Compass Minerals Intl Inc · NYSE:CMP
Compass Minerals Intl — Compass Minerals — 2017 BMO Farm-to-Market Conference
31 slides from Compass Minerals Intl's conference presentation, May 17, 2017
Slide 1: Compass Minerals 2017 BMO Farm-to-Market Conference
C O M PA S S M I N E R A L S 2 0 1 7 B M O FA R M - T O - M A R K E T CONFERENCE M AY 1 7 , 2 0 1 7
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements in this presentation, including without limitation statements about the company’s platform for growth, including its ability to develop best-in-class safety, ensure longevity of assets, drive efficiency, build on essential minerals base, maximize margin
Slide 3: A Leader in Strong, Diverse Markets with Unique Asset Base
A LEADER IN STRONG, DIVERSE MARKETS WITH UNIQUE ASSET BASE • A leading supplier of deicing salt products 2016 SALES = $1.1 BILLION in North America and the U.K. • Advantaged rock salt mining assets - World’s largest salt mine strategically Salt located on deep-water port in Canada Plant Nutrition -
Slide 4: Platform for Growth
PLATFORM FOR GROWTH BUILD ON ESSENTIAL DEVELOP BEST-IN-CLASS MINERALS BASE WITH SAFETY; ENSURE SPECIALTY PLANT LONGEVITY OF KEY NUTRIENTS; MAXIMIZE ASSETS MARGIN POTENTIAL STRENGTHEN GROW IMPROVE DRIVE EFFICIENCY IMPROVE GO-TO-MARKET THROUGHOUT OPERATIONS STRATEGIES; ACHIEVE MORE BALANCED BUSINESS 4
Slide 5: Our Salt Business
OUR SALT BUSINESS • Highway deicing - Rock salt and other deicers sold to municipal, county and state/provincial governments - Rock salt sold to chemical producers • Consumer and industrial - A broad range of non-seasonal packaged and bulk products Water conditioning Salt Production Locations Prim
Slide 6: Salt: Strong Financial Attributes Despite Weather Variability
SALT: STRONG FINANCIAL ATTRIBUTES DESPITE WEATHER VARIABILITY Superior Assets Salt Segment 2016 Snapshot (in millions) • Geology of rock salt mines enables production efficiencies Sales $812 • High-quality, low-cost salt and magnesium chloride assets EBITDA* $247 EBITDA* margin 31% Logistical Advant
Slide 7: Strategic Focus on Efficiency, Asset Reliability and Commercial Excellence
STRATEGIC FOCUS ON EFFICIENCY, ASSET RELIABILITY AND COMMERCIAL EXCELLENCE • Goderich Mine: continued commissioning of additional continuous miners - Expect to complete by end of 2017 - Anticipate $30 million in annual cost savings once fully implemented • Goderich Mine: one shaft lining complete -
Slide 8: Building a Leading Specialty Plant Nutrition Business
BUILDING A LEADING SPECIALTY PLANT NUTRITION BUSINESS Plant Nutrition 2016 Snapshot* Only SOP producer in (Pro forma, in millions) North America Plant Nutrition North America sales $203 Plant Nutrition South America sales $357 Total sales $560 Purchased Wolf Trax product line Plant Nutrition North A
Slide 9: Produquímica Provides Diversification and Growth Opportunities
PRODUQUÍMICA PROVIDES DIVERSIFICATION AND GROWTH OPPORTUNITIES • Key component of plant nutrition Revenue by Business growth strategy 2015 Pro Forma 2016* - Expands product portfolio with more nutrients and delivery technologies 78% 59% - Diversifies geographic footprint and served markets - Enhance
Slide 10: Value to End-Users Drives Specialty Plant Nutrient Demand
VALUE TO END-USERS DRIVES SPECIALTY PLANT NUTRIENT DEMAND • SOP, a premium source of potassium, improves the economics of growing many high-value and chloride-sensitive crops - Strengthens root systems - Increases nutrient uptake - Increases total yield and yield quality - Provides plant-available s
Slide 11: Strong Ag Market Fundamentals in Place in Brazil
STRONG AG MARKET FUNDAMENTALS IN PLACE IN BRAZIL • Brazil is a key global agricultural market with opportunity for strong, long-term growth Abundant Land Available for Cultivation (in million hectares) - A leading producer of many key crops 328 108 - Agribusiness represents ~25% 99 88 12 26 of GDP 1
Slide 12: Key Attributes of Plant Nutrition South America Business: Agriculture
KEY ATTRIBUTES OF PLANT NUTRITION SOUTH AMERICA BUSINESS: AGRICULTURE • Broad product portfolio including Plant Nutrition South America Agro macronutrients, micronutrients, Sales Volume (in thousands of tons) secondary nutrients and other 500 South America Revenue Profile supplements - Complete micr
Slide 13: Consultative Agriculture Sales Force and Strong R&D Platform to Drive Growth
CONSULTATIVE AGRICULTURE SALES FORCE AND STRONG R&D PLATFORM TO DRIVE GROWTH Example of Recent Field Trials • Consultative sales force backed by agronomic research and technical TÔNUS* skills Average yield increase: 9.2% - Working to increase sales of value- added products directly to growers • Stro
Slide 14: Key Attributes of Plant Nutrition South America Business – Chemical Solutions
KEY ATTRIBUTES OF PLANT NUTRITION SOUTH AMERICA BUSINESS – CHEMICAL SOLUTIONS • Water treatment products for municipal Plant Nutrition South America Chemical Solution Sales Volume and industrial clients to treat waste South America (in thousands of tons) water and control odor Revenue Profile 400 -
Slide 15: Plant Nutrition North America Rooted in Premium Potassium
PLANT NUTRITION NORTH AMERICA ROOTED IN PREMIUM POTASSIUM • Only North American SOP producer Wynyard, SOP Production Sites Saskatchewan - Unique asset at Ogden with low-cost solar evaporation SOP production Fruit, Potatoes Can expand production by adding muriate of potash (MOP) • Typically hold 70
Slide 16: Broadening Presence in North America to Drive Sustainable Growth
BROADENING PRESENCE IN NORTH AMERICA TO DRIVE SUSTAINABLE GROWTH • Increase market penetration by measured investment in agronomic research, innovation and commercialization - Centralized North American research and development team - Expanded sales force - Grower-focused education and marketing - K
Slide 17: Near-Term Headwinds; Long-Term Opportunity
NEAR-TERM HEADWINDS; LONG-TERM OPPORTUNITY • Near-term earnings pressured by back- Capital Spending Reductions Expected ($ in millions) to-back mild winters and a down cycle in North America ag market $210 $180 - Slow start to 2017 in Brazil due to $150 stronger local currency and lower global $120
Slide 18: Appendix
= Compass ~ Minerals: w o <q ao w = a ° w o oO 2 a w w x APPENDIX
Slide 19: Current Results and Outlook
CURRENT RESULTS AND OUTLOOK (as of May 3, 2017) 19
Slide 20: Salt: Mild End to Winter
SALT: MILD END TO WINTER • Salt results pressured by lower winter Winter Season Snow Events* weather salt demand and higher per- unit costs 120 - Mild winter weather in U.S. and U.K. 2016-17 50 70 - Sold higher-cost salt produced in 2016 101 2015-16 17 • Bid season just getting underway 84 - Custome
Slide 21: Plant Nutrition North America: Stabilization in SOP Market Continues
PLANT NUTRITION NORTH AMERICA: STABILIZATION IN SOP MARKET CONTINUES • Market conditions slowly SOP Pricing Stabilizing sales volumes in thousands of tons strengthening in North America for SOP and micronutrients 100 $700 • Operating margin expanded to 15% average price per ton 80 $600 from 10% in 1
Slide 22: Plant Nutrition South America: Poised for Continued Growth
PLANT NUTRITION SOUTH AMERICA: POISED FOR CONTINUED GROWTH Strong History of Sales Volume Growth • Strength of broad product (volumes in thousands of tons) portfolio, disciplined management 1000 and customer focus demonstrated 800 this quarter 600 - Lower sales volumes in both 400 businesses largely
Slide 23: 2Q and Rest-of-Year Overview
2Q AND REST-OF-YEAR OVERVIEW (UPDATE AS OF MAY 3, 2017) Salt • 2017-2018 highway deicing bid season in North America underway - Volumes likely to be pressured by mild winter and customer inventory levels in certain markets • Expect 2017 mine production rates to exceed 2016, but remain below optimal
Slide 24: Current 2017 Outlook Summary
CURRENT 2017 OUTLOOK SUMMARY (UPDATE AS OF MAY 3, 2017) 2017 OUTLOOK: FULL YEAR EPS - $3.00 to $3.50 Salt Segment 2Q17 FY17 Volumes 1.3 million to 1.7 million tons 11.0 million to 11.6 million tons Average Selling Price (per ton) $73 to $77 Operating Earnings Margin 14% to 16% Plant Nutrition North
Slide 25: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 25
Slide 26: Reconciliation of Non-GAAP Information
RECONCILIATION OF NON-GAAP INFORMATION Reconciliation for EBITDA and Adjusted EBITDA (unaudited) (in millions) 12 months ended December, 31 2016 Revenue $ 1,138.0 Net earnings 162.7 Interest expense 34.1 Income tax expense 34.6 Depreciation, depletion and amortization 90.3 EBITDA $ 321.7 Adjustments
Slide 27: Reconciliation of Non-GAAP Information: Salt
RECONCILIATION OF NON-GAAP INFORMATION: SALT Reconciliation for Salt Segment EBITDA and Adjusted EBITDA (unaudited) (in millions) 12 months ended December 31, 2016 Segment sales $ 811.9 Segment operating earnings 200.6 Depreciation, depletion and amortization 46.7 Segment EBITDA $ 247.3 EBITDA margi
Slide 28: Reconciliation of Non-GAAP Information
RECONCILIATION OF NON-GAAP INFORMATION Reconciliation for 2016 Plant Nutrition North America and Plant Nutrition South America EBITDA (unaudited) (in millions) Pro Forma Plant Nutrition North Pro Forma Plant Nutrition Combined Plant America Segment South America Segment(1) Nutrition(1) Segment sales
Slide 29: Reconciliation of Non-GAAP Information: Plant Nutrition South America
RECONCILIATION OF NON-GAAP INFORMATION: PLANT NUTRITION SOUTH AMERICA Reconciliation for Segment Adjusted Operating Earnings (unaudited) (1) (in millions) Three months ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 GAAP segment operating earnings $ 2.9 $ 6.1 $ 21.7 $ 8.0 Bus
Slide 30: Pro Forma Quarterly 2016 Plant Nutrition South America Results
PRO FORMA QUARTERLY 2016 PLANT NUTRITION SOUTH AMERICA RESULTS* Three months ended March 31, June 30, September 30, December 31, (US$, in millions except foreign exchange rate) 2016 2016 2016 2016 Segment sales $ 61.3 $ 71.8 $ 110.1 $ 113.5 Sales excluding shipping and handling 57.8 68.1 104.9 108.1
Slide 31: Reconciliation of Non-GAAP Information: Plant Nutrition South America
RECONCILIATION OF NON-GAAP INFORMATION: PLANT NUTRITION SOUTH AMERICA Reconciliation for EBITDA (unaudited) (1) (in millions) Three months ended March 31, June 30, September 30, December 31, 2016 2016 2016 2016 Plant nutrition S.A. segment GAAP operating earnings $ 2.9 $ 6.1 $ 21.7 $ 8.0 Depreciatio
Compass Minerals — 2017 BMO Farm-to-Market Conference on 6ix