Compass Minerals Intl Inc · NYSE:CMP
Compass Minerals Intl — Compass Minerals — Investor Presentation (September 2020)
44 slides from Compass Minerals Intl's investor presentation, September 2020
Slide 1: Compass Minerals Business Overview
Compass Minerals Business Overview September 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including without limitation statements about the Goderich mine plan, including its key features and ability to increase efficiency, decrease maintenance needs and provide greater optionality; bid season results, including earnings
Slide 3: Compass Minerals: An Essential, Diversified Global Minerals Company
Compass Minerals: An Essential, Diversified Global Minerals Company 2Q20TTM GROSS SALES BY MARKET Highway deicing in North Plant Nutrition Salt and America and U.K. 36% Magnesium Deicing Chloride Consumer and industrial end 39% uses in North America Plant Specialty and semi- specialty in North and N
Slide 4: 2Q20 Highlights
2Q20 Highlights • Resilient performance and improved execution achieved Operating $17.6M* while addressing COVID-19 challenges Earnings vs. 2Q19 • Maintaining our COVID-19 focus: - Health and safety of EBITDA** 44% vs. 2Q19 employees and communities - Meeting customers needs for our essential produc
Slide 5: Our Salt Business
Our Salt Business 5
Slide 6: Our Salt Business: Well-Positioned in Unique Commodity Industry
Our Salt Business: Well-Positioned in Unique Commodity Industry • Unique attributes - Recession-resistant and non-cyclical - Relatively low cost to end-users Deicing - Transportation costs favor domestic producers 2Q20TTM Consumer non-deicing Salt Sales $880M Industrial • Compass Minerals is well-po
Slide 7: Strong Fundamental Attributes of Our Salt Business
Strong Fundamental Attributes of Our Salt Business Superior Assets • Scale of rock salt mines enables production efficiencies • High-quality, lower-cost salt and magnesium chloride assets Logistical Advantages • Convenient access to water transportation • Deep-water port at Goderich mine • Extensive
Slide 8: Salt: A Resilient History With Margin Improvement Underway
Salt: A Resilient History With Margin Improvement Underway Salt Segment Sales Reflect Snow Activity (tons, in thousands) 14,000 12,000 226 204 10,000 189 186 175 177 160 169 163 Progress Toward Margin Improvement 8,000 153 150 143 134 127 134 111 26.1% 6,000 92 4,000 20.0% 19.3% 2,000 13.5% Sales Vo
Slide 9: Paving the Way for Long-Term Success at Goderich Mine
Paving the Way for Long-Term Success at Goderich Mine • Long-term mine plan Long-Term Goderich Mine Illustration implementation underway • Expected to increase efficiency of mining systems, decrease maintenance needs of previously mined space and provide greater optionality to address potential vari
Slide 10: Improved Execution Lifting Salt Segment Earnings
Improved Execution Lifting Salt Segment Earnings • Strong year-over-year increases 1H20 vs. 1H19 : in average selling prices for North American highway deicing Revenue 2% mostly offset reduced sales volumes due to mild winter weather • Improved Goderich production Operating 24% results and lower log
Slide 11: Challenging North American Highway Deicing Bid Season
Challenging North American Highway Deicing Bid Season • A challenging 2020-2021 North American highway deicing bid season following a North America Highway Deicing mild winter Market Remains Resilient Market - Mid-teens percentage decline in requested bid volumes in our served market • Disciplined e
Slide 12: Our Plant Nutrition Business
Our Plant Nutrition Business 12
Slide 13: Our Plant Nutrition Business: Providing Efficient Solutions for Sustainable Agriculture
Our Plant Nutrition Business: Providing Efficient Solutions for Sustainable Agriculture Specialty plant nutrients help farmers maximize the genetic potential of their crops 2Q20TTM Plant Nutrition Sales To meet the global need for sustainably $622M produced food Compass Minerals has unique and focus
Slide 14: What is Specialty Plant Nutrition?
What is Specialty Plant Nutrition? Biologicals Nutritional and biological potential enhancers Stress relief and fortification Diverse molecular structures and nutritional formulations Provided in minute dosages (g/Ha or ml/Ha) Compass Minerals Bio- stimulants Microbes Adjuvants Chemistries
Slide 15: The Importance of Specialty Plant Nutrition and the Yield Gap
The Importance of Specialty Plant Nutrition and the Yield Gap Advanced seed technology requires Yield Gap – Average Bushels per Acre is more nutrient investment Substantially Below Yield Winner • Growers are investing in NPK but Soy* US BRZ overlooking micronutrient needs 160 140 133 140 • The right
Slide 16: Plant Nutrition Market Landscape
Plant Nutrition Market Landscape Global Market Size ~$160 BILLION COMMODITY SPECIALTY K SPECIALTY PLANT NUTRITION FERTILIZER SOP, SOPM & KTS, Coated Fertilizer Slow Seed N P K KNO3 Release - NPK Blends Solubles Foliars Treatment Biologicals Nutrien Mosaic Haifa Chemical SQM Yara COMPASS MINERALS ICL
Slide 17: Our Core Geographic Presence Today
Our Core Geographic Presence Today Locations advantaged to serve key agriculture markets in Western Hemisphere Compass Minerals’ North American Crop Mix • SOP production well-positioned Tree nuts 30% 25% to serve specialty crops Vegetables Fruits • Access to key agricultural 10% 15% Other, including
Slide 18: Leading Producer of High-Value SOP in the Americas
Leading Producer of High-Value SOP in the Americas • Only North American SOP producer and largest in the Americas - Unique asset at Ogden with low-cost solar evaporation SOP production with ~325,000 tons annual capacity Unique capability to expand annual production by ~200,000 tons by adding muria
Slide 19: Diversified End-Market Insulate From Commodity Row Crops
Diversified End-Market Insulate From Commodity Row Crops Soybeans Strawberries Almonds U.S. acres ~90M ~60K ~1.25M Input costs/acre $473 $67,674 $6,241 Fertilizer cost /acre $41 $688 $490 No. of field passes 5 16 7 Net return/acre $67 $30,325 $9,309 Rocket Seeds™ Protassium+® Protassium+® Compass Mi
Slide 20: Go-to-Market Approach Tailored to Accelerate Growth
Go-to-Market Approach Tailored to Accelerate Growth Plant Nutrition South America Plant Nutrition North America • Comprehensive commercial strategy allows • Strong account management team with long- access to all farmers in Brazil standing relationships with leading distributors • Direct reach to ov
Slide 21: Innovation Pipeline Focused on Specialty Plant Nutrition
Innovation Pipeline Focused on Specialty Plant Nutrition Importance of New Product Launches in Direct- • Stage-gate R&D process and prioritization to-Grower Sales Channel in Brazil methodology promotes projects that are 100% projected to increase internal ROI Products % of Plant Nutrition South Amer
Slide 22: Attractive, Complementary Chemical Solutions Business in Brazil
Attractive, Complementary Chemical Solutions Business in Brazil • Water treatment products for municipal Plant Nutrition South America and industrial clients to treat waste Revenue Profile water and control odor - Products include polymers, coagulants, flocculants and green sand Agro Chemical ~70% -
Slide 23: Strong Start to 2020 With Demand Recovery in Both North and South America
Strong Start to 2020 With Demand Recovery in Both North and South America Plant Nutrition North America Plant Nutrition South America Sales Volumes Sales Volumes (in thousands, short tons) (in thousands, short tons) 400 900 400 350 800 350 300 700 300 600 250 250 500 200 200 400 150 300 150 100 100
Slide 24: Our Path Forward
Our Path Forward 24
Slide 25: Our Key Strategic Priorities
Our Key Strategic Priorities • Drive Zero Harm imperative for our people and the Build Sustainable environment Culture • Increase employee engagement and build execution muscle • Meet then exceed customer expectations, even in this challenging time Deliver on • Continue operational improvements at m
Slide 26: Enterprise-Wide Optimization Implementation Continues
Enterprise-Wide Optimization Implementation Continues • Bottom-up process used to identify Expected Benefit by Value Stream improvement opportunities in key focus areas - More than 1,200 initiatives identified and more than 500 business cases defined - Centralized support structure established to en
Slide 27: Maintaining Strong Liquidity Position and Improving Balance Sheet
Maintaining Strong Liquidity Position and Improving Balance Sheet • $67 million of cash on hand and more than $300 million of total Total Year-End Liquidity liquidity at end of 2Q20 (in millions) $225 to $302 $250 • Entered into U.S. A/R $252 securitization facility to further $202 $175 $175 enhance
Slide 28: Stage is Set for a Bright Future
Stage is Set for a Bright Future Strong leadership team in place with relentless focus on safety, employee engagement and execution Goderich mine achieving production targets and moving forward with long-term mine plan Sizable organic growth plan defined by enterprise- wide optimization effort Free
Slide 29: Appendix
Compass Minerals:
Slide 30: Highway Deicing Industry in North America
Highway Deicing Industry in North America
Slide 31: Government-directed Selling Process Overview
Government-directed Selling Process Overview • Each government issues a Request for Quotation (RFQ) for blind, sealed bids - RFQs are typically issued between April and October - Each government’s RFQ specifies a volume or volume range, a bid due date and a bid open date • All bids are made public o
Slide 32: Bid Award Timeline Shapes Strategy
Bid Award Timeline Shapes Strategy Illustration of Bid Timeline Sun Mon Tue Wed Thur Fri Sat 1 2 3 4 5 6 7 Govt. A RFQ 8 10 11 12 13 14 issued 15 16 17 18 19 20 21 Govt. B RFQ Govt. A Bids 22 Govt. A Bids due 24 27 28 issued awarded 29 30 1 2 3 4 5 Govt. C RFQ 6 7 8 Govt. B Bids due/ 10 12 issued Go
Slide 33: The Government-directed Process Prohibits Price Negotiation
The Government-directed Process Prohibits Price Negotiation • Bid requests usually include Illustration of a Government Bid Request* several delivery points Guaranteed Required Delivery Requested Minimum Delivery Percentage • Amount requested often Location Quantity Purchase Capability Range reflect
Slide 34: Actual Sales Occur Months Later
Actual Sales Occur Months Later • Deliveries begin in late fall and end in early spring • Typically, governments keep only enough rock salt on hand for two or three applications - Highway deicing salt is too bulky for most governments to store in large quantities • Governments reorder as their suppl
Slide 35: Logistics is a Competitive Strength
Logistics is a Competitive Strength Mines Depots 35
Slide 36: 2Q20 Financial Results and Outlook (as of August 4, 2020)
2Q20 Financial Results and Outlook (as of August 4, 2020) 36
Slide 37: 2Q20 Segment Summary
2Q20 Segment Summary Plant Nutrition Plant Nutrition Salt Segment South America North America (In millions of U.S. dollars) 2Q19 2Q20 2Q19 2Q20 2Q19* 2Q20 $47 $15.5 $15.3 $13.5 $30 $32 $8.9 $7.2 $15 $4.6 $5.1 $1.7 Operating EBITDA** Operating EBITDA** Operating EBITDA* earnings earnings earnings • I
Slide 38: 2H20 Outlook
2H20 Outlook (As of Aug. 4, 2020) Plant Nutrition Plant Nutrition Salt North America South America 2H20 Revenue $450M $490M $110M $130M $200M $230M 2H20 EBITDA $125M $145M $37M $45M $40M $50M • 2H20 Salt segment revenue and EBITDA expected to be similar to 2H19 with an increase in sales volumes offs
Slide 39: 2020 Full-Year Guidance Items
2020 Full-Year Guidance Items (As of Aug. 4, 2020) Key Metrics vs. Prior Guidance (in millions of dollars unless otherwise noted) Current (May 5, 2020) Segment Outlook Low High Low High Salt Segment sales volumes (in millions of tons) 10.7 11.1 unchanged Plant Nutrition North America Segment sales v
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations 40
Slide 41: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for EBITDA and Adjusted EBITDA (unaudited) (in millions) Twelve months ended June 30, 2020 Net earnings $ 96.0 Interest expense 71.6 Income tax expense 34.5 Depreciation, depletion and amortization 137.0 EBITDA $339.1 Adjustments to EBITDA: Stock
Slide 42: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Salt Segment EBITDA (unaudited) (in millions) Twelve months ended June 30, 2020 Segment GAAP operating earnings $187.7 Depreciation, depletion and amortization 62.1 Segment EBITDA $ 249.8 Adjustments to EBITDA Executive transition costs(1) 1.
Slide 43: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Salt Segment EBITDA (unaudited) (in millions) Twelve months ended Dec. 31, 2019 2018 Segment GAAP operating earnings $ 168.0 $ 115.7 Depreciation, depletion and amortization 60.4 56.2 Segment EBITDA $ 228.4 $ 171.9 Adjustments to EBITDA Execu
Slide 44: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Plant Nutrition North America and South America Combined Segment EBITDA (unaudited) (in millions) 12 months ended June 30, 2020 Segment GAAP operating earnings $ 79.9 Depreciation, depletion and amortization 63.6 Earnings in equity method inv
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