Compass Minerals Intl Inc · NYSE:CMP
Compass Minerals Intl — Compass Minerals — Investor Presentation (June 2020)
45 slides from Compass Minerals Intl's investor presentation, June 2020
Slide 1: Compass Minerals Business Overview
Compass Minerals Business Overview June 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including without limitation statements about the company’s value drivers, including its ability to improve execution and generate benefits; margin improvements; Goderich Mine success, including ability of mine plan to increase effi
Slide 3: Who We Are
Who We Are Compass Minerals at a Glance Value Drivers • Diversified essential minerals company • Strong margin profile and cash built on advantaged assets generation history - Difficult to replicate and strategically located • Strong management team geared to - Products focused on meeting essential
Slide 4: An Essential, Diversified Global Minerals Company
Compass Minerals: An Essential, Diversified Global Minerals Company 1Q20TTM GROSS SALES BY MARKET Highway deicing in North Plant Nutrition Salt and America and U.K. 35% Magnesium Deicing Chloride Consumer and industrial end 39% uses in North America Plant Specialty and semi- specialty in North and N
Slide 5: 1Q20 Highlights
1Q20 Highlights Year-over-Year Growth in: Cash Flow from Operating Earnings Operations of 33% $228.6 M EBITDA* 78% 15% vs. 1Q19 1Q20 EPS $0.80 ~$110 M vs. Cash on Hand (as of 3/31/2020) 1Q19 EPS $0.22 5 *Earnings before interest, taxes, depreciation and amortization and adjusted for special items. S
Slide 6: Our Salt Business
Our Salt Business 6
Slide 7: 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 - Largely regional markets with natural barriers to entry 1Q20TTM Consumer non-deicing Salt Sales • Compass Minerals is well-positione
Slide 8: 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 9: Salt: A Resilient History With Margin Improvement Underway
Salt: A Resilient History With Margin Improvement Underway Salt Segment Sales Reflect Snow Activity Progress Toward Margin Improvement (tons, in thousands) 26.1% 14,000 20.0% 226 19.3% 12,000 204 10,000 189 186 13.5% 175 177 160 169 163 8,000 153 150 143 134 127 134 6,000 111 92 4,000 2,000 OPERATIN
Slide 10: 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 11: Improved Execution Lifting Salt Segment Earnings
Improved Execution Lifting Salt Segment Earnings • Strong increases in average 1Q20 TTM vs. 1Q19 TTM : selling prices in North American highway deicing drove Revenue 3% 1Q20TTM top-line growth despite 5% reduction in sales volumes • Improved production results at Operating 29% North American salt mi
Slide 12: Our Plant Nutrition Business
Our Plant Nutrition Business 12
Slide 13: Our Plant Nutrition Business: 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 1Q20TTM Plant Nutrition Sales To meet the global need for sustainably $620M 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 Compass Minerals Provided in minute dosages (g/Ha or ml/Ha) 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 100% increase internal ROI % of Plant Nutrition South America Agro Products 80% laun
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 - Grow
Slide 23: Strong Start to 2020 With Demand Recovery in 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) 180 900 400 160 800 140 700 300 120 600 100 500 200 80 400 60 300 100 40 200 20 100
Slide 24: Our Path Forward
Our Path Forward 24
Slide 25: Key 2020 Strategic Priorities
Key 2020 Strategic Priorities • Seeking to unlock true value of our assets which we believe have strong, attractive market positions Strategic • Temporarily suspending strategic review of Plant Assessment Nutrition South America business - Strong start to the year reinforces our view of its value pr
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: Strong Liquidity Position with Limited Near-Term Maturities
Strong Liquidity Position with Limited Near-Term Maturities DEBT MATURITIES BY YEAR • $110 million of cash on hand (in millions, as of March 31, 2020) and $340 million of total liquidity at end of 1Q20 2020 $40 2021 $75 • No large debt maturities until 2022 $23 2024 2023 $21 • Planning for A/R secur
Slide 28: Appendix
Compass Minerals:
Slide 29: Highway Deicing Industry in North America
Highway Deicing Industry in North America
Slide 30: 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 31: 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 32: 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 33: 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 34: Historical North American Bid Season Results
Historical Compass Minerals North American Bid Season Results Average Realized Price Highway Reported Snow Average Awarded Bid Price for Winter ending 1Q Deicing Reported in Following 4Q- Events* Upcoming Winter 1Q 2007 126 5% 13.0% 2008 201 20% 8.3% 2009 179 8% 13.3% 2010 150 0% 4.7% 2011 204 3% -0
Slide 35: Logistics is a Competitive Strength
Logistics is a Competitive Strength Mines Depots 35
Slide 36: 1Q20 Financial Results and Outlook
1Q20 Financial Results and Outlook (as of May 5, 2020) 36
Slide 37: 1Q20 EBITDA Growth in All Three Segments
1Q20 EBITDA* Growth in All Three Segments Plant Nutrition Plant Nutrition Salt Segment South America North America (In millions of U.S. dollars) 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 $68 $72 $15.7 $5.2 $52 $57 $10.0 $2.9 $5.2 $0.3 -$1.6 -$2.6 Operating EBITDA* Operating EBITDA* Operating EBITDA* earnings ea
Slide 38: 2Q20 Outlook
2Q20 Outlook (as of May 5, 2020) Plant Nutrition Plant Nutrition Salt North America South America 2Q20 Revenue $110M $125M $45M $55M $75M $85M 2Q20 EBITDA $28M $35M $13M $18M $8M $12M • Salt segment 2Q20 revenue expected to increase modestly on improved pricing vs. prior year while EBITDA margin exp
Slide 39: 2020 Full-Year Guidance Items
2020 Full-Year Guidance Items (as of May 5, 2020) Key Metrics Current (in millions of dollars unless otherwise noted) Prior (as of May 5, 2020) Segment Outlook Low High Low High Salt Segment sales volumes (in millions of tons) 10.7 11.1 11.0 11.5 Plant Nutrition North America Segment sales volumes (
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 March 31, 2020 Net earnings $ 82.5 Interest expense 71.2 Income tax expense 28.9 Depreciation, depletion and amortization 136.0 EBITDA 318.6 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 Mar. 31 2020 2019 Segment GAAP operating earnings $ 172.6 $ 133.9 Depreciation, depletion and amortization 59.7 56.8 Segment EBITDA $ 232.3 $ 190.7 Adjustments to EBITDA Execut
Slide 43: 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 March 31, 2020 Segment GAAP operating earnings $ 72.2 Depreciation, depletion and amortization 65.2 Earnings in equity method in
Slide 44: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Salt Segment Adjusted Operating Earnings (unaudited) (in millions) 2005 2006 2007 2008 2009 2010 2011 Operating earnings $138.0 $114.4 $138.7 $191.7 $232.4 $206.0 $184.7 Estimated losses incurred from - - - - - - 16.4 tornado net of recoverie
Slide 45: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Free Cash Flow (unaudited, in millions) 1Q19 1Q20 Cash Flow From Operations $128 $229 Capital Spending (22) (25) Free Cash Flow $107 $204 45