CMP - Earnings call 4 2023 | Compass Minerals International, Inc.

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Operator

Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals Fourth Quarter and Fiscal 2023 Earnings Conference Call. Today's conference is being recorded [Operator Instructions] And I will now turn the conference over to Brent Collins, Vice President of Investor Relations. Mr. begin. may you Collins,

Brent Collins

our Good Kevin and welcome Call. Fiscal our Crenshaw. our well will operator. with We'll Minerals remarks and prepared Today, the our Fourth discuss from as as results Quarter XXXX and recent for morning, you, XXXX. to begin CEO, and President Compass we outlook Crutchfield; Thank Earnings Lorin Conference CFO,

Head Jamie of portion Standen, the George today. in question-and-answer of Chris the Yandell, will away and for Chief our Chief our our be Lithium. Commercial Schuller, is Operating Officer Joining call Officer,

Before that to remarks assumptions online November entail we get SEC cause could materially. started, XX, operational investors.compassminerals.com. I financial differ date, will actual our filings of located discussion A outlooks uncertainties remind These and can everyone the company's expectations we these that today outlook the risks XXXX. today's that make as involve results at in be of and and reflect found risks

Our measures. remarks today also financial include certain non-GAAP

of than our our earnings or You which and online. the unless the the in results find continuing presentation, reflect earnings The flows call consolidated are issued cash to other also operations items last of of this our in reconciliations business, presented release night both can amounts only or pertaining available release these during condensed of in statements otherwise. noted

the turn Kevin. now to I'll over call

Kevin Crutchfield

everyone, you joining for thank us morning, call and Good today. our Brent. you, Thank on

on want come I lithium on sustained across our ball project areas our uncertainty which advanced by just project achievements XXXX, positive fiscal provide the Over number our Utah commentary to specifically. Utah, been back made we on of first some a Unfortunately, and a lithium have our wholly in strategic this strategic several the the moment, in operations weighed of course on share price. our strides surrounding in we've heavily year I'll but overshadowed important to has fronts.

for engaged been been decades. XXX more of operating the at We've currently for in in than half citizen the jobs reminder, century, Utah an providing approximately corporate state a facility. local a we've community As Ogden our

Our potash, current mineral-rich Lake. The brine through sodium draws chloride draw and and any from Great which operate additional the Great solar planned sulfate X-year or ponds, a currently on Salt businesses lithium Lake the series process the not into successful over water would magnesium lake lake to cycle. from the would brine upon project a of require build evaporation chloride moves the evaporation brine X- Salt that of

of precipitate concentration content those and our floors. up increases, the the provide minerals business mineral deposits pond sodium magnesium are brine make deposited Those of and chloride the evaporates X SOP, As brine products the necessary chloride. for on Ogden the today. processing These into minerals some naturally water core out the of and

Our lithium entail already simply we're fourth processing. salt extracting the development that mineral would a brine out of

community. the recent of relevant parties the project developed win-win Our incremental local a on In on patiently some would maintaining Great we of Salt this educate jobs that's attributes project. Utah and situation, economy. XXX of rules regulatory sensitivities be in receipts positive royalty aware decision-makers sustainability the framework and the acutely continue establish additional and updated Bill to as a is goal health all concerns for of view, the Salt to lithium all our as the local the substantial We're for XXX tax high-paying lake and Lake, and well and drive was how management stakeholders would Lake. shared a to to enacted add House introduce Great the over related

in Bill operating The we for hard it's uncertainty in the solutions the decades. essentially to announced have weeks of the maintaining in to regulatory and March that the introduced our fact, a And to lake and invested ago, as intention no indefinitely are to process, must health our stable any be over on further in improving investment long in of We environment we've we state. next timing now such lightly. different. considering will the worked part A not are this suspend regulatory the projected subsequent our did set we'll and term. Several impossible the well returns the investments predictable and here of will is We certainty. critical now decision until move linchpin House magnitude, order make paused, reasonable how regulatory and lithium we could with Utah on development have certainty the have Without clarity as be we're the particularly the achieve of XXX project to that passage the have XX forward coming include of rules confidence capital around years. Therefore, to rule-making be of regulatory proceed. confidence the over prudently, making environment

or pursuit sustainable XXX, company resource of House of actively state salt legislation attempt Bill a to lithium will engaged developing the and collaborative inception date of the has service the of halt with Utah the advanced provisions a ensure to implemented progress market. in the way to Minerals has the North a not the slow Compass are battery burgeoning Since made that regarding American its

of the in demonstration stages about suspend project early the by unit it's how commercial thinking we've to best items the in the and additional shareholders of that all of the committed in share scale talked best construction about past. I DLE certain want investment some we thoughts the beyond about with project. active associated to we're parties, our efforts already our concluded further Despite that interest ongoing lithium

have only forward terms not Phase We'll long-term when continue on of economics move We'll convinced any the refine if investment. better perfectly from engineering our to then proposed project. estimates First, the cost. to clear, and incorporate with project the we'll will be X at the financial state receive returns we're of a that view we we'll the them, proceed the the justify

manner prudent. financially Second, if that in we is do do so advanced lithium, a we'll

the at shareholders. thing numerous future dilute but of I stress fund want the to this, lower to lithium common how there capital answer capital sources the Clearly, is cost. on for believe questions increased, taken about firmly are of will development. help capital on other that and at in to today work a asset have importance. of some level share one that do reducing projected fund We still has we're any We using share of existing the cost not to the program least of equity by our of committed program we'll partner ownership viable do not funds the have question considerably As part bringing at our greater lithium

a today better previously, an We be XXXX goal to restoration were ton different of for of we in Full in the of to fiscal for EBITDA that year. same year operations compared time the can Third, to have XX% we driven comment also the average served the important financial allow period, and all solid will XX% standing year a and on timely that the but the profitably to improvement note year, to margin historic we on on that we in effectively approximately bidding a to EBITDA respectively, year-over-year. We acknowledge season and within will that our are on increased the this project. back forward toward XX% a path the winter have to this whereas was discuss salt strategic be by talked job resource adjusted This adjusted Lorin commencing it heels state I'm days. Salt's that last this recent number Utah highway we company started talk path and developed the time happy objectives. we'll able only we focusing of winning snow will and I'm up XX% when of on line also the our we the was deicing fiscal occurring markets the now progress service. review our year, getting timing C&I, game $XX.XX the from of of pricing, credibly increases the price before that in frame, great for lot as we profitability we hopeful percentage the than that X% ago. did salt saw 'XX. of levels XX% increased $XX.XX yet. aren't is and for Year-over-year, business fiscal again, for per about we rules we basics manner. But to markets great with chart benefit nearly I'll American by a for over ground that responsibly had of then our and despite to the North there a state we about including performance stakeholders, to the can on XXXX. a know XXXX made believe outlook

continuing an EBITDA us on base year Retardant added improve U.S. Our EBITDA to shows plan 'XX for rigorous an also margin fortress basis. Fiscal to multiyear the a exciting was business. salt XXXX process, Fire profitability our per emerging core X After products and were for ton both

products in the product first which to qualified market of to the list nearly Service products, XXXX. Forest agencies new fire purchase enter allow to the in decades. December were door X opened This governmental Fortress retardant

the first May, of we Fortress efficacy has In our company the commercial the of that excellent. milestone team in when its achieved the the we process We're XX, products feedback in and was U.S. the The and another first been our on of operational performance of consolidated we've our June dropped thereafter. currently the shortly contract awarded with finalizing contract ownership product. we received

and XXXX. can that the growth for company. We're Forest for the we're this high-margin Service to about a seasonal Fortress, start good provide excited with off counter business potential

of balance Trading debt. year the We Koch the X which Minerals help fiscal equity of Phase on October, down and during project financial sheet of we our partnership our in successfully year, in company and with to strategic & the also closed fiscal was goals. fund lithium the standing pay a another improved strategic to Early

maturity improved also debt XXXX. our with successful We to a maturity pushed that in nearest out our May refinancing profile

call of because leading say to outstanding a and priority for possibly earnings it's reliably keeping We efforts operational thing you colleagues available often can performance. I'll build its our a top a focused a do of yourself the safety every culture relates of and thing on we people, can't strategic our goal, I importance. do debt make to if execution how the net in and this is on business. goal decline the of to As right safe, almost today improvement our a you our to of for basics Safety your and do to due and operate indicator and right it's safety efficiently. And a an our last harm. year-over-year, touch lengthening maturities. The debt this, result zero our that our in saw liquidity

Our embraced clearly employees here and our results. shows it zero we're building the harm, in have culture around

Specifically, lost have injury our approximately Compass that in or X% are X.XX total numbers, dropped from here ago our recordable outstanding operating Those we Minerals. complex from year the time injury rate X.XX particularly the comparable period. declined and to X.XX at in X% environment a rate

my the to their I want the to outstanding extend these and to results. thanks all company safety for across commitment contribution to employees

confident possible, with reflect of I'm forward has that on unique our steps solid will recognized leaders disappointing value tremendous year, in be Utah by and that execution. uncertainty resolve with strong I on soon the as assets As company it's to drowned We're across that we determined have those planned as continued Compass our that the that Minerals the around business remain intrinsic the lithium noise out engaged project. high-quality front. value. and Utah questions we were made arose to know

that, I'll now call over the turn So to with Lorin.

Lorin Crenshaw

performance fiscal my discussing 'XX begin fiscal outlook by our for remarks I'll perspective Kevin. before our around Thanks, providing 'XX.

to a $X.X declined $X.X year-over-year. Net narrowed EBITDA Starting million, results year-over-year. improved of weaker loss X% consolidated profitability operating declined year-over-year $XXX.X offset level. business the Consolidated slightly primarily from net million to Salt earnings sales, at the million million. million. quarter fourth was Consolidated year-over-year Plant for Nutrition to while lower adjusted loss reflect in revenue quarter at $X.X $XX by the

a below of the on deicing impact year, full weather the Plant Nutrition conditions revenue. adverse and negatively company's impacted California the the business average For season highway in

for billion. over at However, million operating operating gains year-over-year. profitability the earnings lower $X.X $XX.X in Salt consolidated that and and adjusted million continuing adjusted million $XX.X of revenue X% allow million $XXX.X was year-over-year. Net business demonstrated the million year. $XX.X Consolidated $XX.X in earnings income year-over-year up net rose Consolidated prior EBITDA just was was EBITDA loss from million, improved a of operations versus $XX.X

fact in influenced throughout booked tax that by at Our valuation deferred full year tax the on came XX%, assets. rate which income allowances is the effective year, we U.S.

our income range guided the impact tax to which refinement our slipping associated of full below allowances, Fortress The with primarily first the the below quarter last effective rate certain of due year is was rate quarter. Excluding income XX%, estimated lower earnings came expectation, valuation roughly foreign the we in estimates. tax to into and

impact Salt X% by businesses. decrease the $XXX.X On while offset volumes, increase XX% segment quarterly flat X% highway rose increased was the C&I ton freight both adjusted per and unplanned year-over-year, $XX.X within product a power earnings year-over-year lines. Quarterly the business. X%, EBITDA XX% to million to for Moving costs distribution rates driven million of sales all-in by essentially X% due C&I increased cost increased while basis, at the declined from improved per X% a which $XX.X million, pricing price both year-over-year. in reflecting resulting XX% across Operating decreased price price revenue business, to continued total ton in Salt to C&I a Highway deicing year-over-year, favorable downtime. year-over-year product deicing while

we For average markets below and volumes was Higher our North a deicing billion. the profitability. Salt deicing highway in consistent Salt cause at in in decrease segment increase C&I approximately in revenue in highway and year-over-year. driver sales volume deicing price over improved salt of was volumes and XX% America leading total business's led C&I pricing was year, with the XX% this X%. with in decline the strategy and XXXX to flat down XX% $X down of full volumes, that highway year-over-year served of pursued season increase pricing in an value the overall were volumes The segment

basis, and and million, million On $XXX.X earnings a modest $XXX.X generated of up Salt X% adjusted respectively, distribution operating XX% and respectively. saw The all-in and both of product year-over-year. increases ton X%, per costs segment in XX%, EBITDA year-over-year

important improved and for Importantly, the ton per XXX over recovered an segment year. saw as year-over-year, by objective mentioned, basis strategic points $XX to Kevin per margins this EBITDA over adjusted which, EBITDA ton, was adjusted us

our year, $XX.X buyers decrease sales the Fourth purchaser prices a year. product combination Distribution driven generally waited associated X% EBITDA down to a in costs and of as for of to buy quarter X%. The to while to declined This segment. price railcar million, XX% XX% in price year-over-year. $X.X Nutrition million storage throughout totaled Turning The year-over-year of hold $XX.X volume. reflected year-over-year, in ton by segment increased declined and until revenue XX% influenced throughout want behavior down the per global an the ton Plant operating deterioration the decrease due $X.X by fertilizer of decline needed. inventory product per timing had all-in potassium the loss to Adjusted million and market cost didn't quarter, million million. demand fees, $XX.X an

in year-over-year. full As the decrease primary highly the of discussed sales in we've year was the throughout California unusual year, driver weather volumes

fixed volumes year-over-year while sales X% year, sales our due product XX% per full totaled for generated the all-in to in and per decrease $XXX.X EBITDA costs lower year volumes. up costs, cost totaled year-over-year earnings a full of ton segment XX% million. to $XX.X $XX.X were XX%. the revenue, adjusted million down on the Operating distribution ton million in due primarily rose the Distribution For impact

a results on bit provide to Fortress' like now would the year. for I of color

XXXX. sales first Fortress had in its

respectively. So this we and to business recognized modest and million, operating positive contributions the of revenue $X.X million, adjusted $XX.X period from million $X.X earnings EBITDA

U.S. initial contract Our the with

December covered largely year and was 'XX. calendar Service structured in as the Forest take-or-pay ending

on September the vast fiscal year contract to value majority We expect it our based of patterns the of activity. the in wildfire of historic ended during recognize

in final activity quarter was U.S. the our which of unusually year, Hilary heavy included storm wildfire tropical rain in fiscal the However, Western from mild.

burned Specifically, calendar National were from year-to-date of approximately acres September, the average U.S. to XX-year in Interagency wildfires Center. the XX% Fire according through the

'XX in bulk original the expectation. our Accordingly, contract of the value later occur the recognition initial in to the months commercial Three will quarter. of quarter while quarter. Fortress approximately adjusted of the the $XX the of unchanged, related current contract that take-or-pay the portion a million than ultimate the into result, Overall, in calendar revenue As is slide were fourth the encouraged operating its we performance initial current we expected impact 'XX by at operations. saw of had to we EBITDA will year

debt revolver the Turning to roughly end, we Net capacity $XXX our million. $XXX million. EBITDA to balance sheet. at quarter adjusted liquidity the of end cash At of around had and stood of of at quarter. X.Xx million $XX comprised of

concluded, the to expecting total sales average and highway commitments, by for we bidding North commitment to on volumes our to prior 'XX. upcoming committed results roughly has be approximately by X% and ratios for an winter decline America America the The deicing historical latest versus X% the the price year-over-year. on average in season experience in year's we weather outlook Moving X% are season bid fiscal and volumes bid assuming to expect season sales winter decrease contract North Despite we activity. year-over-year based up increase

last Snow within North winter XX% served year's days our of average. markets during long-run only the America were approximately

more to average result, should an enough volume As year-over-year offset a levels. lower simply drive having winter commitment than

the have is, to on For million $XXX This in expect of range that EBITDA again, Salt, adjusted million. we we $XXX average the based in winter. assumption

projected of just volumes see sales the occurring reason a lowest for cheaper levels. Therefore, cost guidance. in year potassium we range process historical volumes. $XX Salt in primarily while last higher have as despite chloride, unit supportive in intend following we normal XXX,XXX sales close of The potential This higher revisit completion sales and to driven pricing our a price that's lower SOP season. The Coast this in we with historical EBITDA line investors meaningfully offsetting of below to in Ogden. Two range pond or From out XX presentation. levels targeted they our of assuming be the per is the levels. our cash ton themselves that tons, conditions a Plant higher did are is production of costs have production average the the decline we tons million, for of first take where higher XXXX, $XXX production supplementing below expect year-over-year costs top segment pond although now the available. higher still next tons, weather levels, toward repeat winter will earnings quarter continuation our shown our is $XX of projected that 'XX. From ton, targeted gap million sales to unit we the fourth are tracking quarter outlook pricing remain elevated we case. From industry the occurred to on and moment are May, our of experienced that demand which outcomes performance, perspective, year year-over-year call factors, this conditions this perspective, $XXX naturally margin-wise, the of the business Salt level per pricing roughly around of year earnings stage for the why input than more on in our to During is of well of costs assuming West Slide which call a second strategy And our to roughly earnings quarter by below continue is during sharp increase. a the roughly are at in in cycle. cost the XXXX, restoration are update don't at an back this perspective, extraordinary X% against February around Then, guidance we a $XX you discuss a cash Nutrition restoring The I'll sales to year-over-year, and performance

a current We of chloride and using resulting as and chloride time, than expect seasons cost demand this yields volumes enable resulting as persist, us use at rising replenishment the lower enable average. Over to mix the stockpile, potassium higher to in evaporation costs tons maximize lower assuming levels in us a to to time, unit over required to our deliver tons, percentage declining historical time our that achieve potassium unit but allow is expected pond-based production sales over and the happens. of cost higher

operational us guidance. production with Now cost deliver a will unit to initiative be that expect our that XXXX, our allow actions identify costs. sales we in line we a lower have Such are strategy to reflected reduction historical in strategies tons to not levels, additional to key in

However, run we lowering to the path a this the to cost cost by unit and are producing committed longer the of more in closer term. historical tons business identifying pond-based short levels restoring to

Turning to our corporate guidance.

million We in expect come and between this range of to minus $XX million. minus a segment $XX at

comprised and the As Other Plant includes of Salt Fortress, DeepStore corporate of and and our unrelated a is reminder, business. lithium records and the components: to X Nutrition document impact costs other. management segments

closely U.S. As it we working the to relates Fortress, are with currently

to Service a establish Forest contract year for XXXX. calendar

agreement January not XXXX an to be early However, late finalized or December is XXXX. until expected

to As in the EBITDA quarter. the will we that in recognize a guidance related approximately contract result, adjusted includes current our initial XXXX $XX the only million

Fortress and growth to $XXX $XX $XX expectation range of million, However, be in update will $XX million. contract, and have at concluded, range but million, of of a a profit that development. lithium similar comprised level between we in our $X influenced fiscal is million to current to million adequate Utah for to related of the be approximately million million parts: resume and approximately projected CapEx the is expenses is $XX lithium to our related XXXX of is and expected our CapEx guidance achieve Plant will suspension Salt clarity finalized X and have of Total related related regulatory negotiations we'll for orderly to in $XXX heavily of Nutrition a of our CapEx 'XX. least $XX accordingly. Lithium to contract, $XXX million CapEx million sustaining the achieved we by be project are and whether costs These

strong competitive of economic positions production operationally viable well minerals remains company our with closing, essential in financially with positioned substitutes. the few and In

steps the we up Kevin in the remarks, success we positive made to businesses. Plant emerging maximizing our 'XX us fiscal in on for that alluded high-quality As in focusing Nutrition Salt, Fire several of his set continue well business performance across XXXX and Retardant as

I back to to turn for said, that operator will it With the Operator? open the lines Q&A.

Operator

will from first with Markets. question BMO Capital our Joel take We Jackson Instructions] [Operator

Joel Jackson

have few I questions. I'll a by one go one.

On -- 'XX 'XX be assume a color comes what's expect Fortress, for and to that double the bit is guidance and so you'd year's What this right? you from it least to to in The so I thank $XX 'XX be contribution earnings Fortress of million. the at counting the similar going that to 'XX. happen 'XX will

to be fiscal that you going be it'd little 'XX expect just think sounds how to into earnings than higher contribution? -- business to $XX trying how business like. It a would the normalized million or 'XX bit ramp? like ramp Just And would a 'XX about is

Lorin Crenshaw

then Jamie. I'll start and ask

will in profit million did and Fortress $XX of we million million $X next into or book about $X XXXX roll So year.

in of get you million depends you so and change. profitability we level upcoming on of elaborate? you together, contract. And see those add that all kind to it Jamie, want the this $XX And

James Standen

Yes.

yes. I think --

So that so, prepared remarks Lorin's $XX about million, you expect 'XX level. in million to least 'XX at achieve or think at normalized we $XX million. $XX was said about something

which It's out won't basis, a ongoing. are negotiations figuring take-or-pay We're likely it be it looks that like. next scenario the what year. So

give we color right can incremental now. about that's all you So the

Lorin Crenshaw

let than in and we you better dust February. it rather would just update then be to settle Joel, felt the speculate, And

Joel Jackson

Right.

Okay.

you're case So could business, really, It's normalized number maybe salt the in this on right? right? projecting costs, be $X what's Salt a ton wrong this it's at not first salt -- and know me better increase like cost because about excuse guidance, bare be me guidance year? going guidance me, for perspective, that cost to a is, Is I'm tell cost. blush, looking Okay. On in per from I driving it Fortress. maybe looks a your If -- let

Lorin Crenshaw

of ton cash salt EBITDA per $X. around and about are is sort actually roughly Yes. perspective, about From a ton costs a up flattish, $XX cost

per And from I'm what seeing, a you're so year-over-year. roughly salt sure ton but EBITDA and up is not perspective from flat perspective cash an

Joel Jackson

talk flat environment in what pass then on maybe up and what on Maybe down it on, to are that baton about flat? before costs costs the are make I

Lorin Crenshaw

which And a this C&I. half point is Brent for And that's So we'll from first of natural natural of to kind of consume the flattish year a be perspective, of mid-XXs. high from share? the of is fuel we year-over-year, assuming you hope of view. if to saw that at we perspective, We're in this spike Jamie, important you kind From business else most the the that from gas going gas year look where roughly in fuel. we want last then benefit to absence are will relates a level. anything that

James Standen

not saw I in XXXX. downtime operating would repeat. Items say some we that, itself, to cost like expected on the side and the unplanned cash

but inflationary got we've into as levels offset XXXX some on go production side on by that's input pressure Salt. So improved the still being we

Operator

We will Deutsche Bank. take question David with from next Begleiter our

David Begleiter

we're Is Is months? a too -- would going it time lithium. X just to not on say Are does on year? Is be frame it there Kevin, you pursue longer? lithium? it there and -- and long, these taking negotiations is That move where is a is helpful. would you

Kevin Crutchfield

look, question, you, down. streams tell kind kind David. to Yes. there's mean, what how in work about of X of it we're this. I'll of a thinking But I of terms I It's mean, pin hard that's good kind

of those get as they knows, were everybody promulgated rules draft House released that sorted. the as XXX Bill think need to I part

So comment. they're for public out

as be at with a be as concerns us outcome pin lake. And to set then secondarily, that the session about the with were could way the trying legislative the for I think and come way we'll in there's the how and we'll lithium we've and released, up some Utah involved extracted table made had year up be coming obviously that well in. to works that of in after rules folks first work our a we of the comments on govern that state those, draft on the they we'll

time of the So of whether in on I us on that put clarity got legs and think I or thing the another maybe this April to that will all decision the give think it settle we need kind kind will still frame, a time. shelf for make

year. would frame I of direct to April-May you So time kind next that

David Begleiter

Very helpful. last what terms earnings good Is the $XX of you in even do EBITDA. X normalized it on is $XX in maybe Nutrition, just million think years this number to be think I or And segment? that higher million averaged a could of Plant normalized?

Lorin Crenshaw

on this cash be Yes. business we basis. to We're $XXX where cost a expect below

or back If X be the This -- harvest business times let that years. From going of to we $XX And in you you you focus we Ogden regenerate. ponds looking just just long-term our deposit deposition base concentrate, the the we better We're not to X-year cost we'll that's you and tons be in million. in efforts as do or expect to. in that over over process, range the for the past wait coming X- a perspective, yields terms at a that ought improve the to wait things get get to years, the that. multiply that in less referred for -- look and the can term the as to cost ponds of base just also we're at but we going near

Operator

from We will Greg with BTIG. question our next take Lewis

Gregory Lewis

on one costs. I -- want My was did to go first Yes. back

guess, those a could we pulling -- it costs bit, how to are little about at think like ], gauge freight could your back seems be kind much are So fixed? -- freight it like see is agreements, reset? when as all -- any recontracted I of we [ Or or like way that

Brent Collins

question were Could for us? your you please there. you Greg, up repeat garbled

Gregory Lewis

costs that like America costs move first and the Kind should to if freight trying one. North all look at freight impact, see we what as question, is kind of much that contracted? around get of generally was is to exposure, It we of the think I'm benefiting across it's about were spot freight i.e., lower, from how how your you company my

James Standen

Greg, Jamie. is Sure, this

we we've in buckets. So talked about assumed, different it

look quarter at out truck lot rationalization, XXXX, actually fixed. barge rise of are and XXXX, given the of supply first now vessel we're think bottoming inflationary expected to see the the for the some yellow, pressure. would Conway, On going for and those bankruptcies. be maybe is market we side to truck typical we freight -- When A

And year. So we demand us, actually. the post-pandemic in over destocking of supply behind is think retail shrinking freight the next there's the picture think increase we with

So we've truck baked XXXX, into back our plan increased year. really and of half for the in rates the

significant. to Now rise, freight from longer is not so. don't But a or Think bottom does plan. is the versus current rates in XX% and as It if that would operating benefit and stand of it that our significant increase. we stays occur that

Gregory Lewis

about I did project. think strategic realizing Perfect. helpful. to we least lithium to of largely want we mean, Super partner at Okay. forward I But side, you when then the on move a in the funded with the And that really, Phase it's need mentioned kind that X. project

can -- to about you're any strategic think you're we the landscape I an what think forward. Utah, a given partner, move it? project forward? what's really of clarity partner line like guess, in partner? And kind ongoing, see of don't for thinking kind kind just know, is get lithium in fair we that something that that we And a Or way have Is how probably move the is could of about we a now, that of where just more on I when and really, looking Like terms sight when better about of rough won't we until that partner? offtake see,

Kevin Crutchfield

Yes.

a would precedent partner, long in having is clarity making conditions suitable regulatory investments. you've terms where to that So for of it long-term got have -- I be think a legislative horizon in to Utah,

there's prove then a we clearly, as want question, to secondarily, we -- done. unit still earlier, be that there level. asked still And scalable at mentioned work when demonstrate have to out commercial world his to I So is the David technology Dustguard the to

be to got partner EV it lithium at world or a level. And sort capital nice reduce we'd partner that to been that be the anything and clearly exposure sheet itself. the X partner, I in that's for, we of have would upon conditioned in domain the do the balance So terms mean, ideally, type then a be a those looking would some would criteria met of of our project having with space, then prowess

it. So that thinking of of gives you about some how we're kind sense

Operator

will Anderson We take from Vincent our [Operator Instructions] next question with Stifel.

Vincent Anderson

year margin changes I on hit year? on can season-on-season you based your variable Going fixed of geographical mean, to components the helpful. then maybe cost this netback the drivers the mix you salt last in But expectations. incremental super was or versus I back the any of hoping frame leverage. negatives And commitments positives

Lorin Crenshaw

as in same X% just a base of increase will leverage tons. And shear that X%, you're on that's improve extent seeing. a result normalized the from volumes a tonnage the winter cost to what the our the increase Well, the

As at that to can taken increase reductions. sites that sort it to efforts or $X of call I us And that's in fact, reduce to at relates and are extent the in guidance. we the there referred to ton, to to midpoint to the should we in the of center see our $X efforts terms in Those if We that, cost. year-over-year. have reduce some last -- cost fuel, efforts the things our we what's is per flattish following cost hang kind in as corporate in said, the of of they profit if refer that, allow

Vincent Anderson

Okay.

here. turning Okay. And No, just just X-parter that's helpful. over to then Fortress, a

I first, it, expect And take-or-pay investments? related So initial likely support But understand to have product. budget contracts. year reflect help CapEx that, new this are as you to the place on-base kind of a any then in commercialization of you said those does won't

I that that? qualify you'll interpret for that base of should organic you longer So expecting no wins as enough high a level

James Standen

us Jamie. a of This agreement matter to Vincent. in contract are how element a take-or-pay not elements of a of The contract the last qualification, Yes. It's year's give is matter gallons. number kind contracts. you finalize are that's after said, we some kind let a going and security give why -- parts, hey, the and wait around so daily we've of we're of rates, transparency this moving to It's unfolds. was related of a There of there lot that

quite things few So a there moving. are

permanent As it a about a we that speak, to fundamentally get we neat things mobility. a on delivery have so mobile, is basis, investment, they're our one though base even so signed to the relates of mechanisms

the for ready to that, So in million That's we the and were and bases then future. to to it it capital $XX have put awarded. the get investing flexibility manufacture deploy that we're that,

-- and bearing less not of it's it's situation. a We're capital and bases, have a mobile in pipes investing So concrete intensive at foreign infrastructure than a more structure. we not typical

Lorin Crenshaw

business, be it just provide do on add, that we approach Salt. with similar when will And season. to do wildfire to the subject today it's you provide see regard this guidance -- would business To a earnings what we extent take-or-pay, we'll our I the this in deck is not to

you tells with should for wildfire the season range come curve normal we think that expect like so would out bell sides. And what us a that a to and on you both look

I that just have And so to that you dimension. want underscore will

Vincent Anderson

that Goderich for then No, that. get just If not the more larger you that's to one actually. any for on overhaul. put March we'll of maybe XXXX, I priorities helpful. If your turnaround. appreciate was Kevin, could sneak an on back I I year update planned in I'm projects and hoping for mistaken, this line

Kevin Crutchfield

Yes.

XXth [ just the the -- Vincent. just But yes, like be fair. back line, specific, maybe So be to hole ] to of the

of We driven I there. George exact here, is but ways. continue our entry have not probably way to an drive we're percentage, don't the main XX%, XX%

up entries our will the close money, before, the sections section the and lighting the up all [indiscernible] in the stop So old then with then mine sort bottom new connecting promote and of and as mine to kind new of roof of ability of shared spending we've that holding west and and those the shaft thing.

in new up continue north mine. part of and the of kind the we of infrastructure west to the phase. And develop then kind panel the some that's into first So out the panels

So you'll cost It of but see sudden over to the connect moment precipitously soon talked to not on can that the you'll cost we've as all X gradual, filter before. There's those will see as next the where years, to magic going as be we start roadways X, start side gradually results through be a fall. about some up.

connected we up, we think got I a at those that's close so see to to when change do get still Vincent. begin before Goderich, you'll but to So start year probably or things

Operator

We next will question Silver King. take with from our CL David

David Silver

couple of A questions. Yes.

I think XX. about inventory to at the I'd first, ask September levels like

I it is higher think it's pretty totals recent of the years, and in up one substantially year-over-year.

maybe something? kind inventory from of a average XX season or last at could in volume winter you November talk or below update carryover or if maybe to could I'll of sub cost September -- wondering that there. how if stop Just kind the about just versus a this So Is about think you year? for elements level XX there. subpar it

Lorin Crenshaw

it's Nutrition. year-over-year you it's half related Salt And David, to X/XX at it Lorin. when on higher basis, Plant look you're a is and and right, roughly half

In last diminished. terms year. production-wise of a face that was Nutrition, environment very throughout performed severely well of Plant Ogden In sales the

Salt restored only and winter Plant it. From happened. are our frankly XX% to for Nutrition perspective, lining, levels normal an any that normal. And And that winter was if inventory at so a a we actually more silver there's we levels ran Goderich

reasons our capital the inventory inventory of said, units to be X that units risen. And inflation our of elaborate? X% that volume or a for don't expensive look has higher. you X about if more from average, over the the has -- But EBITDA Kevin that you inventory X% restored one business, per profitability know, has cost that are if want years Kevin, versus but the the more those to it's is same carry. is understand this so to from things And expensive. of that back we've for about gotten With up a to of holding only the working that perspective, ton, this that And XX%. talked notion X unit are last And customers I

David Silver

guess, terms also kickoff, of fixed targets of cost or realignment in your Okay. of I'd the just some you guess, had you reduction as year lowering on the I I cost for update, fiscal an 'XX. business your ask base program,

So if you that, great. would on update just could us be that

Lorin Crenshaw

those et SG&A, year. million laid going were costs Yes. sold, Plant $XX last goods did out a cost to we $XX XX% And we cetera. split that quarter where after roughly maybe of were XX% When Salt, Nutrition, an million half X-K we of about

so this reflected those are they in guidance that you see. and the And we've costs captured --

into it's would in Of eat merit about that accomplished, what course, there our reflected feel factors. with of like other and we've some along are that But guidance. we offsets good

David Silver

for Okay. I last first your And market like timing is whatnot. where in any issues I thoughts few a out shook maybe product positioned Fortress. be Great. that, But first quite accepted next would and season market. And market year? the fire had share or believe year on there's how went just targets one. over And understand it's would a how might to your parts be I back this you the fully that about might longer-term, whether then the expectation be moving share your and guess, I once to share go some maintained increased and

James Standen

to Yes. X% the Sure, David. to U.S. This as right around is the Jamie. We were relates share it X%

total contract Service Forest in XXXX.

And absolutely there. month we'll from expected this base then We as to and year-on-year. resolved negotiate to expect this We increase that be or early here grow build volumes our later hopefully, count to expect month, this contract we January.

continue is grow to the basis, over share next and add expectation years. Our the business add reinvest several in to

acquisition. And So plan. investment nothing how we has deliver about positioned and that we thesis we're can on changed. part made on the That feel front was of we the good that when

Operator

our Loop And Chris Kapsch Markets. Capital we next question from will with take

Christopher Kapsch

Salt business. contract fiscal I outcome had specifically season 'XX back 'XX. on the And juxtapose the one maybe pricing X% bidding the around and at from again

strategy in the your I value heard But You 'XX. used words specifically words those think volume I have referring over don't like to 'XX. reflecting

So it -- strategy is function a that the about I'm of this was outcome still? partly year curious

residual the [indiscernible] or some other other whether more simply a it's of example, interest costs it like rates function the higher bearing dynamic flagged the is other for inventories considerations Or or inflationary the you strike. like and inflation, mine of cost

wondering color strategy, on persisting? volume Just could provide if additional you that's that on over if value the

Kevin Crutchfield

what which we do in season transport do goal like driven marketplace, Competitors things. But this probably value we was value volume, season. Chris, business. different by which and like to marketing competitors let's geographically to the that is same did. just the from a and promote a mindset, through focus approached tough want on in the advantaged we for when business they're is what color. delivery I'd over whole areas team high our add which me to the you X% Jamie and the is in XX% of last up face But some stayed on that bid delivering at level, very any again unprecedented is price That mile the to winter cost. kudos hit or kind And about Let then disciplined with hand of of an the heels it. -- And think we're

$XX I in above that up would of our march as think, to going ton can continue you move that try over to that a So good, the I value time. terms continue forward we team number tell you and expect did marketplace. of kind to promoting strategy And that in

Christopher Kapsch

the to That's follow-up quick was or a on statute And believe there's one there then like incentive when pricing just maybe premium that some situation. was And suppliers government I Okay. even helpful. sole-source incentivize alternative applicable Fortress.

to the definitive. will that fiscal 'XX supply if they're when apply agreements So curious more

James Standen

Yes.

currently the sole our is source. solicitation So open -- a

So it's -- contract as our competitor for has do sole-source we a XXXX.

year-to-year. structure. same over from a XXXX. But 'XX. And yes, regional The little move we a be from different with bidding move So in ultimately, environment away more fundamentally, than and into competitive could that bit occurring expect the bidding terms that -- continues into they were mechanism to this time, it's then

Christopher Kapsch

then sorry, Canada. the then follow-up the just -- just And on could is Okay. in you situation --

were the U.S. provide for as I think this effectively color approval can that's piggybacking product? any just off they progressing on you there well? how -- Is

James Standen

use Yes. U.S. The the Canadians

are days Service the early Forest America our for in business the focus QPL. North of this U.S.

Forest Canada. Service contract, FIRE and then CAL

focus our now in U.S. is we the to are yes, So up but compete able there, right

Operator

And we from JPMorgan. will Instructions] Jeff our question Zekauskas next with take [Operator

Jeffrey Zekauskas

changed -- change comp comp changed discuss how versus Can XXXX? it XXXX briefly incentive management in how in and might -- in or you XXXX?

Kevin Crutchfield

I'm EBITDA, I the couple of sitting activities, year from is did kind that flow, don't kind bonus, of Jeff, of and annual think a is X goals shared that changed And here yet? next. that we plan. are off safety there So ESG but driven to components cash one the of thinking, incentive No. compensation plan and which some It's plan, The disclosed cash stock-based change. Have thing. incentive long-term of incentive

up read So shortly. here about you'll that coming

from read proxy. change So to about is the plan going incentive incentive next, the -- X and in that year plan the short upcoming stock-based The modestly you'll plan term change. long-term the to didn't

Jeffrey Zekauskas

Okay.

looking partner You about for in your talked lithium project. a

would that spend a for begin out then turned and partner as regulatory it more? before wait were did would spending for favorable, before look a developments if So partner? you you you with Or you

continue to if you if importance you didn't the of spend? a partner Or clarify timing couldn't partner, have Can if the things just selection the -- you you resume? would and of a

Kevin Crutchfield

I have they risk. Well, to capital some bonus. And as I that's expertise, have that's again the project the Jeff. ideal nice at a or the it domain mean, lot mentioned to a that that partner extent I in there, unpack lay is think us outcome earlier, level for of to a to

[Technical Difficulty].

Operator

apologize we we back disruption gentlemen, are and with for ladies live our And presenters. the

Kevin Crutchfield

all answering got some I But have your a partner. a Maybe I sure, pick I close got And would value off, wherewithal we'll cut think up I capital be officially then cut partner domain question would add. in I down. for try call terms I where a think some was where sheet, I'll the ideally, was certainly Jeff, expertise to around said we're off and balance another between regulatory for. long-term such have earlier to Utah what we what a mentioned I clarity on our of as for legislative that's is fine that the timing, in looking project. a in going in legislators what balance But to favorable are have we question, to of are looking to resolve the be matters make it's And regulator and that terms important investments. way But

think be, criteria an commercially belief one I we it point. those that met Number partnership that, two, level of going scalable that every to technology, viable demonstrate something it kind think condition, because number And to that's to the the prior condition. on have finish important is jeopardize a unit uncertainty. that's is to valuation, I creates world out but So having doing proof project and we'd is will obviously, been like Dustguard a to

valuable precedent in be those conditions other continuing can to would So us on with closely these with the -- things parallel folks X collaborate but in more a the you in done with getting be to to meantime work partner, anything but well. Utah, expect as

So hopefully, that's responsive question. to your

Operator

further there this And are no questions at time.

remarks. So to I for the call will Mr. Crutchfield now back closing Kevin turn

Kevin Crutchfield

apologize We back thank Minerals we for interest time everybody in forward the sincerely progresses. keeping Compass in. and you and you. abruptly as you your for to look in call But to having interest stopping updated Thank continued dial

for dialing So thank you today. in

Operator

we this participation. for thank gentlemen, concludes and you and Ladies call, today's your

You may now disconnect.

Compass Minerals International (CMP) 17 Nov 232023 Q4 Earnings call transcript