Q3 2022 Compass Minerals International Inc Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by my name is Brent and I will be your conference operator today at this time I would like to welcome everyone to the Compass minerals third quarter fiscal year 2022 earnings calls.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press Star one. Thank you. It is now my pleasure to turn today's call over to Valerie Tomasko. Please go ahead.
Thank you operator.
Good morning, and welcome to the Compass minerals fiscal 2022 third quarter earnings conference call today, we will discuss our recent results and our outlook for the remainder of fiscal 2022.
We will begin with prepared remarks from our president and CEO , Kevin Crutchfield, and our CFO Lorin Crenshaw.
Joining in for the question and answer portion of the call will be George Schuller, Our Chief operations Officer, Jamie Standen, our Chief commercial officer, and Christine <unk>, our head of lithium.
Before we get started I will remind everyone that the remarks, we make today reflect financial and operational outlook as of todays date August 5th 2022.
These outlooks entail assumptions and expectations that involve risks and uncertainties that could cause the company's actual results to differ materially.
A discussion of these risks can be found in our SEC filings located online at investors got compass minerals Dot com.
Our remarks today also include certain non-GAAP financial measures.
You can find reconciliations of these items in our earnings release or in our presentation. Both of which are also available online.
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 noted otherwise.
The company's fiscal 2022 third quarter results and fiscal 2022 outlook in the earnings release and discussed during this earnings call reflects the previously announced change in fiscal year end from December 31 to September 30.
All year over year comparisons to fiscal 2022 third quarter results refer to the corresponding period ending June 32021, I will now turn the call over to Kevin.
Thanks, Valerie and good morning, everyone. Thanks for joining the call today and for your continued interest in compass minerals transformation.
Over the last couple of years, we've embarked on a journey to expand our position as a premier essentials minerals company.
Moving into select high return adjacent markets, leveraging our core competencies, which includes safe and productive mineral extraction experience in optimizing mining and manufacturing assets and.
In logistics and supply chain expertise at.
At the same time, we've continued to focus on safety and transforming our internal culture building execution muscle, increasing our focus on diversity and inclusion and staying true to our core purpose of helping to keep people safe feeding the world and enriching lives.
We made progress in several of these areas this year to date in this past quarter.
First we finished year to date with a total case incident rate or <unk> of just under one.
Reflecting a roughly 58% improvement year over year.
I want to express my gratitude and congratulations to each of our employees around the world for this outstanding safety performance with a particular callout to those who lender experienced talent and hard work at one of our underground mining operations were on a daily basis, they can face complex and challenging circumstances.
I appreciate the level of care focus discipline and collaboration is essential to operating safely and ensuring that each employee returns home to their families and the same condition as they left.
Even with this world class safety performance. Our team has delivered year to date, we're maintaining a vigilant focus on both engineering solutions and behavior based safety training to continue minimizing risks and to ensure a safe and healthy work environment.
From a portfolio management perspective.
Very early this quarter in April we closed on the sale of our South American chemicals business, which represented another significant step in the prioritization of our core assets with.
With the sale, we have now completed the divestment of all of our businesses in that region. Then successfully completed this phase of reshaping our portfolio.
That same month, we also received the maximum possible $18 $5 million earn out related to the sale of our South American plant nutrition business to ICL last year the.
The proceeds from these two events enabled us to continue our debt reduction efforts, notably the impact of our efforts recently had the effect of Moody's upgrading the ratings of our senior secured revolving credit facility and senior secured term debt to be a one from VA to this upgrade reflects the substantial.
And the proportion of secured debt in our capital structure, resulting from our disciplined application of divestiture proceeds towards debt reduction over the past several quarters.
We also successfully secured an amendment to our credit facility this quarter adjusting our net leverage covenant over the next eight quarters to levels that provide considerable financial flexibility.
We view this amendment is effectively serving as a bridge between the fiscal 2022 inflationary dynamic that has compressed our salt segment margins and the expected amount of profit recovery in fiscal 'twenty, three resulting from efforts underway right now to pass through cost as part of the North America.
Ray salt bidding season.
From a leadership and governance perspective. The recent addition of two new Board members Richard Daley in May and Melissa Miller in July bolstered our board of directors with leaders, who add considerable operational financial and human capital management expertise depth and knowledge, we're thrilled to have both of them.
Onboard and look forward to their contributions as thought partners along with our transformational journey.
Moving to our financial performance in the third fiscal quarter, we delivered results in line with our expectations heading into the quarter with revenue rising 8% to $215 million and adjusted EBITDA coming in at $29 million.
With three quarters of our fiscal year now behind us and roughly 80% of the adjusted EBITDA, We expect to achieve this fiscal year, having now been delivered we're focused on finishing the year strong and positioning the company to deliver improved financial results in fiscal 'twenty three more in line with underlying earnings power of <unk>.
Our business.
At this time I'd like to provide some early color on how the 2023 North America Deicing bid season, which commenced in April is unfolding today as a reminder, the contract architecture, commonly employed across our North American de icing business does not allow us to pass through in real.
Time, the substantial inflationary cost that we've withstood in fiscal 'twenty two.
As a result, whereas over the past 10 years, our salt franchise has on average delivered profitability levels of around $20 per ton.
Measured by adjusted EBITDA per ton this year the business is tracking to deliver adjusted EBITDA more in line with $15 per ton.
$5 per ton difference represents roughly a $60 million difference at the midpoint of our projected fiscal 2022 salt sales volumes in.
An essential key to restoring the profitability of our salt business is therefore successfully passing through the costs. We've incurred in 2022 as a part of the 2023 salt bidding season.
Which is approximately 75% complete at this time.
A lot can happen in the final stages of the bid season.
However, two main themes have emerged thus far.
First customer inventory levels were not elevated exiting last winter and seem to have ended this winter essentially unchanged year over year.
This preliminary evidence of this in the states we've bid on in season to date.
The aggregate amount of salt requested is roughly in line with the volumes, though state same states requested a year ago. So on the heels of what was ultimately a relatively average winter across the entire market customer inventories also ended the season at average levels. These kpis as constructive as we.
<unk> sales volumes in 2023, assuming average winter weather.
Second theme that has emerged as signs that all suppliers are striving to restore profitability to pre inflationary levels akin to 2021 levels.
This is evidenced by the fact that in the aggregate for the states, where we bid on season to date, and one where our supply contracts rolled over the weighted average selling price increase year over year is up roughly 14%.
As such pricing levels, the implied gross profit per ton in those states would indeed be approximately restored to more historical levels.
Which as we previously communicated as our primary objective this bid season.
Overall pricing indications to date are favorable.
Of course price is only one aspect of value capture.
Volume and mix or other key components as I indicated on last quarter's earnings call and executing our bidding and production strategy, our focus will be to carefully balance our commitment to serving our customers when and where it matters with the need to maximize profitability and minimize the associated cost of sub optimal logistics moves.
This bid season, we have and will continue to prioritize value over volume.
Looking to strategically place our tons were margin capture can be improved over this past winter season.
Therefore, we expect our bid commitments to be down approximately 13% versus the prior bid season.
With that in mind in addition to restoring profitability through pricing actions. We're also very focused on recalibrating our mix, even further toward geographies, where we have natural competitive advantages that enhance our profitability, even if that entails Kurt curtailing production volumes to some extent.
Overall, a considerable amount of work lies before us.
However.
Encouraged by the tenor and indications of the North American salt bidding season to date.
Now I'd like to provide an update on our continued efforts to system sustainably develop or approximately $2 4 million metric ton LTE resource on the great Salt Lake.
First we recently announced a nonbinding Mou with both LG energy solutions and Ford Motor Company and.
Envisioning a commitment or the majority of our planned annual phase one production starting in 2025.
<unk> also allows for a commitment of phase II production once that project is at full scale in.
In the coming months, we will work to evolve these <unk> into binding supply agreements as part of our broader lithium projects commercial offtake strategy.
Our lithium vision is to support the North American battery market by accelerating the development of a sustainable and secure domestic lithium supply chain.
Finalizing commercial relationships with proven manufacturers like lgs and forward will help enable that vision and assist in solidifying the U S supply chain that is essential to facilitate the electrification of the transportation sector and broader energy transition.
We've also continued to build out our lithium leadership team.
Both through leveraging internal talent and bringing in outside expertise with proven experience in lithium specific processes technology and product development.
As previously announced on September 15, we will have.
Our lithium strategy update call, we look forward to sharing at that time more specific details on our path to maximize the value of our lithium resource, particularly in the areas of technology operating and capital cost intensity initial results of our third party lifecycle assessment and funding strategies among.
Other critical facets.
On the topic of possible lithium funding strategies, a recent Bloomberg article speculated the compass minerals was exploring the sale of our UK salt operations.
To be clear our sale of our UK operations has not been authorized by our board of directors. However, we do consistently review our asset portfolio with an eye towards maximizing value for our shareholders. As we consider sources of capital to fund our lithium development project one potential option among other alter.
<unk> is to monetize an existing asset at a fair valuation.
Then redeploy the resulting proceeds into a faster growing higher returning assets enhancing value and representing an attractive cost of capital.
I'd like to now provide a brief update on fortress North America. The next generation fire Retardant technology company. We've invested in that is leveraging the magnesium chloride from our Ogden facility to produce our proprietary portfolio of innovative environmentally friendly aerial and ground.
Retardant formulations to fight wildfires and abate fire risk.
After several years in startup mode fortress is gradually transitioning from the development stage towards the commercialization of its portfolio.
The qualifying process with U S Forest service is a long and arduous one.
However fortress is the first new company in over 20 years to successfully get to the final approval stage with the U S Forest service we.
We expect that heading into the 2023 fire season to aerial Retardants will be listed on the U S for services qualified product lists as fully quantified products.
<unk> fortress to competitively bid on multiple air basis, with the U S Forest service, USDA, and Cal fire and the 2023 season and beyond.
In the meantime, partnering with Compass minerals year to date fortress has been building out its supply chain and logistics functions positioning itself to be ready to scale its manufacturing capacity to meet expected demand.
We believe the company has adequate capital to ramp up for commercialization and build out manufacturing infrastructure production facilities and staffing to capture a substantial share of a market that we estimate to represent a total addressable north American market on the order of 80 million gallons or over 300 million.
From a revenue perspective.
We're excited about the prospects for this business and we'll share updates as fortress gains traction over the coming quarters.
Finally, the last topic I would like to touch on briefly relates to the decline in our company's valuation since our last earnings call My.
My view is that the first half of the quarter. So our shares underperform largely against the backdrop of the may reduction in our full year earnings guidance.
Second half of the quarter witnessed a broader market decline due to a variety of reasons, including higher interest rates widening credit spreads, particularly for industrial companies with credit rating similar to ours the sell off in the shares of companies within the fertilizer sector and significant valuation compression occur.
Cross the lithium sector.
We're confident we will in time be able to rebound from this decline as we successfully restored the profitability of our salt segment.
Which would have the added benefit of allowing us to deleverage.
This backdrop I would like to emphasize several points about the long term prospects of our company.
First while interest rates and discount rates may rise and fall over time fundamentally we don't believe anything has changed in the last 90 days regarding the long run the earnings power of either our salt our plant nutrition businesses.
In fact, we're increasingly confident in the prospect of restoring the profitability of our salt business given the tone of the bid season to date.
Second our salt business, which comprises the bulk of our adjusted EBITDA has historically proven itself to be highly recession resistant it.
<unk> sales volumes are mainly driven by the weather, which has no correlation with global economic growth rising interest rates or any other notable macro economic factors.
Third.
We believe that the growing market need for domestically source lithium continues to represent an attractive durable secular trend and that the long term prospects for our lithium resource or in our view largely not reflected in our current share price.
And finally, our financial flexibility has only been enhanced in recent months and I believe we are well positioned to successfully manage through a wide range of scenarios over the coming quarters.
All taken together I firmly believe the long term prospects for compass minerals remained very attractive as we successfully execute on our strategy to reduce weather dependent portion of our earnings mix, while accelerating our growth.
With that I'll turn the call over to Loren, who.
Who will discuss our financial performance in greater detail and our updated outlook for the balance of the 2022 fiscal year Lauren.
Thank you Kevin consolidated revenue was $214 $7 million for the third quarter of fiscal 'twenty, two up 8% year over year, primarily driven by favorable salt segment average pricing up 8%.
The favorable price impact on revenue was partially offset by lower plant nutrition sales volumes year over year due to constrained inventory levels and subpar production yields. Despite the revenue increase our consolidated operating earnings declined $4 4 million to an operating loss of $3 5 million and adjusted EBITDA.
<unk> declined by the same amount, reflecting continued pressure on production and distribution costs within the salt segment.
Operating and adjusted EBITDA margins compressed year over year by 210, and 324 basis points respectively.
On a segment basis salt revenue totaled $156 2 million for the third quarter of fiscal 'twenty, two up 10% year over year, driven by 2% growth in sales volumes and an approximate 8% increase in price both the highway and consumer and industrial businesses reflected modest growth in.
Sales volumes.
Highway average selling price was up 7% year over year, primarily due to product and regional mix C&I pricing rose roughly 9% year over year, reflecting our efforts to implement broad based price increases within most product categories in response to the high inflation environment, enabling us to recover.
A portion of the overall inflation impact on our profitability without significant delay.
Despite higher revenue Salt operating earnings declined 35% year over year to $12 4 million, while EBITDA declined 25% to $27 $7 million primarily.
Primarily reflecting higher production and distribution costs.
EBITDA per ton declined by $6 year over year, despite higher pricing driven by higher production and distribution costs from a cost perspective, roughly two thirds of the increase was driven by higher cash Cogs, which rose 22% to roughly $45 per ton and one third by higher shipping and handling.
Enlink costs, which rose 16% to roughly $31 per ton the increase in per unit cash cost was primarily driven by inflationary impacts lower absorption and higher maintenance costs. The increase in per unit shipping and handling costs, primarily reflected the combination of inflationary impacts such as fuel surcharge.
<unk> and higher cost to serve our markets due to geographic mix.
Turning to our plant nutrition segment revenue for the third quarter rose, 3% to $55 $6 million year over year due to higher pricing, despite a 24% decline in volume specifically.
Specifically average sales price rose, 12% sequentially and was up 36% year over year, reflecting the continued supply demand dynamics impacting the global fertilizer sector at this time.
Operating earnings were $10 6 million up from zero point $7 million and EBITDA was $19 4 million nearly doubling year over year.
Higher pricing more than offset the impact of lower production volumes on sales and per unit cash costs as reflected in an operating margin of 19% up from 1% in the comparable year ago period.
From a balance sheet perspective, the past several months have been noteworthy on several fronts. The successful amendment of our credit facility in June provided substantially greater financial flexibility to manage through the ongoing restoration of profitability in our salt segment.
From a rating agency perspective, both S&P in June and Moody's in July reaffirmed our credit ratings and finally, we extended our AR securitization facility by two years to 2025 and as a result, do not have any debt maturities prior to the $250 million of senior notes due in two.
<unk> thousand 24.
I'll elaborate more on the credit Amendment. The 8-K, we filed in June provides details on the change which allows higher net leverage over the next eight quarters.
Our new leverage grid starts out at five five times for the June and September 'twenty, two quarters steps down to five times for the subsequent four quarters and eventually returns back to four five times for.
For the quarter ended June 2024, and thereafter.
It's important to note that we didn't establish our new covenant schedule, assuming a normal fiscal 'twenty three winter. If we had it would reflect a much lower leverage grid instead to be more conservative we assumed a relatively warmer than usual winter occurs in fiscal 'twenty three as a result, we expect to have.
Adequate flexibility to manage through whatever winter weather scenario. We confront overall, we are pleased with the outcome and confident in our ability to manage through whatever weather scenario comes our way over the coming quarters for.
For the quarter, we ended June with net debt of $839 million down $76 million from our 2021 fiscal year end and with net leverage of approximately four four times as defined by our credit agreement, which allows for the add back of noncash and nonrecurring items of approximately $40 million.
For the trailing 12 month period.
Overall, the combination of our financial flexibility with over $240 million of liquidity as of quarter end.
Our manageable debt maturity profile and amended credit facility give us confidence that we are well positioned to manage through the current period and bridge to the ultimate restoration of the profitability of our salt business, which is expected to drive the next leg of deleveraging.
Now turning to our outlook for the balance of the fiscal year the.
The midpoint of our adjusted EBITDA guidance is unchanged, but we've narrowed the range to a 175 million to $195 million from our previous range of $170 million to $200 million in concert we are narrowing our second half adjusted EBIT guidance for salt to a range of 55 million.
$65 million and for plant nutrition to a range of 37 million to $43 million.
As we evaluate the range of our guidance for the fourth quarter among the key drivers of potential upside or downside to the midpoint of that range are the same themes that have impacted our results throughout the year, including production performance at our Ogden facility the impact of global fertilizer market dynamics on <unk>.
Sop price levels and sales volumes and the direction of the trend of inflationary pressures on key inputs.
From a capex perspective, our guidance has drifted towards the lower end of our prior range at approximately $100 million.
Reflecting a $5 million reduction at the midpoint largely due to the timing and sequencing of spending related to certain projects. Finally in the past two quarters, we recorded non cash tax expenses in the form of valuation allowances against certain U S deferred tax assets, our effective tax rate for the year.
As approximately 35% excluding the additional expense from the valuation allowances and a negative 298%, including those expenses.
We are likely to take an additional allowance in the fourth quarter, assuming our earnings outlook tracks in line with our current expectations.
As we approach our next fiscal year, our focus will remain on restoring the profitability of our salt business.
<unk>, our Ogden facility to deliver more consistent predictable and reliable sop production identifying and executing productivity initiatives that allow us to offset the threat of additional inflationary pressures and advancing our efforts to expand our premier essential minerals franchise into the attractive.
Markets with lithium and next generation fire Retardants with that I will turn it back to the operator to open the lines for the Q&A session.
Operator.
At this time I would like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad.
Your first question comes from the line of.
Joel Jackson with BMO capital markets. Your line is open.
Hi, This is Alex on for Joel Jackson, Thanks for taking my questions.
I'm going to ask them one by one.
Could you help us.
On 14% higher.
Isn't pricing could you help us quantify the impact on the net.
Margins in fiscal 2023.
Whether that be in percentage terms our per ton terms and.
Would you expect.
This number to be closer to the $15 per ton or the $20 per ton of adjusted EBITDA that you mentioned before fiscal 2019.
Yes. Good morning. This is Kevin let me take a shot at that and maybe Lerner Jamie would want to add a little color. I mean, I think there are two components that are important to remember one is price.
There is our mix and as we said last quarter one of the things. We wanted to do this quarter was not only move price up but to have a portfolio, where we can take advantage of natural competitive advantages both from a.
Logistics standpoint, and supply and handling and that sort of thing but.
On a year over year basis, 14% up we believe puts us back in that ZIP code of where we were in 2021 I'm not going to get too specific on that because we're still working through our internal plans, but it's a significant move towards restoration of margins that had been more typical and historical here at compass.
<unk> side.
Jamie Lauren anything to add to that.
I would just remind you that when you think about the tons. We're talking about if you take the midpoint of our Salt segment volume you would back out the C&I about $2 million and you'd back out another $2 million for chemicals Mag chloride UK and so you're really talking about the $8 million of tonnes that would be.
Down the 13% and that we've enjoyed a 14% increase in average selling price. So I just want to make sure you're focused on the right numbers.
Okay.
Okay. The next one.
Yes.
On lithium so for the Florida LNG Mou.
It would seem that previously that youre looking to secure a upfront capital offtake.
Given that our GE seems to be signing these mou's with other people as well why not hold up for deals with upfront capital.
So nothing that we are in discussions around with preclude any member of the value chain from participating.
In any way with respect to an upfront capital payment or investment at the asset level as we think about moving forward prudently with lithium.
As a variety of options that are on the table. The first one would be free cash flow and Jamie and his team have done a great job. So far in terms of taking a first step towards restoring the profitability at the salt business and that's going to allow us to deleverage and that cash flow is one source of capital prepaid capital in connection with an offtake agreement.
<unk> is another option.
We might consider what's also comment within the mining sector, our streaming contracts where you.
You part with some fraction of the volume in exchange for an upfront payment than.
And then there is equity at the asset level, which would be an option and obviously equity.
At the campus level all of these options are options that.
Are on the table and we as we advanced discussions.
We will share more with the passage of time.
Perfect that makes sense and just a follow up to that.
Or do you think of some of the key requirements that will be needed to kind of convert some of these most used to like.
<unk> optics.
Go ahead.
That is correct.
I think when you look at it.
And when we use providing perspective on that vein.
Sure you have confidence in the project.
Diligence that goes on.
Our refining binding agreements.
And it's just a relationship that you developed with the customer base as well.
Sure David.
Once you get past those things.
Any other contracts that evening.
Your next question comes from the line of SaaS Goldstein with Morningstar. Your line is open.
Thanks for taking my questions it seems like it.
That strategy has changed a little bit in the past couple of years, maybe last few prioritize volumes that this year its prices and profits how should we think about the bid strategy going forward in future years.
Yes.
And more to that Kevin.
Before what we were trying to do is grab back market share that we've lost kind of post strike et cetera, and we approach this year with very much a value over volume strategy and we maintained.
A lot of discipline throughout.
The bid season, and I think are worthy data point to note too is if you look at.
The average wins across our.
Served market were up at least 500 basis points over the average of all of our competitors.
So.
It was a it was a very focused strategy both on being maintaining price discipline, but also a focus on natural geographic markets. So what I would.
What I would say you could expect going forward as a strategy very similar to that.
To the extent, we have to adjust on the production side, we'll make those adjustments but.
We want our assets to run run pretty hard as well so finding that balance I think it will be.
A key part of our strategy going forward.
That makes sense. Thank you and then can you provide an update on the plant nutrition business.
It seemed like the challenges remained.
Your path forward towards the restoration of volumes and cost reductions from here.
Georgia sit here I'll, let George take that one sure and thanks for that I think just a couple of points.
Look our impacts from the drought conditions.
<unk> had a material effect on our Sop production to date. So we've continued to put a lot of focus on the several things in regards that one of them being <unk>.
Our.
On the call on our infrastructure and what we do with our raising our dikes that type of thing our pump systems, but look at your raw trying to going back we're trying to rebalance everything that we have in our PON process and restore it to you that the historical levels in the past so again theres a lot of there's a lot of pieces to this.
I've spoken of past about use of our kcl in regards to in regards to supplement our production there again the price of ACL does.
It does not allow that to take place at this point in time, but again theres a lot of there's a lot of effort into our entire process out in August so I'm confident but it's going to still take us some time to get to that point.
Okay I'll pass it on from there. Thank you.
Thank you. Your next question is from the line of Chris Shaw with <unk> Crespi. Your line is open.
Hey, good morning, everyone. How are you doing.
Good morning.
Salt.
I know you said that you expect margins to come back with.
Yes.
Strong pricing you are getting in the bid season, but the lower volumes I always.
And I remember sort of thinking about.
Got ours in particular that.
You were pursuing some volumes to leverage the the product coming out of there.
It's a high cost asset so if youre, losing say, 13% volume is that.
That's that's.
Detrimental to margin so that all factored in I assume to the sort of guidance or giving on margins. So it's sort of limited guidance, but.
I just worried about that when I saw the number of initially.
Yes. This is Jamie I'll take that Kevin.
We don't expect to even need slow got or it's down.
Given our platform and the location of our mine in Louisiana, and our and our mine up there and garage, we can actually make shifts and while yes, we're taking our volume back.
The tons, we are reducing our low margin tons that are kind of leaving our portfolio.
We've added high margin tonnes, and we've jettisoned low margin tons. We can also adjust how we serve we call it moving our north South line, north or south and so we can keep got rich running we can move that line a bit south inventories are very tight and lean in the south so we can push that line down.
And still run our run or.
Both sites optimally.
Okay.
I hope I can continue on salt I know the.
So much of an issue on the cost side was transportation higher energy.
Shipping.
How are you contracted for that for the upcoming season.
The oil is coming down already.
<unk> assumes the shipping rates might well do the same so are you locked in at a higher rate going into the season is that flexible was at surcharges I can't remember.
I don't want I was worried that again thinking that you might be locked into a higher level because.
To make sure you had some sort of certainty on the transportation cost.
Yes. So we are exposed to oil primarily we have multi year transportation agreements on the barge.
On the barge side and on the vessel side as well as rail so.
We've made it we've made our estimate of what branch.
Oil looks like as we look out into 'twenty three to.
To the extent, it's lower than we expected, which it is now lower than it was two months ago at $94.
That would accrete to ash.
And if it's if it's where we expected then it's it's going to be at that level. If it were to go higher we could.
Leak some value there, but again.
Just as we're doing this year the industry in general tends to recapture that it's just that timing difference. So we're mostly.
Impacted by oil as it relates to transportation.
So it continues to go down you'll you'll benefit definitely heading into next year next season correct.
Alright.
That's all I have thank you.
Again, if you would like to ask a question press star followed by the number one on your telephone keypad.
Your next question comes from the line of Roger Spitz with Bank of America. Your line is open.
Thanks, and good morning.
Okay.
First I wanted to make sure.
I understood correctly.
When you said that Youre salt for the coming season was up 500 bps of your competitors.
Are you, saying that.
Prices are up 14% your competitors' prices in your view are up maybe 9% is that what you meant by that.
Misunderstand that exactly.
Thats exactly what we meant.
No.
Regarding the four 724.
I see the tension on both sides you got rising rates on the one hand.
Perhaps.
Having you think of Opportunistically looking for <unk>.
The spectrum.
I wouldn't mind seeing some recovery EBITDA as you expect today 2023.
Winter season, how do you think thats going to come down do you think you might.
Wait.
For the time after you see that EBITDA recovery, but before the biological current to refi or do you think it might come sooner.
I see so today, given the extent to which credit spreads have gapped out.
We'd probably be looking to convert that senior note to term debt. It's just less expensive and it also gives us that to pay off is that your question yes.
Yes, that's a great answer that's perfect answer, but thank you very much for that okay.
Thank you.
There are no further questions at this time I will now turn the call back over to Mr. Kevin Crutchfield.
Certainly appreciate everybody tuning in today and we appreciate your continued interest and support of Compass minerals, and we look forward to keeping you updated in the coming quarters. Thank you everyone have a good day.
Ladies and gentlemen, thanks for participating this concludes today's conference call you may now disconnect.
Yes.
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