Compass Minerals Intl Inc · NYSE:CMP
Compass Minerals Intl — Compass Minerals — 2019 BMO Farm-to-Market Conference
38 slides from Compass Minerals Intl's conference presentation, May 16, 2019
Slide 1: 2019 BMO Farm-to-Market Conference
2019 BMO Farm-to-Market Conference May 16, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including without limitation statements about the company’s growth, innovation and product development capabilities, innovation pipeline, production capability, value and earnings, upside and share price potential; expectations rega
Slide 3: Compass Minerals: A Diversified Global Minerals Company
Compass Minerals: A Diversified Global Minerals Company Products and Markets KEEPING PEOPLE SAFE • Highway and residential deicing Highway deicing in North • Water treatment for clean water Salt and America and U.K. • De-dusting and road stabilization Magnesium Chloride Consumer and industrial salt
Slide 4: Plant Nutrition
PLANT NUTRITION Positioned for Growth 4
Slide 5: Providing Efficient Solutions for Sustainable Agriculture
Providing Efficient Solutions for Sustainable Agriculture Specialty plant nutrients help farmers maximize the genetic potential of their crops TTM 1Q19 Plant Nutrition Sales To meet the global need for sustainably $601M produced food Compass Minerals has the leading specialty plant nutrition portfol
Slide 6: 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 7: 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 • The right spe
Slide 8: Macro Factors Support Our Specialty and Geographic Focus
Macro Factors Support Our Specialty and Geographic Focus Growing population and meat consumption Meat consumption (10% CAGR 1990-2030) Underlying macro drivers point to continued long term growth in Ag Emerging markets Developed economies • Population growth • Decline in arable land per capita • I
Slide 9: Plant Nutrition Market Landscape
Plant Nutrition Market Landscape Global Market Size ~$160 BILLION Semi-Specialty and Specialty Market Size ~$30 BILLION … growing at 6% to 8% COMMODITY SPECIALTY K SPECIALTY PLANT NUTRITION FERTILIZER SOP, SOPM & KTS, Coated Fertilizer Slow Seed N P K KNO3 Release - NPK Blends Solubles Foliars Treat
Slide 10: Sizing the Specialty Plant Nutrition Opportunity
Sizing the Specialty Plant Nutrition Opportunity WATER MICRO- NPK* in MT SOLUBLES NUTRIENTS BIOLOGICALS Global Market 187 Million $15.3 Billion $6.8 Billion $3.6 Billion 7 5 11 8 2% $ 1.0 Billion 6.5% 4.2% 3 1 1 9.50 % 10.8% $ 3.4 Billion 21.2% 15 9 5 12 Compass Minerals current addressable market c
Slide 11: Well-Positioned to Deliver Growth With Clear Competitive Advantages
Well-Positioned to Deliver Growth With Clear Competitive Advantages Broad, innovative product portfolio 1 delivering a comprehensive specialty plant nutrition system Focused R&D platform with unique 2 customer feedback loop enabling rapid innovation Scaled and attractive production assets 3 built fo
Slide 12: Portfolio Value: Leadership Position in Nutritional Systems Approach
Portfolio Value: Leadership Position in Nutritional Systems Approach In 555 independent trials over a three-year period, the Compass Minerals Nutritional System outperformed grower standard practice 85% of the time for soybean growers in Brazil, delivering a 6% yield advantage on average. Dry Dry Li
Slide 13: Portfolio Value: Delivers Grower Value in Row Crops and High Value Specialty Crops
Portfolio Value: Delivers Grower Value in Row Crops and High Value Specialty Crops Average ROI to Brazilian Farmer When Using Compass Minerals’ Nutritional System Corn Corn Coffee Soybean Cotton Citrus Summer Winter Avg. • Nutritional season-long systems productivity gain 8% 11% 9% 6% 8% 5% provide
Slide 14: 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 increase internal ROI 100% Products % of Plant Nutrition South America Agro launche
Slide 15: Innovation: Recent North America Launch of Innovative Seed Nutritional Line
Innovation: Recent North America Launch of Innovative Seed Nutritional Line • Patent-pending seed nutritional combining fluency agents with key nutrients • Conceived, developed and launched in under one year • Successful Farming named Rocket Seeds among its “9 Innovations from the 2019 Commodity Cla
Slide 16: Innovation: Key External Partnerships Support Accelerated Growth
Innovation: Key External Partnerships Support Accelerated Growth EMBRAPA Brazil Biologicals • Co-development of nutritional • Collaborations include coating technology - Marrone Bio Innovations • Adds commercial credibility - Osprey Biotechniques • Launched in Fall 2018 - Ajinomoto • Breadth of stra
Slide 17: Attractive Assets: Built for Growth with Advantaged Logistics
Attractive Assets: Built for Growth with Advantaged Logistics Production Facilities and Logistics Support • Eight world-class, SOP Leadership Position in North America integrated production sites with • Advantaged logistical access to key certifications in Brazil North American markets from Utah pro
Slide 18: 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 o
Slide 19: Go-to-Market: Increased Customer Loyalty and Share of Wallet with Direct-to-Grower Sales in Brazil
Go-to-Market: Increased Customer Loyalty and Share of Wallet with Direct-to-Grower Sales in Brazil • Number of direct-to-grower customers Brazil Direct-to-Grower Sales Metrics up 28% between 2015 and 2018 600,000 3,200 • Sales per customer up almost 50% between 2015 and 2018 2,700 500,000 • Drivers
Slide 20: Unique Opportunity for Growth in Plant Nutrition Business
Unique Opportunity for Growth in Plant Nutrition Business • Advantaged and unique plant nutrition business based on specialty crop nutrients and SOP • Well-positioned to drive growth and value from the critical need to sustainably feed a growing population Compass Minerals Plant Nutrition Mid-Term O
Slide 21: Salt Business
SALT BUSINESS POISED TO DELIVER STRONG CASH GENERATION 21
Slide 22: 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 Consumer non-deicing barriers to entry TTM 1Q19 Salt Sales Industrial • Compass Minerals is we
Slide 23: Long-Term Fundamental Attributes
Long-Term Fundamental Attributes Superior Assets • Scale of rock salt mines enables production efficiencies • High-quality, low-cost salt and magnesium chloride assets Logistical Advantages • Convenient access to water transportation • Deep-water port at Goderich • Extensive depot network Localized
Slide 24: A Resilient History
A Resilient History Salt Segment Sales Reflect Snow Activity Salt Segment Operating Earnings: (tons, in thousands) 226 Significant Upside Potential 14,000 204 189 186 12,000 170 175 153 150 160 169 163 (in millions) 143 134 10,000 127 $218.9 111 8,000 92 6,000 4,000 2,000 $122.7 $115.7 Sales Volume
Slide 25: Strategy Focused on Asset Maximization and Efficiency
Strategy Focused on Asset Maximization and Efficiency • Significant capital invested to drive efficiency and consistency - Upgrades and efficiency programs at Goderich Mine Continuous mining and continuous haulage system Additional miner expected to arrive in November to further enhance consiste
Slide 26: Current Outlook and Conclusion
Current Outlook and Conclusion 26
Slide 27: Salt: Signs of Strengthening
Salt: Signs of Strengthening • Strong deicing demand for highway Cumulative Snow Events by Winter Season* and consumer products in North 200 2016-2017 America driven by above-average 2017-2018 160 winter weather in 1Q19 2018-2019 120 10 Year Avg • Additional upside in 1Q19 provided 80 by: 40 - Exten
Slide 28: Plant Nutrition: Facing Headwinds to Start 2019
Plant Nutrition: Facing Headwinds to Start 2019 NA WEATHER COMMODITY PRICES Total Precipitation Percentiles January-March 2019 2015 – 2019 $12.00 2015 – 2019 $4.50 Corn $11.00 Soybean $4.00 $10.00 $3.50 $9.00 $3.00 $8.00 $6.50 2015 – 2019 $4.50 2012 – 2019 Wheat Almonds $5.50 $3.50 $4.50 $2.50 $3.50
Slide 29: Delivering on Commitments: Strong Free Cash Flow Expectations
Delivering on Commitments: Strong Free Cash Flow Expectations Capital Expenditures Stabilizing Free Cash Flow* Increasing (in millions) (in Salt millions) Sales 2015 2016 2017 2018 2019E Major $200 Investments $250 Normalized in Place $150 4.3x 4.3x $200 3.9x ~3.7x $150 $100 2.3x $100 $50 $50 Salt $
Slide 30: Our Value Proposition
Our Value Proposition • Significant growth opportunity in uniquely positioned Plant Nutrition business - Broad and comprehensive specialty product portfolio and leading SOP position - Strong market access to key crop growing regions - Proven track record of innovative product introductions - Expect
Slide 31: Appendix
Compass Minerals Appendix 31
Slide 32: 2Q19 Outlook
2Q19 Outlook (as of April 30, 2019) Plant Nutrition Plant Nutrition Salt North America South America 2Q19 Revenue $105M $120M $50M $60M $75M $85M 2Q19 EBITDA $30M $40M $15M $20M $5M $8M • Salt segment expected to generate increased EBITDA on lower revenue compared to 2Q18 results due to improved pri
Slide 33: 2019 Full-Year Guidance Ranges
2019 Full-Year Guidance Ranges (as of April 30, 2019) Key Metrics Current Prior (in millions of dollars unless otherwise noted) Segment Outlook Low High Low High Salt Segment Sales Volumes (in millions of tons) 10.5 11.0 10.0 10.5 Plant Nutrition North America Segment sales volumes (in thousands of
Slide 34: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for EBITDA and Adjusted EBITDA (unaudited) (in millions) 12 months ended March 31, 2019 Net earnings $ 63.8 Interest expense 65.0 Income tax expense 9.3 Depreciation, depletion and amortization 137.6 EBITDA $ 275.7 CEO transition cost(1) 5.1 Othe
Slide 35: 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, 2019 Segment GAAP operating earnings $ 64.1 Depreciation, depletion and amortization 70.8 Earnings in equity method in
Slide 36: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Salt Segment EBITDA (unaudited) (in millions) 12 months ended March 31, 2019 Segment GAAP operating earnings $ 133.9 Depreciation, depletion and amortization 56.8 Segment EBITDA $ 190.7 Segment sales 848.6 Segment EBITDA margin 22.5% 36
Slide 37: 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 38: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information Reconciliation for Free Cash Flow (unaudited) (in millions) 2015 2016 2017 2018 Cash flow from operations $ 137.9 $ 167.3 $ 146.9 $ 190.7 Capital expenditures 217.6 182.2 114.1 96.8 Free cash flow ($ 79.7) ($ 14.9) $ 32.8 $ 93.9 38
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