Q1 2022 Compass Minerals International Inc Earnings Call

Speaker 1: Good morning, ladies and gentlemen. My name is Julie and I will be your conference operator today. At this time, I would like to welcome everyone to the Compass Minerals. I would now like to turn the call over to Douglas Criss, Senior Director of investor relations. Please go ahead.

Good morning, Ladies and gentlemen, my name is Julie and I will be your conference operator today.

This time I would like to welcome everyone to the compact minerals I would now like to turn the call over to Douglas Kris Senior director of Investor Relations. Please go ahead.

Speaker 2: Good morning and welcome to the Compass Minerals fiscal 2022 first quarter earnings cup.

Good morning, and welcome to the Compass minerals fiscal 2022 first quarter earnings Conference call.

Speaker 2: Today, we will discuss our recent results and our outlook for fiscal 2022.

Today, we will discuss our recent results and our outlook for fiscal 2022.

We will begin with prepared remarks from our president and CEO Kevin Crutchfield.

Speaker 2: We will begin with prepared remarks from our President and CEO , Kevin Crutchfield and our CFO ,

And our CFO Lorin Crenshaw.

Speaker 2: Joining in for the question and answer portion of the call will be George Schuler, our Chief Operations Officer.

Joining in the question and answer portion of the call will be George Schuller, Our Chief operations Officer.

Speaker 2: Jamie Standes, our Chief Commercial Officer, and Chris Yandell, our Head of Liberal.

Jamie Standen, our chief commercial officer.

And Christy Endo, our head of what the.

Speaker 2: Before we get started, I will remind everyone that the remarks we make today represent our view of our financial and operational outlook as of today's date, February 9, 2022.

Before we get started I will review.

And everyone that the remarks, we make today represent our view of our financial and operational outlook.

Today's date February nine 2022.

Speaker 2: These expectations involve risks and uncertainties that could cause the company's actual results to differ material.

These expectations involve risks and uncertainties that could cause the company's actual results to differ materially.

Speaker 2: A discussion of these risks can be found in our SEC filings located online at investors.compassmineral.com

A discussion of these risks can be found in our SEC filings located online at investors that compass minerals Dot com.

Speaker 2: Our remarks today also include certain non-depth financial...

Our remarks today also includes certain non-GAAP financial measures.

Speaker 2: can find reconciliations of these items in our earnings release or in our presentation, both of which are also available.

You can find reconciliations of these items in our earnings release or in our presentation. Both of which are also available online.

Speaker 2: The results in our earnings release issued last night and presented during this call reflect only the continuing operation of the business.

The results in our earnings release issued last night and presented during this call reflect only the continuing operations of the business other than amounts pertaining to the condensed consolidated statements of cash flows or unless otherwise noted.

Speaker 2: other than amounts pertaining to the condensed consolidated statements of cash flows or unless otherwise.

The company's fiscal 2022 first quarter results and fiscal 2020 outlook in the earnings release and presented during this earnings call reflect the previously announced changes and fiscal year end from December 31 September 30.

Speaker 2: The company's fiscal 2022 first quarter results and fiscal 2022 outlook in the earnings release and presented during this earnings call reflect the previously announced changes in fiscal year end from December 31, September 30.

Speaker 2: All year-over-year comparisons to fiscal 2022 first quarter results refer to the corresponding period ending December 31, 2020.

All year over year comparison with fiscal 2022 first quarter results refer to the corresponding period ending December 31.

Good.

I will now turn the call over to Kevin Thanks, Doug.

Speaker 2: morning everyone and thanks for taking time to join our call.

Good morning, everyone and thanks for taking time to join our call today.

Speaker 2: I'm excited to welcome our recently appointed CFO , Lauren Crenshaw, to his first Compass Minerals Quarterly Earnings.

I'm excited to welcome our recently appointed CFO Lorin Crenshaw Foods' first compass minerals.

Really earnings call Lorin brings a new perspective to our business and I am appreciative of the contributions she's already making in his short time here.

Speaker 2: Lauren brings a new perspective to our business and I'm appreciative of the contributions he's already making in his short time.

Speaker 2: Throughout the first quarter, our team continued to demonstrate its resiliency and the ability to adapt to the many challenges of operating a weather-dependent business in a high-inflation environment.

Throughout the first quarter, our team continued to demonstrate its resiliency and the ability to adapt to the many challenges of operating a weather dependent business at a high inflation environment.

Speaker 2: Culture we've established has allowed us to focus our efforts on the common goal of creating value, while continuing to maintain a safe and responsible opportunity.

Ultra we've established has allowed us to focus our efforts on the common goal of creating value, while continuing to maintain a safe and responsible operating environment.

Speaker 2: After providing a brief review of our fiscal 2022 first quarter performance.

After providing a brief review of our fiscal 2022 first quarter performance I'll spend a few minutes discussing our long term vision for compass minerals, and specifically why we believe our strategic shift towards the adjacent markets of lithium and next generation fire Retardants make sense for our business our advancing these.

Speaker 2: spend a few minutes discussing our long-term vision for compass minerals and specifically why we believe our strategic shift toward the adjacent markets of lithium and next-generation fire retardants makes sense for our business.

Opportunities for what to expect as we work to unlock value for our shareholders.

Speaker 2: and what to expect as we work to unlock value for our shareholders.

As reported in our earnings release yesterday.

Speaker 2: First quarter revenue growth was 7% year over year, primarily driven by volume gains in our salt.

First quarter revenue growth was 7% year over year, primarily driven by volume gains in our salt business and higher pricing in our potassium plus sop products as well as throughout most of our consumer and industrial product lines.

Speaker 2: and higher pricing in our potassium plus SOP product, as well as throughout most of our consumer and industrial products.

Speaker 2: While our top line results showed year over year improvement, profitability was suppressed primarily by previously cited headwinds that are likely to persist throughout.

While our topline results showed year over year improvement.

<unk> ability was suppressed primarily by previously cited headwinds that are likely to persist throughout this year, including inflationary pressures on distribution and input cost, particularly with our salt segment and.

Speaker 2: including inflationary pressures on distribution and input costs, particularly within our salt

Speaker 2: and low inventory levels constraining our ability to grow plant nutrition.

And low inventory levels constraining, our ability to grow plant nutrition volumes.

Speaker 2: The net result of these factors, combined with a weak start to winter in our served markets, caused consolidated adjusted EVA dial for the first quarter to decline by approximately 6% year over year to $58 million, a result that we believe is well below the normalized earnings.

The net result of these factors combined with a weak start to winter in our served markets caused consolidated adjusted EBITDA for the first quarter to decline by approximately 6% year over year to $58 million. A result that we believe is well below the normalized earnings potential of our business.

Speaker 2: In our salt segment, revenue grew approximately 20% year over year on higher volumes partially off the...

And our Salt segment revenue grew approximately 20% year over year on higher volumes, partially offset by lower pricing.

Speaker 2: revenue increase, despite the relatively weak winter weather during the quarter, reflected a combination of growth in our mid-season commitments and volumes in a comparable year period being below historical average.

This revenue increase despite the relatively weak winter weather during the quarter reflected a combination of growth in our bid season commitments and volumes in the comparable year period being below historical average.

Speaker 2: Due to higher costs and lower pricing in the segment, however, this top line growth did not translate to increased profitability, resulting in SALT segment EVA to offer the first quarter declining by approximately 10% year-over-year to $56 million.

Due to higher costs and lower pricing in the segment. However, this topline growth did not translate to increased profitability.

Resulting in Salt segment EBITDA for the first quarter declining by approximately 10% year over year to $56 million.

Our salt business has not been immune to the rapidly growing inflationary pressures impacting the broader economy. We've experienced this phenomenon across our business and everything from higher fuel costs and transportation rates for trapping vessels and rail the higher prices on input items, such as palettes and bags.

Speaker 2: Our salt business has not been immune to the rapidly growing inflationary pressures impacting the broader economy. We've experienced this phenomenon across our business in everything from higher fuel costs and transportation rates for trucking, vessels, and rail, to higher prices on input items such as pallets and bags.

Speaker 2: And while the contract structure within our consumer and industrial business has generally allowed us to pass along certain of these costs here today, we are not going to be able

While the contract structure within our consumer and industrial business is generally allowed us to pass along certain of these costs year to date.

Speaker 2: the nature of the highway deicing business is such that we must recapture costs as part of the upcoming bid season. This timing

The nature of the highway Deicing business is such that we must recapture cost as part of the upcoming bid season, recognizing this timing challenge, we're determined to paas inflationary costs along in both the short and intermediate term in an effort to protect the profitability of our business.

Speaker 2: We're determined to pass inflationary costs along in both the short and intermediate term in an effort to protect the profitability of our business.

Speaker 2: In addition to inflationary costs, we also experienced higher costs during the first quarter, to position our products in certain of our southern U.S. markets, due to a maintenance outage at our co-launch mine that we initiated several months earlier than originally planned.

In addition to inflationary costs, we also experienced higher cost during the first quarter positioning our products and certain of our southern U S markets due to a maintenance outage at our Cote Blanche mine that we initiated several months earlier than originally planned.

Speaker 2: Although conducting this outage during the winter quarter was inopportune from a logistics and financial perspective, as it occurred at a critical time for us in terms of filling our salt depots for the winter season,

Although conducting this outage during the winter quarter was an opportunity from a logistics and financial perspective.

It occurred at a critical time for us in terms of showing our salt depots for the winter season.

Speaker 2: It was definitely the right thing to do from a safety and business continuity perspective, which took precedence over the short-term impact of financial performance.

It was definitely the right thing to do from a safety and business continuity perspective, which took precedence over the short term impact of financial performance.

Speaker 2: Certain costs related to this outage impacted the first quarter, while others will flow through as products are sold throughout the year.

Certain costs related to this outage impacted the first quarter, while others will flow through as products are sold throughout the year.

Now turning to plant nutrition.

Speaker 2: This segment delivered a sharp year over year improvement and even offered a quarter of 49

This segment delivered a sharp year over year improvement in EBITDA for the quarter of 49% to $18 million and an increase in EBITDA margins year over year to roughly 34% up approximately 18 percentage points driven largely by higher pricing as we continued to keep pace with a constructive macro.

Speaker 2: to $18 million and an increase in EBITDA margins year over year to roughly 34% of approximately 18 percentage.

Speaker 2: driven largely by higher pricing as we continue to keep pace with a constructive macro backdrop in the fertilizer market.

The backdrop in the fertilizer market.

Speaker 2: It's worth noting that these strong profit results were achieved despite volumes being down 42% year over year. As we shared when we issued guidance last quarter, throughout the fiscal year we expect plant nutrition volume levels to track below the inherent potential for this business.

It's worth noting that the strong profit results were achieved despite volumes being down 42% year over year.

As we shared when we issued guidance last quarter throughout the fiscal year, we expect plant nutrition volume levels to track below the inherent potential for this business.

Speaker 2: reflecting the fact that we entered 2022 with a depressed inventory level, primarily due to yield challenges at our Ogden facility and sustained demand levels across our

Reflecting the fact that we entered 2020 too with a depressed inventory level, primarily due to yield challenges at our Ogden facility and sustained demand levels across our market.

Speaker 2: For over a year, our team has worked diligently to holistically re-examine our SOP end-to-end process.

For over a year our team has worked diligently to Holistically reexamine, our sop end to end process.

Speaker 2: As a result, we've put in place a number of process improvements at our August meeting.

As a result, we've put in place a number of process improvements at our Ogden facility designed to help optimize our performance increase our efficiency reduce downtime and ultimately drive higher yields and production volumes.

Speaker 2: designed to help optimize our performance, increase our efficiency, reduce downtime, and ultimately drive higher yields and production.

Speaker 2: In addition, our R&D team has done significant work to try to better predict the consistency of our feedstock year to year, including building a lab scale model to conduct in-depth studies on the effects of naturally occurring factors such as temperature, humidity, and precipitation levels on our stockpiles and pond deposits.

In addition, our R&D team has done significant work to try to better predict the consistency of our feedstock year to year, including building a lab scale model to conduct in depth studies on the effects of naturally occurring factors, such as temperature humidity and precipitation levels on our stockpiles and PON deposit concentration.

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Speaker 2: as we continue to manage through a multi-year drought with low-grade salt lakes.

As we continue to manage through a multiyear drought with low grade Salt Lake levels, we remain focused on restoring yields production costs closer to historical performance.

Speaker 2: we remain focused on restoring yields, production costs closer to historical performance.

Speaker 2: At this time, I'd like to switch gears and spend a few minutes highlighting the strategic growth opportunities that lie before us, what we've already accomplished, and anticipate this divide.

At this time I'd like to switch gears and spend a few minutes highlighting the strategic growth opportunities that lie before us.

What we've already accomplished and anticipated milestones in the year ahead.

Speaker 2: I'll also review why we believe the right path for our company to drive long-term shareholder values to expand upon our position as a premier essential minerals company and into select high return adjacent markets.

I'll also review why we believe the right path for our company to drive long term shareholder value is to expand upon our position as a premier essential minerals company and into select high return adjacent markets.

As we think about how to execute on our vision for the future of Compass minerals. We've carefully considered how we can best leverage our core competencies of mineral extraction experience in optimizing mining and manufacturing assets and logistics and supply chain expertise, while continuing to honor and build upon our strong safe.

Speaker 2: future of compass minerals, we carefully considered how we can best leverage our core competencies of mineral extraction.

Speaker 2: experience in optimizing mining and manufacturing assets, and logistics and supply chain expertise, while continuing to honor and build upon our strong safety culture and core purpose.

The culture and core purpose having.

Speaker 2: Having already leveraged these core competencies into leading positions within our existing product category.

Having already leveraged these core competencies into leading positions within our existing product categories. We view, our strategic decision to expand thoughtfully into two high return natural adjacencies.

Speaker 2: We view our strategic decision to expand thoughtfully into two high return natural adjacencies, lithium and next generation.

Lithium and next generation aerial fire retardants as both a potential value creator.

Speaker 2: both a potential value creator and an opportunity to rebalance a portion of our revenue away from weather dependent products. Since announcing the identification of our lithium resource seven months ago, our focus has been on advancing five key dimensions of the project. People, testing, capital, and operating costs.

And an opportunity to rebalance a portion of our revenue away from weather dependent products since announcing the identification of our lithium resource seven months ago. Our focus has been on advancing five key dimensions of the project people testing capital and operating cost intensity identifying a direct lithium extraction.

Speaker 2: identifying a direct lithium extraction or DLE technology provider, and ensuring sustainable operations through a third party conducted lifecycle assessment of our development.

Our DLA technology provider and ensuring sustainable operations through a third party conducted lifecycle assessment of our development options.

Speaker 2: Among the most notable recent accomplishments have been the areas of people and test.

Among the most notable recent accomplishments have been the areas of people and testing.

Speaker 2: In terms of people, we successfully bolstered our senior management and board of directors through the addition of key executives with deep industry experience, including our new CFO , Lauren Crenshaw, head of our lithium operations, Christian Dej.

In terms of people, we successfully bolstered our senior management and board of directors through the addition of key executives with deep industry experience, including our new CFO Lorin Crenshaw.

Out of our lithium operations Christian Bale.

An independent director Gareth Joyce.

Speaker 2: Each has already contributed significantly to our go-forward strategy and decision-making process, and I look forward to working closely with them and the additional technical professionals we've added to help navigate our lithium development.

<unk> has already contributed significantly to our go forward strategy and decision, making process and I look forward to working closely with them and the additional technical professionals, we've added to help navigate our lithium development.

Speaker 2: From a testing perspective, we achieved a critical proof point this past October with the successful third party conversion by the oleia of our brine to battery grade lithium hydroxide, which can be used in electric vehicle.

From a testing perspective, we achieved a critical proof point this past October with the.

Successful third party conversion Bob.

<unk> of our Bryan to battery grade lithium hydroxide, which can be used in electric vehicle and energy storage market.

Speaker 2: We believe that this is the first known conversion to be proven from brine originating in the Great Salt Lake, and we're very encouraged by the results.

We believe that this is the first node conversion to be proven from Brian originating in the great Salt Lake and we're very encouraged by the results.

Speaker 2: As we look forward, an additional critical milestone that we expect to reach in 2022 is the completion of an economic assessment.

As we look forward and additional critical milestone that we expect to reach in 2022 is the completion of an economic assessment with FPL, one level of accuracy of the capital and operating costs required to develop the resource. This project phase will allow us to narrow our options and is expected to be defined at in <unk>.

Speaker 2: of the capital and operating costs required to develop the resource. This project phase will allow us to narrow our options.

Speaker 2: expected to be defined at an FEL 2 level shortly thereafter. As some investors may be already aware, the engineering cost estimating process is a multi-stage progression from FEL 0 through FEL 3 in detailed engineering. We're approaching the end of the first phase.

L. Two level shortly thereafter as some investors may be already aware the engineering cost estimating process is a multi stage progression from <unk> zero through <unk> III and detailed engineering.

We're approaching the end of the first phase is.

As the process progresses, the accuracy of the cost estimate continues to be improve until the project becomes fully defined ready for construction and eventually commissioning and operations.

Speaker 2: accuracy of the cost estimate continues to be improved until the project becomes fully defined, ready for construction, and eventually commissioning and operation.

Speaker 2: I share this synopsis to say that while our FEL 1 level cost estimates should provide a solid foundation and insight into the economics of the project, by their nature, they're subject to a relatively wide comp-

I share this synopsis to say that while our FTE L. One level cost estimates should provide a solid foundation and insight into the economics of the project by their nature are subject to a relatively wide confidence interval, which narrows upon advancing the project through the varying stages and cost estimates.

Speaker 2: which narrows upon advancing the project through the varying FEL stages and cost estimates.

Another milestone expected this year relates to our formal selection of a DLT technology providers as we've discussed on past calls we have been rigorously evaluating range of DLA technologies and are increasingly confident we'll be able to announce our selected technology provider by this summer.

Speaker 2: Another milestone expected this year relates to our formal selection of a DLE technology.

Speaker 2: As we've discussed on past calls, we've been rigorously evaluating range of the LE tech.

Speaker 2: and are increasingly confident we'll be able to announce our selected technology provider by this summer.

Speaker 2: Our pilot projects in connection with this evaluation are structured to help prove out the technologies and provide input as we progress in our engineering and our design.

Our pilot projects in connection with this evaluation are structured to help prove out the technologies to provide input as we progress in our engineering and our design.

Speaker 2: Finally, we also expect the completion of the lifecycle assessment of our lithium project by this summer. As previously announced, we've engaged Minviro, a global industry leader in this field, to conduct a lifecycle assessment. In our ongoing discussions with numerous potential partners and based on various structures we're considering for the business, we believe the sustainable aspects of our current Great Salt Lake operation provide a differentiator to other projects in development. Ensuring we're...

Finally, we also expect the completion of a lifecycle assessment of our lithium project by this summer as previously announced we have engaged some enviro a global industry leader in this field to conduct a lifecycle assessment and our ongoing discussions with numerous potential partners and based on various structures were.

<unk> for the business, we believe the sustainable aspects of our current great Salt Lake operation provide a differentiator to other projects in development.

Ensuring we're minimizing the environmental impacts as we work towards supplying in domestic battery grade lithium resource is of Paramount importance.

Speaker 2: work towards supplying a domestic battery-grade lithium resource.

Speaker 2: being responsible stewards of our assets, and engaging proactively with stakeholders.

Being responsible stewards of our assets and engaging proactively with stakeholders.

Speaker 2: From friends of the Great Salt Lake to the Audubon Society.

Friends of the Great Salt Lake to the Audubon Society.

Speaker 2: to the state of Utah, core to our DNA. When thinking about the best path to maximize value for our shareholders related to our lithium development opportunity, at a high level, there are three options.

The state of Utah core to our DNA when thinking about the best path to maximize value for our shareholders related to our lithium development opportunity at a high level there are three options.

Alone.

Speaker 2: advance with one or more partners, or monetize the asset via an outright sale. Our assessment of each of these options remains ongoing, with a view toward deciding which path to take sometime later this year.

Advanced with one or more partners or monetize the asset via an outright sale.

Our assessment of each of these options remains ongoing with a view towards deciding which path to take some time later this year.

Speaker 2: Overall, I believe Compass Minerals is an excellent position to deliver a battery-grade lithium product by 2025. And there is arguably no better backdrop against which to be engaged in discussions with interested parties and potential partners than now, given the global supply and demand outlook for providers of sustainable, domestically sourced lithium.

Overall, I believe compass minerals is an excellent position to deliver a battery grade lithium product by 2025, and there is arguably no better backdrop against which to be engaged in discussions with interested parties and potential partners than now.

Given the global supply and demand outlook for providers of sustainable domestically source lithium.

I am pleased with the project milestones we've already accomplished in a brief timeframe. We remain confident that there is a prudent path to advance this potentially high returning initiative as we look forward to being in a position to share additional information in the coming quarters.

Speaker 2: I'm pleased with the project milestones we've already accomplished in a brief timeframe. We remain confident that there is a prudent path to advance this potentially high returning initiative as we look forward to being in a position to share additional information in the coming quarter.

Speaker 2: We're also excited about our investment in Fortress North America, which we announced a few months ago.

We're also excited about our investment in fortress, North America, which we announced a few months ago wildfire.

Speaker 2: Wildfire frequency and intensity have been steadily increasing for decades, and wildfire solutions have become a fast-growing specialty business with larger government budgets being appropriated for the abatement of and fighting of wildfires.

Frequency and intensity have been steadily increasing for decades, and wildfire solutions have become a fast growing specialty business with larger government budgets being appropriated for the abatement of fighting of wildfires.

Speaker 2: Fortress at its core is a disruptive next generation fire retardant technology.

Fortress at its core is a disruptive next generation fire retardant technology company by.

Speaker 2: by leveraging the magnesium chloride currently produced at our organs.

By leveraging the magnesium chloride currently produce at our Ogden facility.

Speaker 2: Fortress has developed and is in the early stages of manufacturing their proprietary portfolio of highly specialized aerial and ground retardant formulations with unique properties for fighting wildfires and abating fire risk.

<unk> has developed and is in the early stages of manufacturing their proprietary portfolio of highly specialized aerial and ground was hard and formulations with unique properties for fighting wildfires and abating fire risk.

Speaker 2: Importantly, the U.S. Forest Service testing has shown that fortress retarded products result in more effective and more eco-friendly hiring.

Importantly, U S Forest service testing has shown that fortress retarded products result in more effective and more eco friendly higher retardants.

One of the additional features of the fortress business is that it is primarily a spring summer and fall business, which we expect to provide a natural complement to our winter season focused.

Speaker 2: One of the additional features of the fortress business is that it is primarily a spring, summer, and fall.

Speaker 2: which we expect to provide a natural complement to our winter season focus.

The icing salt business.

Speaker 2: For many years, there's been only one supplier of aerial fire.

For many years there has been only one supplier of aerial fire retardants.

Speaker 2: who utilizes a diammonium phosphate-based retardant.

Player, who utilizes a downloading them phosphate based retarded formula.

Speaker 2: to gather through Compass Minerals essential materials and extensive supply chain capabilities and fortress anticipated position and unique chemistry.

Together through compass minerals essential materials, and extensive supply chain capabilities and fortress anticipated position and unique chemistry.

Speaker 2: We're confident in our ability to be successful in this growth industry, which we estimate represents a total addressable market of approximately $300 million.

We're confident in our ability to be successful in this growth industry, which we estimate represents a total addressable market of approximately $300 million.

Speaker 2: As evidence of fortress progress today, I'd like to touch briefly on some of the accomplishments of the fortress team and anticipated developed milestones over the 22

As evidence of fortress progress today I'd like to touch briefly on some of the accomplishments of the fortress team and anticipated developed milestones over the 'twenty two 'twenty three time frame.

Speaker 2: Notably, Fortress has successfully obtained conditional qualification of certain of its products on the U.S. Forest Service qualified products.

Notably fortress has successfully obtained conditional qualification of certain of its products, while the U S Forest service qualified product list.

Speaker 2: Specifically, two of its aerial retardants are conditionally qualified, while a third ground applied retarded is fully qualified.

Specifically two of its aerial Retardants are conditionally qualified while a third ground applied retarded is fully qualified.

With the capital infusion. We recently provided fortress is in a position to accelerate the build out of infrastructure production facilities and his team.

Speaker 2: With the capital infusion we recently provided, Fortress is in a position to accelerate the build out of infrastructure, production facilities, and its team. Fortress also has recently hired Tom Davis as its chief manufacturing and supply chain officer.

<unk> also has recently hired Tom Davis, as its chief manufacturing and supply chain officer with.

With 30 years of direct experience in the chemical industry. Tom was formerly responsible for building the global operations and supply chain organization for perimeter solutions.

Speaker 2: Tom was formerly responsible for building the global operations and supply chain organization for perimeter solutions.

Speaker 2: primary current global supplier of fire-rehardened products.

Our primary current global supplier of fire retardant products.

Speaker 2: In terms of future expected milestones, by 2023, Fortress expects to receive further approvals from the U.S. Forest Service for select products currently in testing and to make additional submissions for products in development, including mobile and helicopter distributed retardants.

In terms of future expected milestones by 2023 fortress expects to receive further approvals from the U S Forest service for select products currently in testing and to make additional submissions for products in development, including mobile and helicopter distributed for targets.

Lastly, fortress has built an intellectual property moat around Mag chloride based fire retardants supported by a portfolio of issued and pending patents.

Speaker 2: Lastly, Fortress has built an intellectual property mode around mag chloride based fire retardants.

Speaker 2: supported by portfolio of issued and pending at

Speaker 2: In closing, we continue to work to optimize our core business as we look to mitigate inflationary elements impacting our cost structure to help restore the earnings power of our legacy salt and

In closing, we continue to work to optimize our core business as we look to mitigate inflationary elements impacting our cost structure to help restore the earnings power.

Our legacy Salt and plant nutrition businesses.

Speaker 2: Team continues to see improved production performance in our flagship Godrich mine as we progress our long-term mine.

The team continues to see improved production performance at our flagship Goderich mine as we progress our long term mine plan.

Speaker 2: On a parallel track, we expect our organic high return opportunities to allow our company to unlock additional value from our advantage asset base, raise the economic profit potential of our

On a parallel track, we expect our organic high return opportunities to allow our company to unlock additional value from our advantage asset base raised the economic profit potential of our business accelerate growth and drive long term shareholder returns.

Speaker 2: accelerate growth, and drive long-term shareholder return.

Speaker 2: Our capital allocation approach with a dividend payout more closely aligned with peers and company with captive growth opportunities is an output and an enabler of our corporate strategy.

Our capital allocation approach with a dividend payout more closely aligned with peers and company with captive growth opportunities is an output and an enabler of our corporate strategy.

I am thankful for the efforts of our dedicated workforce, whose unwavering focus on safety and sustainable growth is reinforced by their commitment to achieving the goals, we set forth for fiscal 2022.

Speaker 2: whose unwavering focus on safety and sustainable growth is reinforced by their commitment to achieving the goals we set forth for fiscal 2022.

Speaker 2: Their efforts are instrumental in creating value for the benefit of all compass mineral stakeholders.

Their efforts are instrumental in creating value for the benefit of all compass minerals stakeholders.

Speaker 2: Now I'm going to turn it over to Lauren, who will discuss in more detail our financial performance and our updated outlook for fiscal 2022. Lauren.

Now I'm going to turn it over to Loren who.

We will discuss in more detail, our financial performance and our updated outlook for fiscal 2020 to Laurent.

Speaker 2: Thanks, Kevin. Consolidated revenue was $331.5 million for the first quarter of fiscal 2022, up 7% year over year, primarily driven by higher volumes in our North America highway.

Thanks, Kevin consolidated revenue was $331 5 million for the first quarter of fiscal 2022 up 7% year over year, primarily driven by higher volumes in our North America Highway business and favorable pricing in our plant nutrition segment in C&I business. Despite the revenue increase.

Speaker 3: favorable pricing in our plant nutrition segment and CNI.

Speaker 3: Despite the revenue increase, our consolidated operating earnings declined to $20.4 million, and adjusted EBITDA declined by $3.6 million to $58.4 million, or 6% year over year, as upward pressure on distribution and product costs within the salt segment in particular more than offset exceptional plant nutrition price performance and EBITDA.

Our consolidated operating earnings declined to $20 4 million and adjusted EBITDA declined by $3 6 million to $58 4 million or 6% year over year as upward pressure on distribution and product costs within the salt segment in particular more than offset exceptional plant nutrition price performance and EBITDA.

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Speaker 3: On a segment basis, salt revenue for the quarter totaled $273.9 million, up 20% year over year, driven by 24% higher sales.

On a segment basis <unk> revenue for the quarter totaled $273 9 million up 20% year over year, driven by 24% higher sales volume.

Speaker 3: Specifically, Highway de-icing volume rose 27% year over year despite a weak start to winter, reflecting higher commitment levels achieved during last year's bid.

Specifically highway Deicing volume rose, 27% year over year, despite a weak start to winter, reflecting higher commitment levels achieved during last year's bid season.

Speaker 3: CNI volumes also rose up 9% euro.

C&I volumes also rose up 9% year over year, reflecting strength in both the IC and non deicing products with the icing, reflecting a stronger prebuilt demand and non deicing, reflecting higher water conditioning and AG volume.

Speaker 3: reflecting strength in both deicing and non-deicing products, with deicing reflecting a stronger pre-fill demand and non-deicing reflect...

Speaker 3: Soft segment volume growth also benefited from volumes in the comparable year ago period being below average.

Segment volume growth also benefited from volumes and the comparable year ago period being below average.

Speaker 3: Salt volume gains were partially offset by lower prices, with a 1% decline in the highway deicing average sales price, offsetting a 3% increase in the CNI average sales price.

But volume gains were partially offset by lower prices with a 1% decline in the highway Deicing average sales price offsetting a 3% increase in the C&I average sales price.

In our C&I business broad based price increases were implemented across most product categories, primarily in response to the high inflation environment, reflecting an area of our business, where the potential exists to pass through costs on a more real time basis, enabling us to claw back some portion of the overall.

Speaker 3: Broad-based price increases were implemented across most product categories, primarily in response to the high inflation environment.

Speaker 3: like the area of our business where the potential exists to pass through costs on a more real-time basis, enabling us to claw back some portion of the overall inflation-related drag on our profitability.

<unk> inflation related drag on our profitability overall, despite higher revenue.

Speaker 3: Overall, despite higher revenue, fault operating earnings fell 11% year over year, while EBITDA fell approximately 10% to 55.6 million for the quarter. Primarily reflecting, the inflationary effects on distribution costs not fully captured during the most recent fault bid season. And...

Operating earnings fell 11% year over year, while EBITDA fell approximately 10% to $55 6 million for the quarter, primarily reflecting the inflationary effects on distribution cost not fully captured during the most recent bid season and higher product costs.

Speaker 3: While it is too early to predict how the rest of the winter season will play out, we believe we should be in a position to recoup a meaningful portion of these higher costs during the upcoming mid season. Starting to our plant nutrition segment.

While it is too early to predict how the rest of the winter season will play out.

We believe we should be in a position to recoup a meaningful portion of these higher cost during the upcoming bid season.

Turning to our plant nutrition segment revenue for the first quarter fell 30% to $54 6 million year over year on lower volume.

Speaker 3: 54.6 million Euro a year on lower volume.

Speaker 3: Lower volumes primarily reflect the combination of low inventory levels related to the yield issues Kevin detailed early.

Sure volumes, primarily reflect the combination of low inventory levels related to the yield issues, Kevin detailed earlier sustain.

Speaker 3: same demand levels across our SOP product.

Sustained demand levels across our sop product rates and the impact from extreme wildfires in the Western U S last year, delaying plantings and pushing orders into the comparable year ago period.

Speaker 3: and the impact from extreme wildfires in the Western U.S. last year, delaying plantings and pushing orders into the comfortable year ago pure.

Speaker 3: Overall, despite the decline in revenue, plant nutrition operating...

Overall, despite the decline in revenue plant nutrition operating earnings were $9 5 million and EBITDA was up 49% in the quarter to $18 3 million, primarily driven by higher prices and also by lower per unit cash costs.

Speaker 3: where 9.5 million and EBITDA was up 49% in the quarter to 18.3 million, primarily driven by higher prices and also by lower per unit.

Speaker 3: Specifically, the average sales price for our Protassium Plus SOP product rose 5% sequentially to $660 per ton, and was up 20% year over year, reflecting the continued positive macro backdrop in the fertilizer.

Specifically the average sales price for our protest TM, plus sop product rose, 5% sequentially to $660 per ton and was up 20% year over year, reflecting the continued positive macro backdrop in the fertilizer sector.

Speaker 3: From a balancing perspective, largely due to the seasonality of our deice and salt.

From a balance sheet perspective.

Largely due to the seasonality of our de icing salt business historically, our working capital tends to be highest in the quarter ended December 31.

Speaker 3: Historically, our working capital tends to be highest in the quarter-end of December 30.

Speaker 3: That dynamic played out this quarter was net debt rising by 69 million versus fiscal year in levels, reflecting higher working capital requirements and cash required to fund our incremental investment in portraits.

That dynamic played out this quarter with net debt rising by $69 million versus fiscal year end levels, reflecting higher working capital requirements and cash required to fund our incremental investment in fortress.

Now turning to our outlook for the balance of the year.

Speaker 3: Re-spectators, year to date, represent meaningful headwinds to our original full-year early-

Three factors year to date represent meaningful headwinds to our original full year earnings guidance inflationary pressures across our salt business have resulted in distribution and product costs are tracking higher than expected.

Speaker 3: Inflationary pressures across our salt business have resulted in distribution and product costs tracking higher than

Speaker 3: Lower volumes due to the relatively weak start to winter and the market we serve for the quarter ended in the

Lower volumes due to the relatively weak start to winter and the markets. We serve for the quarter ended in December .

Speaker 3: and higher than expected product costs primarily due to the need to use suboptimal routing methods to position product at our salt depots in certain of our southern markets caused by the accelerated outage at our cold blotch mine.

And higher than expected product cost, primarily due to the need to use sub optimal routing methods to position product at our salt depots and certain of our southern markets caused by the accelerated outage at our Cote Blanche mine.

Speaker 3: Taking these factors into account, we have lowered our expectations for the 22 fiscal year and currently expect our adjusted EBITDA to be in the range of 200 to 235 million. Driven by erosion.

Taking these factors into account, we have lowered our expectations for the 'twenty two fiscal year <unk>.

We currently expect our adjusted EBITDA to be in the range of $200 million to $235 million.

Driven by erosion in the outlook for our Salt segment.

Speaker 3: Accordingly, we have lowered first half EBITDA guidance for that business to a range of 120 to 160 million. The midpoint of our guidance assumes that winter weather transpires in line with historical averages for the balance of the season and the markets that we serve.

Accordingly, we have lowered first half EBITDA guidance for that business to a range of $120 million to $160 million. The midpoint of our guidance assumes that winter weather transpires in line with historical averages for the balance of the season and the markets that we serve.

Speaker 3: The upper and lower bounds of our updated salt segment guidance broadly reflect our estimate of the profitability levels we would expect if snow events are meaningfully higher or meaningfully lower than the historical.

The upper and lower bounds of our updated salt segment guidance broadly reflect our estimate of the profitability levels. We would expect if snow events are meaningfully higher are meaningfully lower than the historical average.

As plant nutrition has started the year strong first half of fiscal 'twenty two EBITDA guidance for this segment is unchanged at between 25% and $35 million.

Speaker 3: The plant nutrition has started the year strong. First half, fiscal 22, Iba de Gaidets, for this segment is unchanged at between 25 and 35 minutes.

Speaker 3: We continue to expect SOP pricing strength in the first half of fiscal 22 to more than offset lower sales volume, resulting in improved margin and process.

We continue to expect Sop pricing strength in the first half of fiscal 'twenty two to more than offset lower sales volume, resulting in improved margins and profitability year over year with.

Speaker 3: with improvement in plant nutrition productivity anticipated during the second half of fiscal 22.

With improvement in plant nutrition productivity anticipated during the second half of fiscal 'twenty two.

From a capex perspective, given the weather dependent nature of our business, it's essential that our approach to capex. The agile, particularly during the first two quarters of our fiscal year, which represent the bulk of the winter season.

Speaker 3: From a CAPEX perspective, given the weather dependent nature of our business, it's essential that our approach to CAPEX be agile.

Speaker 3: particularly during the first two quarters of our fifth school year, which represent the bulk of the winter season.

Speaker 3: Given that we not only face the typical weather related.

Given that we not only face the typical weather related uncertainty, but also a wide range of cost pressures that are quite evident at this time.

Speaker 3: but also a wide range of cost pressures that are quite evident at this time. We've reduced our capex guidance by 25 million at the midpoint to a range of 100 to 110 million.

We've reduced our capex guidance by $25 million at the midpoint to a range of $100 million to $110 million.

Speaker 3: We believe taking a discipline approach to capital management is an effective lever to offset our lower profitability.

We believe taking a disciplined approach to capital management is an effective lever to offset our lower profitability outlets and to help ensure we also ultimately deliver cash flow results in line with our original expectations heading into this fiscal year.

Speaker 3: And to help ensure we also ultimately deliver cash flow results in line with our original expectations heading into this fiscal year. Finally, our effective tax rate guidance has been reduced to a range of 14 to 17...

Finally, our effective tax rate guidance has been reduced to a range of 14% to 17%. The decrease stems from the overall refinement of projected income levels, including lower income overall mix.

Speaker 3: The decrease stems from the overall refinement of projected income levels, including lower income overall.

Speaker 3: the next of the income between the U.S. and Canada and certain taxes.

The mix of income between the U S and Canada and certain tax benefits and.

Speaker 3: In closing, I just like to add that two months in, I'm thrilled to be a part of the Compass Mineral's team. To join the leadership team.

In closing I'd, just like to add that two months in I'm thrilled to be a part of the compass minerals team.

I joined the leadership team Kevin has assembled.

Speaker 3: and joined the over 2000 compass minerals employees across our

And joined the over 2000 compass minerals employees across our locations as we build on the strengths of what is already a leading essential minerals company.

Speaker 3: We build on the strengths of what is already a leading essential mental

Speaker 3: As we leverage our core competencies into new areas, I'm confident that there is a prudent path forward to achieving our goals, bringing our vision into reality and ultimately creating shareholder.

As we leverage our core competencies into new areas I'm confident that there is a prudent path forward to achieving our goals, bringing our vision into reality and ultimately creating shareholder value with that I will turn it back to the operator to open the lines for the Q&A session.

Speaker 3: With that, I will turn it back to the operator to open the lines for the Q&A session.

Operator.

Speaker 1: Thank you. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment, compel the Q&A roster.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your question keypad, well pause for just a moment compile the Q&A roster.

Speaker 1: your first question, come from David Beglitter from Dirtchebek. Please go ahead.

Your first question comes from David Bank.

<unk> from Deutsche Bank. Please go ahead.

Speaker 4: Uh, thank you. Good morning and Laura and welcome aboard look forward to working with you again

Thank you good morning, and Laura and welcome aboard and look forward to working with working with you again.

Speaker 4: Kevin Lauren just on the quarter. What did the co-blunch average cost you guys in Q1? What will cost you guys in Q2? you.

Kevin Loren just on the quarter, what did the Cote Blanche outage cost you guys in Q1, and what it will cost you guys in Q2.

How are you doing David Lauren.

Speaker 3: As you think about the reduction in our guidance, which was 18 million at the midpoint, about 50% of it relates to volume and about 50% relates to cost.

As you think about the reduction in our guidance, which was $18 million at the midpoint about 50% of it relates to volume and about 50% relates to cost of those cost I would say about two thirds related to inflation and a third related to product movements and as that product movements.

Speaker 3: Of those costs, I would say about two-thirds related to inflation and a third related to product move.

Speaker 3: And it's that product movements that you touched on. And I would say about two or three million get the quarter and the balance will be spread throughout the year as we sell the product that now has higher cost embedded.

You touched on and I would say about two years or $3 million hit the quarter and the balance will be spread throughout the year as we sell the product that now has higher cost embedded in it.

Speaker 4: Very good and just on catbacks what was the 25 million reduction? What was that tied to that you're not that you've pushed out?

Very good and just on Capex, what was the 25 million reduction what was that tied to that youre not.

You've pushed out now.

I am sorry, David would you repeat.

Speaker 4: I'm sorry, Dave, would you repeat? I'm the cat-backed reduction by $25 million. More projects have you delay or deferred to achieve that reduction.

On the Capex reduction by $25 million, what projects have you delayed or deferred to achieve that reduction.

Hey, Dave This is Kevin we had a handful of.

Speaker 2: projects that we felt like, you know, made sense, the extent we could afford in their costs.

Projects that we felt like.

It made sense to the extent, we can afford in their cost reduction efficiency types of things that we decided just based on kind of the reduced guide that it would make sense to push those off a little bit, but nothing that would sort of jeopardize the continuity of the business on a day to day, they were very discretionary and David I would also add if you just look historically.

Speaker 2: reduction, efficiency, types of things that we decided just based on.

Speaker 2: kind of the reduced guide that it would make sense to push those off a little bit, but nothing that would sort of jeopardize the...

Speaker 3: continuity of the of the business on a day to day that we're very discretionary. And David, I would also add if you just look historically at this business, as you know, it's been able to be supported by catbacks around $80 million. We do now have the lithium catbacks on top of that, but this is the business that over a long period of time has been able to comfortably support itself at much lower levels of catbacks than where we are today.

<unk> at this business as you know, it's been able to be supported by Capex around $80 million. We do now have the lithium capex on top of that but this is a business that over long periods of time has been able to comfortably support itself at much level much lower levels of capex than where we are today.

Thank you very much.

Speaker 1: Next question, come some Bob Carte from Goldman Sachs. Please go ahead.

Thank you next caller.

Your next question comes from Bob <unk> from Goldman Sachs. Please go ahead.

Hi, This is Emily <unk> on for Bob.

Speaker 5: Hi, this is Emily Kekon for Bob. In the C&I business, how sticky do you guys expect the Broadway price increases mentioned?

C&I business, how sticky do you guys expect the broad based price increases mentioned today.

Speaker 6: Yeah sure, I'll think that. Pretty sticky. It's interesting historically.

Yes, sure I'll take that.

Pretty sticky.

It's interesting historically when.

Speaker 6: When we've experienced inflationary pressures and we have a lot of opportunities to pass those on through to our customers, it sticks for the long term. And so, for example, if if rate rates and other disruptions that are causing higher costs.

When we've experienced inflationary pressures and we we have a lot of opportunities to pass those on through through to our customers.

Sticks for the long term and so for example, if if freight rates and other disruptions that are causing higher cost start to fall. We typically would retain that now we do that through great customer relationships.

Speaker 6: start to fall, we typically would retain that. Now we do that through great customer relationship.

Speaker 6: We spend a lot of time tracking our net promoter score and we've made significant improvements over the last couple of years. And that's really caused a lot of stickiness and customers and really creates a lot of opportunity to create more value through those customer relationships. So we expect those to stay in place and improve pricing where we can across all product groups going forward.

Spent a lot of time.

Tracking our net promoter score and we've made significant improvements over the last couple of years and that's really caused a lot of stickiness in customers and really creates a lot of opportunity to create more value through that through those customer relationships. So we expect those to stay in place and.

And improved pricing, where we can across all product groups going forward.

Okay, Great and then just one more could you guys talk about actions taken to manage inventory levels during the quarter.

Speaker 5: Okay great and then just one more. Could you guys talk about actions taken to manage inventory levels during the quarter?

Speaker 3: Well, historically, this quarter we just close is the quarter where we generally have the highest amount of work in capital, is where we are building inventory in order to position ourselves for the upcoming winter season. And so that's our typical pattern. I don't know if there's anything more to add.

Well historically this.

Quarter, we just closed is the quarter, where we generally have the highest amount of working capital is where we are.

Building inventory in order to position ourselves for the upcoming winter season, and so thats. Our typical pattern I don't know if there is anything more to add.

Speaker 6: We're doing an unusual, nothing unusual, typical seasonality.

We only do anything unusual nothing unusual typical seasonality.

Yes.

Great. Thank you.

Your next question comes from Seth Goldstein from Morningstar. Please go ahead.

Speaker 1: A unique question comes from Seth Goldstein from Morningstar. Please go ahead.

Hi, good morning, everyone and thanks for taking my questions.

Speaker 6: Hi, good morning everyone and thanks for taking my question. Just to clarify is the updated guidance based on average winter weather to start 2022 or does it factor in the strong snowfall in the Midwest that we had in January and early February ?

Just just to clarify is the updating guidance updated guidance based on average winter weather to start 2022 or does it factor in the strong snowfall in the Midwest that we had in January and early February .

Speaker 3: Yeah, so the guidance at the midpoint assumes normalized weather.

Yes, so the guidance at the midpoint assumes normalized weather.

Speaker 3: for the season from January on. And so that midpoint reflects our experience through December .

For the season from January on and so that midpoint reflects our experience through December .

Speaker 3: It does not reflect our experience through January , February , et cetera. And so that's what that midpoint anticipates. If you look at the width of the guidance, you'll notice our guidance is wider than it has been in the past. And so at the midpoint, you have normalized winter and on either side of that, you've got roughly a standard deviation on either side to reflect a lower. The normal levels, no days.

It does not reflect our experience through January February et cetera, and so that's what that midpoint anticipates. If you look at the width of the guidance Youll notice our guidance is wider.

Then it has been in the past and so at the midpoint you have normalized winter and on either side of that you've got roughly a standard deviation on either side to reflect a lower than normal levels notice or a higher than normal level of snow days.

Speaker 3: normal levels no day.

Speaker 2: I just said that we still have fair amount of winter left, but January and first part of February are off to a pretty good start and track. I call it normal-ish. Again, we still got a lot of winter left to go. We'll see where we land, but good start to the calendar year.

Instead I would just.

To add that.

Still have a fair amount of winter left.

January and partial first part of February we're off to a pretty good start in attracting tenants.

Call it normal ish.

We still got a lot of winter left left to go in.

We'll see we'll see where we land, but good start to the calendar year.

Speaker 7: Okay, great. I appreciate the clarification. And then will you update that soundly timeline for when you expect SOP production to be fully restored with the brine process, or is that still an ongoing working process?

Okay, Great I appreciate the clarification and then we will update us on the timeline for when you expect sop production to be fully restored.

With the Brian process or is that still an ongoing work in process.

Yes sure Seth this is George Schuller.

Speaker 6: Yeah, sure. I said, this is George Schuller. We, you know, is Kevin going down in his comments, you know, it's kind of an ongoing process. Lots of times, you know, again, with the drought, drought doesn't necessarily affect our production, but it does affect what we have coming in from a Brian point of view in our west pond. So we've done a lot in regards to...

As Kevin pointed out in his comments, it's kind of an ongoing process.

Lots of times, you know again with the with the drought drop doesn't necessarily affect our our production, but it does affect what we have coming in from a brand point of view in our west on so we've done a lot in regards to.

Speaker 6: Make sure we improve our processes, our literally making sure that what we have in place as far as improvements efficiency, we're doing that is hard for me to kind of gloss or right now and give you an absolute date.

Making sure we improve our processes arent literally making sure that.

What we have in place as far as improvements efficiency, we're doing that it's hard for me to kind of go out to right now give you an absolute eight or off to say, we'll be back to normalized production, but I can tell you that I feel pretty confident that we're well are well on track.

Speaker 6: or us to say, well, we've backed the normalize production, but I can tell you that I feel pretty confident that we're well on a track that gets back to every establishment ourselves in the future. You know, again, see that, I guess, I'd say long term, you know, where we've seen the drought in the last couple of years, we have to do some things at the site to make sure we embed that going forward. Okay.

<unk> reestablished ourselves in the future.

Again see that I guess, that's a long term what we've seen the drought in the last couple of years, we have to do some things at the site to make sure we embed that going forward.

Okay, great. Thanks for taking my questions.

Okay.

You said.

Speaker 1: Your next question comes from Chris Shaw for Moniz Kristi. Please go ahead. Good morning, everyone. How you doing?

Your next question comes from Chris Shaw from a nurse Christine. Please go ahead.

Good morning, everyone. How are you doing.

Hey, Chris.

Speaker 2: The playing out this with timeline on the lithium asset, you know, it seems like the...

The.

Laying out the sort of timeline on that.

Lithium asset.

It seems like the <unk>.

Ben.

Speaker 2: You think it's just in summer of 2002 for the decision on maybe the DLE partner or provider and also just sounds like the

The date, suggesting summer of 2002 for a decision on maybe.

Partner or provider and also just it sounds like the <unk>.

Speaker 2: which of the three paths you laid out you might take has been pushed back a bit. Am I right in reading that? And it's so why is that sort of been pushed back time?

Which of the three Paas you laid out you might take has been pushed back a bit it right in reading that and if so why was that why is that sort of been pushed back time wisely.

Speaker 2: No, I don't think we pushed back the time on it all. I think of the last call actually, we referred to a summer as a point when we would do a reveal around

No I don't I don't think we pushed back the timeline at all I think over the last call actually.

Referred to.

Summer is a point when we would do a reveal around.

Speaker 2: estimated cap ex at the FEL one maybe FEL one plus level DLE providers selection testing results where we're going to show up where we think we're going to show up on the cost curve So I think you know from our standpoint we're tracking right consistent with everything we said the last quarter

The estimated capex at the NPL, one maybe <unk> plus level.

The DLA providers selection testing, where testing results, where we're going to show up where we think we're going to show up on the on the cost curve. So I think.

From our standpoint, we're tracking consistent with everything we said the last quarter.

Speaker 3: And I'm gonna say one of the common questions, one of the common questions that we get is around what our path for it would be. And that's why we added the slide on slide seven of the earnings deck, but it's right in line with what Kevin said on the last call. We just thought it'd be helpful to have a slide to share with you what our intentions are.

And I would also say one of the common question is one of the common questions that we get is around what our path forward would be and that's why we added the slide on slide seven of the earnings deck, but it's.

Right in line with what Kevin said on the last call. We just thought it would be helpful to have a slide to share with you what our intentions are.

Speaker 2: Right. Was the last call, did you push back the timeline? Maybe I just forgot that you had done that, or was I just mismurring to all of this?

Right. So you remember it was the last call did you pushed back the timeline, maybe I just forgot that you've done that or was that just misremembering the all of it.

Well, we never gave a time, we've yet to give a timeline per se when we announced this in July we shared that we would be investigating three different paths, we didn't say.

Speaker 3: But we never gave a time, we've yet to give a timeline per se. When we announced this in July , we shared that we would be investigating three different paths. We didn't.

Speaker 3: Within what period of time we would conclude that investigation, but on the last call Kevin did share that by this summer we'd be in a position to be able to talk about our operating costs or capital intensity around this asset, which should allow investors to apply some sort of net present value to it.

Within what period of time, we would conclude that investigation, but on the last call Kevin did share that by this summer we'd be in a position to be able to talk about our operating costs, our capital intensity around this asset which should allow investors to apply some sort of net present value to it.

Right right. Okay. That's all I had thanks so much.

Yes. Thank you.

Speaker 1: Your next question comes from Joel Jackson from the ML Capital Markets. Please go ahead.

Your next question comes from Joel Jackson from BMO Capital markets. Please go ahead.

Hi, This is Alex Chan on for Joel Jackson, Thanks for taking my questions.

Speaker 8: Hi, this is Alex Chen on Forgeology Action. Thanks for taking my questions. So I know earlier you talked about the CAPX reduction to 25 million are able to provide a bit more specific color on how this might impact the timelines to progress the fortress and the theme projects. Because the urgency to develop these projects does the weaker outlook increase the odds that compass will need an equity raises here?

So I know earlier, you talked about the Capex reduction to $25 million are able to provide a bit more specific color on.

How this might impact the timelines to progress the fortress on that theme projects because the urgency.

These projects does the weaker outlook increase the odds that compass, we will need an equity raises here.

Speaker 3: I'll address that in two ways. Fortress is not included in the capex of our numbers. We've made an investment in Fortress that should provide it with adequate capital to advance its initiatives, and that is done and not a part of our capex. When you think about the 25 million reduction in our capex, it does not.

I'll address that in two ways fortress is not included in the Capex.

Our numbers, we've made an investment in fortress that should provided with adequate capital to.

To advance initiatives and that is done and not a part of our Capex. When you think about the $25 million reduction in our Capex.

It does not.

Speaker 3: until a reduction to the lithium dimension of that. And so Chris and his team are proceeding on pace with regard to the pilot plant. And that CAPEX reduction does not impact the lithium oriented aspect of our CAPEX budget. As far as our guidance and the implications on our funding.

Entail a reduction to the lithium dimension of that and so Chris and his team are proceeding on pace with regard to the pilot plants and that Capex reduction does not impact the lithium.

Oriented aspect of our Capex budget.

As far as our our guidance and the implications on our funding.

Speaker 3: And I have been here for 60 days and have thought about our path forward with regard to

And I have been here for 60 days and have thought about our path forward with regard to lithium.

Speaker 3: I'm confident that we will be able to find a prudent path forward. And the way that I would encourage you to think about it is his three forms of capital.

I am confident that we will be able to find a a prudent path forward and the way that I would encourage you to think about it is is three forms of capital. The first one is free cash flow the cheapest form of capital is free cash flow and frankly today, we're under earning.

Speaker 3: The first one is free cash flow. The cheapest form of capital is free cash flow. And frankly, today we're under earning. We're under earning on the order of magnitude of $30 billion. And when we wake up, we're thinking about how do we restore the possibility of our salt business and restore the profitability of our plant nutrition business. And so they said that we do that. That's going to throw off.

We're under earning on the order of magnitude of $30 billion and when we wake up we are thinking about how do we restore the profitability of our salt business and restore the profitability of our plant nutrition business and to the extent that we do that that's going to throw off.

Speaker 3: significant free cash flow over the next couple of years. The second form of capital, what you often see with free revenue.

Significant free cash flow over the next couple of years, the second form of capital what you often see with three Rev.

Revenue lithium companies is prepaid capital in connection with off take agreements and so as Chris and his team are.

Speaker 3: is prepaid capital in connection with off-takers.

Speaker 3: And so as Chris and his team are engaged in dialogues, we don't think there'll be any shorties of interest. So they said that we...

We are engaged in dialogues.

We don't think there'll be any shortage of interest.

Extent that we.

Speaker 3: chose to pursue an offtake of agreement of some sort. The third form capital that I would encourage you to think about is what you also see free revenue lithium companies do, which is...

Chose to pursue an offtake agreement of some sort the third form capital.

That I would encourage you to think about is what you also see pre revenue lithium companies do which is.

Speaker 3: through strategic private equity at the asset level, not at the compass equity level, but at the asset level.

I think through strategic private equity at the asset level not at the compass equity level, but at the asset level and so again, given the backdrop and the attractiveness of this asset we don't think there'll be any shortage of interest to the extent that that became a requirement and so that's the way we're thinking about things no decisions have been.

Speaker 3: And so again, given the backdrop and the attractiveness of this asset, we don't think there be any shortage of interest to the extent that that became a requirement. And so that's the way we're thinking about things, no decisions have been made, but we think that we will find a prudent path forward. And when I say that I mean, a path allows us to maintain our credit profile while still advancing this initiative, if that's the direction we chose to go into.

Made but we think that we will find a prudent path forward and when I say that I mean, a path that allows us to maintain our credit profile, while still advancing.

This initiative is thats the direction, we chose to go into.

Speaker 8: Great, thanks for that clarity. And my second question is with regard to the below average snowfall so far this winter. Will Compass need to reconsider the God-rich production strategy, even if that might mean not achieving the per-time past targets that the company is.

Great Thanks for that clarity.

And my second question.

With regard to the below average snowfall so far this winter.

We will compass need to consider at the Goderich production strategy, even if that might mean.

Not achieving the per ton.

Cost targets that the company is looking to achieve.

Yes, good question I think.

Speaker 2: Yeah, good question. I think we've got to let Winter play out first. Once we do that, that'll inform how we think about God rich.

We got to let winter play out first and once we do that that will inform how we think about doddridge.

Speaker 2: I would just add that George and his team have got rich running really, really well, but I also want to emphasize that, you know, we'll take a ballot.

I'd, just add that George and his team have got or it's running really really well, but I also want to emphasize that.

We'll take a balanced approach. This season, if we finish strong I think it was set up for a good bid season, and if we finish kind of with a whimper, we're prepared to take whatever steps are necessary to adjust our production to match. What we think the anticipated demand is going to be so we're building in that.

Speaker 2: this season, if we finish strong, I think it'll set up for a good bid season. And if we finish with the whimper, we're prepared to take whatever steps are necessary to adjust our production to match what we think the anticipated demand is going to be. So we're building in that flexibility to calibrate what we think the market wants as opposed to trying to overshoot it.

<unk> of calibrate, what we think the market wants as opposed to trying to overshoot it.

Perfect. Thank you.

Okay.

Your next question comes from David Silver from CL King. Please go ahead.

Speaker 1: Your next question comes from David Silver from CL King. Please go ahead.

Yes.

Speaker 9: Yeah, hi, thank you. So a couple of questions. I think the first question I'd like to maybe ask you a little bit more about the selection of the DLE process.

Yes, hi, thank you.

So a couple of questions I think the first question I'd like to maybe ask you a little bit more about the selection of the DLA process. So.

Speaker 9: So firstly, the timing. So you mentioned earlier in your comments that a decision might be forthcoming this summer.

So firstly the timing. So you mentioned earlier in your comments that decision might be forthcoming this summer.

Speaker 9: And I'm just wondering, has that timeline changed, let's say, over the last three to six months, in other words?

I'm, just wondering has that timeline changed let's say over.

Over the last three to six months in other words.

Speaker 9: is the decision point sooner than maybe wasn't anticipated.

Is the decision point sooner than than may be.

What's the anticipated.

At the beginning of your strategic evaluation and then secondly regarding the process itself are there any kind of peculiarities or.

Speaker 9: at the beginning of your strategic evaluation. And then secondly, regarding the process itself, are there any kind of peculiarities or project specific aspects that you think are noteworthy? In other words, maybe the...

Project specific aspects that you think are noteworthy in other words, maybe the the other elements that the lithium must be extracted from the composition of the Brian Let's say all.

Speaker 9: The other elements that the lithium must be extracted from the composition of the brine, let's say, or the level of automation or purity that you're trying to get for. In other words, is this a relatively standard process or are you tweaking the process in significant ways based on the specific resource?

Or the level of automation or purity that youre trying to get for in other words is this a relatively standard process or are you tweaking the process in significant ways based on the specific resource. Thank you.

Speaker 2: Thank you. Thanks, thanks for those questions. I'll take the first one and I'll let Chris discuss the second one. Let's look at the with respect to the DLE, the selection of the DLE provider. That's a huge decision and you've gotta get that right. And we'll take whatever time is necessary.

Hey.

Thanks for those questions I'll take the first one and I'll, let Chris.

<unk>. The second one look I think with respect to the DLA. The selection of the BLE provider, that's a huge decision and you've got to get that right.

And we'll take whatever time.

As necessary.

Speaker 2: But we continue to believe that we'll be in a position by mid-summer to have, to be able to make that selection and announce it externally. But what we want to do is just go through and continue to test because it, you know, you get this wrong, you're going to have a problem. So it'll take as long as it takes, but we feel based on the progress today, the technologies that were tested that by, you know, sometime in the summer, we'll be in a position to make that announcement.

But we continue to believe that we'll be in a position by mid summer.

To be able to make that selection and announce it.

Totally but what we want to do is just go through and continue to test because you get this wrong youre going to have a problem. So it will take as long as it takes but we feel based on the progress to date the technologies that we're testing that.

Sometime in the summer, we will be in a position to make that announcement.

Speaker 2: And then on your second question, I think that's a pretty technical one. I'll let Chris tackle that one. Hey, thanks, Kevin. So David, with regards to looking at the process itself, I would say that the crops of it is resting on the DLE. After the DLE, going into the conversion portion of the process, it would be very...

And then on your on your second question I think.

Pretty technical and I'll, let Chris tackle that one.

Thanks, Kevin and David with regards to looking at.

Process, So I would say that the crux of it is progressing on the VLT after the deli going into the conversion.

<unk> of the process it would be very standard when you look at the BLE and one of the things that you take into consideration is not all brine is equal not are equal and you have to match the technology to your brine as well.

Speaker 3: When you look at the DLE, one of the things that you take into consideration is that not all Brian is equal, not all DLEs are equal. And you have to match the DLE technology to your Brian as well. And that's what we've been doing. And we look at the DLE technology.

What we've been doing and we look at the the Brian that we had certainly it's high in magnesium and one of the things that we want to do is make sure. We have a high rejection magnesium a high recovery of lithium. So we've tried to get as close to parity as you will our magnesium lithium ratio.

Speaker 10: The grind that we have, certainly it's high in magnesium. And one of the things that we wanna do is make sure we have a high rejection of magnesium, a high recovery of lithium. So we're trying to get as close to parity as you will on a magnesium lithium ratio. You know, we would love to be...

We would love to be lower compared with you on that in your lithium business.

Speaker 10: Lower the parity on 90 in the empathy, the goal is parity and if there is a version process, it's pretty much a general process. Is that?

And then from there the conversion process.

Much general process.

Does that answer your question David.

Speaker 9: Yeah, no, thank you. That was great. I honestly was wondering about magnesium concentrations and things. I'll do a little more research on that, but thank you for pointing that out. Second question I have relates to financial flexibility and kind of covenant situations. So...

Yes, no. Thank you that was that was great.

Honestly I was wondering about magnesium concentrations and things so ill do a little more research on that but thank you for pointing that out.

Second second question I have relates to financial flexibility and kind of covenant situations. So.

Speaker 9: A lot of covenants are related to trailing 12 months, EBITDA levels, and kind of been tracking it here.

A lot of covenants.

Our related to trailing 12 month, EBITDA levels and kind of been tracking it here.

Speaker 9: My TTM went down this quarter with the undererning, as you mentioned.

My TTM went down this this quarter with the under earning as you mentioned.

Speaker 9: and just guessing but there may be another step down next quarter. And if that was the case, I mean, is this, from your perspective, will there be a need for any, you know, adjustments to your current financing or any kind of steps that are needed just to clear out a little more flexibility in terms of meeting the key covenants on your main credit degree?

And just guessing, but but there may be another step down.

Next quarter.

And if that was the case I mean is this from your perspective will there be a need for any adjustments to your current financing or any any kind of steps that are needed just to clear out a little more flexibility in terms of meeting the key covenants.

On your main credit agreements. Thank you.

Yes.

Speaker 3: Yeah, David. Thanks for a question. What I would say is, first of all, we're thrilled to have and blessed to have a strong bank route that over many, many years has been very understanding and supportive of our business. I think the right way to think about it is to say, at the midpoint of your guidance, do you think that you would need any sort of headroom?

Yes, David Thanks for your question, what I would say is first of all we are thrilled to have and blessed to have a strong bank group that over many many years has been very understanding and supportive.

Our business I think the right way to think about it is to say at the midpoint of your guidance.

Do you think that you would need any sort of headroom and what I would say is that at the midpoint of our guidance we start to approach those covenants. However.

Speaker 3: And what I would say is that at the midpoint of our guidance, we start to approach those covenants. However, there's a couple of things I remind you of. One, this is a business that, again, has historically been able to sustain itself off of...

A couple of things I'd remind you up one this is a business that again has historically been able to sustain itself off.

Speaker 3: CapEx levels that are considerably below where we are today. And so that's something well within our control that to extend the circumstances.

Capex levels that are considerably below where we are today, and so thats something well within our control that to the extent the circumstances.

Speaker 3: Suggesting we could tap the brakes further on campus.

Suggested we could tap the brakes further on Capex. The second thing I'd say is that the ICL sale that we executed last year had an earn out associated with it that was in Brazilian reais.

Speaker 3: The second thing I'd say is that the ICL sale that we executed last year had an urn out associated with it that was in Brazilian Rii that at today's exchange rates are in the mid teens in terms of what it could be. That business will flow this books and in the coming months, we will know to what extent we receive proceeds from that urn out.

That at today's exchange rates.

In the mid teens in terms of what it could be.

That business will close its books and in the coming months, we will know to what extent.

We received proceeds from that earn out I would also say that in the recent quarter, we had a pretty heavy working capital.

Speaker 3: I would also say that in the recent quarter we had a pretty heavy working output.

Speaker 3: By the end of this year, our 9.30 quarter, we expect that working capital drag to not be quite as much as it was this quarter. But broadly speaking, we think we've got the ability to stay within our covenants. But we also are blessed to have a very strong and supportive bank route. During a time when this business is earning below its potential. And I think that's the...

By the end of this year, our 930 quarter, we expect that working capital drag to not be quite as.

As much as it was this quarter, but broadly speaking.

We think we've got the ability to stay within our covenants, but we also are blessed to have a very strong and supportive bank group. During a time when this business is earning below its potential and I think thats.

Speaker 3: That's the focus of this leadership pain. It is on restoring the earnings.

That's the focus of this leadership team is on restoring the earnings potential for salt and for plant nutrition, and I think we'll manage through it.

Speaker 3: for salt and for plant nutrition and I think we'll manage through it.

Speaker 9: Thank you for that. The year now was about 4% I believe of the announced price right maybe 16 million or so. Yeah, I just 88 million Brazilian ri by 88 right right right yeah yeah so that's about 15 million today but it's subject to their performance.

Thank you for that the earn out was about 4% I believe.

The announced price right, maybe $16 million or so.

88 million Brazilians.

About 88, no rate right, so thats about $15 million a day, but it's subject to their performance.

Speaker 9: Okay, I'd like to squeeze in one more if you don't mind. And this has to do with the salt kind of marketing opportunity. So there's a lot of things going on this quarter, but my assumption is that the long-term mining program at God rich and...

Okay I'd like to squeeze in one more if you don't mind and this has to do with the salt kind of marketing opportunity.

So theres a lot of things going on this quarter, but my assumption.

Assumption is that the long term mining program at Goderich and.

Speaker 9: bidding strategies and things are kind of working towards a multi-year conclusion or a goal where compass is able to market a structurally larger amount of their overall salt volume on a annual basis.

Bidding strategies and things are kind of working towards a multi year.

No.

Conclusion or go where.

Compass is able to market.

Structurally larger amount of their overall salt volume on on an annual basis.

Speaker 9: And one competitor's mind is no longer operating. We know about that. But I am wondering about how you view the freight markets globally and what kind of incremental opportunity that might provide, let's say, over the next year or two.

<unk>.

One competitors mine is no longer operating we know about that but I am wondering about how you view the freight markets globally.

And what kind of incremental opportunity that might provide let's say over the next year or two.

Speaker 9: to widen your marketing radius a little bit or maybe squeeze out some offshore supply above and beyond what's happened, let's say over the last year or two. So is the structurally higher freight rates or maybe other factors that you might cite? Is that...

To widen your marketing radius, a little bit or maybe squeeze out some offshore.

Supply above and beyond.

What's happened, let's let's say over the last year or two so.

Is the.

Is this structurally higher freight rates are may be other factors that you might cite is that.

Speaker 9: A piece of the puzzle may be to improving the sales volume structurally going forward and kind of clearing the way for that anticipated increase in God-or-Ritch production.

A piece of the puzzle maybe two improving the.

The sales volume structurally going forward and kind of clearing the way for that anticipated increase in goderich production.

Speaker 2: Yeah, the few aspects there in your question that I want to dress and I'll pass it to Jamie for some additional color, but you know, number number one, what we want to do, you know, this upcoming bidsies and this recover. Some of those inflationary pressures that we got we got caught with we built some of them into the our plan, but they even exceeded that. So we want to we want to recapture that the transportation is a real limiting factor.

Yes.

You aspects there in your question that I want to address and I'll pass it to Jamie for some additional color but.

Number one what we want to do in this upcoming bid season. This recover some of those inflationary pressures that we got we got caught with we built some of them into our plan, but even exceeded that so we want to we want to recapture that transportation is a real limiting factor.

Speaker 2: in this business and when transportation rates are high.

In this business and when transportation rates are high.

Speaker 2: It limits your ability to stretch the footprint that you have so we may have to take it, you know, adjustments. We look at our

It limits your ability to stretch the footprint that you have so we may have to take the adjustments. We've look at our solid operations as a portfolio. So what we want to do is balance that production with what we anticipate the demand to be so that we can get fair value for our products and then.

Speaker 2: salt operations as a portfolio. So what we want to do is balance.

Speaker 2: that production with what we anticipate the demand to be so that we can get fair value for our products. And then I think with respect to, you know, basically you're asking about import.

I think with respect to.

Basically you are asking about imports.

Speaker 2: You know, we try to monitor that market the best we can and to the extent that you could secure imports in a fashion cheaper than you could make it yourself It could be obviously something that we would be very in tune to

We try to monitor that market the best we can and to the extent that you could secure imports in a fashion cheaper than you could make it yourself.

Obviously, something that we would be very attuned to.

Speaker 2: But here to for at least today, that hasn't been the case given the volatile seaborne transportation rates, that the cost of product at various places in the world tends to be pretty stable. It's the transportation rates that are highly volatile and they're pretty inflated at the moment, which we think is impairing their ability to penetrate in the U.S. like they have historically. So it is something that we watch, but...

But heretofore or at least to date.

That hasnt been the case, given the volatile seaborne transportation rates.

Cost of product at various places in the world tends to be pretty stable.

Transportation rates that are highly volatile and they're pretty inflated at the moment, which we think is impairing their ability to penetrate in the U S. Like they have historically so it is something that we watch but nothing there to act on so far do you want to add any color Jamie It is really important.

Speaker 6: nothing there to act on so far. If you want to add any color, Jamie. No, it is really important. International shipping rates are important to both our plant nutrition and salt business.

International shipping rates are important to both our plant nutrition and salt business.

Speaker 6: We like to see the higher shipping rates ocean wise. It does prevent imports from penetrating and competing with us. It also prevents, you know, European, European SOP products from coming into the US cost effectively. So that is, and then you mentioned the mine, the Avery Island mine shutting down that votes well for the interior US market. And

We like to see the higher shipping rates Ocean wise, it does prevent imports from penetrating and competing with US I'd also prevents.

European European Sop products coming into the U S cost effectively so.

That is and then you mentioned the mine Avery Island mine.

Shutting down that that bodes well for the interior U S market and.

Speaker 6: As we set up our strategy for our bid season, Kevin mentioned earlier, we will see how winter unfolds, we'll assess all those supply and demand dynamics and optimize the value of every time as we go through our bid season. And we think a combination of recapturing and many of these inflationary and transportation costs.

As we as we set up our strategy for our bid season, Kevin mentioned earlier, we will see how winter unfolds, we'll assess all of those supply and demand dynamics and.

Optimize the value of every time.

As we go through our bid season, and we think a combination of recapturing and many of these inflationary and transportation costs as well as <unk>.

Speaker 6: well as some improvement in the portfolio itself are going to drive a tremendous amount of value, particularly as we go into 2023.

Some improvement in the portfolio itself are going to drive a tremendous amount of value, particularly as we go into 2023.

Okay.

That's great. Thank you very much.

Okay.

Speaker 1: The year next question comes from Roger Spitz, from Bank of America. Please go ahead.

Your next question comes from Roger Spitz from Bank of America. Please go ahead.

Speaker 11: Thanks very much. So regarding your sold volumes up 24 percent, I just want to be clear, was that all due to the or mostly due to the the market share gain uh that you spoke about on your last call and I mean was a it still was a lot of that from Cargill's every island mine shut down or did you take share do you think from other North American competitors?

Alright, thanks, very much so regarding yourself volume's up 24% just wanted to be clear was that all due to the mostly due to the market share gain.

That you spoke about on your last call and.

And if so was a lot of that from Cargos every island mine shutdown or did you take share do you think from other North American competitors.

Yes, so our commitments were up significantly.

Speaker 6: Yeah, so our commitments were up significantly in this last bit season. So part of that is Avery Island related. Part of it is some territories we're serving that are newer for us, but yes, absolutely related to our higher commitments.

In this last bid season so.

Part of that is Avery island related.

Part of it is some.

Some territories, we're serving that are that are newer for us.

But yes, absolutely related to our higher commitments.

Speaker 11: Got it. And I see that in fiscal Q1, 22, salt shipping and handling, and the pressure lease spending was $39 million, or 25% of salt sales. What is that of as a percent of salt cogs? You're shipping and handling. Good Morning. Okay, great job. Thank you.

Got it and.

I see that in fiscal Q1, 'twenty, two soft shipping and handling and the press release spending was $39 million or 25% of solid SaaS.

What is that.

As a percent of salt Cogs.

Youre shipping and handling.

Do you have that shipping and handling costs.

Of course.

Hum.

Yes.

Speaker 6: I don't have that number. Yeah, so of the total cost. Yeah, I mean, we kind of, you can see our unit shipping cost as a line item is separate from cost. So we have shipping and the handling separately. Salt shipping and handling on a unit cost basis was about $26 per ton.

I don't have that number.

So of the total cost, yes, I mean, we kind of you can see our units shipping cost as a line item is separate from Cogs. So we have shipping and handling separately.

Salt shipping and handling.

On a unit cost basis.

Was.

Was about 20 was about $26 per ton.

Speaker 6: And, and, and, you know, gross price with 80 and you can see our, our all in cost for the Ford quarter was about 42. So it's in the, in our first quarter, December quarter, it was about a third of the total cost. If you combined our cogs and our shipping and handling. Got it.

<unk>.

And.

Gross price was 80 and you can see our all in costs for the fourth quarter was about 42 so.

It's in the in our first quarter December quarter It was about.

A third of the total cost if you combined our Cogs and our shipping and handling.

Got it and then four.

Speaker 11: North American freight, which I guess you do probably by various methods, vessel, what have you. Sort of, can you talk about the contracts you have, how long are those contracts, how often the prices set, or a reset, I should say, for different modes of transportation for shipping your highway deacer.

North American freight, which I guess, you do probably by <unk>.

Various methods vessel what have you sort.

Can you talk about the contracts you have.

How long are those contracts, how how often the prices set.

Reset I should say four different modes of transportation for shipping your.

Highway Sir.

Tom.

Speaker 6: So it varies across the different modes. We typically enter into multi-year agreements on barge.

Yes, so it varies across the different modes, we typically enter into multiyear agreements on barge.

Speaker 6: Sometimes vessel agreements can be five, seven years it depends. Oftentimes they have built-in inflationary inflators.

Sometimes vessel agreements are or can be five seven years it depends.

Oftentimes they have built in inflationary in flavors.

Speaker 6: As you get to truck, it's not as set. We tend to do some spot shipping in season. We do have relationships with pricing, but it's a mixed bag across the broad geography that we serve. It trucking is probably more of a-

As you get to truck.

It's not as.

It's not as set we tend to do some spot ship shipping season, we do have relationships with with pricing, but it's a mixed bag across the.

Broad geography that we serve.

Trucking is probably more of a spot.

Speaker 2: I've arranged, yeah, year to year. Yeah. And we're experiencing, you know, pressure just like ever.

Type of a range year to year.

Yes.

We're experiencing.

Truck pressure just like everybody else's.

Got it so I guess my last question based on that is when you when you think about yourself the ISR.

Speaker 11: God, so I guess the last question based on that is when you think about your salty ice or sort of what percent of that freight for the season is sort of known because it's contract for the season versus sounds like more truck where it's more

Sort of what percent of that freight for the season.

Is sort of known because its contract for the season versus sounds like Mark truck, where it's more.

Speaker 11: and just gonna move up and down depending presumably on diesel crossing, things like that.

Spot and just kind of move up and down depending presumably on diesel costs and things like that.

Yes, so we.

Speaker 6: Yeah, so we, as we ship through the summer, as we produce and ship to our depots, we have good line of sight on that while we're doing it, and that's mostly vessel and barge.

As we shift through the summer as we produced and shipped to our depots. We have good line of sight on that while we're while we're doing it and that's mostly vessel and barge.

We're exposed.

Speaker 6: on the last mile we'll call it when you're delivering salt from a depot to a customer during the winter. So, and I'll tell you that the truck is significantly more expensive on a unit, on a mile or unit delivered base to spend in barge and vessel. So,

On the last mile we'll call it when youre delivering salt from the depot to a customer during the winter So and I'll tell you that the truck is significantly more expensive.

On a unit on a mile or unit delivered basis than barge.

And vessel so.

Speaker 6: That's what drives some of that expense that was somewhat unanticipated as we've talked about for this winter season. It's the truck side.

That's what drives some of that.

That that expense that was somewhat unanticipated as we've talked about.

For this winter season, it's the truck side.

Speaker 1: And your last question, can some Brian Divrubio, some Bard, please go ahead.

And your last question comes from Brian <unk> from Baird. Please go ahead.

Speaker 4: good morning, so I think you partially answered my first question. It was hoping you could give some more granularity in the cost and inflationary pressures that you've experienced, particularly with this soil segment. So did I hear you right? It was primarily with the trucking.

Good morning, So I think you partially answered my first question I was hoping you could give some more client granularity.

The cost and inflationary pressures that you've experienced particularly in the salt segment. So did I hear you right that was primarily with the trucking.

Part.

Yeah truck truck has been most impactful in that truck and fuel related to truck.

Speaker 6: Yeah, truck truck has been most impactful in that truck and fuel related to truck. You know, like I said on barge and vessel, there is a fuel surcharge component there, but those are multi-year agreements with known escalators, if you will. So absolutely trucking and it's as much availability. It's so we end up paying higher rates.

Like I said on barge and vessel there is a fuel surcharge component there, but those are multi year agreements with with known escalators. If you will so so absolutely tracking and it's as much availability. It's so we end up paying higher rates.

Speaker 6: to find the trucks. So because of this, there's a 10 to 1 load to truck availability ratio in the US. So everybody's experiencing this obviously and that was quite impactful to our, to our will be impactful to our results this winter season.

Just to find the trucks so because of this.

There is a 10 to one.

Load to truck availability ratio nationally in the U S. So everybody is experiencing this obviously and that was quite impactful to our two are will be impactful to our results. This winter season, and Jamie just one question I guess is the inflationary pressure to know some of that's related to our <unk>.

Speaker 6: Jamie, just one question. I guess it is the inflationary pressure to those. Some of that's related to our input cost around bags, pallets, middle of everything that we have in input cost we'll see that inflationary pressure as well. Absolutely.

<unk> cost around bags pallets literally everything that we have in input costs, we've seen an inflationary pressure as well absolutely.

Speaker 4: got it on fortunately miss rate less company and everybody's experience in the thing just uh... one part of the truck so just to be clear so even though you had long term pricing arrangements you basically just got hit with surcharge is because of just all the the various issues that you you encounters that correct

Got it no. Unfortunately misery loves company and everybody is experiencing the same.

One final part of the truck so just to be clear. So even though you have long term pricing arrangements you basically just got hit with surcharges because of just all the various issues that you encountered is that correct.

Yes, so it's kind of year to year as Kevin said, we don't we don't have as much in certain markets. We do have some multi year agreements on the truck side, but a lot of its year to year remember from year to year.

Speaker 6: Yeah, so it's kind of year to year as Kevin said. We don't have as much in certain markets. We do have some multi-year agreements on the truck side, but a lot of it's year to year. Remember, from year to year, our portfolio shifts around, so we do need different truckers and different geographers.

Our portfolio shifts around so we do need different truckers in different geographies and we're just really facing this national headwind of truck availability.

Speaker 6: And we're just really facing this national headwind of truck availability. You know, we do a lot of things to mitigate it. We try to get flip things around and get customers to pick up salt so that we don't have to manage that directly where we can. But you know, we work, it's a, it's a, it's a geography by geography exercise. And you know, we're doing everything we can to minimize the imp.

Do a lot of things to mitigate it we tried to we tried to get flipped things around and get customers to pick up salt. So that we don't have to manage that directly where we can but we work.

It's a it's a geography by geography exercise and we're doing everything we can to minimize the impact.

Speaker 4: and just follow the question from me, given sort of the headwind you're facing, how are you thinking about approaching the next, or should they be upcoming bit season?

Understood and then just final question for me.

Given sort of the headwinds you're facing how are you thinking about approaching the next or I should say the upcoming bid season.

Yes, I think we'll.

Speaker 2: Yeah, I think we'll, again, we'll see how we finish up. And as Jamie mentioned, we want to take a look at our portfolio to make sure that we're serving markets that are natural to us and not serving markets or at least to the degree that aren't so natural to us.

Again, we'll see how we how we finish up and as Jamie mentioned, we want to.

Take a look at our portfolio.

To make sure that we are serving markets that are natural to us and.

Not serving markets or at least to the degree that are so natural to us.

Speaker 2: And then you will think about supply demand, ensure that from our perspective, we have that balance appropriately so that we can...

And then we'll think about.

Supply demand ensure that from our perspective, we have that balanced appropriately. So that we can achieve fair value and grow margins on the salt side. So for sure we will.

Speaker 2: chief fair value and grow margins on the south side. So for sure, you know, we'll, the goal would be to recover these inflates.

The goal would be to recover these inflationary.

Speaker 2: cost that we've incurred and passed those on and then raise price beyond that to the market permits. And it's just too early to predict what that looks like and we'll update you in the next couple of months on that one.

The costs that we've incurred in Paas pass those on and then raise price beyond that to the extent the market market permits.

Too early to predict what that looks like and we'll update you in the next couple of months on that one.

Speaker 4: Got to get put in another way is your preference to run the mind as full as you can or to maximize profitability.

Got it I guess put it another way is your preference to run the mines as full as you can or to sort of maximize profitability.

Speaker 4: you know, per cost of our... I guess you need to do somewhat, you gotta run this mind.

Per customer.

Yes, you need to do somewhat you've got to run those mines.

Speaker 2: That a pretty high rate anyway. Yeah, look, yeah, you always want to run your minds, you know, kind of flat out. But again, to the day, you don't want to overshoot some marketing or so it's a fine balance between being good.

That's a pretty high rate anyway.

Yes look you always want to run your mines.

Kind of kind of flat out but at the end of the day, you don't want to overshoot the market either so.

It's a fine balance between being.

<unk> been good.

Speaker 2: stewards of the market and achieving fair value for our products. But you'll have to extend. We've got to make adjustments at the mind level to match supply and the man. We're absolutely prepared to do that. And we have ways that we can do that. And maintain good efficiency as well.

Stewards of.

The market in achieving fair value for our products that you'll look to extent, we've got to make adjustments at the mine level to match supply and demand. We're absolutely prepared to do that and we have ways that we can do that and maintain good efficiency as well.

And there are no further question at this time I will turn the call back over to the presenters for closing remarks.

Speaker 1: And there no further question at this time. I will tend to call back over to the presenters for closing remarks.

Speaker 2: Thanks again everybody for participating today. We really appreciate your continued engagement as we work toward what we believe is an exciting future for Compass Minerals. We look forward to talking to you soon.

Thanks again, everybody for participating today, we really appreciate your continued engagement as we work toward what we believe is an exciting future for compass minerals look forward to talking to you soon.

This concludes today's conference call you may now disconnect.

Okay.

[music].

Yes.

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