

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3239

Item 4.	Controls and Procedures	3339

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3441

Item 1A.	Risk Factors	3441

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3542

Item 3.	Defaults Upon Senior Securities	3542

Item 4.	Mine Safety Disclosures	3542

Item 5.	Other Information	3542

Item 6.	Exhibits	3643

SIGNATURES		3744


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

COMPASS MINERALS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


							(Unaudited)
		(Unaudited)					March 31, 2021		December 31, 2020
		March 31, 2021		December 31, 2020			(Restated)		(Revised)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	42.8	$	10.6	Cash and cash equivalents	$	42.8	$	10.6
Receivables, less allowance for doubtful accounts of $4.3 in 2021 and $3.9 in 2020	Receivables, less allowance for doubtful accounts of $4.3 in 2021 and $3.9 in 2020	158.6		185.1		Receivables, less allowance for doubtful accounts of $4.3 in 2021 and $3.9 in 2020	158.6		185.1
Inventories	Inventories	219.9		299.9		Inventories	231.7		298.7
Current assets held for sale	Current assets held for sale	338.8		206.5		Current assets held for sale	338.8		206.5
Other	Other	49.0		55.1		Other	45.7		55.4
Total current assets	Total current assets	809.1		757.2		Total current assets	817.6		756.3
Property, plant and equipment, net	Property, plant and equipment, net	845.0		851.7		Property, plant and equipment, net	845.0		851.7
Intangible assets, net	Intangible assets, net	49.9		49.9		Intangible assets, net	49.9		49.9
Goodwill	Goodwill	56.4		55.7		Goodwill	56.4		55.7
Noncurrent assets held for sale	Noncurrent assets held for sale	0		404.1		Noncurrent assets held for sale	—		404.1
Other	Other	144.6		143.8		Other	144.6		143.8
Total assets	Total assets	$	1,905.0	$	2,262.4	Total assets	$	1,913.5	$	2,261.5

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	0	$	10.0	Current portion of long-term debt	$	—	$	10.0
Accounts payable	Accounts payable	104.6		82.6		Accounts payable	104.6		82.6
Accrued salaries and wages	Accrued salaries and wages	16.0		21.7		Accrued salaries and wages	16.5		22.2
Income taxes payable	Income taxes payable	0.6		5.1		Income taxes payable	0.6		5.1
Accrued interest	Accrued interest	14.1		9.0		Accrued interest	14.1		9.0
Current liabilities held for sale	Current liabilities held for sale	199.3		111.5		Current liabilities held for sale	199.3		111.4
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	58.8		56.4		Accrued expenses and other current liabilities	58.8		56.4
Total current liabilities	Total current liabilities	393.4		296.3		Total current liabilities	393.9		296.7
Long-term debt, net of current portion	Long-term debt, net of current portion	1,184.0		1,299.1		Long-term debt, net of current portion	1,184.0		1,299.1
Deferred income taxes, net	Deferred income taxes, net	60.8		60.0		Deferred income taxes, net	57.9		57.3
Noncurrent liabilities held for sale	Noncurrent liabilities held for sale	0		76.1		Noncurrent liabilities held for sale	—		76.1
Other noncurrent liabilities	Other noncurrent liabilities	143.5		143.9		Other noncurrent liabilities	153.9		154.0
Commitments and contingencies (Note 9)	Commitments and contingencies (Note 9)	0		0		Commitments and contingencies (Note 9)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock: $0.01 par value, 200,000,000 authorized shares; 35,367,264 issued shares	Common stock: $0.01 par value, 200,000,000 authorized shares; 35,367,264 issued shares	0.4		0.4		Common stock: $0.01 par value, 200,000,000 authorized shares; 35,367,264 issued shares	0.4		0.4
Additional paid-in capital	Additional paid-in capital	131.3		127.0		Additional paid-in capital	131.3		127.0
Treasury stock, at cost — 1,390,182 shares at March 31, 2021 and 1,407,926 shares at December 31, 2020	Treasury stock, at cost — 1,390,182 shares at March 31, 2021 and 1,407,926 shares at December 31, 2020	(4.4)		(4.4)		Treasury stock, at cost — 1,390,182 shares at March 31, 2021 and 1,407,926 shares at December 31, 2020	(4.4)		(4.4)
Retained earnings	Retained earnings	319.5		567.3		Retained earnings	320.5		559.1
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(323.5)		(303.3)		Accumulated other comprehensive loss	(324.0)		(303.8)
Total stockholders’ equity	Total stockholders’ equity	123.3		387.0		Total stockholders’ equity	123.8		378.3
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,905.0	$	2,262.4	Total liabilities and stockholders’ equity	$	1,913.5	$	2,261.5

The accompanying notes are an integral part of the consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

COMPASS MINERALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except share and per share data)


								Three Months Ended March 31,
		Three Months Ended March 31,				2021		2020
		2021		2020				(Restated)		(Restated)
Sales	Sales	$	426.0	$	346.9		Sales	$	425.5	$	345.9
Shipping and handling cost	Shipping and handling cost	123.2		98.5			Shipping and handling cost	123.1		98.4
Product cost	Product cost	206.8		173.2			Product cost	194.0		163.4
Gross profit	Gross profit	96.0		75.2			Gross profit	108.4		84.1
Selling, general and administrative expenses	Selling, general and administrative expenses	32.4		29.8			Selling, general and administrative expenses	32.4		29.8
Operating earnings	Operating earnings	63.6		45.4			Operating earnings	76.0		54.3

Other expense (income):	Other expense (income):						Other expense (income):
Interest expense	Interest expense	15.7		16.6			Interest expense	15.7		16.6
Loss (gain) on foreign exchange	Loss (gain) on foreign exchange	2.1		(18.0)			Loss (gain) on foreign exchange	2.1		(18.0)
Other expense, net	Other expense, net	0.3		0.3			Other expense, net	0.3		0.3
Earnings from continuing operations before income taxes	Earnings from continuing operations before income taxes	45.5		46.5			Earnings from continuing operations before income taxes	57.9		55.4
Income tax expense for continuing operations	Income tax expense for continuing operations	12.6		12.6			Income tax expense for continuing operations	16.0		15.4
Net earnings from continuing operations	Net earnings from continuing operations	32.9		33.9			Net earnings from continuing operations	41.9		40.0
Net loss from discontinued operations	Net loss from discontinued operations	(256.5)		(6.3)			Net loss from discontinued operations	(256.3)		(6.0)
Net (loss) earnings	Net (loss) earnings	$	(223.6)	$	27.6		Net (loss) earnings	$	(214.4)	$	34.0

Basic net earnings from continuing operations per common share	Basic net earnings from continuing operations per common share	$	0.96	$	0.99		Basic net earnings from continuing operations per common share	$	1.22	$	1.17
Basic net loss from discontinued operations per common share	Basic net loss from discontinued operations per common share	(7.55)		(0.19)			Basic net loss from discontinued operations per common share	(7.54)		(0.18)
Basic net (loss) earnings per common share	Basic net (loss) earnings per common share	$	(6.59)	$	0.80		Basic net (loss) earnings per common share	$	(6.32)	$	0.99

Diluted net earnings from continuing operations per common share	Diluted net earnings from continuing operations per common share	$	0.95	$	0.99		Diluted net earnings from continuing operations per common share	$	1.21	$	1.16
Diluted net loss from discontinued operations per common share	Diluted net loss from discontinued operations per common share	(7.55)		(0.19)			Diluted net loss from discontinued operations per common share	(7.54)		(0.18)
Diluted net (loss) earnings per common share	Diluted net (loss) earnings per common share	$	(6.60)	$	0.80		Diluted net (loss) earnings per common share	$	(6.32)	$	0.99

Weighted-average common shares outstanding (in thousands):	Weighted-average common shares outstanding (in thousands):						Weighted-average common shares outstanding (in thousands):
Basic	Basic	33,974		33,892			Basic	33,974		33,892
Diluted	Diluted	34,012		33,892			Diluted	34,012		33,892

The accompanying notes are an integral part of the consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

COMPASS MINERALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited, in millions)


								Three Months Ended March 31,
		Three Months Ended March 31,				2021		2020
		2021		2020				(Restated)		(Restated)
Net (loss) earnings	Net (loss) earnings	$	(223.6)	$	27.6		Net (loss) earnings	$	(214.4)	$	34.0
Other comprehensive income (loss):	Other comprehensive income (loss):						Other comprehensive income (loss):
Unrealized gain from change in pension obligations, net of tax of $(0.1) in 2021 and $0.0 in 2020	Unrealized gain from change in pension obligations, net of tax of $(0.1) in 2021 and $0.0 in 2020	0.2		0.2			Unrealized gain from change in pension obligations, net of tax of $(0.1) in 2021 and $0.0 in 2020	0.2		0.2
Unrealized gain on cash flow hedges, net of tax of $0.0 in both 2021 and 2020	Unrealized gain on cash flow hedges, net of tax of $0.0 in both 2021 and 2020	0.1		0.1			Unrealized gain on cash flow hedges, net of tax of $0.0 in both 2021 and 2020	0.1		0.1
Cumulative translation adjustment	Cumulative translation adjustment	(20.5)		(173.5)			Cumulative translation adjustment	(20.5)		(173.8)
Comprehensive loss	Comprehensive loss	$	(243.8)	$	(145.6)		Comprehensive loss	$	(234.6)	$	(139.5)

The accompanying notes are an integral part of the consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

COMPASS MINERALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2021 and 2020

(Unaudited, in millions)


		Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance, December 31, 2020		$	0.4	$	127.0	$	(4.4)	$	567.3	$	(303.3)	$	387.0
Comprehensive loss		—		—		—		(223.6)		(20.2)		(243.8)
Balance, December 31, 2020 (revised)														Balance, December 31, 2020 (revised)	$	0.4	$	127.0	$	(4.4)	$	559.1	$	(303.8)	$	378.3
Comprehensive loss (restated)														Comprehensive loss (restated)	—		—		—		(214.4)		(20.2)		(234.6)
Dividends on common stock ($0.72 per share)	Dividends on common stock ($0.72 per share)	—		0.1		—		(24.2)		—		(24.1)		Dividends on common stock ($0.72 per share)	—		0.1		—		(24.2)		—		(24.1)
Stock options exercised, net of shares withheld for taxes	Stock options exercised, net of shares withheld for taxes	—		0.2		—		—		—		0.2		Stock options exercised, net of shares withheld for taxes	—		0.2		—		—		—		0.2
Stock-based compensation	Stock-based compensation	—		4.0		—		—		—		4.0		Stock-based compensation	—		4.0		—		—		—		4.0
Balance, March 31, 2021		$	0.4	$	131.3	$	(4.4)	$	319.5	$	(323.5)	$	123.3
Balance, March 31, 2021 (restated)														Balance, March 31, 2021 (restated)	$	0.4	$	131.3	$	(4.4)	$	320.5	$	(324.0)	$	123.8


		Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance, December 31, 2019		$	0.4	$	117.1	$	(3.2)	$	607.4	$	(192.1)	$	529.6
Comprehensive income (loss)		—		—		—		27.6		(173.2)		(145.6)
Balance, December 31, 2019 (revised)														Balance, December 31, 2019 (revised)	$	0.4	$	117.1	$	(3.2)	$	595.6	$	(192.2)	$	517.7
Comprehensive income (loss) (restated)														Comprehensive income (loss) (restated)	—		—		—		34.0		(173.5)		(139.5)
Dividends on common stock ($0.72 per share)	Dividends on common stock ($0.72 per share)	—		0.1		—		(24.9)		—		(24.8)		Dividends on common stock ($0.72 per share)	—		0.1		—		(24.9)		—		(24.8)
Shares issued for stock units, net of shares withheld for taxes	Shares issued for stock units, net of shares withheld for taxes	—		—		(0.1)		—		—		(0.1)		Shares issued for stock units, net of shares withheld for taxes	—		—		(0.1)		—		—		(0.1)
Stock-based compensation	Stock-based compensation	—		2.4		—		—		—		2.4		Stock-based compensation	—		2.4		—		—		—		2.4
Balance, March 31, 2020		$	0.4	$	119.6	$	(3.3)	$	610.1	$	(365.3)	$	361.5
Balance, March 31, 2020 (restated)														Balance, March 31, 2020 (restated)	$	0.4	$	119.6	$	(3.3)	$	604.7	$	(365.7)	$	355.7

The accompanying notes are an integral part of the consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

COMPASS MINERALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


							Three Months Ended March 31,
		Three Months Ended March 31,					2021		2020
		2021		2020			(Restated)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net (loss) earnings	Net (loss) earnings	$	(223.6)	$	27.6	Net (loss) earnings	$	(214.4)	$	34.0
Adjustments to reconcile net (loss) earnings to net cash flows provided by operating activities:	Adjustments to reconcile net (loss) earnings to net cash flows provided by operating activities:					Adjustments to reconcile net (loss) earnings to net cash flows provided by operating activities:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	34.6		33.1		Depreciation, depletion and amortization	34.6		33.1
Finance fee amortization	Finance fee amortization	0.8		0.8		Finance fee amortization	0.8		0.8
Stock-based compensation	Stock-based compensation	4.0		2.4		Stock-based compensation	4.0		2.4
Deferred income taxes	Deferred income taxes	(1.0)		7.5		Deferred income taxes	(1.1)		7.4
Unrealized foreign exchange loss (gain)	Unrealized foreign exchange loss (gain)	5.6		(18.0)		Unrealized foreign exchange loss (gain)	5.6		(18.0)
Loss on impairment of long-lived assets	Loss on impairment of long-lived assets	253.1		0		Loss on impairment of long-lived assets	253.1		—
Other, net	Other, net	0.4		3.5		Other, net	0.4		3.6
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	17.8		87.1		Receivables	17.8		87.1
Inventories	Inventories	73.6		36.6		Inventories	60.7		27.0
Other assets	Other assets	(1.9)		54.5		Other assets	1.7		53.8
Accounts payable and accrued expenses and other current liabilities	Accounts payable and accrued expenses and other current liabilities	37.2		(4.9)		Accounts payable and accrued expenses and other current liabilities	37.2		(1.2)
Other liabilities	Other liabilities	(0.4)		(1.6)		Other liabilities	(0.2)		(1.4)
Net cash provided by operating activities	Net cash provided by operating activities	200.2		228.6		Net cash provided by operating activities	200.2		228.6
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(18.2)		(25.3)		Capital expenditures	(18.2)		(25.3)
Other, net	Other, net	2.0		(0.6)		Other, net	2.0		(0.6)
Net cash used in investing activities	Net cash used in investing activities	(16.2)		(25.9)		Net cash used in investing activities	(16.2)		(25.9)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from revolving credit facility borrowings	Proceeds from revolving credit facility borrowings	6.3		46.2		Proceeds from revolving credit facility borrowings	6.3		46.2
Principal payments on revolving credit facility borrowings	Principal payments on revolving credit facility borrowings	(136.6)		(147.2)		Principal payments on revolving credit facility borrowings	(136.6)		(147.2)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	69.8		22.0		Proceeds from issuance of long-term debt	69.8		22.0
Principal payments on long-term debt	Principal payments on long-term debt	(55.1)		(18.7)		Principal payments on long-term debt	(55.1)		(18.7)
Dividends paid	Dividends paid	(24.1)		(24.8)		Dividends paid	(24.1)		(24.8)
Deferred financing costs	Deferred financing costs	(0.1)		(0.1)		Deferred financing costs	(0.1)		(0.1)
Other, net	Other, net	(0.5)		(0.2)		Other, net	(0.5)		(0.2)
Net cash used in financing activities	Net cash used in financing activities	(140.3)		(122.8)		Net cash used in financing activities	(140.3)		(122.8)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(1.1)		(4.8)		Effect of exchange rate changes on cash and cash equivalents	(1.1)		(4.8)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	42.6		75.1		Net change in cash and cash equivalents	42.6		75.1
Cash and cash equivalents, beginning of the year	Cash and cash equivalents, beginning of the year	21.0		34.7		Cash and cash equivalents, beginning of the year	21.0		34.7
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	63.6		109.8		Cash and cash equivalents, end of period	63.6		109.8
Less: cash and cash equivalents included in current assets held for sale	Less: cash and cash equivalents included in current assets held for sale	(20.8)		(15.8)		Less: cash and cash equivalents included in current assets held for sale	(20.8)		(15.8)
Cash and cash equivalents of continuing operations, end of period	Cash and cash equivalents of continuing operations, end of period	$	42.8	$	94.0	Cash and cash equivalents of continuing operations, end of period	$	42.8	$	94.0


Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	10.5	$	11.3
Income taxes paid, net of refunds	$	14.7	$	(37.7)

The accompanying notes are an integral part of the consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

COMPASS MINERALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Accounting Policies and Basis of Presentation:

Compass Minerals International, Inc. (“CMI”), through its subsidiaries (collectively, the “Company”), is a leading producer of essential minerals focused on safely delivering where and when it matters to help solve nature’s challenges for customers and communities. The Company’s salt products help keep roadways safe during winter weather and are used in numerous other consumer, industrial and agricultural applications. Its plant nutrition products improve the quality and yield of crops, while supporting sustainable agriculture. The Company’s principal products are salt, consisting of sodium chloride and magnesium chloride and plant nutrients, consisting of sulfate of potash (“SOP”). The Company’s production sites are located in the United States (“U.S.”), Canada and the United Kingdom (“U.K.”). The Company also provides records management services to businesses located in the U.K. Except where otherwise noted, references to North America include only the continental U.S. and Canada, and references to the U.K. include only England, Scotland and Wales. References to “Compass Minerals,” “our,” “us” and “we” refer to CMI and its consolidated subsidiaries.

CMI is a holding company with no significant operations other than those of its wholly-owned subsidiaries. The consolidated financial statements include the accounts of CMI and its wholly-owned domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2020, as filed with the ~~Securities and Exchange Commission (“SEC”)~~SEC in its ~~Annual Report on~~ Form ~~10-K on February 26, 2021.~~10-K/A. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included.

The Company experiences a substantial amount of seasonality in its sales, including its deicing salt product sales. As a result, Salt segment sales and operating earnings are generally higher in the first and fourth quarters and lower during the second and third quarters of each calendar year. In particular, sales of highway and consumer deicing salt and magnesium chloride products vary based on the severity of the winter conditions in areas where the products are used. Following industry practice in North America and the U.K., the Company seeks to stockpile sufficient quantities of deicing salt throughout the second, third and fourth quarters of the calendar year to meet the estimated requirements for the winter season. Production of deicing salt can also vary based on the severity or mildness of the preceding winter season. Due to the seasonal nature of the deicing product lines, operating results for the interim periods are not necessarily indicative of the results that may be expected for the full fiscal year.

Significant Accounting Policies

The Company’s significant accounting policies are detailed in “Note 2 – Summary of Significant Accounting Policies” within Part II, Item 8 of its ~~Annual Report on~~ Form ~~10-K~~10-K/A for the year ended December 31, 2020. The Company reports its financial results from discontinued operations and continuing operations separately to recognize the financial impact of disposal transactions from ongoing operations. Discontinued operations reporting occurs when a component or a group of components of an entity has been disposed of or classified as held for sale and represents a strategic shift that has a major effect on the entity’s operations and financial results. In the Company’s Consolidated Statements of Cash Flows, the cash flows from discontinued operations are not separately classified. The Company has reclassified certain prior year amounts, including the results of discontinued operations, assets and liabilities held for sale and reportable segment information, to conform to the current year presentation. Unless otherwise indicated, amounts provided in these Notes pertain to continuing operations. See Note 2 for information on discontinued operations and Note 10 for information on the Company’s reportable segments.

Recent Accounting Pronouncements

The Company has evaluated all of the recently issued, but not yet effective, accounting standards that have been issued or proposed by the ~~FASB~~Financial Accounting Standards Board (“FASB”) or other standards-setting bodies through the filing date of these unaudited consolidated financial statements and does not believe the future adoption of any such pronouncements will have a material impact on its consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Strategic Evaluation and Plan to Sell Businesses

During 2020, the Company initiated an evaluation of the strategic fit of certain of the Company’s businesses. On February 16, 2021, the Company announced its plan to restructure its former Plant Nutrition South America segment to enable targeted and separate sales processes for each portion of the former segment, including its chemicals and specialty plant nutrition businesses along with the Company’s equity method investment in Fermavi Eletroquímica Ltda. (“Fermavi”). Concurrently, to optimize its asset base in North America, the Company evaluated the strategic fit of its North America micronutrient product business. On March 16, 2021, the Board of the Directors of the Company approved a plan to sell the Company’s South America chemicals and specialty plant nutrition businesses, investment in Fermavi and North America micronutrient product business (collectively, the “Specialty Businesses”) with the goal of reducing the Company’s leverage and enabling increased focus on optimizing the Company’s core businesses. The South America chemicals and specialty plant nutrition businesses and investment in Fermavi were previously reported as the Company’s Plant Nutrition South America segment. The North America micronutrient product business was previously included as part of the Company’s Plant Nutrition North America segment, which has been renamed as the Plant Nutrition segment. The Company now has 2 reportable segments, Salt and Plant Nutrition, as discussed further in Note 10.

The Company concluded that the Specialty Businesses met the criteria for classification as held for sale upon receiving approval from its Board of Directors to sell the Specialty Businesses in the first quarter of 2021. In addition, the Company believes there is a single disposal plan representing a strategic shift that will have a material effect on its operations and financial results. Consequently, the Specialty Businesses qualify for presentation as assets and liabilities held for sale and discontinued operations in accordance with U.S. GAAP. Accordingly, current and noncurrent assets and liabilities of the Specialty Businesses are presented in the Consolidated Balance Sheets as assets and liabilities held for sale for both periods presented and their results of operations are presented as discontinued operations in the Consolidated Statements of Operations for each period presented. Interest expense attributed to discontinued operations represents interest expense for loans in Brazil by the Company’s South America chemicals and specialty plant nutrition businesses, which are expected to be fully repaid from proceeds received from the Company’s sale of its South America specialty plant nutrition ~~business.~~businesses.

As described further in Note 2, on ~~March 23,~~May 4, 2021, July 1, 2021 and ~~April 7,~~August 20, 2021, the Company ~~entered into definitive agreements to sell~~completed the sale of a component of its North America micronutrient business, the sale of its South America specialty plant nutrition business, and ~~a component~~the sale of its investment in Fermavi, respectively. In the second quarter of 2021, the Company abandoned the remaining inventory of its North America micronutrient product business ~~respectively.~~and has reclassified its remaining product lines as discontinued operations for all periods presented. The Company continues to actively pursue the ~~sales~~sale of ~~the remaining~~its South America chemicals business and ~~its investment in Fermavi, and~~believes the ~~Company believes these sales are~~sale is probable to occur within the next twelve months.

Revisions to Prior Period Consolidated Financial Statements

As discussed further in Note 15, management corrected its interim inventory valuation methodology which resulted in a historical understatement of first-quarter Salt segment operating income, which was completely offset in subsequent quarters with no impact to full-year operating results.

Additionally, management corrected other immaterial items, the cumulative effect of which was considered to be too material to correct through fiscal 2021 earnings included in previously filed consolidated financial statements. These adjustments primarily related to understatement of the Canadian other post-employment benefit obligations and the overvaluation of bulk SOP stockpile inventory at the Company's Ogden facility. In accordance with the guidance in FASB Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-10-S99-1, Assessing Materiality, and ASC Topic 250-10-S99-1, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, the Company concluded that its previously issued unaudited consolidated financial statements were not materially misstated as a result of these other immaterial adjustments.

The historical periods presented in this Form 10-Q/A reflect adjustments to the information presented in the Company’s previously-filed Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, the Form 10-K/A and the Original Report. Additionally, historical periods have been adjusted to reflect the application of discontinued operations in accordance with U.S. GAAP, as discussed above. See Note 15 for the effect of the revisions on each of the individual effected line items in the Company’s unaudited consolidated financial statements.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

2. Discontinued Operations:

On March 23, 2021, the Company entered into a definitive agreement to sell its South America specialty plant nutrition business to ICL Brasil Ltda., a subsidiary of ICL Group Ltd. The transaction closed on July 1, 2021. Upon closing, the Company received gross proceeds of approximately $432.3 million, including $12.7 million in working capital adjustments (in each case, based on exchange rates at the time of closing), ~~for R$1.11 billion Brazilian reais plus~~comprised of a cash payment of approximately $325.5 million and an ~~amount that will be set at closing to equal $198.3~~additional $106.8 million ~~U.S. dollars, subject to certain adjustments for~~in net debt ~~and working capital.~~assumed by ICL Brasil Ltda. The terms of the definitive agreement provide for an additional earn-out payment of up to R$88 million Brazilian reais, payable in 2022 and which will be calculated on a sliding scale if the South America specialty plant nutrition business achieves certain full-year 2021 earnings before interest, taxes, depreciation and amortization (“EBITDA”) performance targets. ~~The~~At the closing of the transaction, ~~is expected to close in~~ the ~~third quarter of 2021, subject to customary closing conditions and required antitrust approval in Brazil. The Company and ICL Brasil Ltda. have~~parties also ~~agreed to enter~~entered into a Reverse Transition Services Agreement, which ~~will govern~~governs the ~~parties~~parties’ respective rights and obligations with respect to the provision of certain transition services to the Company’s Brazil subsidiaries after closing. The Reverse Transition Services Agreement has a term of 18 months and allows the Company’s remaining Brazil subsidiaries to assign their rights and obligations with respect to the transition services to any buyer of a sufficient portion of their assets.

On April 7, 2021, the Company entered into a definitive agreement to sell a component of its North America micronutrient business (primarily consisting of intangible assets and certain inventory of the business) to Koch Agronomic Services, LLC, a subsidiary of Koch Industries (“KAS”), through an asset purchase and sale agreement. On May 4, 2021, the Company completed the sale for approximately ~~$60.25~~$56.7 million, ~~subject~~which resulted in the removal of the North America micronutrient business assets and liabilities from the Company’s unaudited consolidated financial statements, including $7.0 million in goodwill. The Company recognized a gain from the sale of $30.8 million, net of $2.8 million from the release of accumulated currency translation adjustment (“CTA”) upon substantial liquidation of the business.

On June 28, 2021, the Company entered into a definitive agreement to ~~a closing working capital adjustment.~~sell its investment in Fermavi for R$45 million Brazilian reais (including R$30 million Brazilian reais of deferred purchase price). The transaction closed on ~~May 4,~~August 20, 2021. Upon closing the Company received gross proceeds of approximately $2.8 million (based on exchange rates at the time of closing).

In measuring the assets and liabilities held for sale at fair value less estimated costs to sell, the Company completed an ~~impairment~~ analysis when its Board of Directors committed to a plan to sell the Specialty ~~Businesses.~~Businesses and the Company will update the analysis each quarter until the businesses are sold. Management evaluated indicators of fair value of each of the Specialty Businesses, including the net proceeds expected to be realized at closing of the transactions ~~described above~~ to sell its South America specialty plant nutrition business, ~~and~~ a component of its North America micronutrient business, its investment in Fermavi and the earn-out component of the proceeds from the sale of the South America specialty plant nutrition business, in addition to indications of fair value received from third parties in connection with the marketing of ~~the remaining~~its South America chemicals ~~business and the investment in Fermavi. A significant portion~~business.

The amount of CTA loss within accumulated other comprehensive loss (“AOCL”) on the Company’s ~~foreign currency translation adjustment (“CTA”) balance as of March 31, 2021, is~~Consolidated Balance Sheets related to ~~the foreign exchange translation of the Specialty Businesses’ balance sheet. The CTA loss balance of~~ the Specialty Businesses was considered in the Company’s


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

determination of the ~~impairment loss.~~adjustment to fair value less estimated costs to sell. The Company recognized a ~~total impairment~~net loss from its adjustment to fair value less estimated costs to sell of $255.2 million included in its loss from discontinued operations in its Consolidated Statement of Operations for the three months ended March 31, 2021. The ~~impairment~~net loss from adjustment to fair value less estimated costs to sell is due primarily to the translation of the net assets of the Company’s Brazil subsidiaries from Brazilian reais to U.S. dollars, which has been reported in CTA. ~~The impairment loss~~As of March 31, 2021, the adjustment to fair value less costs to sell for ~~its~~the Company’s South America chemicals and specialty plant nutrition businesses was $92.7 million and $154.5 million, respectively, inclusive of CTA. The amount of CTA recorded in ~~CTA~~AOCL will ~~not~~ be eliminated ~~until there is a~~upon substantial liquidation of ~~the applicable~~each foreign entity. The Company also recognized ~~an impairment~~ loss for the adjustment to fair value less estimated costs to sell of $8.0 million on its investment in ~~Fermavi. There was 0 impairment for its North America micronutrient product business.~~Fermavi as of March 31, 2021.

As described above, the Company has entered into definitive agreements to sell its South America specialty plant nutrition business and a component of its North America micronutrient business on March 23, 2021, and April 7, 2021, respectively. The Company’s determination of the net proceeds to be realized at or after closing of each transaction involves certain estimates and judgments based on, among other items: (i) management’s interpretation and application of key terms of each definitive agreement, (ii) certain consolidated balance sheet amounts of the business or asset group as of March 31, 2021, and (iii) certain projections of costs to be incurred through an estimated future ~~closing~~ date. The balances of net working capital, cash, ~~and~~ debt and deductions, are subject to future ~~change~~changes based on the operations of the remaining business from March 31, 2021, through the closing date or earn-out determination date, and estimated proceeds and costs to sell the ~~business~~businesses could differ from actual results. ~~As such,~~Consequently, a change in the ~~impairment loss~~adjustment to fair value less estimated costs to sell associated with the Specialty Businesses could occur in a future period, including upon closing of the transactions described above or thereafter.

In addition to calculating an estimate of net proceeds expected to be realized at or after closing, as described above, certain additional judgments, estimates and other reporting matters related to discontinued operations include matters discussed in the following paragraphs.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

As discussed in Note 1, the North America micronutrient product business was previously reported in the Company’s Plant Nutrition North America segment (which is now known as the Plant Nutrition segment), which aligns with the Plant Nutrition North America reporting unit for purposes of evaluating goodwill. Based on the Company’s assessment of the estimated relative fair values of the North America micronutrient product business and the remaining business from the former Plant Nutrition North America reporting unit, the Company performed an allocation of goodwill between the North America micronutrient product business classified as held for sale and the business being retained, which resulted in ~~$6.9 million and~~ $6.8 million of goodwill allocated to the North America micronutrient product business as of ~~March 31, 2021, and~~ December 31, ~~2020, respectively.~~2020. See Note 6 for additional details. An allocation of goodwill related to the former Plant Nutrition South America segment was not required as of March 31, 2021, as the entire segment and related goodwill is classified as held for sale at March 31, 2021, and December 31, 2020.

The information below sets forth selected financial information related to the operating results of the Specialty Businesses classified as discontinued operations. While the reclassification of the Specialty Business’ revenue and expenses ~~related~~ to net loss from discontinued operations ~~from~~in prior periods ~~have~~has no impact upon previously reported results, the Consolidated Balance Sheets present the assets and liabilities that were reclassified from the specified line items to assets and liabilities held for sale and the Consolidated Statements of Operations present the revenue and expenses that were reclassified from the specified line items to discontinued operations.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The following table represents summarized ~~balance sheet~~Consolidated Balance Sheet information of assets and liabilities held for sale (in millions):


		March 31, 2021		December 31, 2020			March 31, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	20.8	$	10.5	Cash and cash equivalents	$	20.8	$	10.4
Receivables, less allowance for doubtful accounts of $6.7 in 2021 and $7.1 in 2020	Receivables, less allowance for doubtful accounts of $6.7 in 2021 and $7.1 in 2020	111.4		111.5		Receivables, less allowance for doubtful accounts of $6.7 in 2021 and $7.1 in 2020	111.4		111.5
Inventories	Inventories	72.5		70.7		Inventories	72.5		70.7
Property, plant and equipment, net	Property, plant and equipment, net	103.3		0		Property, plant and equipment, net	103.3		—
Goodwill	Goodwill	207.6		0		Goodwill	207.6		—
Loss recognized on held for sale classification	Loss recognized on held for sale classification	(255.2)		0		Loss recognized on held for sale classification	(255.2)		—
Other	Other	78.4		13.8		Other	78.4		13.9
Current assets held for sale	Current assets held for sale	$	338.8	$	206.5	Current assets held for sale	$	338.8	$	206.5

Property, plant and equipment, net	Property, plant and equipment, net	$	0	$	113.2	Property, plant and equipment, net	$	—	$	113.2
Goodwill	Goodwill	0		225.5		Goodwill	—		225.5
Other	Other	0		65.4		Other	—		65.4
Noncurrent assets held for sale	Noncurrent assets held for sale	$	0	$	404.1	Noncurrent assets held for sale	$	—	$	404.1

Current portion of long-term debt	Current portion of long-term debt	$	94.3	$	53.7	Current portion of long-term debt	$	94.3	$	53.7
Accounts payable	Accounts payable	48.9		34.3		Accounts payable	48.9		34.3
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	56.1		23.5		Accrued expenses and other current liabilities	56.1		23.4
Current liabilities held for sale	Current liabilities held for sale	$	199.3	$	111.5	Current liabilities held for sale	$	199.3	$	111.4

Long-term debt, net of current portion	Long-term debt, net of current portion	$	0	$	38.6	Long-term debt, net of current portion	$	—	$	38.6
Other noncurrent liabilities	Other noncurrent liabilities	0		37.5		Other noncurrent liabilities	—		37.5
Noncurrent liabilities held for sale	Noncurrent liabilities held for sale	$	0	$	76.1	Noncurrent liabilities held for sale	$	—	$	76.1

The following table represents summarized ~~statements~~Consolidated Statements of ~~operations~~Operations information of discontinued operations (in millions):, inclusive of the remaining North America micronutrient product lines abandoned during the three months ended June 30, 2021, which were reclassified as discontinued operations for all periods presented, as discussed above:


		Three Months Ended March 31,					Three Months Ended March 31,
		2021		2020			2021		2020
Sales	Sales	$	85.4	$	67.0	Sales	$	85.9	$	68.0
Shipping and handling cost	Shipping and handling cost	3.8		3.3		Shipping and handling cost	3.9		3.3
Product cost	Product cost	62.8		51.6		Product cost	63.0		52.0
Gross profit	Gross profit	18.8		12.1		Gross profit	19.0		12.7
Selling, general and administrative expenses	Selling, general and administrative expenses	13.5		13.3		Selling, general and administrative expenses	13.5		13.3
Operating earnings (loss)	Operating earnings (loss)	5.3		(1.2)		Operating earnings (loss)	5.5		(0.6)
Interest expense	Interest expense	1.7		2.4		Interest expense	1.7		2.4
Loss on foreign exchange	Loss on foreign exchange	4.3		3.7		Loss on foreign exchange	4.3		3.7
Loss on impairment		255.2		0
Loss on adjustment to fair value less estimated costs to sell						Loss on adjustment to fair value less estimated costs to sell	255.2		—
Other income, net	Other income, net	(0.4)		(0.1)		Other income, net	(0.4)		0.1
Loss from discontinued operations before income taxes	Loss from discontinued operations before income taxes	(255.5)		(7.2)		Loss from discontinued operations before income taxes	(255.3)		(6.8)
Income tax expense (benefit)	Income tax expense (benefit)	1.0		(0.9)		Income tax expense (benefit)	1.0		(0.8)
Net loss from discontinued operations	Net loss from discontinued operations	$	(256.5)	$	(6.3)	Net loss from discontinued operations	$	(256.3)	$	(6.0)

1011


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The significant components included in our Consolidated Statements of Cash Flows for the discontinued operations are as follows (in millions):


							Three Months Ended March 31,
		Three Months Ended March 31,					2021		2020
		2021		2020					(Revised)
Depreciation, depletion and amortization	Depreciation, depletion and amortization	$	4.7	$	5.7	Depreciation, depletion and amortization	$	4.7	$	5.7
Loss on impairment of long-lived assets	Loss on impairment of long-lived assets	253.1		0		Loss on impairment of long-lived assets	253.1		—
Capital expenditures	Capital expenditures	1.6		1.4		Capital expenditures	1.6		2.5
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	21.0		22.0		Proceeds from issuance of long-term debt	21.0		22.0
Principal payments on long-term debt	Principal payments on long-term debt	(10.9)		(16.2)		Principal payments on long-term debt	(10.9)		(16.2)

3. Revenues:

Nature of Products and Services

The Company’s Salt segment products include salt and magnesium chloride for use in road deicing and dust control, food processing, water softeners, and agricultural and industrial applications and the Company’s Plant Nutrition segment products include various grades of SOP. In the U.K., the Company operates a records management business utilizing excavated areas of the Winsford salt mine with one other location in London, England.

Identifying the Contract

The Company accounts for a customer contract when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

Identifying the Performance Obligations

At contract inception, the Company assesses the goods and services it has promised to its customers and identifies a performance obligation for each promise to transfer to the customer a distinct good or service (or bundle of goods or services). Determining whether products and services are considered distinct performance obligations that should be accounted for separately or aggregated together may require significant judgment.

Identifying and Allocating the Transaction Price

The Company’s revenues are measured based on consideration specified in the customer contract, net of any sales incentives and amounts collected on behalf of third parties such as sales taxes. In certain cases, the Company’s customer contracts may include promises to transfer multiple products and services to a customer. For multiple-element arrangements, the Company generally allocates the transaction price to each performance obligation in proportion to its stand-alone selling price.

When Performance Obligations Are Satisfied

The vast majority of the Company’s revenues are recognized at a point in time when the performance obligations are satisfied based upon transfer of control of the product or service to a customer. To determine when the control of goods is transferred, the Company typically assesses, among other things, the shipping terms of the contract, as shipping is an indicator of transfer of control. Some of the Company’s products are sold when the control of the goods transfers to the customer at the time of shipment. There are also instances when the Company provides shipping services to deliver its products. Shipping and handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs. The Company recognizes shipping and handling costs that are incurred after the customer obtains control of the goods as fulfillment costs which are accrued at the time of revenue recognition.

Significant Payment Terms

The customer contract states the final terms of the sale, including the description, quantity and price of each product or service purchased. Payment is typically due in full within 30 days of delivery. The Company does not adjust the consideration for the

1112


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

effects of a significant financing component if the Company expects, at contract inception, that the period between when the good or service is transferred to the customer and when the customer pays for that good or service will be one year or less.

Refunds, Returns and Warranties

The Company’s products are generally not sold with a right of return and the Company does not generally provide credits or incentives, which may be required to be accounted for as variable consideration when estimating the amount of revenue to be recognized. The Company uses historical experience to estimate accruals for refunds due to manufacturing or other defects.

See Note 10 for disaggregation of sales by segment, type and geographical region.

4. Inventories:

Inventories consist of the following (in millions):


							March 31, 2021		December 31, 2020
		March 31, 2021		December 31, 2020			(Restated)		(Revised)
Finished goods	Finished goods	$	168.8	$	252.1	Finished goods	$	180.6	$	250.9
Raw materials and supplies	Raw materials and supplies	51.1		47.8		Raw materials and supplies	51.1		47.8
Total inventories	Total inventories	$	219.9	$	299.9	Total inventories	$	231.7	$	298.7

5. Property, Plant and Equipment, Net:

Property, plant and equipment, net, consists of the following (in millions):


	March 31, 2021		December 31, 2020
Land, buildings and structures, and leasehold improvements	$	547.8	$	544.5
Machinery and equipment	1,041.7		1,035.4
Office furniture and equipment	54.2		50.7
Mineral interests	168.9		172.4
Construction in progress	59.7		43.7
	1,872.3		1,846.7
Less: accumulated depreciation and depletion	(1,027.3)		(995.0)
Property, plant and equipment, net	$	845.0	$	851.7

6. Goodwill and Intangible Assets, Net:

Amounts related to the Company’s amortization of intangible assets are as follows (in millions):


	Three Months Ended March 31,
	2021		2020
Aggregate amortization expense	$	0.4	$	0.4

Amounts related to the Company’s goodwill are as follows (in millions):


	March 31, 2021		December 31, 2020
Plant Nutrition Segment	$	50.3	$	49.6
Other	6.1		6.1
Total	$	56.4	$	55.7

1213


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The change in goodwill between December 31, 2020, and March 31, 2021 was due to the impact from translating foreign-denominated amounts to U.S. dollars. As of March 31, 2021, there were no indicators necessitating an interim impairment test of the Company’s operating segments based on the Company’s review of operating performance. ~~See~~ ~~Note 2~~ ~~for a discussion of the Company’s evaluation of interim impairment indicators related to discontinued operations.~~

7. Income Taxes:

The Company’s effective income tax rate differs from the U.S. statutory federal income tax rate primarily due to U.S. statutory depletion, state income taxes (net of federal tax benefit), foreign income, mining and withholding taxes, global intangible low-taxed income and interest expense recognition differences for book and tax purposes.

As of March 31, 2021, and December 31, 2020, the Company had $3.4 million of gross foreign federal net operating loss (“NOL”) carryforwards that have no expiration date, $0 and $0.1 million, respectively, of gross foreign federal NOL carryforwards which expire beginning in 2033, and $0.2 million of net operating tax-effected state NOL carryforwards which expire beginning in 2027.

Canadian provincial tax authorities have challenged tax positions claimed by one of the Company’s Canadian subsidiaries and have issued tax reassessments for years 2002-2015. The reassessments are a result of ongoing audits and total $157.0 million, including interest, through March 31, 2021. The Company disputes these reassessments and will continue to work with the appropriate authorities in Canada to resolve the dispute. There is a reasonable possibility that the ultimate resolution of this dispute, and any related disputes for other open tax years, may be materially higher or lower than the amounts the Company has reserved for such disputes. In connection with this dispute, local regulations require the Company to post security with the tax authority until the dispute is resolved. The Company has posted collateral in the form of a $121.7 million performance bond and has paid $39.5 million to the Canadian tax authorities (most of which is recorded in other assets in the Consolidated Balance Sheets at March 31, 2021, and December 31, 2020), which is necessary to proceed with future appeals or litigation.

The Company expects that it will be required by local regulations to provide security for additional interest on the above unresolved disputed amounts and for any future reassessments issued by these Canadian tax authorities in the form of cash, letters of credit, performance bonds, asset liens or other arrangements agreeable with the tax authorities until the disputes are resolved.

The Company expects that the ultimate outcome of these matters will not have a material impact on its results of operations or financial condition. However, the Company can provide no assurance as to the ultimate outcome of these matters, and the impact could be material if they are not resolved in the Company’s favor. As of March 31, 2021, the Company believes it has adequately reserved for these reassessments.

Additionally, the Company has other uncertain tax positions as well as assessments and disputed positions with taxing authorities in its various jurisdictions, which are consistent with those matters disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Settlements

In 2017, the Company, the Canadian Revenue Authority (“CRA”) and the U.S. Internal Revenue Service (“IRS”) reached a settlement agreement on transfer pricing issues for the Company’s 2007-2012 tax years. During 2018, in accordance with the agreement, the Company’s U.S. subsidiary made intercompany cash payments of $85.7 million to its Canadian subsidiary and tax payments were made to Canadian taxing authorities of $17.5 million. Additional tax payments of $5.3 million were made during 2019 with the remaining liability of $1.4 million expected to be paid in 2021. Corresponding tax refunds of $22.3 million have been received through March 31, 2021, from U.S. taxing authorities, with the remaining refund of approximately $0.7 million expected in 2021 (recorded in other current assets in the Consolidated Balance Sheets).

In 2018, the Company, the CRA and the IRS reached a settlement agreement on transfer pricing and management fees as part of an advanced pricing agreement that covers tax years 2013-2021. During 2019, in accordance with the settlement agreement, the Company’s U.S. subsidiary made intercompany cash payments of $106.1 million to its Canadian subsidiary and tax payments to Canadian taxing authorities of $29.9 million, with the remaining $1.4 million balance paid during 2020. Corresponding tax refunds of $60.0 million have been received through March 31, 2021, from U.S. taxing authorities, with the remaining $1.7 million expected in 2021 (recorded in other current assets in the Consolidated Balance Sheets).

1314


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

8. Long-Term Debt:

Long-term debt consists of the following (in millions):

March 31,
2021 December 31,
2020
4.875% Senior Notes due July 2024 $ 250.0 $ 250.0
Term Loan due January 2025 345.8 390.0
Revolving Credit Facility due January 2025 0 130.3
6.75% Senior Notes due December 2027 500.0 500.0
AR Securitization Facility expires June 2023 100.0 51.2
1,195.8 1,321.5
Less unamortized debt issuance costs (11.8) (12.4)
Total debt 1,184.0 1,309.1
Less: current portion 0 (10.0)
Long-term debt $ 1,184.0 $ 1,299.1

In the first quarter of 2021, the Company made a $41.7 million required prepayment of its term loan for 2020 Excess Cash Flow (as such term is defined in the credit agreement). This prepayment will reduce the future required term loan payments. As such, the Company will not have a scheduled term loan payment until June 2023.


	March 31, 2021		December 31, 2020
4.875% Senior Notes due July 2024	$	250.0	$	250.0
Term Loan due January 2025	345.8		390.0
Revolving Credit Facility due January 2025	—		130.3
6.75% Senior Notes due December 2027	500.0		500.0
AR Securitization Facility expires June 2023	100.0		51.2
	1,195.8		1,321.5
Less unamortized debt issuance costs	(11.8)		(12.4)
Total debt	1,184.0		1,309.1
Less current portion	—		(10.0)
Long-term debt	$	1,184.0	$	1,299.1

As of March 31, 2021, the term loan and revolving credit facility under the Company’s credit agreement were secured by substantially all existing and future U.S. assets of the Company, the Goderich mine in Ontario, Canada and capital stock of certain subsidiaries. As of March 31, 2021, the weighted average interest rate on all borrowings outstanding under the term loan and revolving credit facility under the Company’s credit agreement was approximately 2.1%.

Securitization

On June 30, 2020, certain of the Company’s U.S. subsidiaries entered into a three-year committed revolving accounts receivable financing facility (the “AR Facility”) of up to $100 million with PNC Bank, National Association (“PNC”), as administrative agent and lender, and PNC Capital Markets, LLC, as structuring agent.

In connection with the AR Facility, two of the Company’s U.S. subsidiaries, from time to time, sell and contribute receivables and certain related assets to a special purposes entity and wholly-owned U.S. subsidiary of the Company (the “SPE”). The SPE finances its acquisition of the receivables by obtaining secured loans from PNC and the other lenders party to a receivables financing agreement. A U.S. subsidiary of the Company services the receivables on behalf of the SPE for a fee. In addition, the Company has agreed to guarantee the performance by its subsidiaries. The Company and its subsidiaries do not guarantee the loan principal or interest under the receivables financing agreement or the collectability of the receivables under the AR Facility.

The purchase price for the sale of receivables consists of cash available to the SPE from loans under the AR Facility and from collections on previously sold receivables and, to the extent the SPE does not have funds available to pay the purchase price due on any day in cash, through an increase in the principal amount of a subordinated intercompany loan. The SPE pays monthly interest and fees with respect to amounts advanced by the lenders under the AR Facility.

The SPE’s sole business consists of the purchase or acceptance through capital contributions of the receivables and the subsequent granting of a security interest in these receivables and related rights to PNC on behalf of the lenders under the AR Facility. The SPE is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the SPE’s assets prior to any assets or value in the SPE becoming available to the Company and the assets of the SPE are not available to pay creditors of the Company or any of its affiliates other than the SPE.

9. Commitments and Contingencies:

The Wisconsin Department of Agriculture, Trade and Consumer Protection (“DATCP”) and the Wisconsin Department of Natural Resources (“DNR”) have information indicating that agricultural chemicals are present within the subsurface area of the Company’s property located in Kenosha, Wisconsin. The agricultural chemicals were used by previous owners and

1415


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

operators of the site. None of the identified chemicals have been used in association with the Company’s operations since it acquired the property in 2002. DATCP and DNR have directed the Company to conduct further investigations into the environmental conditions at the Kenosha property. The Company continues on-property investigations and has provided the findings to DATCP and DNR as they have become available. All investigations and mitigation activities to date, and any potential future remediation work, are being conducted under the Wisconsin Agricultural Chemical Cleanup Program, which provides for reimbursement of some of the costs.

The Company conducts business operations in several countries and is subject to various federal and local labor, social security, environmental and tax laws. While the Company believes it complies with such laws, they are complex and subject to interpretation. In addition to the tax assessments discussed in Note 7, the Company’s Brazilian subsidiaries are party to administrative tax proceedings and claims which totaled $7.5 million and $7.9 million as of March 31, 2021 and December 31, 2020, respectively, and relate primarily to value added tax, state tax (ICMS) and social security tax (PIS and COFINS) assessments. The Company has assessed the likelihood of a loss at less than probable and therefore, has not established a reserve for these matters. The Company also assumed liabilities for labor-related matters in connection with the acquisition of Compass Minerals América do Sul Indústria e Comércio Ltda., which are primarily related to compensation, labor benefits and consequential tax claims that totaled $2.8 million and $3.5 million as of March 31, 2021 and December 31, 2020, respectively. The Company believes the maximum exposure for these other labor matters totaled approximately $13 million and $16 million as of March 31, 2021 and December 31, 2020, respectively. Amounts recorded are included in liabilities held for sale on the Consolidated Balance Sheets.

The Division of Enforcement of the SEC is investigating the Company’s disclosures primarily concerning the operation of the Goderich mine. The Company has cooperated with this investigation and will continue to do so. While it is not possible to predict the timing or the outcome of the SEC inquiry, the Company believes that this matter will not have a material impact on its results of operation, cash flows or financial position.

The Company is also involved in legal and administrative proceedings and claims of various types from the ordinary course of the Company’s business.

Management cannot predict the outcome of legal claims and proceedings with certainty. Nevertheless, management believes the outcome of legal proceedings and claims, which are pending or known to be threatened, even if determined adversely, will not, individually or in the aggregate, have a material adverse effect on the Company’s results of operations, cash flows or financial position.

10. Operating Segments:

The Company’s reportable segments are strategic business units that offer different products and services, and each business requires different technology and marketing strategies. In connection with the planned and executed disposals discussed in Note 1, the Company has identified 2 reportable segments. The Specialty Businesses that comprised the Company’s former Plant Nutrition South America reportable segment and the North America micronutrient product business previously reported within the former Plant Nutrition North America reportable segment were classified as discontinued operations for all periods presented. As part of the Company’s strategic shift, the Company has renamed the former Plant Nutrition North America segment as the Plant Nutrition segment.

For the three months ended March 31, 2021 and 2020, the Company has presented 2 reportable segments: Salt and Plant Nutrition. The Salt segment produces and markets salt, consisting of sodium chloride and magnesium chloride, for use in road deicing for winter roadway safety and for dust control, food processing, water softeners and other consumer, agricultural and industrial applications. The Plant Nutrition segment produces and markets plant nutrients, including various grades of SOP.

1516


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Segment information is as follows (in millions):, inclusive of the remaining North America micronutrient product lines abandoned during the three months ended June 30, 2021, which were reclassified as discontinued operations for all periods presented:


Three Months Ended March 31, 2021	Three Months Ended March 31, 2021	Salt		Plant Nutrition		Corporate & Other(a)		Total		Three Months Ended March 31, 2021	Salt		Plant Nutrition		Corporate & Other(a)		Total
Sales to external customers	Sales to external customers	$	369.0	$	54.2	$	2.8	$	426.0	Sales to external customers	$	369.0	$	53.7	$	2.8	$	425.5
Intersegment sales	Intersegment sales	0		0.5		(0.5)		—		Intersegment sales	—		0.5		(0.5)		—
Shipping and handling cost		115.5		7.7		0		123.2
Operating earnings (loss)		80.1		4.4		(20.9)		63.6
Shipping and handling cost (revised)										Shipping and handling cost (revised)	115.4		7.7		—		123.1
Operating earnings (loss) (restated)										Operating earnings (loss) (restated)	91.6		5.3		(20.9)		76.0
Depreciation, depletion and amortization	Depreciation, depletion and amortization	18.0		8.8		3.1		29.9		Depreciation, depletion and amortization	18.0		8.8		3.1		29.9
Total assets (as of end of period)		892.9		481.9		191.4		1,566.2
Total assets (as of end of period) (restated)										Total assets (as of end of period) (restated)	901.4		481.9		191.4		1,574.7


Three Months Ended March 31, 2020	Three Months Ended March 31, 2020	Salt		Plant Nutrition		Corporate & Other(a)		Total		Three Months Ended March 31, 2020	Salt		Plant Nutrition		Corporate & Other(a)		Total
Sales to external customers	Sales to external customers	$	287.8	$	56.4	$	2.7	$	346.9	Sales to external customers	$	287.8	$	55.4	$	2.7	$	345.9
Intersegment sales	Intersegment sales	0		0.3		(0.3)		—		Intersegment sales	—		0.3		(0.3)		—
Shipping and handling cost		89.9		8.6		0		98.5
Operating earnings (loss)		56.9		6.6		(18.1)		45.4
Shipping and handling cost (revised)										Shipping and handling cost (revised)	89.8		8.6		—		98.4
Operating earnings (loss) (restated)										Operating earnings (loss) (restated)	67.8		4.6		(18.1)		54.3
Depreciation, depletion and amortization	Depreciation, depletion and amortization	14.6		9.8		3.0		27.4		Depreciation, depletion and amortization	14.6		9.8		3.0		27.4
Total assets (as of end of period)		956.5		528.4		32.2		1,517.1
Total assets (as of end of period) (restated)										Total assets (as of end of period) (restated)	967.2		522.2		32.2		1,521.6

Disaggregated revenue by product type is as follows (in millions):


Three Months Ended March 31, 2021	Three Months Ended March 31, 2021	Salt		Plant Nutrition		Corporate & Other(a)		Total		Three Months Ended March 31, 2021	Salt		Plant Nutrition		Corporate & Other(a)		Total
Highway Deicing Salt	Highway Deicing Salt	$	291.3	$	0	$	0	$	291.3	Highway Deicing Salt	$	291.3	$	—	$	—	$	291.3
Consumer & Industrial Salt	Consumer & Industrial Salt	77.7		0		0		77.7		Consumer & Industrial Salt	77.7		—		—		77.7

SOP		0		54.7		0		54.7
SOP (revised)										SOP (revised)	—		54.2		—		54.2
Eliminations & Other	Eliminations & Other	0		(0.5)		2.8		2.3		Eliminations & Other	—		(0.5)		2.8		2.3
Sales to external customers	Sales to external customers	$	369.0	$	54.2	$	2.8	$	426.0	Sales to external customers	$	369.0	$	53.7	$	2.8	$	425.5


Three Months Ended March 31, 2020	Three Months Ended March 31, 2020	Salt		Plant Nutrition		Corporate & Other(a)		Total		Three Months Ended March 31, 2020	Salt		Plant Nutrition		Corporate & Other(a)		Total
Highway Deicing Salt	Highway Deicing Salt	$	215.1	$	0	$	0	$	215.1	Highway Deicing Salt	$	215.1	$	—	$	—	$	215.1
Consumer & Industrial Salt	Consumer & Industrial Salt	72.7		0		0		72.7		Consumer & Industrial Salt	72.7		—		—		72.7

SOP		0		56.7		0		56.7
SOP (revised)										SOP (revised)	—		55.7		—		55.7
Eliminations & Other	Eliminations & Other	0		(0.3)		2.7		2.4		Eliminations & Other	—		(0.3)		2.7		2.4
Sales to external customers	Sales to external customers	$	287.8	$	56.4	$	2.7	$	346.9	Sales to external customers	$	287.8	$	55.4	$	2.7	$	345.9

(a)Corporate and other includes corporate entities, records management operations and other incidental operations and eliminations. Operating ~~earnings (loss)~~loss for corporate and other includes indirect corporate overhead, including costs for general corporate governance and oversight, as well as costs for the human resources, information technology, legal and finance functions. Corporate assets in 2021 include assets under the Company’s A/R Facility.

1617


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The Company’s revenue by geographic area is as follows (in millions):


		Three Months Ended March 31,					Three Months Ended March 31,
Revenue	Revenue	2021		2020		Revenue	2021		2020
United States(a)	United States(a)	$	316.0	$	257.7	United States(a)	$	317.0	$	253.6
Canada	Canada	70.8		77.4		Canada	70.6		77.4
United Kingdom	United Kingdom	34.9		11.8		United Kingdom	34.9		11.8
Other	Other	4.3		0		Other	3.0		3.1
Total revenue	Total revenue	$	426.0	$	346.9	Total revenue	$	425.5	$	345.9

(a)United States sales exclude product sold to foreign customers at U.S. ports.

11. Stockholders’ Equity and Equity Instruments:

In May 2020, the Company’s stockholders approved the 2020 Incentive Award Plan (the “2020 Plan”), which authorizes the issuance of 2,977,933 shares of Company common stock. Since the date the 2020 Plan was approved, the Company ceased issuing equity awards under the 2015 Incentive Award Plan (as amended, the “2015 Plan”). Since the approval of the 2015 Plan in May 2015, the Company ceased issuing equity awards under the 2005 Incentive Award Plan (as amended, the “2005 Plan”). The 2005 Plan, the 2015 Plan and the 2020 Plan allow for grants of equity awards to executive officers, other employees and directors, including restricted stock units (“RSUs”), performance stock units (“PSUs”), stock options and deferred stock units.

Options

Substantially all of the stock options granted vest ratably, in tranches, over a four-year service period. Unexercised options expire after seven years. Options do not have dividend or voting rights. Upon vesting, each option can be exercised to purchase 1 share of the Company’s common stock. The exercise price of options is equal to the closing stock price on the grant date.

To estimate the fair value of options on the grant date, the Company uses the Black-Scholes option valuation model. Award recipients are grouped according to expected exercise behavior. Unless better information is available to estimate the expected term of the options, the estimate is based on historical exercise experience. The risk-free rate, using U.S. Treasury yield curves in effect at the time of grant, is selected based on the expected term of each group. The Company’s historical stock price is used to estimate expected volatility. The fair value and inputs used to calculate fair value for options granted for the three months ended March 31, 2021, are included in the table below:



Fair value of options granted			$13.46
Exercise price			$63.14
Expected term (years)			4.75
Expected volatility			36.1%
Dividend yield			3.7%
Risk-free rate of return			0.4%

RSUs

Typically, the RSUs granted under the 2015 Plan and the 2020 Plan vest after one to three years of service. RSUs entitle the holders to 1 share of common stock for each vested RSU. Unvested RSUs do not have voting rights but are entitled to receive non-forfeitable dividends (generally after a performance hurdle has been satisfied for the year of the grant) or other distributions equal to those declared on the Company’s common stock for RSUs that are earned as a result of the satisfaction of the performance hurdle. The closing stock price on the grant date is used to determine the fair value of RSUs.

PSUs

Substantially all of the PSUs granted under the 2015 Plan and the 2020 Plan are either total stockholder return PSUs (“TSR PSUs”), return on invested capital PSUs (“ROIC PSUs”) or EBITDA growth PSUs (“EBITDA Growth PSUs”). The actual number of shares of the Company’s common stock that may be earned with respect to TSR PSUs is calculated by comparing

1718


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

the Company’s total stockholder return to the total stockholder return for each company comprising the Company’s peer group over the three-year performance period and may range from 0% to 200% of the target number of shares based upon the attainment of these performance conditions. The actual number of shares of common stock that may be earned with respect to ROIC PSUs is calculated based on the average of the Company’s annual return on invested capital for each year in the three-year performance period and may range from 0% to 200% of the target number of shares based upon the attainment of these performance conditions. The actual number of shares of common stock that may be earned with respect to EBITDA Growth PSUs is calculated based on the attainment of EBITDA growth during the performance period and may range from 0% to 300% of the target number of shares based upon the attainment of these performance conditions.

PSUs represent a target number of shares of the Company’s common stock that may be earned before adjustment based upon the attainment of certain performance conditions. Holders of PSUs do not have voting rights but are entitled to receive non-forfeitable dividends or other distributions equal to those declared on the Company’s common stock for PSUs that are earned, which are paid when the shares underlying the PSUs are issued.

To estimate the fair value of the TSR PSUs on the grant date, the Company uses a Monte-Carlo simulation model, which simulates future stock prices of the Company as well as the Company’s peer group. This model uses historical stock prices to estimate expected volatility and the Company’s correlation to the peer group. The risk-free rate was determined using the same methodology as the option valuations as discussed above. The Company’s closing stock price on the grant date was used to estimate the fair value of the ROIC PSUs and EBITDA Growth PSUs. The Company will adjust the expense of the ROIC PSUs and EBITDA Growth PSUs based upon its estimate of the number of shares that will ultimately vest at each interim date during the vesting period.

During the three months ended March 31, 2021, the Company reissued the following number of shares from treasury stock: 5,948 shares related to the exercise of stock options, 1,945 shares related to the release of RSUs which vested, and 12,730 shares related to stock payments. In 2020, the Company issued 72,454 net shares from treasury stock. The Company withheld a total of 4,225 shares with a fair value of $0.2 million related to the vesting of RSUs and exercised options during the three months ended March 31, 2021. The fair value of the shares were valued at the closing price at the vesting date and represent the employee tax withholding for the employee’s compensation. The Company recognized a tax deficiency of $0.1 million from its equity compensation awards as an increase to income tax expense during the three months ended March 31, 2021. During the three months ended March 31, 2021 and 2020, the Company recorded $4.0 million and $2.9 million (includes $0.5 million paid in cash), respectively, of compensation expense pursuant to its stock-based compensation plans. No amounts have been capitalized. The following table summarizes stock-based compensation activity during the three months ended March 31, 2021:


		Stock Options			RSUs			PSUs(a)				Stock Options			RSUs			PSUs(a)
		Number	Weighted-average exercise price		Number	Weighted-average fair value		Number	Weighted-average fair value			Number	Weighted-average exercise price		Number	Weighted-average fair value		Number	Weighted-average fair value
Outstanding at December 31, 2020	Outstanding at December 31, 2020	868,772	$	63.06	207,982	$	55.68	241,794	$	65.57	Outstanding at December 31, 2020	868,772	$	63.06	207,982	$	55.68	241,794	$	65.57
Granted	Granted	120,602	63.14		89,998	63.14		96,002	63.14		Granted	120,602	63.14		89,998	63.14		96,002	63.14
Exercised(b)	Exercised(b)	(5,948)	58.11		0	0		0	0		Exercised(b)	(5,948)	58.11		—	—		—	—
Released from restriction(b)	Released from restriction(b)	0	0		(1,945)	42.63		0	0		Released from restriction(b)	—	—		(1,945)	42.63		—	—
Cancelled/expired	Cancelled/expired	(52,468)	86.87		(2,218)	65.70		(23,962)	60.43		Cancelled/expired	(52,468)	86.87		(2,218)	65.70		(23,962)	60.43
Outstanding at March 31, 2021	Outstanding at March 31, 2021	930,958	$	61.76	293,817	$	57.98	313,834	$	65.22	Outstanding at March 31, 2021	930,958	$	61.76	293,817	$	57.98	313,834	$	65.22

(a)Until the performance period is completed, PSUs are included in the table at the target level at their grant date and at that level represent 1 share of common stock per PSU.

(b)Common stock issued for exercised options and for vested and earned RSUs and PSUs was issued from treasury stock.

1819


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Accumulated Other Comprehensive Loss (“AOCL”)

The Company’s comprehensive income (loss) is comprised of net (loss) earnings, net amortization of the unrealized loss of the pension obligation, the change in the unrealized gain (loss) on natural gas and foreign currency cash flow hedges and ~~foreign currency translation adjustments.~~CTA. The components of and changes in AOCL as of and for the three months ended March 31, 2021 and 2020, are as follows (in millions):


Three Months Ended March 31, 2021(a)	Three Months Ended March 31, 2021(a)	Gains and (Losses) on Cash Flow Hedges		Defined Benefit Pension		Foreign Currency		Total		Three Months Ended March 31, 2021(a)	Gains and (Losses) on Cash Flow Hedges		Defined Benefit Pension		Foreign Currency		Total
Beginning balance		$	0.2	$	(9.4)	$	(294.1)	$	(303.3)
Beginning balance (revised)										Beginning balance (revised)	$	0.2	$	(9.4)	$	(294.6)	$	(303.8)
Other comprehensive income (loss) before reclassifications(b)	Other comprehensive income (loss) before reclassifications(b)	1.9		0		(20.5)		(18.6)		Other comprehensive income (loss) before reclassifications(b)	1.9		—		(20.5)		(18.6)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	(1.8)		0.2		0		(1.6)		Amounts reclassified from accumulated other comprehensive loss	(1.8)		0.2		—		(1.6)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	0.1		0.2		(20.5)		(20.2)		Net current period other comprehensive income (loss)	0.1		0.2		(20.5)		(20.2)
Ending balance		$	0.3	$	(9.2)	$	(314.6)	$	(323.5)
Ending balance (revised)										Ending balance (revised)	$	0.3	$	(9.2)	$	(315.1)	$	(324.0)


Three Months Ended March 31, 2020(a)	Three Months Ended March 31, 2020(a)	Gains and (Losses) on Cash Flow Hedges		Defined Benefit Pension		Foreign Currency		Total		Three Months Ended March 31, 2020(a)	Gains and (Losses) on Cash Flow Hedges		Defined Benefit Pension		Foreign Currency		Total
Beginning balance		$	(0.6)	$	(6.9)	$	(184.6)	$	(192.1)
Other comprehensive income (loss) before reclassifications(b)		2.7		0		(173.5)		(170.8)
Beginning balance (revised)										Beginning balance (revised)	$	(0.6)	$	(6.9)	$	(184.7)	$	(192.2)
Other comprehensive income (loss) before reclassifications(b) (restated)										Other comprehensive income (loss) before reclassifications(b) (restated)	2.7		—		(173.8)		(171.1)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	(2.6)		0.2		0		(2.4)		Amounts reclassified from accumulated other comprehensive loss	(2.6)		0.2		—		(2.4)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	0.1		0.2		(173.5)		(173.2)		Net current period other comprehensive income (loss)	0.1		0.2		(173.8)		(173.5)
Ending balance		$	(0.5)	$	(6.7)	$	(358.1)	$	(365.3)
Ending balance (revised)										Ending balance (revised)	$	(0.5)	$	(6.7)	$	(358.5)	$	(365.7)

(a)With the exception of the cumulative ~~foreign currency translation adjustment,~~CTA, for which no tax effect is recorded, the changes in the components of ~~accumulated other comprehensive loss~~AOCL presented in the tables above are reflected net of applicable income taxes.

(b)The Company recorded a foreign exchange ~~loss~~gain (loss) of $(19.2) million and $(75.5) million in the three months ended March 31, 2021 and 2020, respectively, in ~~accumulated other comprehensive loss~~AOCL related to intercompany notes which were deemed to be of a long-term investment nature.

The amounts reclassified from AOCL to expense (income) for the three months ended March 31, 2021 and 2020, are shown below (in millions):


		Amount Reclassified from AOCL						Amount Reclassified from AOCL
		Three Months Ended March 31, 2021		Three Months Ended March 31, 2020		Line Item Impacted in the Consolidated Statements of Operations		Three Months Ended March 31, 2021		Three Months Ended March 31, 2020		Line Item Impacted in the Consolidated Statements of Operations
Gains (losses) on cash flow hedges:	Gains (losses) on cash flow hedges:						Gains (losses) on cash flow hedges:
Natural gas instruments	Natural gas instruments	$	(0.2)	$	(0.3)	Product cost	Natural gas instruments	$	(0.2)	$	(0.3)	Product cost
Foreign currency contracts	Foreign currency contracts	(2.5)		(3.6)		Interest expense	Foreign currency contracts	(2.5)		(3.6)		Interest expense
Income tax expense	Income tax expense	0.9		1.3			Income tax expense	0.9		1.3
Reclassifications, net of income taxes	Reclassifications, net of income taxes	(1.8)		(2.6)			Reclassifications, net of income taxes	(1.8)		(2.6)
Amortization of defined benefit pension:	Amortization of defined benefit pension:						Amortization of defined benefit pension:
Amortization of loss	Amortization of loss	0.3		0.2		Product cost	Amortization of loss	0.3		0.2		Product cost
Income tax benefit	Income tax benefit	(0.1)		0			Income tax benefit	(0.1)		—
Reclassifications, net of income taxes	Reclassifications, net of income taxes	0.2		0.2			Reclassifications, net of income taxes	0.2		0.2
Total reclassifications, net of income taxes	Total reclassifications, net of income taxes	$	(1.6)	$	(2.4)		Total reclassifications, net of income taxes	$	(1.6)	$	(2.4)

1920


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

12. Derivative Financial Instruments:

The Company is subject to various types of market risks, including interest rate risk, foreign currency exchange rate transaction and translation risk and commodity pricing risk. Management may take actions to mitigate the exposure to these types of risks, including entering into forward purchase contracts and other financial instruments. Currently, the Company manages a portion of its commodity pricing risks by using derivative instruments. The Company does not seek to engage in trading activities or take speculative positions with any financial instrument arrangement. The Company has entered into natural gas derivative instruments with counterparties it views as creditworthy. However, the Company does attempt to mitigate its counterparty credit risk exposures by, among other things, entering into master netting agreements with some of these counterparties. The Company records derivative financial instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets. The assets and liabilities recorded as of March 31, 2021 and December 31, 2020 were not material.

Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. Depending on the exposure being hedged, the Company must designate the hedging instrument as a fair value hedge, a cash flow hedge or a net investment in foreign operations hedge. For the qualifying derivative instruments that have been designated as hedges, the change in fair value is recognized through earnings when the underlying transaction being hedged affects earnings, allowing a derivative’s gains and losses to offset related results from the hedged item in the statements of operations. Any ineffectiveness related to these hedges was not material for any of the periods presented. For derivative instruments that have not been designated as hedges, the entire change in fair value is recorded through earnings in the period of change.

Natural Gas Derivative Instruments

Natural gas is consumed at several of the Company’s production facilities, and changes in natural gas prices impact the Company’s operating margin. The Company’s objective is to reduce the earnings and cash flow impacts of changes in market prices of natural gas by fixing the purchase price of up to 90% of its forecasted natural gas usage. It is the Company’s policy to consider hedging portions of its natural gas usage up to 36 months in advance of the forecasted purchase. As of March 31, 2021, the Company had entered into natural gas derivative instruments to hedge a portion of its natural gas purchase requirements through December 2022. As of March 31, 2021 and December 31, 2020, the Company had agreements in place to hedge forecasted natural gas purchases of 2.9 million and 2.5 million MMBtus, respectively. All natural gas derivative instruments held by the Company as of March 31, 2021 and December 31, 2020 qualified and were designated as cash flow hedges. As of March 31, 2021, the Company expects to reclassify from AOCL to earnings during the next twelve months $0.6 million of net gains on derivative instruments related to its natural gas hedges.

13. Fair Value Measurements:

The Company’s financial instruments are measured and reported at their estimated fair values. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction. When available, the Company uses quoted prices in active markets to determine the fair values for its financial instruments (Level 1 inputs) or, absent quoted market prices, observable market-corroborated inputs over the term of the financial instruments (Level 2 inputs). The Company does not have any unobservable inputs that are not corroborated by market inputs (Level 3 inputs).

The Company holds marketable securities associated with its defined contribution and pre-tax savings plans, which are valued based on readily available quoted market prices. The Company utilizes derivative instruments to manage its risk of changes in natural gas prices (see Note 12). The fair values of the natural gas derivative instruments are determined using market data of forward prices for all of the Company’s contracts.

2021


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The estimated fair values for each type of instrument are presented below (in millions):


		March 31, 2021		Level One		Level Two		Level Three			March 31, 2021		Level One		Level Two		Level Three
Asset Class:	Asset Class:									Asset Class:
Mutual fund investments in a non-qualified savings plan(a)	Mutual fund investments in a non-qualified savings plan(a)	$	2.1	$	2.1	$	0	$	0	Mutual fund investments in a non-qualified savings plan(a)	$	2.1	$	2.1	$	—	$	—
Derivatives – natural gas instruments, net	Derivatives – natural gas instruments, net	0.4		0		0.4		0		Derivatives – natural gas instruments, net	0.4		—		0.4		—
Total Assets	Total Assets	$	2.5	$	2.1	$	0.4	$	0	Total Assets	$	2.5	$	2.1	$	0.4	$	—
Liability Class:	Liability Class:									Liability Class:
Liabilities related to non-qualified savings plan	Liabilities related to non-qualified savings plan	$	(2.1)	$	(2.1)	$	0	$	0	Liabilities related to non-qualified savings plan	$	(2.1)	$	(2.1)	$	—	$	—

Total Liabilities	Total Liabilities	$	(2.1)	$	(2.1)	$	0	$	0	Total Liabilities	$	(2.1)	$	(2.1)	$	—	$	—

(a)Includes mutual fund investments of approximately 30% in common stock of large-cap U.S. companies, 10% in common stock of small to mid-cap U.S. companies, 10% in international companies, 20% in bond funds, 5% in short-term investments and 25% in blended funds.


		December 31, 2020		Level One		Level Two		Level Three			December 31, 2020		Level One		Level Two		Level Three
Asset Class:	Asset Class:									Asset Class:
Mutual fund investments in a non-qualified savings plan(a)	Mutual fund investments in a non-qualified savings plan(a)	$	1.9	$	1.9	$	0	$	0	Mutual fund investments in a non-qualified savings plan(a)	$	1.9	$	1.9	$	—	$	—
Derivatives – natural gas instruments, net	Derivatives – natural gas instruments, net	0.2		0		0.2		0		Derivatives – natural gas instruments, net	0.2		—		0.2		—
Total Assets	Total Assets	$	2.1	$	1.9	$	0.2	$	0	Total Assets	$	2.1	$	1.9	$	0.2	$	—
Liability Class:	Liability Class:									Liability Class:
Liabilities related to non-qualified savings plan	Liabilities related to non-qualified savings plan	$	(1.9)	$	(1.9)	$	0	$	0	Liabilities related to non-qualified savings plan	$	(1.9)	$	(1.9)	$	—	$	—

Total Liabilities	Total Liabilities	$	(1.9)	$	(1.9)	$	0	$	0	Total Liabilities	$	(1.9)	$	(1.9)	$	—	$	—

(a)Includes mutual fund investments of approximately 30% in the common stock of large-cap U.S. companies, 10% in the common stock of small to mid-cap U.S. companies, 5% in the common stock of international companies, 15% in bond funds, 15% in short-term investments and 25% in blended funds.

Cash and cash equivalents, receivables (net of allowance for doubtful accounts) and accounts payable are carried at cost, which approximates fair value due to their liquid and short-term nature. The Company’s investments related to its nonqualified savings plan of $2.1 million and $1.9 million at March 31, 2021 and December 31, 2020, respectively, are stated at fair value based on quoted market prices. As of March 31, 2021 and December 31, 2020, the estimated fair value of the Company’s fixed-rate 4.875% Senior Notes due July 2024, based on available trading information (Level 2), totaled $255.6 million and $260.3 million, respectively, compared with the aggregate principal amount at maturity of $250.0 million. As of March 31, 2021 and December 31, 2020, the estimated fair value of the Company’s fixed-rate 6.75% Senior Notes due December 2027, based on available trading information (Level 2), totaled $533.8 million and $543.1 million, respectively, compared with the aggregate principal amount at maturity of $500.0 million. The fair value at March 31, 2021 and December 31, 2020 of amounts outstanding under the Company’s term loans and revolving credit facility, based upon available bid information received from the Company’s lender (Level 2), totaled approximately $342.3 million and $513.8 million, respectively, compared with the aggregate principal amount at maturity of $345.8 million and $520.3 million, respectively.

WeManagement performed an ~~impairment~~ analysis for our ~~Plant Nutrition South America businesses during the first quarter~~Specialty Businesses as of March 31, 2021 and June 30, 2021, which resulted in the recognition of a loss related to an ~~impairment loss.~~adjustment to fair value less estimated costs to sell the Specialty Businesses. The fair value measurements used in this analysis were a combination of Level 2 and Level 3 inputs. Refer to Note 2 for a discussion of fair value as it relates to the Company’s Specialty Businesses.

2122


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

14. Earnings (loss) per Share:

The Company calculates earnings per share using the two-class method. The two-class method requires allocating the Company’s net earnings (loss) to both common shares and participating securities. The following table sets forth the computation of basic and diluted earnings (loss) per common share (in millions, except for share and per-share data):


								Three Months Ended March 31,
		Three Months Ended March 31,				2021		2020
		2021		2020				(Restated)		(Restated)
Numerator:	Numerator:						Numerator:
Net earnings from continuing operations	Net earnings from continuing operations	$	32.9	$	33.9		Net earnings from continuing operations	$	41.9	$	40.0
Less: net earnings allocated to participating securities(a)	Less: net earnings allocated to participating securities(a)	(0.5)		(0.6)			Less: net earnings allocated to participating securities(a)	(0.6)		(0.4)
Net earnings from continuing operations available to common stockholders	Net earnings from continuing operations available to common stockholders	32.4		33.3			Net earnings from continuing operations available to common stockholders	41.3		39.6
Net loss from discontinued operations	Net loss from discontinued operations	(256.5)		(6.3)			Net loss from discontinued operations	(256.3)		(6.0)
Net (loss) earnings available to common stockholders	Net (loss) earnings available to common stockholders	$	(224.1)	$	27.0		Net (loss) earnings available to common stockholders	$	(215.0)	$	33.6

Denominator (in thousands):	Denominator (in thousands):						Denominator (in thousands):
Weighted-average common shares outstanding, shares for basic earnings per share	Weighted-average common shares outstanding, shares for basic earnings per share	33,974		33,892			Weighted-average common shares outstanding, shares for basic earnings per share	33,974		33,892
Weighted-average awards outstanding(b)	Weighted-average awards outstanding(b)	38		0			Weighted-average awards outstanding(b)	38		—
Shares for diluted earnings per share	Shares for diluted earnings per share	34,012		33,892			Shares for diluted earnings per share	34,012		33,892

Basic net earnings from continuing operations per common share	Basic net earnings from continuing operations per common share	$	0.96	$	0.99		Basic net earnings from continuing operations per common share	$	1.22	$	1.17
Basic net loss from discontinued operations per common share	Basic net loss from discontinued operations per common share	(7.55)		(0.19)			Basic net loss from discontinued operations per common share	(7.54)		(0.18)
Basic net (loss) earnings per common share	Basic net (loss) earnings per common share	$	(6.59)	$	0.80		Basic net (loss) earnings per common share	$	(6.32)	$	0.99

Diluted net earnings from continuing operations per common share	Diluted net earnings from continuing operations per common share	$	0.95	$	0.99		Diluted net earnings from continuing operations per common share	$	1.21	$	1.16
Diluted net loss from discontinued operations per common share	Diluted net loss from discontinued operations per common share	(7.55)		(0.19)			Diluted net loss from discontinued operations per common share	(7.54)		(0.18)
Diluted net (loss) earnings per common share	Diluted net (loss) earnings per common share	$	(6.60)	$	0.80		Diluted net (loss) earnings per common share	$	(6.32)	$	0.99

(a)Weighted participating securities include RSUs and PSUs that receive non-forfeitable dividends and consist of 445,000 and 412,000 weighted participating securities for the three months ended March 31, 2021 and 2020, respectively.

(b)For the calculation of diluted net (loss) earnings per share, the Company uses the more dilutive of either the treasury stock method or the two-class method to determine the weighted-average number of outstanding common shares. In addition, the Company had 1,278,000 and 1,266,000 weighted-average equity awards outstanding for the three months ended March 31, 2021 and 2020, respectively, that were anti-dilutive.

15. Revisions to Prior Period Consolidated Financial Statements:

The Company’s quarterly financial results have been restated to correct an error in its interim inventory valuation methodology related to the capitalization of inventory variances at its Salt production mines, which resulted in a historical understatement of its first-quarter consolidated and Salt segment operating income, that is completely offset in subsequent quarters with no impact to full-year operating results. This correction resulted in shifting previously reported Salt segment product costs from the first quarter of 2021 and 2020, respectively, to subsequent quarters.

The Company's consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 have also been revised to correct for certain immaterial items, the cumulative effect of which was considered to be too material to correct through fiscal 2021 earnings; however, the errors were not material to any annual historical periods. The Company's consolidated financial statements as of December 31, 2020 have been revised to correct certain immaterial items, the cumulative effect of which were considered to be too material to correct through fiscal 2021 earnings. These adjustments primarily relate to understatement of the Canadian other post-employment benefit obligations andoverstatement of bulk SOP stockpile inventory at the Company's Ogden facility.

In the tables below, the amounts As Previously Reported represent the amounts as reported in the Company's 2021 first quarter Form 10-Q. The As Restated columns reflect the adjustments described above. The As Revised columns reflect the adjustments described above for prior year revisions.

2223


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The effects of the restatements described above on the Company’s Consolidated Balance Sheet as of March 31, 2021, are as follows:


	As Previously Reported		As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	42.8	$	42.8
Receivables, less allowance for doubtful accounts	158.6		158.6
Inventories(a)	219.9		231.7
Current assets held for sale	338.8		338.8
Other(b)	49.0		45.7
Total current assets	809.1		817.6
Property, plant and equipment, net	845.0		845.0
Intangible assets, net	49.9		49.9
Goodwill	56.4		56.4
Other	144.6		144.6
Total assets	$	1,905.0	$	1,913.5

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	—
Accounts payable	104.6		104.6
Accrued salaries and wages(c)	16.0		16.5
Income taxes payable	0.6		0.6
Accrued interest	14.1		14.1
Current liabilities held for sale	199.3		199.3
Accrued expenses and other current liabilities	58.8		58.8
Total current liabilities	393.4		393.9
Long-term debt, net of current portion	1,184.0		1,184.0
Deferred income taxes, net(d)	60.8		57.9
Other noncurrent liabilities(c)	143.5		153.9
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock: $0.01 par value, 200,000,000 authorized shares; 35,367,264 issued shares	0.4		0.4
Additional paid-in capital	131.3		131.3
Treasury stock, at cost — 1,390,182 shares at March 31, 2021	(4.4)		(4.4)
Retained earnings(e)	319.5		320.5
Accumulated other comprehensive loss(f)	(323.5)		(324.0)
Total stockholders’ equity	123.3		123.8
Total liabilities and stockholders’ equity	$	1,905.0	$	1,913.5

(a) Amount in As Restated column reflects increase of $11.8 million related to the correction in inventory valuation methodology.

(b) Amount in As Restated column reflects a $3.3 million tax benefit related to the correction in inventory valuation methodology.

(c) Amounts in As Restated column reflect Canadian Benefits obligation, consisting of $0.5 million of current liabilities and $10.4 million of noncurrent liabilities.

(d) Amount in As Restated column reflects $2.9 million reduction of deferred tax liability related to the Canadian Benefits obligation.

(e) Amount in As Restated column reflects retained earnings reduction of $7.4 million related to the Canadian Benefits obligation and an increase of $8.4 million related to the change in inventory valuation methodology.

(f) Amount in As Restated column reflects a $0.5 million impact of translating the Canadian Benefits obligation into U.S. dollars and $0.1 million related to the change in inventory valuation methodology.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The effects of the revisions described above on the Company’s Consolidated Balance Sheet as of December 31, 2020, are as follows:


	As Previously Reported		As Revised
ASSETS
Current assets:
Cash and cash equivalents	$	10.6	$	10.6
Receivables, less allowance for doubtful accounts	185.1		185.1
Inventories(a)	299.9		298.7
Current assets held for sale	206.5		206.5
Other(b)	55.1		55.4
Total current assets	757.2		756.3
Property, plant and equipment, net	851.7		851.7
Intangible assets, net	49.9		49.9
Goodwill	55.7		55.7
Noncurrent assets held for sale	404.1		404.1
Other	143.8		143.8
Total assets	$	2,262.4	$	2,261.5

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	10.0	$	10.0
Accounts payable	82.6		82.6
Accrued salaries and wages(c)	21.7		22.2
Income taxes payable	5.1		5.1
Accrued interest	9.0		9.0
Current liabilities held for sale	111.5		111.4
Accrued expenses and other current liabilities	56.4		56.4
Total current liabilities	296.3		296.7
Long-term debt, net of current portion	1,299.1		1,299.1
Deferred income taxes, net(d)	60.0		57.3
Noncurrent liabilities held for sale	76.1		76.1
Other noncurrent liabilities(c)	143.9		154.0
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock: $0.01 par value, 200,000,000 authorized shares; 35,367,264 issued shares	0.4		0.4
Additional paid-in capital	127.0		127.0
Treasury stock, at cost — 1,407,926 shares at December 31, 2020	(4.4)		(4.4)
Retained earnings(e)	567.3		559.1
Accumulated other comprehensive loss(f)	(303.3)		(303.8)
Total stockholders’ equity	387.0		378.3
Total liabilities and stockholders’ equity	$	2,262.4	$	2,261.5

(a) Amount in As Revised column reflects increase of $1.2 million related to the SOP inventory correction.

(b) Amount in As Revised column reflects a $0.3 million tax benefit related to the SOP inventory correction.

(c) Amounts in As Revised column reflect Canadian Benefits obligation, consisting of $0.4 million of current liabilities and $10.1 million of noncurrent liabilities.

(d) Amount in As Revised column reflects $2.7 million reduction of deferred tax liability related to the Canadian Benefits obligation.

(e) Amount in As Revised column reflects retained earnings reductions of $7.4 million related to the Canadian Benefits obligation and $0.8 million related to the SOP inventory correction.

(f) Amount in As Revised column reflects a $0.5 million impact of translating the Canadian Benefits obligation into U.S. dollars.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The effects of the restatement described above on the Company’s Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020, inclusive of the remaining North America micronutrient product lines abandoned during the three months ended June 30, 2021, which were reclassified as discontinued operations for all periods presented, are as follows:


	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	As Previously Reported		As Restated		As Previously Reported		As Restated
Sales	$	426.0	$	425.5	$	346.9	$	345.9
Shipping and handling cost	123.2		123.1		98.5		98.4
Product cost(a)	206.8		194.0		173.2		163.4
Gross profit	96.0		108.4		75.2		84.1
Selling, general and administrative expenses	32.4		32.4		29.8		29.8
Operating earnings	63.6		76.0		45.4		54.3

Other expense (income):
Interest expense	15.7		15.7		16.6		16.6
Loss (gain) on foreign exchange	2.1		2.1		(18.0)		(18.0)
Other expense, net	0.3		0.3		0.3		0.3
Earnings from continuing operations before income taxes	45.5		57.9		46.5		55.4
Income tax expense for continuing operations(b)	12.6		16.0		12.6		15.4
Net earnings from continuing operations	32.9		41.9		33.9		40.0
Net loss from discontinued operations	(256.5)		(256.3)		(6.3)		(6.0)
Net (loss) earnings	$	(223.6)	$	(214.4)	$	27.6	$	34.0

Basic net earnings from continuing operations per common share	$	0.96	$	1.22	$	0.99	$	1.17
Basic net loss from discontinued operations per common share	(7.55)		(7.54)		(0.19)		(0.18)
Basic net (loss) earnings per common share	$	(6.59)	$	(6.32)	$	0.80	$	0.99

Diluted net earnings from continuing operations per common share	$	0.95	$	1.21	$	0.99	$	1.16
Diluted net loss from discontinued operations per common share	(7.55)		(7.54)		(0.19)		(0.18)
Diluted net (loss) earnings per common share	$	(6.60)	$	(6.32)	$	0.80	$	0.99

Weighted-average common shares outstanding (in thousands):
Basic	33,974		33,974		33,892		33,892
Diluted	34,012		34,012		33,892		33,892

(a) Amounts in As Restated column reflect impacts of ($11.8) million and ($11.1) million for the correction in inventory valuation methodology, ($1.2) million and $1.5 million related to the SOP inventory correction and $0.2 million and $0.2 million related to the Canadian Benefits obligation for the three months ended March 31, 2021 and 2020, respectively.

(b) Amounts in As Restated column reflect increases in income tax expense of $3.2 million and $3.3 million related to the correction in inventory valuation methodology, $0.3 million and ($0.4) million related to the SOP inventory correction and ($0.1) million related to the Canadian Benefits obligation for the three months ended March 31, 2021 and 2020, respectively.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The following table presents the effects of the revisions to the Company’s Consolidated Statements of Stockholders’ Equity:


	Retained Earnings				Accumulated Other Comprehensive Loss
(In millions)	As Previously Reported		As Revised		As Previously Reported		As Revised
Balance, December 31, 2019(a)	$	607.4	$	595.6	$	(192.1)	$	(192.2)
Balance, March 31, 2020(b) (restated)	610.1		604.7		(365.3)		(365.7)
Balance, December 31, 2020(c)	567.3		559.1		(303.3)		(303.8)
Balance, March 31, 2021(d) (restated)	319.5		320.5		(323.5)		(324.0)

(a) Amount in As Revised column under the Retained Earnings heading reflects retained earnings reductions of $6.8 million related to the SOP inventory correction and $9.3 million related to the Canadian Benefits obligation, both offset by related tax effects. Amount in As Revised column under the Accumulated Other Comprehensive Loss heading reflects a $0.1 million impact of translating the Canadian Benefit obligation into U.S. dollars.

(b) Restated amount in As Revised column under the Retained Earnings heading reflects retained earnings reductions of $8.3 million related to the SOP inventory correction and $8.9 million related to the Canadian Benefits obligation, as well as a retained earnings increase of $11.1 million related to the correction in inventory valuation methodology, all offset by related tax effect. Restated amount in As Revised column under the Accumulated Other Comprehensive Loss heading reflects the impact of translating the SOP inventory correction and the Canadian Benefits obligation into U.S. dollars of ($0.7) million and $0.3 million, respectively.

(c) Amount in As Revised column under the Retained Earnings heading reflects retained earnings reductions of $10.6 million related to the Canadian Benefits obligation and $1.2 million related to the SOP inventory correction, both offset by related tax effects. Amount in As Revised column under the Accumulated Other Comprehensive Loss heading reflects a $0.5 million impact of translating the Canadian Benefits obligation into U.S. dollars.

(d) Restated amount in As Revised column under the Retained Earnings heading reflects the retained earnings increase of $11.7 million related to the correction in inventory valuation methodology, as well as a retained earnings reduction of $10.9 million related to the Canadian Benefits obligation, both offset by tax effects. Restated amount in As Revised column under the Accumulated Other Comprehensive Loss heading reflects the impact of translating the Canadian Benefits obligation and the change in inventory valuation methodology of ($0.6) million and $0.1 million, respectively.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The effects of the restatements described above on the Company’s Consolidated Statement of Cash Flows are as follows:


	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
	As Previously Reported		As Restated		As Previously Reported		As Restated
Cash flows from operating activities:
Net (loss) earnings	$	(223.6)	$	(214.4)	$	27.6	$	34.0
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
Depreciation, depletion and amortization	34.6		34.6		33.1		33.1
Finance fee amortization	0.8		0.8		0.8		0.8
Stock-based compensation	4.0		4.0		2.4		2.4
Deferred income taxes(a)	(1.0)		(1.1)		7.5		7.4
Unrealized foreign exchange loss (gain)	5.6		5.6		(18.0)		(18.0)
Loss on impairment of long-lived assets	253.1		253.1		—		—
Other, net	0.4		0.4		3.5		3.6
Changes in operating assets and liabilities, net of disposition:
Receivables	17.8		17.8		87.1		87.1
Inventories(b)	73.6		60.7		36.6		27.0
Other assets(c)	(1.9)		1.7		54.5		53.8
Accounts payable and accrued expenses and other current liabilities(d)	37.2		37.2		(4.9)		(1.2)
Other liabilities(e)	(0.4)		(0.2)		(1.6)		(1.4)
Net cash provided by operating activities	200.2		200.2		228.6		228.6
Cash flows from investing activities:
Capital expenditures	(18.2)		(18.2)		(25.3)		(25.3)
Other, net	2.0		2.0		(0.6)		(0.6)
Net cash used in investing activities	(16.2)		(16.2)		(25.9)		(25.9)
Cash flows from financing activities:
Proceeds from revolving credit facility borrowings	6.3		6.3		46.2		46.2
Principal payments on revolving credit facility borrowings	(136.6)		(136.6)		(147.2)		(147.2)
Proceeds from issuance of long-term debt	69.8		69.8		22.0		22.0
Principal payments on long-term debt	(55.1)		(55.1)		(18.7)		(18.7)
Dividends paid	(24.1)		(24.1)		(24.8)		(24.8)
Deferred financing costs	(0.1)		(0.1)		(0.1)		(0.1)
Other, net	(0.5)		(0.5)		(0.2)		(0.2)
Net cash used in financing activities	(140.3)		(140.3)		(122.8)		(122.8)
Effect of exchange rate changes on cash and cash equivalents	(1.1)		(1.1)		(4.8)		(4.8)
Net change in cash and cash equivalents	42.6		42.6		75.1		75.1
Cash and cash equivalents, beginning of the year	21.0		21.0		34.7		34.7
Cash and cash equivalents, end of period	63.6		63.6		109.8		109.8
Less: cash and cash equivalents included in current assets held for sale	(20.8)		(20.8)		(15.8)		(15.8)
Cash and cash equivalents of continuing operations, end of period	$	42.8	$	42.8	$	94.0	$	94.0

(a) Amounts in As Restated column reflect the impact of deferred taxes related to the Canadian Benefits obligation.

(b) Amounts in As Restated column reflect the impact of the SOP inventory correction of ($1.2) million and $1.5 million and the change in inventory valuation methodology of ($11.7) million and ($11.1) million for the three months ended March 31, 2021 and 2020, respectively.

(c) Amounts in As Restated column reflect the impact of the SOP inventory correction of $0.4 million and $0.3 million and the change in inventory valuation methodology of $3.2 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

(d) Amount in As Restated column reflects the impact of the change in inventory valuation methodology.

(e) Amount in As Restated column reflects the impact of recording deferred taxes related to the Canadian Benefits obligation.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

16. Subsequent Events:

Change in Fiscal Year

On June 23, 2021, the Board of Directors of the Company approved a change in the Company’s fiscal year end from December 31st to September 30th. As a result of this change, the Company will file a Transition Report on Form 10-K for the transition period ending September 30, 2021.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements, other than statements of historical fact, contained in this ~~Quarterly Report on~~ Form ~~10-Q~~10-Q/A constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: our mining and industrial operations; geological conditions; dependency on a limited number of key production and distribution facilities and critical equipment; weather conditions; strikes, other forms of work stoppage or slowdown or other union activities; the inability to fund necessary capital expenditures or successfully complete capital projects; supply constraints or price increases for energy and raw materials used in our production processes; our indebtedness and inability to pay our indebtedness; restrictions in our debt agreements that may limit our ability to operate our business or require accelerated debt payments; tax liabilities; financial assurance requirements; the inability of our customers to access credit or a default by our customers of trade credit extended by us or financing we have guaranteed; our payment of any dividends; the impact of competition on the sales of our products; risks associated with our international operations and sales, including changes in currency exchange rates and inflation risks; the impact of anticipated changes in plant nutrition product prices and customer application rates; conditions in the sectors where we sell products and supply and demand imbalances for competing products; increasing costs or a lack of availability of transportation services; the seasonal demand for our products; our rights and governmental authorizations to mine and operate our properties; compliance with foreign and United States (“U.S.”) laws and regulations related to import and export requirements and anti-corruption laws; compliance with environmental, health and safety laws and regulations; environmental liabilities; misappropriation or infringement claims relating to intellectual property; product liability claims and product recalls; inability to obtain required product registrations or increased regulatory requirements; changes in industry standards and regulatory requirements; disruptions caused by the COVID-19 pandemic, or other outbreaks of infectious disease or similar public health threats; our ability to successfully implement our strategies; the timing and outcome of the sale processes for our South America business and our ability to complete the sales of our South America businesses; the loss of key personnel; a compromise of our computer systems, information technology or operations technology or the inability to protect confidential or proprietary data; our ability to expand our business through acquisitions, integrate acquired businesses and realize anticipated benefits from acquisitions; climate change and related laws and regulations; domestic and international general business and economic conditions; and other risks referenced from time to time in this report and our other filings with the ~~Securities and Exchange Commission (the “SEC”),~~SEC, including Part I, Item 1A, “Risk Factors” of our ~~Annual Report on~~ Form ~~10-K~~10-K/A for the year ended December 31, 2020.

In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” the negative of these terms or other comparable terminology. Forward-looking statements include without limitation statements about the impact of the COVID-19 pandemic on us; our outlook, including expected sales volumes; existing or potential capital expenditures; capital projects and investments; the industry and our competition; projected sources of cash flow; potential legal liability; proposed legislation and regulatory action; the seasonal distribution of working capital requirements; our reinvestment of foreign earnings outside the U.S.; our ability to optimize cash accessibility, minimize tax expense and meet debt service requirements; future tax payments and tax refunds; outcomes of matters with taxing authorities; the effects of currency fluctuations and inflation; and the seasonality of our business. These forward-looking statements are only predictions. Actual events or results may differ materially.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We undertake no duty to update any of the forward-looking statements after the date hereof or to reflect the occurrence of unanticipated events.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Unless the context requires otherwise, references to the “Company,” “Compass Minerals,” “our,” “us” and “we” refer to Compass Minerals International, Inc. (“CMI,” the parent holding company) and its consolidated subsidiaries. Except where otherwise noted, references to North America include only the continental U.S. and Canada, and references to the United Kingdom (the “U.K.”) include only England, Scotland and Wales. Except where otherwise noted, all references to tons refer to “short tons” and all amounts are in U.S. dollars. One short ton equals 2,000 pounds. Compass Minerals and Protassium+ and combinations thereof, are trademarks of CMI or its subsidiaries in the U.S. and other countries.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

Discontinued Operations

During 2020, we initiated an evaluation of the strategic fit of certain of our businesses. On February 16, 2021, we announced our plan to restructure our former Plant Nutrition South America segment to enable targeted and separate sales processes for each portion of the former segment, including our chemicals and specialty plant nutrition businesses along with our equity method investment in Fermavi Eletroquímica Ltda. (“Fermavi”). Concurrently, to optimize our asset base in North America, we evaluated the strategic fit of our North America micronutrient product business. On March 16, 2021, the Board of the Directors approved a plan to sell our South America chemicals and specialty plant nutrition businesses, our investment in Fermavi and our North America micronutrient product business (collectively, the “Specialty Businesses”) with the goal of reducing our leverage and enabling increased focus on optimizing our core businesses.

As described further in Item 1, Note 2, on March 23, 2021, ~~and~~ April 7, 2021, and June 28, 2021, we entered into definitive agreements to sell our South America specialty plant nutrition business, ~~and~~ a component of our North America micronutrient business and our Fermavi investment, respectively. The South America specialty plant nutrition business sale closed in July 1, 2021, the North America micronutrient sale closed on May 4, 2021 and the sale of the Fermavi investment closed on August 20, 2021. We continue to actively pursue the ~~sales~~sale of the ~~remaining~~ South America chemicals business, and ~~our equity method investment in Fermavi, and~~ we believe ~~these sales are~~this sale is probable to occur within the next twelve months.

We believe there is a single disposal plan representing a strategic shift that will have a material effect on our operations and financial results. Consequently, the Specialty Businesses qualify for presentation as assets and liabilities held for sale and discontinued operations in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Accordingly, current and noncurrent assets and liabilities of the Specialty Businesses are presented in the Consolidated Balance Sheets as assets and liabilities held for sale for both periods presented and their results of operations are presented as discontinued operations in the Consolidated Statements of Operations for each period presented.

COVID-19 Pandemic

The ongoing COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. As an essential business, we have continued producing and delivering products that support critical industries such as transportation, agriculture, chemical, food, pharmaceutical and animal nutrition. We have instituted several measures in response to the COVID-19 pandemic and have experienced negative impacts to our business from COVID-19, but our results of operations for the three months ended March 31, 2021 and 2020, were not materially affected by COVID-19.

The ultimate impact that COVID-19 will have on our future results is unknown at this time. For more information, see Part I, Item 1A, “Risk Factors” in our ~~Annual Report on~~ Form ~~10-K~~10-K/A for the year ended December 31, 2020.

Critical Accounting Estimates

Preparation of our consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management believes the most complex and sensitive judgments result primarily from the need to make estimates about matters that are inherently uncertain. Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8, Note 2 to the Consolidated Financial Statements included in our ~~Annual Report on~~ Form ~~10-K~~10-K/A for the year ended December 31, 2020, describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. For a further description of our critical accounting policies, see Item 1, Note 1 of our Consolidated Financial Statements included in this ~~Quarterly Report on~~ Form ~~10-Q.~~10-Q/A. Actual results in these areas could differ from management’s estimates.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Company Overview

Compass Minerals is a leading producer of essential minerals, including salt, sulfate of potash (“SOP”) specialty fertilizer and magnesium chloride. As of March 31, 2021, we operated 12 production and packaging facilities (excluding 9 production facilities in South America that are part of our discontinued operations), including:

•The largest rock salt mine in the world in Goderich, Ontario, Canada;

•The largest dedicated rock salt mine in the U.K. in Winsford, Cheshire;

•A solar evaporation facility located in Ogden, Utah, which is both the largest SOP production site and the largest solar salt production site in the Western Hemisphere; and

•Several mechanical evaporation facilities producing consumer and industrial salt.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

We now have two reportable segments, Salt and Plant Nutrition (which was previously known as the Plant Nutrition North America segment), as discussed in Item 1, Note 10 to the Consolidated Financial Statements. Unless otherwise indicated, the information and amounts provided in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” pertain to continuing operations.

Our Salt segment provides highway deicing salt to customers in North America and the U.K. as well as consumer deicing and water conditioning products, ingredients used in consumer and commercial food preparation, and other salt-based products for consumer, agricultural and industrial applications in North America. In the U.K., we operate a records management business utilizing excavated areas of our Winsford salt mine with one other surface location in London, England.

Our Plant Nutrition segment produces and markets specialty plant nutrition products worldwide to distributors and retailers of crop inputs, as well as growers. Our principal plant nutrition product in our Plant Nutrition segment is SOP, which we market under the trade name Protassium+.

Consolidated Results of Continuing Operations

The following is a summary of our consolidated results of continuing operations for the three months ended March 31, 2020 and 2021, respectively. The following discussion should be read in conjunction with the information contained in our consolidated financial statements and the notes thereto included in this ~~Quarterly Report on~~ Form ~~10-Q.~~10-Q/A.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

THREE MONTHS ENDED MARCH 31

* Refer to “—Reconciliation of Net Earnings from Continuing Operations to EBITDA and Adjusted EBITDA” for a reconciliation to the most directly comparable U.S. GAAP financial measure and the reasons we use this non-GAAP measure.

COMMENTARY: THREE MONTHS ENDED MARCH 31, 2020 AND 2021

•Total sales increased 23%, or ~~$79.1~~$79.6 million, due to an increase in our Salt segment, which was partially offset by a decrease in our Plant Nutrition segment.

•Operating earnings increased 40%, or ~~$18.2~~$21.7 million, due to an increase in our Salt ~~segment, which was partially offset by a decrease in our~~and Plant Nutrition ~~segment.~~segments.

•Earnings before interest, taxes, depreciation and amortization (“EBITDA”)* adjusted for items management believes are not indicative of our ongoing operating performance (“Adjusted EBITDA”)* increased 31%, or $25.7 million.

•Diluted net earnings per share increased $0.05 to $1.21.

THREE MONTHS ENDED MARCH 31

2532


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

•~~Diluted net earnings per share decreased $0.04 to $0.95.~~

~~THREE MONTHS ENDED MARCH 31~~

COMMENTARY: THREE MONTHS ENDED MARCH 31, 2020 AND 2021

Gross Profit: Increased ~~28%~~29%, or ~~$20.8~~$24.3 million; Gross Margin increased 1.0 percentage point to ~~23%~~25%

•Salt segment gross profit increased ~~$22.6~~$23.1 million primarily due to higher sales volumes and lower per-unit highway deicing product and logistics costs, which was partially offset by lower averages sales prices.

•The gross profit of the Plant Nutrition segment ~~decreased $1.7~~increased $1.2 million due to ~~higher~~lower per-unit ~~product~~logistics costs, ~~primarily due to the quality of the pond harvest at our Ogden facility and lower average sales prices,~~ which was partially offset by lower ~~per-unit logistics costs.~~average sales prices.

OTHER EXPENSES AND INCOME

COMMENTARY: THREE MONTHS ENDED MARCH 31, 2020 AND 2021

SG&A: Increased $2.6 million; Decreased 1.0 percentage point as a percentage of sales from 8.6% to 7.6%

•The increase in SG&A expense was primarily due to higher corporate professional services fees and higher corporate incentive compensation.

Interest Expense: Decreased $0.9 million to $15.7 million

•The decrease was primarily due to a decrease in our weighted average interest rates during the period due to lower interest rates on our term loan and the use of our revolving accounts receivable financing facility in 2021 which has a lower interest rate when compared to our revolving credit facility.

Loss (Gain) on Foreign Exchange: Decreased $20.1 million from income of $18.0 million to an expense of $2.1 million

•We realized foreign exchange losses of $2.1 million in the first quarter of 2021 compared to gains of $18.0 million in the first quarter of 2020 primarily due to changes in foreign currency exchange rates on our non U.S. dollar denominated intercompany loans between our U.S. and foreign subsidiaries.

Income Tax Expense: Tax expense ~~was unchanged at $12.6~~increased $0.6 million from $15.4 million to $16.0 million

•~~Income~~The increase in income tax expense was ~~$12.6 million~~primarily due to an increase in ~~both periods. The effective tax rate increased from 27%~~pretax book income in the first quarter of ~~2020~~2021 compared to the first quarter of 2020. The effective tax rate was 28% in ~~the current period.~~both periods.

•Our income tax provision in both periods differs from the U.S. statutory rate primarily due to U.S. statutory depletion, state income taxes, global intangible low-taxed income, foreign income, mining and withholding taxes and interest expense recognition differences for tax and financial reporting purposes.

Net Loss from Discontinued Operations: Increased from a loss of ~~$6.3~~$6.0 million to a loss of ~~$256.5~~$256.3 million

•The loss from discontinued operations resulted primarily from the impairment of our South America chemicals and specialty plant nutrition businesses of $255.2 million reflecting the accumulated currency translation adjustment due to the significant weakening of the Brazilian real since the acquisition of these businesses. This loss was partially offset


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

by improved operating earnings of our South America businesses and North America micronutrient product businesses.

•Our operating earnings for our South America chemicals and specialty nutrition businesses and North America micronutrient product businesses improved by $4.7 million and ~~$1.8~~$1.7 million, respectively. The improvements in our South America businesses were due to higher sales volumes in our specialty plant nutrition business, which was partially offset by lower chemical sales volumes and a 34% weaker Brazilian real. The North America micronutrient product business improved primarily due to lower SG&A expenses and improved average sales prices. The improvements in operating earnings for both businesses was partially offset by costs incurred during the current period related to the sale of the businesses.

Operating Segment Performance

The following financial results represent consolidated financial information with respect to sales from our Salt and Plant Nutrition segments. The results of operations of the consolidated records management business, and other incidental revenues, include sales of $2.8 million and $2.7 million for the first quarter of 2021 and 2020, respectively. These revenues are not material to our consolidated financial results and are not included in the following operating segment financial data.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Salt

THREE MONTHS ENDED MARCH 31


		1Q 2021		1Q 2020			1Q 2021		1Q 2020
Salt Sales (in millions)	Salt Sales (in millions)	$	369.0	$	287.8	Salt Sales (in millions)	$	369.0	$	287.8
Salt Operating Earnings (in millions)	Salt Operating Earnings (in millions)	$	80.1	$	56.9	Salt Operating Earnings (in millions)	$	91.6	$	67.8
Salt Sales Volumes (thousands of tons)	Salt Sales Volumes (thousands of tons)					Salt Sales Volumes (thousands of tons)
Highway deicing	Highway deicing	4,550		3,104		Highway deicing	4,550		3,104
Consumer and industrial	Consumer and industrial	478		469		Consumer and industrial	478		469
Total tons sold	Total tons sold	5,028		3,573		Total tons sold	5,028		3,573
Average Salt Sales Price (per ton)	Average Salt Sales Price (per ton)					Average Salt Sales Price (per ton)
Highway deicing	Highway deicing	$	64.00	$	69.30	Highway deicing	$	64.00	$	69.30
Consumer and industrial	Consumer and industrial	$	162.70	$	154.84	Consumer and industrial	$	162.70	$	154.84
Combined	Combined	$	73.38	$	80.53	Combined	$	73.38	$	80.53

COMMENTARY: THREE MONTHS ENDED MARCH 31, 2020 AND 2021

•Salt sales increased 28%, or $81.2 million, primarily due to higher Salt sales volumes, which were partially offset by lower average sales prices.

•Average sales prices decreased 9%, partially offsetting the Salt sales increase by $20.4 million, due to lower highway deicing average sales prices.

•Highway deicing average sales prices decreased 8% due to lower North American highway deicing contract prices for the 2020-2021 winter season. Consumer and industrial average sales prices increased 5% due to product sales mix.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

•Salt sales volumes increased 41%, or 1,455,000 tons, and contributed $101.6 million to the sales increase. Highway deicing sales volumes increased 47% primarily as a result of an increase in winter weather activity in February 2021 in the U.S. and the first quarter of 2021 the U.K. Consumer and industrial sales volumes increased 2% due to an increase in deicing sales volumes.

•Salt operating earnings increased ~~41%~~35%, or ~~$23.2~~$23.8 million, due to higher deicing sales volumes, lower highway deicing per-unit product cost and lower highway deicing per-unit logistics costs. The improved per unit product cost is primarily due to higher operating rates at our U.K. and Goderich mines as well as higher first quarter 2020 costs of purchased salt and expenses stemming from the upgrades to our mining equipment at our Goderich mine. The increase in operating earnings was partially offset by higher per-unit product cost at our consumer and industrial facilities primarily due to lower production volumes.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Plant Nutrition (Formerly Plant Nutrition North America)

THREE MONTHS ENDED MARCH 31


		1Q 2021		1Q 2020			1Q 2021		1Q 2020
Plant Nutrition Sales (in millions)	Plant Nutrition Sales (in millions)	$	54.2	$	56.4	Plant Nutrition Sales (in millions)	$	53.7	$	55.4
Plant Nutrition Operating Earnings (in millions)	Plant Nutrition Operating Earnings (in millions)	$	4.4	$	6.6	Plant Nutrition Operating Earnings (in millions)	$	5.3	$	4.6
Plant Nutrition Sales Volumes (thousands of tons)	Plant Nutrition Sales Volumes (thousands of tons)	94		96		Plant Nutrition Sales Volumes (thousands of tons)	94		95
Plant Nutrition Average Sales Price (per ton)	Plant Nutrition Average Sales Price (per ton)	$	579	$	590	Plant Nutrition Average Sales Price (per ton)	$	573	$	581

COMMENTARY: THREE MONTHS ENDED MARCH 31, 2020 AND 2021

•Plant Nutrition sales decreased 4%3%, or ~~$2.2~~$1.7 million due to lower sales volumes and lower average sales prices.

•Plant Nutrition sales volumes decreased 2%1%, or ~~2,000~~1,000 tons, which resulted in a ~~$1.2~~$0.6 million decrease in sales.

•Plant Nutrition average sales prices decreased 2%1%, resulting in a ~~$1.0~~$0.8 million decrease in sales.

•Plant Nutrition operating earnings ~~decreased $2.2~~increased $0.7 million to ~~$4.4~~$5.3 million due to ~~lower sales prices and higher per-unit product costs partially offset by~~ lower per-unit logistics costs due to a higher mix of direct shipments to customers compared to the prior ~~period. Higher per-unit product costs were due to~~period, which was partially offset by lower ~~production yields, which primarily resulted from a lower quality pond harvest at our Ogden facility.~~average sales prices.

2021 Full-Year Outlook as of March 31, 2021

•Given higher Salt sales volumes in the first quarter of 2021, we expect Salt sales volumes for 2021 to range from 11.5 million tons to 12.3 million tons.

•Plant Nutrition sales volumes for 2021 are expected to range from 350,000 tons to 380,000 tons.

•Full year 2021 capital expenditures are expected to be in the $95 million to $100 million range.

•For information about the impact of the COVID-19 pandemic on the Company, see “COVID-19 Pandemic" and Part I, Item 1A, “Risk Factors” in our ~~Annual Report on~~ Form ~~10-K~~10-K/A for the year ended December 31, 2020.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

Liquidity and Capital Resources

Historically, our cash flows from operating activities have generally been adequate to fund our basic operating requirements and ongoing debt service. We have also used cash generated from operations to fund capital expenditures, which strengthen our operational position, pay dividends, fund smaller acquisitions and repay our debt. To a certain extent, our ability to meet our short- and long-term liquidity and capital needs is subject to general economic, financial, competitive, legislative, regulatory and weather conditions, effects of climate change, geological variations in our mine deposits and other factors that are beyond our control. Historically, our working capital requirements have been the highest in the fourth quarter and lowest in the second quarter. When needed, we may fund short-term working capital requirements by accessing our $300 million revolving credit facility.

We have been able to manage our cash flows generated and used across Compass Minerals to permanently reinvest earnings in our foreign jurisdictions or efficiently repatriate those funds to the U.S. As of March 31, 2021, we had $19.6 million of cash and cash equivalents (in our Consolidated Balance Sheets) that were either held directly or indirectly by foreign subsidiaries. As


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

a result of U.S. tax reform, we revised our permanently reinvested assertion and we now expect to repatriate approximately $150 million of unremitted foreign earnings on which we have recorded $4.3 million of income tax expense as of March 31, 2021 for foreign withholding tax and state income taxes. Due to our ability to generate adequate levels of domestic cash flow on an annual basis, it is our current intention to continue to reinvest all remaining undistributed earnings of our foreign subsidiaries indefinitely. We review our tax circumstances on a regular basis with the intent of optimizing cash accessibility and minimizing tax expense.

In addition, the amount of permanently reinvested earnings is influenced by, among other things, the profits generated by our foreign subsidiaries and the amount of investment in those same subsidiaries. The profits generated by our domestic and foreign subsidiaries are impacted by the transfer price charged on the transfer of our products between them. As discussed in Item 1, Note 7 of our Consolidated Financial Statements, our calculated transfer price on certain products between one of our foreign subsidiaries and a domestic subsidiary has been challenged by Canadian federal and provincial governments. In 2017, we reached a settlement agreement with the Canadian Revenue Authority and the U.S. Internal Revenue Service on transfer pricing issues for our 2007-2012 tax years. During 2018, in accordance with the settlement agreement, our U.S. subsidiary made intercompany cash payments of $85.7 million to our Canadian subsidiary and tax payments to Canadian taxing authorities of $17.5 million. Additional tax payments of $5.3 million were made during 2019 with the remaining liability of $1.4 million expected to be paid in 2021. Corresponding tax refunds of $22.3 million have been received through March 31, 2021 from U.S. taxing authorities, with the remaining refund of approximately $0.7 million expected in 2021. Additionally during 2018, we reached a settlement agreement with federal Canadian and U.S. tax authorities on transfer pricing and management fees as part of an advanced pricing agreement covering tax years 2013-2021. During 2019, in accordance with the settlement agreement, our U.S. subsidiary made intercompany cash payments of $106.1 million to our Canadian subsidiary and tax payments were made to Canadian taxing authorities of $29.9 million with the remaining $1.4 million balance paid during 2020. Corresponding tax refunds of $60.0 million have been received through March 31, 2021, from U.S. taxing authorities, of which $55 million was received during the first quarter of 2020, with the remaining refund of $1.7 million expected in 2021. Canadian provincial taxing authorities continue to challenge our transfer prices of certain items. The final resolution of these challenges may not occur for several years. We currently expect the outcome of these matters will not have a material impact on our results of operations. However, it is possible the resolution could materially impact the amount of earnings attributable to our domestic and foreign subsidiaries, which could impact the amount of permanently reinvested foreign earnings. See Item 1, Note 7 of our Consolidated Financial Statements for a discussion regarding our Canadian tax reassessments and settlement.

On March 23, 2021, we entered into a definitive agreement to sell our South America specialty plant nutrition business to ICL Brasil Ltda., a subsidiary of ICL Group Ltd., for R$1.11 billion Brazilian reais plus an amount that will be set at closing to equal $198.3 million U.S. dollars, subject to certain adjustments for net debt and working capital. The terms of the agreement provide for an additional earn-out payment of up to R$88 million Brazilian reais, payable in 2022 and calculated on a sliding scale, if the South America specialty plant nutrition business achieves certain full-year 2021 EBITDA performance targets. The transaction is expected to close in the third quarter of 2021, subject to customary closing conditions and required antitrust approval in Brazil. The Brazilian debt, presented in liabilities held for sale (see ~~Item 1,~~ ~~Note 2~~), is expected to be deducted from gross proceeds from the transaction. We recorded a non-cash impairment loss of $255.2 million on our South America businesses during the three months ended March 31, 2021, due to the significant weakening of the Brazilian real since the date of acquisition of these businesses.

On April 7, 2021, we entered into a definitive agreement to sell a component of our North America micronutrient business to Koch Agronomic Services, LLC, a subsidiary of Koch Industries, for approximately $60.25 million, subject to a closing working capital adjustment. The transaction closed on May 4, 2021.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

Cash and cash equivalents of $63.6 million as of March 31, 2021, ~~of $63.6 million~~ included cash held for sale of $20.8 million. We generated $200.2 million of operating cash flows in the first three months of 2021. In the first three months of 2021, we used cash on hand and cash flows from operations to pay $115.6 million of net long-term debt, to fund capital expenditures of $18.2 million, primarily for routine refurbishments and replacements, and pay dividends on our common stock of $24.1 million. Cash and cash equivalents from continuing operations of $42.8 million increased $32.2 million from December 31, 2020. Cash flows from continuing operations totaled $196.8 million during the three months ended March 31, 2021, including income from continuing operations of ~~$32.9~~$41.9 million, net working capital reductions of $122.4 million driven by the seasonality of our Salt business, as the winter weather in the fourth quarter each year typically increases our December 31 receivables balance, and depreciation, depletion and amortization of $29.9 million.

As of March 31, 2021, we had $1.20 billion of indebtedness, consisting of $250.0 million outstanding under our 4.875% Senior Notes due 2024, $500.0 million outstanding under our 6.75% Senior Notes due 2027, $345.8 million of borrowings outstanding under our senior secured credit facilities (consisting of term loans and a revolving credit facility), with no borrowings against our revolving credit facility (see Item 1, Note 8 of our Consolidated Financial Statements for more detail regarding our debt). We had $13.0 million of outstanding letters of credit as of March 31, 2021, which reduced our revolving credit facility borrowing availability to $287.0 million.

On March 23, 2021, we entered into a definitive agreement to sell our South America specialty plant nutrition business to ICL Brasil Ltda., a subsidiary of ICL Group Ltd. The transaction closed on July 1, 2021. Upon closing we received gross proceeds of approximately $432.3 million, including $12.7 million in working capital adjustments (in each case, based on exchange rates at the time of closing), comprised of a cash payment of approximately $325.5 million and an additional $106.8 million in net debt assumed by ICL Brasil Ltd. The terms of the definitive agreement provide for an additional earn-out payment of up to R$88 million Brazilian reais, payable in 2022 and calculated on a sliding scale, if the South America specialty plant nutrition


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

business achieves certain full-year 2021 EBITDA performance targets. The Brazilian debt, presented in liabilities held for sale (see Item 1, Note 2), was deducted from gross proceeds from the transaction.

On April 7, 2021, we entered into a definitive agreement to sell a component of our North America micronutrient business to Koch Agronomic Services, LLC, a subsidiary of Koch Industries. On May 4, 2021, we completed the sale for approximately $56.7 million.

In the first quarter of 2021, we made a $41.7 million required prepayment of our term loan for 2020 Excess Cash Flow (as such term is defined in the credit ~~agreement)~~agreement). This prepayment will reduce the future required term loan payments. As such, we will not have a scheduled term loan payment until June 2023.

On June 30, 2020, certain of our U.S. subsidiaries entered into a three-year committed revolving accounts receivable financing facility of up to $100 million of borrowings with PNC Bank, National Association, as administrative agent and lender, and PNC Capital Markets, LLC, as structuring agent. As of March 31, 2021 we had $100.0 million of outstanding loans under this accounts receivable financing facility. See Item 1, Note 8 of our Consolidated Financial Statements for more information.

Our debt service obligations could, under certain circumstances, materially affect our financial condition and impair our ability to operate our business or pursue our business strategies. As a holding company, CMI’s investments in its operating subsidiaries constitute substantially all of its assets. Consequently, our subsidiaries conduct substantially all of our consolidated operating activities and own substantially all of our operating assets. The principal source of the cash needed to pay our obligations is the cash generated from our subsidiaries’ operations and their borrowings. Our subsidiaries are not obligated to make funds available to CMI. Furthermore, we must remain in compliance with the terms of our credit agreement governing our term loans and revolving credit facility, including the total leverage ratio and interest coverage ratio, in order to make payments on our debt or pay dividends to our stockholders. We must also comply with the terms of our indenture governing our senior notes. Although we are in compliance with our debt covenants as of March 31, 2021, we can make no assurance that we will remain in compliance with these ratios nor can we make any assurance that the agreements governing the current and future indebtedness of our subsidiaries will permit our subsidiaries to provide us with sufficient dividends, distributions or loans to fund scheduled interest payments on our debt when due. If we consummate an additional acquisition, our debt service requirements could increase. Furthermore, we may need to refinance all or a portion of our indebtedness on or before maturity; however, we cannot provide assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

The table below provides a summary of our cash flows by category:


THREE MONTHS ENDED MARCH 31, 2021			THREE MONTHS ENDED MARCH 31, 2020
Operating Activities:
» Net loss was ~~$223.6~~$214.4 million.			» Net earnings were ~~$27.6~~$34.0 million.
» Non-cash depreciation and amortization expense was $34.6 million.			» Non-cash depreciation and amortization expense was $33.1 million.
» Working capital items were a source of operating cash flows of ~~$126.3~~$117.2 million.			» Working capital items were a source of operating cash flows of ~~$171.7~~$165.3 million.
» Non-cash impairment loss of $253.1 million.
Investing Activities:
» Net cash flows used by investing activities included $18.2 million of capital expenditures.			» Net cash flows used by investing activities included $25.3 million of capital expenditures.
Financing Activities:
» Net cash flows used by financing activities included the payment of dividends of $24.1 million.			» Net cash flows used by financing activities included the payment of dividends of $24.8 million.
» In addition, we had net payments on our debt of $115.6 million.			» In addition, we had net payments on our debt of $97.7 million.

Other Matters

See Item 1, Notes 7 and 9 of our Consolidated Financial Statements for a discussion regarding labor, environmental and litigation matters.


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Reconciliation of Net Earnings from Continuing Operations to EBITDA and Adjusted EBITDA

Management uses a variety of measures to evaluate our performance. While our consolidated financial statements, taken as a whole, provide an understanding of our overall results of operations, financial condition and cash flows, we analyze components of the consolidated financial statements to identify certain trends and evaluate specific performance areas. In addition to using U.S. GAAP financial measures, such as gross profit, net earnings and cash flows generated by operating activities, management uses EBITDA and Adjusted EBITDA. We have presented Adjusted EBITDA for both continuing operations and consolidated including discontinued operations for comparability purposes (see Item 1, Note 2 for a discussion of discontinued operations). Both EBITDA and Adjusted EBITDA are non-GAAP financial measures used to evaluate the operating performance of our core business operations because our resource allocation, financing methods, cost of capital and income tax positions are managed at a corporate level, apart from the activities of the operating segments, and our operating facilities are located in different taxing jurisdictions, which can cause considerable variation in net earnings. We also use EBITDA and Adjusted EBITDA to assess our operating performance and return on capital against other companies, and to evaluate potential acquisitions or other capital projects. EBITDA and Adjusted EBITDA are not calculated under U.S. GAAP and 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 U.S. GAAP or as a measure of our overall profitability or liquidity. EBITDA and Adjusted EBITDA exclude interest expense, income taxes and depreciation and amortization, each of which are an essential element of our cost structure and cannot be eliminated. Furthermore, Adjusted EBITDA excludes other cash and non-cash items, including stock-based compensation, loss (gain) on foreign exchange and other expense (income). Our borrowings are a significant component of our capital structure and interest expense is a continuing cost of debt. We are also required to pay income taxes, a required and ongoing consequence of our operations. We have a significant investment in capital assets and depreciation and amortization reflect the utilization of those assets in order to generate revenues. Our employees are vital to our operations and we utilize various stock-based awards to compensate and incentivize our employees. Consequently, any measure that excludes these elements has material limitations. While EBITDA and Adjusted EBITDA are frequently used as measures of operating performance, these terms are not necessarily comparable to similarly titled measures of other companies due to the potential inconsistencies in the method of calculation.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

The calculation of EBITDA and Adjusted EBITDA as used by management is set forth in the table below (in millions):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2021		2020
Net earnings from continuing operations	Net earnings from continuing operations	$	32.9	$	33.9		Net earnings from continuing operations	$	41.9	$	40.0
Interest expense	Interest expense	15.7		16.6			Interest expense	15.7		16.6
Income tax expense	Income tax expense	12.6		12.6			Income tax expense	16.0		15.4
Depreciation, depletion and amortization	Depreciation, depletion and amortization	29.9		27.4			Depreciation, depletion and amortization	29.9		27.4
EBITDA from continuing operations	EBITDA from continuing operations	91.1		90.5			EBITDA from continuing operations	103.5		99.4
Adjustments to EBITDA from continuing operations:	Adjustments to EBITDA from continuing operations:						Adjustments to EBITDA from continuing operations:
Stock-based compensation - non cash	Stock-based compensation - non cash	3.8		2.3			Stock-based compensation - non cash	3.8		2.3
Loss (gain) on foreign exchange	Loss (gain) on foreign exchange	2.1		(18.0)			Loss (gain) on foreign exchange	2.1		(18.0)
Other expense, net	Other expense, net	0.3		0.3			Other expense, net	0.3		0.3
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	97.3		75.1			Adjusted EBITDA from continuing operations	109.7		84.0
Adjusted EBITDA from discontinued operations	Adjusted EBITDA from discontinued operations	10.5		4.5			Adjusted EBITDA from discontinued operations	10.7		5.0
Adjusted EBITDA	Adjusted EBITDA	$	107.8	$	79.6		Adjusted EBITDA	$	120.4	$	89.0

Recent Accounting Pronouncements

See Part 1, Note 1 of our Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Effects of Currency Fluctuations and Inflation

Our operations outside of the U.S. are conducted primarily in Canada and the U.K. Therefore, our results of operations are subject to both currency transaction risk and currency translation risk. We incur currency transaction risk whenever we or one of our subsidiaries enters into either a purchase or sales transaction using a currency other than the local currency of the transacting entity. With respect to currency translation risk, our financial condition and results of operations are measured and


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

recorded in the relevant local currency and then translated into U.S. dollars for inclusion in our consolidated financial statements. Exchange rates between these currencies and the U.S. dollar have fluctuated significantly from time to time and may do so in the future. The majority of revenues and costs are denominated in U.S. dollars, with Canadian dollars and British pounds sterling also being significant. Significant changes in the value of the Canadian dollar or British pound sterling relative to the U.S. dollar could have a material effect on our financial condition and our ability to meet interest and principal payments on U.S. dollar-denominated debt, including borrowings under our senior secured credit facilities.

Although inflation has not had a significant impact on our operations, our efforts to recover cost increases due to inflation may be hampered as a result of the competitive industries and countries in which we operate.

Seasonality

We experience a substantial amount of seasonality in our sales. Our sales of our salt deicing products are seasonal. Consequently, our Salt segment sales and operating income are generally higher in the first and fourth quarters and lower during the second and third quarters of each calendar year. In particular, sales of highway and consumer deicing salt and magnesium chloride products vary based on the severity of the winter conditions in areas where the product is used. Following industry practice in North America, we seek to stockpile sufficient quantities of deicing salt in the second, third and fourth quarters of the calendar year to meet the estimated requirements for the winter season.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our business is subject to various types of market risks that include interest rate risk, foreign currency exchange rate risk and commodity pricing risk. Management has taken actions to mitigate our exposure to commodity pricing and foreign currency exchange rate risk by entering into natural gas derivative instruments and foreign currency contracts. We may take further actions to mitigate our exposure to interest rates, exchange rates and changes in the cost of transporting our products due to variations in our contracted carriers’ cost of fuel, which is typically diesel fuel. However, there can be no assurance that our hedging activities will eliminate or substantially reduce these risks. We do not enter into any financial instrument arrangements for speculative purposes. Our market risk exposure related to these items has not changed materially since December 31, 2020.


~~Table of Contents~~						~~COMPASS MINERALS INTERNATIONAL, INC.~~

Item 4. Controls and Procedures

~~Evaluation of~~ Disclosure Controls and Procedures

~~As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation of the effectiveness of the design and operation of the Company’s~~We maintain disclosure controls and procedures ~~(as defined~~that are designed to provide reasonable assurance that information required to be disclosed in ~~Rule 13a-15(e)~~our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In connection with the preparation of this Amended Quarterly Report Form 10-Q/A, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the ~~Company’s~~ Chief Executive Officer and Chief Financial Officer concluded that ~~the Company’s~~our disclosure controls and procedures ~~were effective~~are ineffective as of March 31, 2021, due to ~~ensure that information required to be disclosed~~the material weakness described below and this evaluation has been revised from our evaluation included in the ~~reports it files~~previously filed 2021 Form 10-Q for the quarter ended March 31, 2021 (which had reported disclosures controls and ~~submits~~procedures as effective).

The Company identified a material weakness in internal control over financial reporting during the preparation of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. The Company did not have properly designed controls and policies to analyze inventory variances at interim reporting dates that required capitalization for their salt inventory. Refer to Item 1, Note 15 to the unaudited Consolidated Financial Statements for further information. The Company determined that the material weakness existed at December 31, 2020 and has reassessed its conclusion on management’s report on internal controls over financial reporting included in the Company’s 2020 Form 10-K. Management will re-issue its report by amending the Company’s previously filed 2020 Form 10-K and will conclude that the Company did not maintain effective controls over financial reporting at December 31, 2020. The Company’s independent registered public accounting firm will also


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

be re-issuing their report in amended 2020 Form 10-K and will express an adverse opinion on internal controls over financial reporting as of December 31, 2020.

A material weakness, as defined in Rule 12b-2 under the Exchange Act, is ~~recorded, processed, summarized and reported within~~a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the ~~time periods specified~~Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. This material weakness resulted in material misstatements in the ~~SEC’s rules~~unaudited quarterly information presented in Note 17 of our previously filed Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) and ~~forms.~~the unaudited consolidated financial statements included in our Original Report.

For this purpose, disclosure controls and procedures include controls and procedures designed to ensure that information that is required to be disclosed under the Exchange Act is accumulated and communicated to the Company’s management, including theNotwithstanding such material weaknesses in internal control over financial reporting, our Chief Executive Officer and Chief Financial Officer ~~as appropriate~~have concluded that our unaudited Consolidated Financial Statements included in this Amended Quarterly Report on Form 10-Q/A present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

In designing and evaluating our disclosure controls and procedures, management recognizes that any control, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Due to ~~allow timely decisions regarding required disclosure.~~the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

Remediation Efforts and Status of Material Weakness

The Company is in the process of enhancing the design of certain internal controls over financial reporting related to accounting for inventory under ASC Topic 330 – Inventory and ASC Topic 270 - Interim Reporting in accordance with a remediation plan for the material weakness, which includes updating the Company’s inventory valuation policy and subsequent application of the policy. These enhanced controls will be tested for effectiveness in future periods. In addition, the Company is amending its previously-filed 2020 Form 10-K and Original Report by filing an amended Annual Report on Form 10-K/A for the year ended December 31, 2020 and this amended Quarterly Report on Form 10-Q/A.

Changes in Internal Control Over Financial Reporting

~~There has been~~Other than as discussed above, there were no ~~change~~changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

3340


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in the legal proceedings described in Part I, Item 1, Note 7 and Part I, Item 1, Note 9 of our Consolidated Financial Statements and, from time to time, various routine legal proceedings and claims arising from the ordinary course of our business. These primarily involve tax assessments, disputes with former employees and contract labor, commercial claims, product liability claims, personal injury claims and workers’ compensation claims. Management cannot predict the outcome of legal proceedings and claims with certainty. Nevertheless, management believes that the outcome of legal proceedings and claims, which are pending or known to be threatened, even if determined adversely, will not, either individually or in the aggregate, have a material adverse effect on our results of operations, cash flows or financial condition. There have been no material developments since December 31, 2020 with respect to our legal proceedings, except as described in Part I, Item 1, Note 7 and Part I, Item 1, Note 9 of our Consolidated Financial Statements.

Item 1A. Risk Factors

For a discussion of the risk factors applicable to Compass Minerals, please refer to Part I, Item 1A, “Risk Factors” in our ~~Annual Report on~~ Form ~~10-K~~10-K/A for the year ended December 31, 2020, as updated and supplemented by the discussion below.

The sale of our South America specialty plant nutrition business may not be completed on the terms or timeline currently contemplated, or at all, as the parties involved may be unable to satisfy the conditions or obtain the approvals required to complete these transactions or such approvals may contain material restrictions or conditions.

The consummation of sale of our South America specialty plant nutrition business is subject to numerous conditions, including the occurrence of certain events contemplated by the definitive agreement to sell our South America specialty plant nutrition business (the “South America Sale Agreement”), such as consummation of the Pre-Closing Restructuring (as defined in the South America Sale Agreement), obtaining approval from Brazil’s Administrative Council for Economic Defense, including its General Superintendence and Administrative Tribunal (“CADE”) and other customary closing conditions.

CADE may not approve the transactions contemplated by the South America Sale Agreement, may impose conditions to the approval of such transactions or require changes to the terms of these transactions. Any such conditions or changes could have the effect of delaying completion of these transactions or reducing the anticipated benefits of these transactions.

We cannot assure you that the sale of our South America specialty plant nutrition business will be consummated on the terms or timeline currently contemplated, or at all. For example, the COVID-19 pandemic could impact the ability to satisfy, or the timing of satisfying, the conditions contemplated by the South America Sale Agreement.

Failure to complete the sale of our South America specialty plant nutrition business could adversely affect our business, financial condition and results of operations.

If the proposed sale of our South America specialty plant nutrition business is not consummated, we will be subject to several risks, including the following:

•We have expended and will continue to expend time and resources and incur expenses (such as with respect to legal, advisory and financial services) related to the proposed sale, which must be paid regardless of whether the proposed sale is consummated; and

•The price of our common stock may decline, or our business, financial condition and results of operations may be impacted to the extent that the market price of our common stock reflects positive market assumptions that the proposed sale will be completed and the related benefits will be realized.

If the proposed sale of our South America specialty plant nutrition business is not completed for any reason, we cannot assure you that these or other risks will not materialize and will not materially affect our business, financial condition or results of operations.

3441


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

The announcement of the planned sales of our South America businesses could have an adverse effect on our business, financial condition or results of operations.

The announcement of the potential sales of our South America businesses and pendency of our proposed sale of our South America specialty plant nutrition business could disrupt our business in negative ways. For example, the proposed sales of our South America businesses could disrupt our operations in South America, which could have an adverse impact on our relationships with our customers and other third-party business partners, and could distract our workforce and management team. Any such event could adversely affect our business, financial condition or results of operations. In addition, under the South America Sale Agreement, we are subject to certain restrictions on the conduct of our business, which may adversely affect our ability to execute certain business strategies while the proposed sale of our South America specialty plant nutrition business is pending.

The impact of currency fluctuation or devaluation in Brazil may negatively affect the earn-out consideration we may be entitled to receive pursuant to the South America Sale Agreement.

The South America Sale Agreement provides that, if the transactions contemplated by the agreement are consummated, we may be entitled to a maximum earn-out payment of R$88 billion Brazilian reais, payable in 2022, if the South America specialty plant nutrition business meets certain performance metrics. The exchange rate between the Brazilian real and the U.S. dollar has fluctuated and will continue to do so in the future. The volatility in this exchange rate may adversely impact our expected payment once converted to U.S. dollars at the time of payment. Although we expect to employ a variety of techniques to mitigate the impact of fluctuations of the applicable exchange rate, we cannot guarantee that such hedging and risk management strategies will be effective, and any such earn-out payment amount could be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K ~~is included in~~incorporated by reference to Exhibit 95 to ~~this~~Compass Mineral International, Inc.’s Quarterly Report on Form ~~10-Q.~~10-Q for quarter ended March 31, 2021.

Item 5. Other Information

None.

3542


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

Item 6. Exhibits


Exhibit No.						Exhibit Description
2.1						Quotas Purchase Agreement, dated March 23, 2021, among Compass Minerals do Brasil Ltda., ICL Brasil Ltda, Compass Minerals America Inc. and Amsterdam Fertilizers B.V. (incorporated by reference to Exhibit 2.1 to Compass Minerals International Inc.’s Current Report on Form 8-K filed on March 24, 2021).
31.1*						Section 302 Certifications of Kevin S. Crutchfield, President and Chief Executive Officer.
31.2*						Section 302 Certifications of James D. Standen, Chief Financial Officer.
32**						Certification Pursuant to 18 U.S.C. §1350 of Kevin S. Crutchfield, President and Chief Executive Officer, and James D. Standen, Chief Financial Certification Pursuant to 18 U.S.C. §1350 of Kevin S. Crutchfield, President and Chief Executive Officer, and James D. Standen, Chief Financial Officer.
95*95						Mine Safety ~~Disclosures.~~Disclosures (incorporated by reference to Exhibit 95 to Compass Mineral International, Inc.’s Quarterly Report on Form 10-Q for quarter ended March 31, 2021).
101**						The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements.
104						Cover Page Interactive Data File (contained in Exhibit 101).
* Filed herewith
** Furnished herewith

3643


Table of Contents						COMPASS MINERALS INTERNATIONAL, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	COMPASS MINERALS INTERNATIONAL, INC.

Date: ~~May 7,~~September 2, 2021	By:	/s/ James D. Standen
		James D. Standen
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

3744