Compass Minerals International Inc (CMP) Q3 2025 Earnings Call Highlights: Strong EBITDA Growth ...

Consolidated Revenue: $215 million, up approximately 6% year over year. Operating Income: $15.9 million, improved from $5.9 million last year. Net Loss: $17 million, compared to a net loss of $43.6 million in the prior year period. Adjusted EBITDA: Increased by 25% to $41 million, compared to $32.8 million a year ago. Salt Business Revenue: $166 million, compared to $160.6 million a year ago. Salt Business Pricing: Down 1% year over year to approximately $108 per ton. Salt Business Volumes: Up 4% compared to the prior year period. Salt Business Operating Earnings per Ton: Increased 4% year over year to $18.20 per ton. Salt Business Adjusted EBITDA per Ton: Increased by 6% to $29.66. Plant Nutrition Business Revenue: $45 million, up 15% year over year from $39 million. Plant Nutrition Sales Volume: Up 1% from prior year period. Plant Nutrition Pricing: Down 5% for the same period. Distribution Cost per Ton: Increased 10% to around $98 per ton. Production Costs per Ton: Decreased approximately 23%. North American Highway Deicing Inventory Value: Increased sequentially by 28%. Liquidity: $388 million, comprised of $79 million of cash and revolver capacity of around $309 million. Total Net Debt: $746 million, down $116 million or 13% year over year. Adjusted EBITDA Guidance: Increased to $193 million for the year, up from $188 million. Capital Expenditures Guidance: Remains unchanged at a range of $75 to $85 million.

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Release Date: August 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Compass Minerals International Inc (NYSE:CMP) reported a solid third quarter with improvements in operating earnings and adjusted EBITDA. The company made significant progress in improving the cost structure of its Ogden plant, resulting in higher productivity and strong sales volumes. The salt business saw a decrease in production costs by 2%, leading to improved segment operating earnings and adjusted EBITDA on a per ton basis. The refinancing completed in the third quarter enhanced financial flexibility, liquidity, and extended the maturity profile, supporting the company's back-to-basic strategy. The sale of fortress assets and intellectual property generated net proceeds of approximately $20 million, further strengthening the financial position.

Negative Points

Despite improvements, Compass Minerals International Inc (NYSE:CMP) reported a consolidated net loss of $17 million for the quarter. Pricing in the salt business was down 1% year-over-year, impacting net revenue per ton. Distribution costs per ton in the plant nutrition business increased by 10%, affecting overall cost management. The bid season for North American highway deicing resulted in only a 2 to 4% increase in contracted selling prices, which was considered average and below some expectations. The company remains cautious about inventory management, with a focus on avoiding past challenges with excess inventory.

Story Continues

Q & A Highlights

Q: Can you help us understand if the 2 to 4% increase in highway deicing pricing will result in higher net backs for the upcoming winter season? A: Edward Dowling, President and CEO, explained that the focus is on value over volume, and they are working on cost reductions. Guidance will be provided once budgeting is complete, typically in November.

Q: The bid season results were 2 to 4%, which seems average. Did you expect higher prices or more market share from competitors like Cargill or American Rock Salt? A: Edward Dowling noted that volumes are up, and pricing is transparent. The strategy is value over volume, and it generally takes two years to clear the market after a year like last year. The last season was a return to average weather, impacting supply and demand dynamics.

Q: Plant nutrition costs per ton were favorable in Q3. Why do costs appear to increase in Q4? A: Edward Dowling mentioned that the recovery on the ponds is ahead of expectations, contributing to lower costs. The plant is currently down for scheduled maintenance, which may affect costs. Pat Marin added that KCL prices impact costs, and they expect higher KCL prices next year.

Q: Are North American highway deicing inventory levels down 50% relative to last year for Compass Minerals or the industry? A: Edward Dowling confirmed that the 50% reduction is for Compass Minerals' inventory levels. They are managing working capital carefully to avoid excess inventory issues experienced in the past.

Q: What are your balance sheet targets regarding leverage, and how do you plan to handle the 2027 bond stub? A: Edward Dowling stated the goal is to achieve an investment-grade debt-to-equity ratio of 2 to 3. The plan is to use cash flow to pay down the remaining 2027 bonds.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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