Slide 1: Credit Suisse Basic Materials Conference
N Credit Suisse Basic Materials Conference September 12, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including without limitation statements about the company’s ability to maximize its asset base, drive growth, grow profitability, solidify cost-leadership position, improve production, build commercial excellence, innovate, geograph
Slide 3: Compass Minerals: A Diversified Global Minerals Company
Compass Minerals: A Diversified Global Minerals Company FINANCIAL HIGHLIGHTS TTM 2Q18 SALES = CORE PRODUCTS KEY MARKETS $1.4 BILLION • Salt • Highway deicing in North America and Plant • Plant Nutrients the U.K. Salt Nutrition • Magnesium Chloride • Specialty and commodity agriculture • Chemical Sol
Slide 4: Our Markets: Focused on Essential and Growing Needs
Our Markets: Focused on Essential and Growing Needs • Highway and residential deicing • Water treatment for clean water Global Trends • De-dusting and road stabilization Life Expectancy Population 75 70 65 60 55 +37% GLOBAL LIFE EXPENTANCY 8B 50 45 6B 40 4B • Specialty crops like fruits, • Culinary/
Slide 5: Our Strategy: Maximizing Our Asset Base to Drive Growth
Our Strategy: Maximizing Our Asset Base to Drive Growth • Investments in place at key assets - Goderich Mine: shaft relining and new mining technology Improving production - Ogden: expanded production capability • Focus on commercial improvements - Salt business: incremental geographic Building expa
Slide 6: Our Specialty Plant Nutrition Business: Providing Efficient Solutions for Sustainable Agriculture
Our Specialty Plant Nutrition Business: Providing Efficient Solutions for Sustainable Agriculture To meet the global need for sustainably produced food TTM 2Q18 Plant Nutrition Sales Specialty plant nutrient inputs help farmers $600M maximize the genetic potential of their crops Compass Minerals is
Slide 7: Our Plant Nutrition Business Has Strong Foothold in Key Agriculture Areas
Our Plant Nutrition Business Has Strong Foothold in Key Agriculture Areas Advantaged production locations to serve key agriculture markets in Western Hemisphere Compass Minerals’ North American Crop Mix • SOP production well-positioned Tree nuts to serve specialty crops 30% 25% Vegetables Fruits • A
Slide 8: Strengthening Farm Economics for Brazil Agriculture
Strengthening Farm Economics for Brazil Agriculture Soybean Harvested Area in Average Price Premium for Soybean Largest Single Brazil Expanding Brazil Soybeans vs. U.S. Crop Served by Compass Increased Minerals in Brazil 40 +19% Attractive specialty nutrient offerings for Soybean growers 35 30 25 20
Slide 9: Our Salt Business
Our Salt Business Strategy to Grow Profitability 9
Slide 10: Our Salt Business: Well-Positioned in Unique Commodity Industry
Our Salt Business: Well-Positioned in Unique Commodity Industry • Salt is a commodity with unique attributes - Recession-resistant Deicing - Relatively low cost to end-users Consumer non-deicing - Largely regional markets with natural TTM 2Q18 barriers to entry Salt Sales Industrial $822M • Compass
Slide 11: Strong Fundamental Attributes of Our Salt Business
Strong Fundamental Attributes of Our Salt Business Superior Assets • Scale of rock salt mines enables production efficiencies • High-quality, lower-cost salt and magnesium chloride assets Logistical Advantages • Convenient access to water transportation • Deep-water port at Goderich • Extensive depo
Slide 12: Our Salt Business' Resilient History and Strong Earning Potential
Our Salt Business’ Resilient History and Strong Earning Potential Salt Segment Sales Move with Snow Event Activity Salt Segment Operating Earnings: (tons, in thousands) 226 Significant Upside Potential 14,000 204 ($ in millions) 189 186 12,000 170 175 175 153 150 160 169 143 134 $218.9 10,000 127 11
Slide 13: How We Deliver and Expand Our Salt Earnings Potential
How We Deliver and Expand Our Salt Earnings Potential • Strong focus on execution beginning Spotlight on Winsford Mine with safety and efficiency • Only dedicated salt mine in the U.K. • Achieve cost savings from recently actioned initiatives • Has employed continuous mining for all - Achieved ~$15
Slide 14: Innovating Our Approach to Mining at Goderich
Innovating Our Approach to Mining at Goderich Innovations Advantages Expected Outcome Safer, more sustainable production environment Continuous mining and Predictability of output haulage Solidify cost-leadership Increased flexibility to ramp production up or down position in North America Optimized
Slide 15: Progress on Goderich Investments Continues
Progress on Goderich Investments Continues • Final installation of Continuous Goderich Mine Production Plan Mining and Continuous Haulage Systems completed in late 2017 Target 600k tons/month • New collective bargaining Tons Produced agreement achieved in July 2018 - Provides for overlapping shifts
Slide 16: Well-Positioned for Growth and Margin Expansion from Current Levels
Well-Positioned for Growth and Margin Expansion from Current Levels Key considerations for 35.0% Salt Segment margin improvement: Operating Margin Outlook • Price improvements based 30.0% on current bid results - Assumes long-term average price increases 25.0% after 2018-2019 winter • Benefit of ann
Slide 17: 2018 Outlook
Compass Minerals:
Slide 18: 2H18 and Full-Year Segment Outlook (As of August 6, 2018)
2H18 and Full-Year Segment Outlook (As of August 6, 2018) Segment Outlook Plant Nutrition Plant Nutrition Salt North America South America Full-year sales volumes 11.8M to 12.3M tons 340,000 to 360,000 tons 750,000 to 875,000 tons 2H18 revenue $440M to $470M $115M to $135M $250M to $275M 2H18 operat
Slide 19: Free Cash Flow and Leverage Ratio Improvements Expected
Free Cash Flow and Leverage Ratio Improvements Expected • Most major capex projects complete Free Cash Flow* and Leverage Ratio - 2017 capex declined 48% from 2015 Expected to Improve (in millions) peak spending of $218M Projected less than $100 million for 2018 2015 2016 2017 2018E 2019E 2020E -
Slide 20: Investments in Place; Expect Improving Free Cash Flow
Investments in Place; Expect Improving Free Cash Flow Salt Sales Improving Free Execution & Market Cash Flow Declining Fundamentals Improvement CapEx Capital Expenditures (in millions) 2018 CapEx Salt expected to Sales decline 54% $250 from peak in 2015 $200 Plant Nutrition $150 Sales $100 $50 $0 Pl
Slide 21: Appendix
Compass Minerals:
Slide 22: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for EBITDA and Adjusted EBITDA (unaudited) (in millions) 12 months ended June 30, 2018 Net earnings $ 32.6 Interest expense 55.5 Income tax expense 54.5 Depreciation, depletion and amortization 135.4 EBITDA $ 278.0 Restructuring charges 4.3 Other
Slide 23: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Salt Segment Operating Earnings (unaudited) (in millions) 12 months ended June 30, 2018 Segment GAAP operating earnings $ 128.5 Restructuring charge 2.0 Adjusted operating earnings $ 130.5 Segment sales 822.4 Adjusted segment operating margin
Slide 24: Reconciliation for Salt Segment Adjusted Operating Earnings
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 recoveries1 Adjusted operating earnings $138.0 $
Slide 25: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Plant Nutrition North America and South America Combined Segment Operating Earnings (unaudited) (in millions) 12 months ended June 30, 2018 Segment GAAP operating earnings $ 69.6 Restructuring charge 1.2 Adjusted operating earnings $ 70.8 Seg
Slide 26: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Free Cash Flow (unaudited) (in millions) 2015 2016 2017 Cash flow from operations $ 137.9 $ 167.3 $ 146.9 Capital expenditures 217.6 182.2 114.1 Free cash flow ($ 79.7) ($ 14.9) $ 32.8 26